(navigation image)
Home American Libraries | Canadian Libraries | Universal Library | Community Texts | Project Gutenberg | Children's Library | Biodiversity Heritage Library | Additional Collections
Search: Advanced Search
Anonymous User (login or join us)
Upload
See other formats

Full text of "The history of the Standard Oil Company"

!ar4< 



THE HISTORY OF 
THE STANDARD OIL COMPANY 




JOHN D. ROCKEFELLER 
A sketch from life by George Varian, made in Cleveland, October, 1903 



THE HISTORY OF 

THE STANDARD 
OIL COMPANY 

BY 

IDA M. TARBELL 

AUTHOR OF 

THE LIFE OF ABRAHAM LINCOLN, THE LIFE OF NAPOLEON BONAPARTE, 
AND MADAME ROLAND: A BIOGRAPHICAL STUDY 

ILLUSTRATED WITH PORTRAITS 
PICTURES AND DIAGRAMS 




VOLUME TWO 

NEW YORK 

McCLURE, PHILLIPS & CO. 
MCMV 



Copyright, 1904, by 
McCLURE, PHILLIPS & CO. 

Published, November, 1904, N 
SECOND IMPRESSION 




Copyright, 1902, 1903, 1904, by The S. S. McClure Co. 



CONTENTS 

CHAPTER NINE 
THE FIGHT FOR THE SEABOARD PIPE-LINE 

PROJECT FOR SEABOARD PIPE-LINE PUSHED BY INDEPENDENTS TIDEWATER 
PIPE COMPANY FORMED OIL PUMPED OVER MOUNTAINS FOR THE FIRST 
TIME INDEPENDENT REFINERS READY TO UNITE WITH TIDEWATER BE- 
CAUSE IT PROMISES TO FREE THEM FROM RAILROADS THE STANDARD 
FACE TO FACE WITH A NEW PROBLEM DAY OF THE RAILROADS OVER 
AS LONG DISTANCE TRANSPORTERS OF OIL NATIONAL TRANSIT COM- 
PANY FORMED WAR ON THE TIDEWATER BEGUN PLAN TO WRECK 
ITS CREDIT AND BUY IT IN ROCKEFELLER BUYS A THIRD OF THE 
TIDEWATER'S STOCK THE STANDARD AND TIDEWATER BECOME ALLIES- 
NATIONAL TRANSIT COMPANY NOW CONTROLS ALL PIPE-LINES AGREE- 
MENT ENTERED INTO WITH PENNSYLVANIA RAILROAD TO DIVIDE THE 
BUSINESS OF TRANSPORTING OIL Pages 3-30 

CHAPTER TEN 
CUTTING TO KILL 

ROCKEFELLER NOW PLANS TO ORGANISE OIL MARKETING AS HE HAD AL- 
READY ORGANISED OIL TRANSPORTING AND REFINING WONDERFULLY 
EFFICIENT AND ECONOMICAL SYSTEM INSTALLED CURIOUS PRACTICES 
INTRODUCED REPORTS OF COMPETITORS' BUSINESS SECURED FROM RAIL- 
WAY AGENTS COMPETITORS' CLERKS SOMETIMES SECURED AS ALLIES 
IN MANY INSTANCES FULL RECORDS OF ALL OIL SHIPPED ARE GIVEN 
STANDARD BY RAILWAY AND STEAMSHIP COMPANIES THIS INFORMA- 
TION IS USED BY STANDARD TO FIGHT COMPETITORS COMPETITORS 
DRIVEN OUT BY UNDERSELLINO-EVIDENCE FROM ALL OVER THE 
COUNTRY PRETENDED INDEPENDENT OIL COMPANIES STARTED BY THE 
STANDARD STANDARD'S EXPLANATION OF THESE PRACTICES IS NOT 
SATISFACTORY PUBLIC DERIVES NO BENEFIT FROM TEMPORARY LOWER- 
ING OF PRICES PRICES MADE ABNORMALLY HIGH WHEN COMPETITION 
IS DESTROYED Pages 31-62 



CONTENTS 

CHAPTER ELEVEN 
THE WAR ON THE REBATE 

ROCKEFELLER'S SILENCE BELIEF IN THE OIL REGIONS THAT COMBINED 
OPPOSITION TO HIM WAS USELESS INDIVIDUAL OPPOSITION STILL CON- 
SPICUOUSTHE STANDARD'S SUIT AGAINST SCOFIELD, SHURMER AND 
TEAGLE SEEKS TO ENFORCE AN AGREEMENT WITH THAT FIRM TO LIMIT 
OUTPUT OF REFINED OIL SCOFIELD, SHURMER AND TEAGLE ATTEMPT 
TO DO BUSINESS INDEPENDENTLY OF THE STANDARD AND ITS REBATES 
FIND THEIR LOT HARD THEY SUE THE LAKE SHORE AND MICHIGAN 
SOUTHERN RAILWAY FOR DISCRIMINATING AGAINST THEM A FAMOUS 
CASE AND ONE THE RAILWAY LOSES ANOTHER CASE IN THIS WAR OF 
INDIVIDUALS ON THE REBATE SHOWS THE STANDARD STILL TO BE TAKING 
DRAWBACKS THE CASE OF GEORGE RICE AGAINST THE RECEIVER OF THE 
CINCINNATI AND MARIETTA RAILROAD Pages 63-87 



CHAPTER TWELVE 

THE BUFFALO CASE 

THE STANDARD BUYS THREE-FOURTHS OF THE VACUUM OIL WORKS OF 
ROCHESTER TWO VACUUM EMPLOYEES ESTABLISH BUFFALO LUBRICAT- 
ING OIL COMPANY AND TAKE WITH THEM AN EXPERIENCED STILLMAN 
FROM THE VACUUM THE BUFFALO LUBRICATING OIL COMPANY HAS 
AN EXPLOSION AND THE STILLMAN SUDDENLY LEAVES THE BUFFALO 
LUBRICATING OIL COMPANY IS SUED BY VACUUM FOR INFRINGEMENT 
OF PATENTS MATTHEWS SUES THE EVERESTS OF THE VACUUM FOR 
DELIBERATELY TRYING TO RUIN HIS BUSINESS MATTHEWS WINS HIS 
FIRST CIVIL SUIT HE FILES A SECOND SUIT FOR DAMAGES, AND SECURES 
THE INDICTMENT OF SEVERAL -STANDARD OFFICIALS FOR CRIMINAL 
CONSPIRACY ROGERS, ARCHBOLD AND McGREGOR ACQUITTED THE 
EVERESTS FINED . .... Page. 88-1 1 



[vi] 



CONTENTS 

CHAPTER THIRTEEN 
THE STANDARD OIL COMPANY AND POLITICS 

OIL MEN CHARGE STANDARD WITH INTRENCHING ITSELF IN STATE AND 
NATIONAL POLITICS ELECTION OF PAYNE TO SENATE IN OHIO IN 1884 
CLAIMED TO ESTABLISH CHARGE OF BRIBERY FULL INVESTIGATION OF 
PAYNE'S ELECTION DENIED BY UNITED STATES SENATE COMMITTEE ON 
ELECTIONS PAYNE HIMSELF DOES NOT DEMAND INVESTIGATION POPU- 
LAR FEELING AGAINST STANDARD IS AGGRAVATED THE BILLINGSLEY 
BILL IN THE PENNSYLVANIA LEGISLATURE A FORCE BILL DIRECTED 
AGAINST THE STANDARD OIL MEN FIGHT HARD FOR IT THE BILL IS 
DEFEATED STANDARD CHARGED WITH USING MONEY AGAINST IT A 
GROWING DEMAND FOR FULL KNOWLEDGE OF THE STANDARD A RESULT 
OF THESE SPECIFIC CASES Page. HI-I28 



CHAPTER FOURTEEN 
THE BREAKING UP OF THE TRUST 

EPIDEMIC OF TRUST INVESTIGATION IN 1888 STANDARD INVESTIGATED BY 
NEW YORK STATE SENATE ROCKEFELLER'S REMARKABLE TESTIMONY- 
INQUIRY INTO THE NATURE OF THE MYSTERIOUS STANDARD OIL TRUST 
ORIGINAL STANDARD OIL TRUST AGREEMENT REVEALED INVESTIGA- 
TION OF THE STANDARD BY CONGRESS IN 1888 AS A RESULT OF THE 
UNCOVERING OF THE STANDARD OIL TRUST AGREEMENT ATTORNEY- 
GENERAL WATSON OF OHIO BEGINS AN ACTION IN QUO WARRANTO 
AGAINST THE TRUST MARCUS A. HANNA AND OTHERS TRY TO PER- 
SUADE WATSON NOT TO PRESS THE SUIT WATSON PERSISTS COURT 
FINALLY DECIDES AGAINST STANDARD AND TRUST IS FORCED TO MAKE 
AN APPARENT DISSOLUTION Pages 129-155 

[vii] 



CONTENTS 

CHAPTER FIFTEEN 
A MODERN WAR FOR INDEPENDENCE 

PRODUCERS' PROTECTIVE ASSOCIATION FORMED A SECRET INDEPENDENT 
ORGANIZATION INTENDED TO HANDLE ITS OWN OIL AGREEMENT MADE 
WITH STANDARD TO CUT DOWN PRODUCTION RESULTS OF AGREEMENT 
NOT AS BENEFICIAL TO PRODUCERS AS EXPECTED PRODUCERS PROCEED 
TO ORGANISE PRODUCERS' OIL COMPANY, LIMITED INDEPENDENT RE- 
FINERS AGREE TO SUPPORT MOVEMENT PRODUCERS AND REFINERS' 
COMPANY FORMED LEWIS EMERY, JR.'S, FIGHT FOR SEABOARD PIPE-LINE 
THE UNITED STATES PIPE LINE STANDARD'S DESPERATE OPPOSITION- 
INDEPENDENT REFINERS ALMOST WORN OUT THEY ARE RELIEVED BY 
FORMATION OF PURE OIL COMPANY PURE OIL COMPANY FINALLY BE- 
COMES HEAD OF INDEPENDENT CONSOLIDATION INDEPENDENCE POSSIBLE, 
BUT COMPETITION NOT RESTORED Pages 156-191 



CHAPTER SIXTEEN 
THE PRICE OF OIL 

EARLIEST DESIGNS FOR CONSOLIDATION INCLUDE PLANS TO HOLD UP THE 
PRICE OF OIL SOUTH IMPROVEMENT COMPANY SO INTENDS COM- 
BINATION OF 1872-1873 MAKES OIL DEAR SCHEME FAILS AND PRICES 
DROP THE STANDARD'S GREAT PROFITS IN 1876-1877 THROUGH ITS 
SECOND SUCCESSFUL CONSOLIDATION RETURN OF COMPETITION AND 
LOWER PRICES STANDARD'S FUTILE ATTEMPT IN 1880 TO REPEAT RAID 
OF 1876-1877 STANDARD IS CONVINCED THAT MAKING OIL TOO DEAR 
WEAKENS MARKETS AND STIMULATES COMPETITION GREAT PROFITS OF 
1879-1889 LOWERING OF THE MARGIN ON EXPORT SINCE 1889 BY REASON 
OF COMPETITION MANIPULATION OF DOMESTIC PRICES EVEN MORE 
MARKED- HOME CONSUMERS PAY COST OF STANDARD'S FIGHTS IN FOR- 
EIGN LANDS STANDARD'S VARIOUS PRICES FOR THE SAME GOODS AT 
HOME HIGH PRICES WHERE THERE IS NO COMPETITION AND LOW 
PRICES WHERE THERE IS COMPETITION . . Pages 192-230 



CONTENTS 

CHAPTER SEVENTEEN 

THE LEGITIMATE GREATNESS OF THE STANDARD OIL 

COMPANY 

CENTRALISATION OF AUTHORITY ROCKEFELLER AND EIGHT OTHER TRUS- 
TEES MANAGING THINGS LIKE PARTNERS IN A BUSINESS NEWS-GATHER- 
ING ORGANIZATION FOR COLLECTING ALL INFORMATION OF VALUE TO 
THE TRUSTEES ROCKEFELLER GETS PICKED MEN FOR EVERY POST AND 
CONTRIVES TO MAKE THEM COMPETE WITH EACH OTHER PLANTS 
WISELY LOCATED THE SMALLEST DETAILS IN EXPENSE LOOKED OUT FOR 
QUICK ADAPTABILITY TO NEW CONDITIONS AS THEY ARISE ECONOMY 
INTRODUCED BY THE MANUFACTURE OF SUPPLIES A PROFIT PAID TO 
NOBODY PROFITABLE EXTENSION OF PRODUCTS AND BY-PRODUCTS A 
GENERAL CAPACITY FOR SEEING BIG THINGS AND ENOUGH DARING TO 
LAY HOLD OF THEM Pages 23 1-255 

CHAPTER EIGHTEEN 
CONCLUSION 

CONTEMPT PROCEEDINGS BEGUN AGAINST THE STANDARD IN OHIO IN 1897 
FOR NOT OBEYING THE COURT'S ORDER OF ifyz TO DISSOLVE THE TRUST 
SUITS BEGUN TO OUST FOUR OF THE STANDARD'S CONSTITUENT COM- 
PANIES FOR VIOLATION OF OHIO ANTI-TRUST LAWS ALL SUITS DROPPED 
BECAUSE OF EXPIRATION OF ATTORNEY-GENERAL MONNETT'S TERM- 
STANDARD PERSUADED THAT ITS ONLY CORPORATE REFUGE IS NEW 
JERSEY CAPITAL OF THE STANDARD OIL COMPANY OF NEW JERSEY IN- 
CREASED, AND ALL STANDARD OIL BUSINESS TAKEN INTO NEW ORGAN- 
ISATIONRESTRICTION OF NEW JERSEY LAW SMALL PROFITS ARE GREAT 
AND STANDARD'S CONTROL OF OIL BUSINESS IS ALMOST ABSOLUTE- 
STANDARD OIL COMPANY ESSENTIALLY A REALISATION OF THE SOUTH 
IMPROVEMENT COMPANY'S PLANS THE CRUCIAL QUESTION NOW, AS 
ALWAYS, IS A TRANSPORTATION QUESTION THE TRUST QUESTION WILL 
GO UNSOLVED SO LONG AS THE TRANSPORTATION QUESTION GOES UN- 
SOLVEDTHE ETHICAL QUESTIONS INVOLVED . . . Pages 256-292 

APPENDIX Pages 293-396 

INDEX Pages 397-409 

[ix] 



LIST OF ILLUSTRATIONS 



SKETCH OF JOHN D. ROCKEFELLER Frontispiece 

A sketch from life by George Varian, made in Cleveland, October, 1903. FACING 

PAGE 
PORTRAIT OF ALANSON A. SUMNER 4 

Prominent supporter of the Tidewater Pipe Company, still active in its counsels. 

PORTRAIT OF HENRY HARLEY 4 

President of the Pennsylvania Transportation Company. Projector of the first sea- 
board pipe line. 



PORTRAIT OF SAMUEL VAN SYCKEL 4 

The first successful pipe line for gathering and transporting oil was completed by 
Mr. Van Syckel in 1865. 

PORTRAIT OF GENERAL HERMAN HAUPT 4 

Civil Engineer for the first and second pipe lines projected to the seaboard. 

PORTRAIT OF BYRON D. BENSON 12 

The first president of the Tidewater Pipe Company. 

PORTRAIT OF DAVID K. McKELVY 12 

The successor of Mr. Benson as president of the Tidewater. 

PORTRAIT OF MAJOR ROBERT E. HOPKINS 12 

Treasurer of the Tidewater from its organization until his death in 1901. 

PORTRAIT OF SAMUEL Q. BROWN 12 

The present president of the Tidewater, successor to Mr. McKelvy. 

PORTRAIT OF JOHN D. ROCKEFELLER IN 1880 32 

From a photograph by Sarony. 

PORTRAIT OF WILLIAM C. SCOFIELD 68 

Senior member of the firm of Scofield, Schurmer and Teagle, of Cleveland. Plain- 
tiff in important suits against Lake Shore Railroad for freight discriminations. 

PORTRAIT OF DANIEL SCHURMER 68 

Associate of Mr. Scofield and Mr. Teagle in the war on railroad rebates which 
the firm waged for nearly twenty years. 



[xi] 



LIST OF ILLUSTRATIONS 



PAGE 



PORTRAIT OF JOHN TEAGLE 

Independent refiner of Cleveland, Ohio, prominent in struggle against freight dis- 
criminations by the railroads. 

PORTRAIT OF CHARLES B. MATTHEWS ....... 68 

Independent refiner of Buffalo. Plaintiff in " Buffalo case," where members of the 
Standard Oil Company were indicted for conspiracy. 

BURST IN A PIPE LINE . . . . : ... 7 6 

BLEACHING TANK 9 2 

CONSTRUCTING AN IRON TANK FOR STORING OIL .... 92 

OIL AGITATORS 9 2 

FIVE-BARREL STILL USED IN THE FIFTIES IN DISTILLING CRUDE OIL 

AS A LUMINANT 9 2 

PORTRAIT OF JOHN D. ROCKEFELLER * zo 

By Eastman Johnson. 

PORTRAIT OF DAVID K. WATSON H 2 

Attorney-General of Ohio from 1887 to 1891. Mr. Watson brought suit against 
the Standard Oil Company in May, 1890, in the Supreme Court of Ohio. 

PORTRAIT OF FRANK S. MONNETT H 2 

Attorney-General of Ohio from 1895 to 1899. Mr. Monnett brought suit against 
the Standard Oil Company in 1897 in the Supreme Court of Ohio. 

PORTRAIT OF LEWIS EMERY, JR H 2 

Independent oil operator and refiner. Leader in movement for free pipe-line bill 
and anti-discrimination laws. Founder of the United States Pipe Line. 

PORTRAIT OF GEORGE RICE H 2 

Plaintiff in numerous cases brought against the Standard Oil Company. Prominent 
independent witness in various State and congressional investigations. 

GROUP OF CLEVELAND CITIZENS H 6 

Who called on John D. Rockefeller at his residence, " Forest Hill," on July Z$, 
1896, to thank him for his gift of park lands to the city. Mr. Rockefeller 
is in the centre of the group, the late Senator Marcus A. Hanna in the right 
lower corner, and Governor Myron T. Herrick in the centre of the top row. 

MICHAEL MURPHY .... 164 

The present President of the Pure Oil Company. 

DAVID KIRK '64 

The first President of the Pure Oil Company. 

JAMES W. LEE ^4 

The chief counsel of the Pure Oil Company. President of the company from 
1897 to 1901. 

[xii] 



LIST OF ILLUSTRATIONS 

FACING 
PAGE 

THOMAS W. PHILLIPS ,/r 

104. 

A leader in the independent movement, which resulted in the Pure Oil Company. 

LAYING A SIX-INCH PIPE LINE, CAIRO, WEST VIRGINIA . . 182 

A TYPICAL OIL FARM OF THE EARLY DAYS .... 2l6 

PORTRAIT OF S. C. T. DODD . . 2 , 2 

Chief counsel of the Standard Oil Company. Framer of the Trust agreement of 
1882. 

PORTRAIT OF JABEZ A. BOSTWICK 2 , 2 

From 1872 to 1892 the chief oil buyer of the Standard Oil Company. 
PORTRAIT OF JOSEPH SEEP 

Head of the "Seep Agency," through which all oil transported by the Standard 
Oil Company goes. 

PORTRAIT OF DANIEL O'DAY IN 1872 .... 2 - 2 

Vice-president of the National Transit Company, the pipe-line company owned by 
the Standard Oil Company. 

PORTRAIT OF JOHN D. ROCKEFELLER 2?6 

From a photograph by Allen Ayrault Green, taken about 1892. 

A 25,ooo-BARREL TANK OF OIL IN FLAMES f , 2 g o 



[ Xiii ] 



CHAPTER NINE 
THE FIGHT FOR THE SEABOARD PIPE-LINE 

PROJECT FOR SEABOARD PIPE-LINE PUSHED BY INDEPENDENTS TIDEWATER 
PIPE COMPANY FORMED OIL PUMPED OVER MOUNTAINS FOR THE FIRST 
TIME INDEPENDENT REFINERS READY TO UNITE WITH TIDEWATER BE- 
CAUSE IT PROMISES TO FREE THEM FROM RAILROADS THE STANDARD 
FACE TO FACE WITH A NEW PROBLEM DAY OF THE RAILROADS OVER 
AS LONG DISTANCE TRANSPORTERS OF OIL NATIONAL TRANSIT COM- 
PANY FORMED WAR ON THE TIDEWATER BEGUN PLAN TO WRECK 
ITS CREDIT AND BUY IT IN ROCKEFELLER BUYS A THIRD OF THE 
TIDEWATER'S STOCK THE STANDARD AND TIDEWATER BECOME ALLIES- 
NATIONAL TRANSIT COMPANY NOW CONTROLS ALL PIPE-LINESAGREE- 
MENT ENTERED INTO WITH PENNSYLVANIA RAILROAD TO DIVIDE THE 
BUSINESS OF TRANSPORTING OIL. 



I 



project for a seaboard pipe-line to be built by 
the producers and to be kept independent of Stand- 
ard capital and direction had been pushed with 
amazing energy. Early in the fall of 1878 General 
Haupt reported that his right of way was complete from the 
Allegheny River to Baltimore; contracts were let for the tele- 
graph line and preparation begun to lay the pipe. Before much 
actual work had been done it became clear to the company 
that it was not from the Butler oil field but from that of 
Bradford that a seaboard pipe-line should run; that the for- 
mer field was showing signs of exhaustion, while the latter 
was evidently going to yield abundantly. With a promptness 
which would have done credit to Mr. Rockefeller himself, 
Messrs. Benson, Hopkins and McKelvy changed their plan. 

[3] 



THE HISTORY OF THE STANDARD OIL COMPANY 

The new idea was to lay a six-inch line from Rixford, in the 
Bradford field, to Williamsport, on the Reading Railroad, 
a distance of 109 miles. The Reading, not having had so far 
any oil freight, was happy to enter into a contract with them 
to run oil to both Philadelphia and New York until they 
could get through to the seaboard themselves. In November, 
1878, a limited partnership, called the Tidewater Pipe Com- 
pany, was organised with a capital of $625,000 to carry out 
the scheme. Many of the best known producers of the Oil 
Regions took stock in the company, the largest stockholders 
being A. A. Sumner and B. D. Benson.* 

The first work was to get a right of way. The company went 
at the work with secrecy and despatch. Its first move was to 
buy from the Equitable Pipe Line, the second independent 
effort to which, as we have seen, the Producers' Union lent 
its support in 1878, a short line it had built, and a portion 
of a right of way eastward which Colonel Potts had been 
quietly trying to secure. This was a good start, and the chief 
engineer, B. F. Warren, pushed his way forward to Wil- 
liamsport near the line which Colonel Potts had projected. 
The Standard, intent on stopping them, and indeed on putting 
an end to all future ventures of this sort, set out at once to get 
what was called a "dead line" across the state. This was an ex- 
clusive right for pipe-line purposes from the northern to the 
southern boundary of Pennsylvania. As there was no free pipe- 
line bill in those days, this "dead line," if it had been complete, 
would have been an effectual barrier to the Tidewater. Much 
money was spent in this sordid business, but they never suc- 
ceeded in completing a line. The Tidewater, after a little 
delay, found a gap not far from where it wanted to cross, and 
soon had pushed itself through to Williamsport. With the 
actual laying of the pipe there was no interference which 
proved serious, though the railroads frequently held back 

* See Appendix, Number 37. Articles of incorporation of the Tidewater Pipe Line. 

[4] 




ALANSON A. SUMNER 

Prominent supporter of the Tide-water Pipe Com- 
pany, still active in its counsels. 




HENRY HARLEY 

President of the Pennsylvania Transportation Com- 
pany. Projector of the first seaboard pipe line. 





SAMUEL VAN SYCKEL 

The first successful pipe line for gathering and trans- 
porting oil was completed by Mr. Van Syckel in 1865. 



GENERAL HERMAN HAUPT 

Civil Engineer for the first and second pipe lines 
projected to the seaboard. 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

shipments of supplies. At Williamsport, where the pipe 
crossed under the railroad, it was torn out once. The Tide- 
water had no trouble in this case in getting an injunction 
which prevented further lawlessness. 

By the end of May the company was ready for operation. 
The plant which they had constructed proposed to transport 
10,000 barrels of oil a day over a distance of 109 miles. The 
apparatus for doing this consisted simply of tanks, pumps 
and pipes. At Coryville, on the edge of the Bradford field, 
two iron tanks, each holding 25,000 barrels of oil, were con- 
nected with an enormous pump of a new pattern devised by 
the Holly Company especially for this work. This pump, 
which was driven by an engine of seventy horse-power, was 
expected to force the oil through a six-inch pipe to a second 
station twenty-eight miles away and about 700 feet higher. 
Here a second pump took up the oil again, driving it to the 
summit of the Alleghanies, a few miles east. From this point 
the oil ran by gravitation to Williamsport. 

It was announced that the pumps would be started on the 
morning of May 28. The experiment was watched with 
keenest interest. Up to that time oil had never been pumped 
over thirty miles, and no great elevation had been overcome. 
Here was a line 109 miles long, running over a mountain 
nearly 2,600 feet high. It was freely bet in the Oil Regions 
that the Tidewater would get nothing but a drizzle for its 
pains. However, oil men, Standard men, representatives of 
the Pennsylvania Railroad, newspaper men and natives gath- 
ered in numbers at the stations, and indeed all along the route, 
to watch the result. 

The pump at station one was started by B. D. Benson, 
the president of the company. There were present with him 
several members of the concern, and to-day these men speak 
with emotion of the moment when Mr. Benson opened the 
valve to admit the oil to the pump. Would the great venture, 

[5] 



THE HISTORY OF THE STANDARD OIL COMPANY 2 

on which they had staked all, be a success? Without a hitch 
the oil flowed in a full stream into the pipe and began its 
long journey over the mountains. It travelled about as fast as 
a man could walk and, as the pipe lay on the ground, the 
head of the stream could be located by the sound. Patrolmen 
followed the pipe the entire length watching for leaks. There 
was now and then a delay from the stopping of the pumps; 
but the cause was trivial enough, never anything worse than 
chips under the valves or clogging in the pipe by stones and 
bits of wood which the workmen had carelessly left in when 
joining the pipe. When the oil reached the second station there 
was general rejoicing; nevertheless, the steepest incline, the 
summit of the Alleghanies, had yet to be overcome. The oil 
went up to the top of the mountain without difficulty, and on 
June 4, the seventh day after Mr. Benson opened the valve 
at Station One, oil flowed into the big receiving tank beyond 
Williamsport. A new era had come in the oil business. Oil 
could be pumped over the mountains. It was only a matter 
of time when the- Tidewater would pump to New York. 

Once at the seaboard, the Tidewater had a large and sure 
outlet for its oil in the group of independent refiners left at 
the mercy of the Standard in the fall of 1877 by the downfall 
of the Empire Line. These refiners had most of them run the 
entire gamut of experiences forced on the trade by the railroads 
and the Standard. Take, for instance, the experience of Ayres, 
Lombard and Company, related by Josiah Lombard in 1879 
in the Pennsylvania suits. They had gone into the business 
in 1869 in West Sixty-sixth street. At the beginning they had 
shipped principally over the Erie, sometimes as high as 50,000 
barrels a month ; but when that road came into the hands of 
Fisk and Gould those gentlemen began to try to build up a 
refining business in New York for their own friends. Edward 
Stokes was at that time hand in glove with Fisk; he had in 
the Oil Regions an able friend, Henry Harley. Harley bought 

[6] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

and shipped the oil over the Erie; special rates were given 
him, and the Stokes refinery soon began to flourish at the ex- 
pense of the former shippers of the Erie. Mr. Lombard find- 
ing, as he says, that there was no possibility of doing business 
with that road under the Fisk and Gould management, went 
over to the New York Central. Here he furnished his own cars. 
Ay res, Lombard and Company owned 100 cars on the Central 
in 1872, worth about $35,000, and in these they shipped the 
bulk of their oil. The South Improvement Company manoeu- 
vres in the spring of 1872 completely stopped their shipping 
over that road and in 1872 they sold their cars. Mr. Lombard 
said in his testimony: "We sold them (the cars) because the 
Standard Oil Company were getting the ascendency so much 
over the New York roads that we could not get a rate of freight 
from the lower districts and the Parker district, where the 
bulk of the oil was produced at that time, that would enable 
us to compete with them in the New York market, so there 
was no use in owning the cars." 

Driven off the Erie and Central, the firm made a running 
arrangement with Mr. Rockefeller for a year; the Standard 
bought the cars and agreed to furnish Ayres, Lombard and 
Company crude oil for a certain price at a certain time, and 
take the refined oil from them at a fixed price. This contract 
was made probably under the Refiners' Association which Mr. 
Rockefeller succeeded in effecting in August, 1872, after the 
failure of the South Improvement Company, which associa- 
tion, as we have already seen, took in fully four-fifths of the 
refining interests of the country. The contract continued, Mr. 
Lombard said in testimony, for a year or more, and was then 
terminated by notice from the Standard Oil Company. Soon 
after the termination of the contract with the Standard, which 
was either late in 1873 or early in 1874 (Mr. Lombard was 
not able to decide this when he was under examination), the 
firm began shipping over the Pennsylvania road. They bought 

[7] 



THE HISTORY OF THE STANDARD OIL COMPANY 
part of their oil at this time from Adnah Neyhart. Now, some- 
time in 1875, as we have seen, Mr. Neyhart began to feel the 
Standard pressure and his business was sold to the Standard. 
Again Ayres, Lombard and Company found a large part 
of their supply of oil cut off. For about a year they shipped 
over the Pennsylvania. It was not long, however, before 
the concern found that even on the Pennsylvania they were 
under a disadvantage, that road having made in 1875 dis- 
criminating contracts with the Standard. Again the firm 
changed, buying its oil from J. A. Bostwick and Com- 
pany of New York. Now Bostwick was the Standard Oil 
buyer, one of the original South Improvement Company, and 
a stockholder in the Standard Oil Company. Mr. Lombard 
swore that he had not been taking oil of Bostwick for more 
than a year before the Standard began to draw its lines 
around him, as he put it, and again the question arose how 
were they to get oil for their refinery. There seemed no way 
but to try to make a contract with the Pennsylvania Company. 
On the i8th of May, 1877, he went to Philadelphia and saw 
Colonel Potts, who told him he would be glad to have his ship- 
ments on the Pennsylvania. Accordingly a contract was made 
for a year, the company guaranteeing them as low a rate as 
anybody else had. But this contract of Mr. Lombard was 
destined to end as speedily and as disastrously as all of those he 
had been making for over five years, for in the fall of the year 
the Empire Line was sold to the Standard, and in the spring 
of 1878, when Mr. Lombard's contract ran out, the Pennsyl- 
vania refused to renew it on the terms they gave the Standard. 
Mr. Lombard gave a very interesting account of the inter- 
view he and his fellow refiners of New York had with Mr. 
Cassatt in reference to this matter: 

"In March, 1878, I think it was by appointment, we had an interview with Mr. 
Cassatt, third vice-president of the Pennsylvania Railroad. There were present Mr. 
Bush, Mr. Gregory, Mr. Burke, Mr. Ohlen, and myself, besides Mr. Cassatt. It 

[8] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

was held in Mr. Bush's office, 123 Pearl street, New York. We sought that interview 
for the purpose of finding out what our position would be on the Pennsylvania Rail- 
road after the termination of our contract with the Empire Line, which they had 
assumed. We had quite a plain talk on the subject. We began by telling Mr. 
Cassatt something that he already knew that we for the past year had been 
probably the largest shippers over the Pennsylvania Railroad that they had had; 
largest shippers of petroleum. He acknowledged it, and we asked him if we should, 
after the first of May, be on the same footing and have as low a rate of freight as anybody 
else, which was guaranteed by contract up to that time. He said no, we would not. 
We asked him why not. Well, he said, it would not be satisfactory to the Standard 
Oil Company. I then put the question to him what difference it made to the Penn- 
sylvania Railroad Company whether it was satisfactory to the Standard Oil Company 
or not. He said that the Standard Oil Company was the only party which could keep 
peace between the trunk lines. I said, It seems to me you have the matter very much 
in your own hands; there are but four of you; if you agree upon a certain rate of freight 
the oil is to come forward at, I see no use of the intervention of a third party or a fifth 
party in this case. He said, I cannot trust or rather, he said, They are the only people 
that can keep harmony. Then we had a little discussion about the rates. He said 
that they had been bringing oil for the past year at a very low rate. I told him I under- 
stood it was a little over seventy cents an average on crude petroleum. He denied it, 
and said it was not. Then when we were talking about the subject of rates, he said 
of course the rates on petroleum were very profitable, and said we could find out 
the rate at which they could bring petroleum, if they were compelled to, by looking 
up their annual report, and seeing the cost a ton per mile, which was something like 
five or six mills per ton per mile, and which if we figured that it would be a very profit- 
able business. We told him we did not object to him making a good profit at any 
time; all we wished was to have as low a rate of freight as anybody else had, which we 
could not get. 

"He said we had better make an arrangement with the Standard and we would 
all of us make money, and that they had a very large business and proposed to make 
money, and the discrimination would be so light against us that we would hardly 
notice it, and we formed the idea from what he said. We asked him whether the dis- 
crimination against us would be larger if the rate of freight were high than it would if 
the rate of freight were low. He said, yes, it would be, but he said the discrimination 
would be very small. We tried to find out by asking what it would be, but did not suc- 
ceed. He then said if we would unite with the Standard we would do better and 
everything would be peaceable and harmonious, and he would use his efforts to pro- 
mote such a union if we wished it. We told him we did not wish to unite with the 
Standard; we dealt on freight matters with the Pennsylvania Railroad, not with the 
Standard Oil Company. 

[9] 



THE HISTORY OF THE STANDARD OIL COMPANY 
There was another interview a, which Mr. Bush, Mr. Ohlen Mr. Cass,.,, and 
mvs elf were the only parties as I remember it; it was held in Pennsylvan.a, a, the oi 
7,hf Pennsylvania* Llroad Company, in the las, part of May or early par, of June; 
, wa at the time of what we called the squeeze in car. Previous to that t,me we had 
had all the cars we warned without any difficulty; at tha, tone and when we were 
wanting jus, about the same kind of cars we had previous,y been wantrng, and busmess 
was running on very easily, we found we were unable to ge, anyth.ng hke the amounts 
w had before; inlad of getting for the firm I represent from twelve to fifteen 
Tars a day we were getting only one or two-utterly insuffic,en, for the busmess. 
We cant over to seeM, Cassatt about it-M, Bush, Mr.Ohto ^ and myself. He 
said he knew there was trouble; that the other side, the Standard O,l Company had 
some five hundred cars full here a, Philadelphia and Baltimore; that he had no d,s- 
covered t until recently, but that he would have it remedied. They hadbeen ho.d.ng 
hTherefull. I asked him why, if he knew of the cars being detamed he kept g,v,ng 
h em carl He said he did not know exactly how that was. I to.d h,m ,f these cars 
were shipped here and held, i, seemed to me they ought to stop g,vmg cats to part.es 
folding 'hem. He said the matter would be remedied soon. We asked ^ 
He could not tell exactly. I said, 'Can', you stop gmng them cars! He sa d h 
would remedy the matter, we should have all the cats we needed; and ,t was a, that 
rime that he made the remark to which Mr. Bush testified, when we had some We 
gTera. conversation, tha, if we built a pipe-line he would buy ,, up or old ,ron ,n 
sL days. I think I remarked tha, the Condui, Pipe brought a good pnce for old 
a laughing way. The interview was pleasant enough. Then early m July- 
i'nk i wa ,heL p'ar, of June or early part of July-Mr Oh,en, Mr. Bush, Mr 
Wilson, Mr. King, M, Gregory, and myself came ,o Ph.ladelph.a and met Co on 
Scot, president of the Pennsylvania Railroad, Mr. Cassatt, and Mr. Brundr 
le offic of the Pennsylvania road, with the same .rouble, .he same two troubles as 
of old, a scarcity of cars and a discrimination in freight. As to scarc.ty of cars, they 



ametesaid they had already fought one figh, in our 
million and a half of dollars. We told them no, a, all ,n our behalf, we had nothmg 
To do with it; we were simply shippers over the road and d,d no, part,c,pa, , , the 
matter at all; it was a matter of their own. He seemed to be a htt e -'* 
When he made the remark which has been given m evrdence before, 
would be no peace or profit in the business until we made some arrangement wi.h 

[10] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

Standard Oil Company; he would be very glad to have such an arrangement made, 
and would do all in his power to accomplish it. We told him we did not wish any 
arrangement with the Standard Oil Company; we had been dealing for years with the 
Pennsylvania Railroad Company, and we wished to deal with them now on all trans- 
portation and freight matters. I think there was nothing further in that interview. 

"He asked why we did not apply to the other roads for transportation. We told 
him we had. He said, with what results ? That the Central Road had no cars of their 
own. He said that was a very flimsy pretext. I said that the Erie road cars were 
controlled by the Standard Oil Company, and the Central cars were controlled by 
the Standard Oil Company. That in fact the whole transportation of the oil country 
seemed to be controlled by the Standard Oil Company, and the New York Central, and 
the Erie, and the Pennsylvania Central, and the Baltimore and Ohio, they controlled 
the whole thing, and there was no chance, and in addition to that we had been shippers 
and customers of the Pennsylvania road for years." 

Naturally enough, men who had been through such experi- 
ences as these of Mr. Lombard were glad to unite with the 
Tidewater, which promised to free them from the railroads 
and their chief competition, and they promised to take all 
their supply from the line. 

The success of the Tidewater experiment brought Mr. 
Rockefeller face to face with a new situation. Just how seri- 
ous this situation was is shown by the difference in the cost 
of transporting a barrel of oil to the seaboard by rail and 
transporting it by pipe. According to the calculation of Mr. 
Gowen, the president of the Reading Railroad, the cost by 
rail was at that time from thirty-five to forty-five cents. The 
open rate was from $1.25 to $1.40, and the Standard Oil Com- 
pany probably paid about eighty-five cents, when the roads 
were not protecting it from "injury by competition." Now, 
according to General Haupt's calculation in 1876, oil could 
be carried in pipes from the Oil Regions to the seaboard for 
16 2-3 cents a barrel. General Haupt calculated the average 
difference in cost of the two systems to be twenty-three cents, 
enough to pay twenty-eight per cent, dividends on the cost 
of a line even if the railway put their freights down to cost. 

En] 



THE HISTORY OF THE STANDARD OIL COMPANY 

This little calculation is enough to show that the day of the 
railroads as long-distance transporters of crude oil was over; 
that the pipe-lines were bound to replace them. Now, Mr. 
Rockefeller had by ten years of effort made the roads his 
servant; would he be able to control the new carrier? A man 
of lesser intellect might not have foreseen the inevitableness 
of the new situation ; a man of lesser courage would not have 
sprung to meet it. Mr. Rockefeller, however, is like all great 
generals: he never fails to foresee where the battle is to be 
fought; he never fails to get the choice of positions. He 
wasted no time now in deciding what should be done. He 
proposed not merely to control future long-distance oil trans- 
portation; he proposed to own it outright. 

Hardly had the news of the success of the Tidewater's 
experiment reached the Standard before this truly Napoleonic 
decision was being carried out. Mr. Rockefeller had secured 
a right of way from the Bradford field to Bayonne, New Jer- 
sey, and was laying a seaboard pipe-line of his own. At the 
same time he set out to acquire a right of way to Philadelphia, 
and soon a line to that point was under construction. Even 
before these seaboard lines were ready, pipes had been laid 
from the Oil Regions to the Standard's inland refining points 
Cleveland, Buffalo and Pittsburg. With the completion of 
this system Mr. Rockefeller would be independent of the rail- 
roads as far as the transportation of crude oil was concerned. 
It was, of course, a new department in his business, and, to 
manage it, a new company was organised in April, 1881 
the National Transit Company with a capital of five million 
dollars, and a charter of historical interest, for it was a mate 
of the charter of the ill-fated South Improvement Company, 
granted by the same Legislature and giving the same omnibus 
privileges the right in fact to do any kind of business, except 
banking, in any part of the world. The South Improvement 
Company charter, as we have seen, was repealed. The charter 

[12] 




BYRON D. BENSON 
The first president of the Tidewater Pipe Company. 




DAVID K. MCKELVY 

The successor of Mr. Benson as president of the 
Tidewater. 





MAJOR ROBERT E. HOPKINS 

Treasurer of the Tidewater from its organization 
until his death in 1901. 



SAMUEL Q. BROWN 

The present president of the Tidewater, successor 
to Mr. McKelvy. 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

which the National Transit Company now bought seems to 
have gone into hiding when the character of its mate was dis- 
closed and so had been forgotten. How it came to be unearthed 
by the Standard or what they paid for it, the writer does not 
know. However, as H. H. Rogers aptly told the Industrial 
Commission in 1899, when he was asked if a considerable sum 
was not given for it: "I should suppose every good thing 
had to be paid for; I should say a man owning a charter of 
that kind would sell it at the best price he could get." 

And while Mr. Rockefeller was making this lavish ex- 
penditure of money and energy to meet the situation created 
by the bold development of the Tidewater, what was his atti- 
tude toward that company? One would suppose that Mr. 
Rockefeller, of all men, would be the first to acknowledge 
the service the Tidewater had rendered the oil business ; that 
in this case he would have felt an obligation to make an excep- 
tion to his claim that the oil business was his ; that he would 
have allowed the new company to live. But Mr. Rockefeller's 
commercial vision is too keen for that; that would not be 
business. The Tidewater had been built to feed a few inde- 
pendent refineries in New York. If these refineries operated 
outside of him, they might disturb his system; that is, they 
might increase the output of refined and so lower its price. 
The Tidewater must not be allowed to live, then. But how 
could it be put out of commission? It had money to operate. 
There were plenty of oil producers glad to give it their prod- 
uct, because it was independent. The Reading Railroad had 
gone heart and soul into its fight it had refiners pledged to 
take its oil, and these refiners had markets of their own at 
home and abroad. What was he going to do about it? There 
were several ways to accomplish his end; in two of them, at 
least, Mr. Rockefeller excelled from long practice. The first 
was to get out of the way the refineries which the Tidewater 
expected to feed, and this was undertaken at once. The refiners 

[13] 



were approached usually by members of the Standard Oil 
Company as private individuals, and terms of purchase or 
lease so generous made to them that they could not afford to 
decline. At the same time they were assured confidentially that 
the Tidewater scheme was a pure chimera, that they under- 
stood the pipe-line business better than anybody else and they 
knew oil could not be pumped over the mountains. All but 
one firm yielded to the pressure. Ayres and Lombard stood by 
the Tidewater, but soon after their refusal to sell they were 
condemned as a public nuisance and obliged to move their 
works! The Tidewater met the situation by beginning to 
build refineries of its own one at Bayonne, New Jersey, and 
another near Philadelphia in the meantime storing the oil 
it had expected to sell. 

Having done his best to cut off his rival's outlet, Mr. Rocke- 
feller called upon the railroads to carry out that article of 
their contract with him which bound them to protect him 
from "injury by competition." What was done was told a 
few months later to the Committee on Commerce in the House 
of Representatives by Franklin B. Gowen, the president of 
the Reading Railroad. According to Mr. Gowen the Tide- 
water and Reading were no sooner ready to run oil than a 
meeting of the trunk lines was held at Saratoga, at which the 
representatives of the Standard Oil Company were present, 
and on that day the through rate on oil was reduced to twenty 
cents per barrel to the Standard Oil Company. "It was subse- 
quently reduced to fifteen cents," Mr. Gowen told the Com- 
mittee, "and I believe, though I do not certainly know, to 
ten cents per barrel in cars of the Standard Oil Company; 
. . . and I am told that at the meeting at Saratoga a time 
was fixed by the Standard Oil Company within which they 
promised to secure the control of the pipe-line provided the 
trunk lines would make the rate for carrying oil so low that 
all concerned in transportation would lose money. 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

"I know this, that only three or four months ago we were 
told I do not mean myself, but the gentlemen who directly 
represented the pipe-line which leads to our road that if 
they would agree to give all their oil to the Standard Oil 
Company to be refined, we could carry 10,000 barrels a day, 
and the rates would be advanced by the trunk lines. But, to 
use the language of those making the offer, 'we' (meaning 
the Standard Oil Company) 'will never permit the trunk lines 
to advance the rate on oil until your pipe-line gives us all its 
product to refine,' and the prophesy of four months ago has 
become the history of to-day." Mr. Flagler differs with Mr. 
Gowen in his explanation of this cut in rates. Mr. Flagler con- 
tends that the Standard Oil Company really opposed it, but 
that the railroads insisted on it. Mr. Flagler's testimony is 
interesting reading in connection with all that we know about 
the Tidewater Company. It will be found in the appendix.* 

This was the Tidewater's first year's experience. The second 
and third were not unlike it. But the company lived and ex- 
panded. It bought and built refineries, it sent its president 
to Europe to open markets, it extended its pipe-line still nearer 
to the seaboard, and it did this by a series of amazingly plucky 
and adroit financial moves borrowing money, speculating 
in oil, exchanging credit, chasing checks from bank to bank, 
"hustling," in short, as few men ever did to keep a business 
alive. And every move had to be made with caution, for the 
Standard's eye was always on them, its hand always out- 
stretched. Samuel Q. Brown, the present president of the 
organisation, when on the witness stand in December, 1882, 
said that so much did the Tidewater fear espionage that they 
were accustomed to keep their oil transactions as a private and 
not a general account, in order that they might not be reported 
to the Standard ; that even matters which they believed they 

* See Appendix, Number 38. Testimony of Henry M. Flagler in regard to the 
Tidewater contest. 

[15] 



THE HISTORY OF THE STANDARD OIL COMPANY 




Scale 3 miles to each division. CONDENSED PROFILE OF TIDEWATER PIPE LINE 

The pipe followed the jagged line representing surface of the ground. The numbers above the 
Station I lifted the oil over 600 feet. From here it flowed by gravitation until the gradient line the 
oil to the next high point, the creit of the Alleghanies. As the gradient line shows, the oil now would 
the speed of the flow. 

were keeping in an absolutely private way frequently leaked 
out, to the injury of the business. 

By January, 1882, the Tidewater was in such a satisfactory 
condition that it decided to negotiate a loan of $2,000,000 to 
carry out plans for enlargement. The First National Bank 
of New York, after a thorough examination of the business, 
agreed to take the bonds at ninety cents on the dollar, but 
trouble began as soon as the probable success of the bond issue 
was known. The officials of the First National Bank were 
called upon by stockholders of the Tidewater, men holding 
nearly a third of the company's stock, and assured that the 
company was insolvent, and that it would be unsafe for the 
bank to take the loan. The First National declined to be influ- 
enced by the information, on the ground that the disgruntled 
stockholders had sold themselves to the Standard Oil Com- 
pany, and were trying to discredit the Tidewater, so that the 
Standard might buy it in. It had been planned to place some 
of these bonds in Europe, and Franklin B. Gowen was 
sent over for that purpose. Mr. Brown said on the witness 
stand, a few months later, that as soon as Mr. Gowen started 
from this side it was cabled to Europe that he was going over 
to place bonds which were not sound; that the stockholders 

[16] 



THE FIGHT FOR iHE SEABOARD PIPE-LINE 




BETWEEN RIXFORD AND TAMANEND, PENNSYLVANIA 

surface line show the location of the pumping stations from which the oil was forced. The pump at 
sloping straight line above the surface line touched the ground. A new station, No. 2, then lifted the 
flow to Station 4, making many steep ascents without further pumping. Station 3 was added to increase 



were all of them wealthy men, and if the bonds had been good 
property they would have taken them themselves. Mr. Brown 
declared this report was spread so generally on the other side 
that it interfered seriously with Mr. Gowen's attempt to place 
the loan. 

These manoeuvres failing to ruin the Tidewater's credit, 
a more serious attack was made in the fall of 1882, by the 
filing of a long bill of complaint against the management of 
the company, followed by an appeal that a receiver be ap- 
pointed and the business wound up. The appeal came from 
E. G. Patterson, a stockholder of the Tidewater, and a man 
who, up to this time, had been one of the most intelligent 
opponents of the Standard in the Oil Regions. Mr. Patter- 
son was one of the few who had realised, from the first devel- 
opment of Mr. Rockefeller's pretensions, that it was a question 
of transportation, and that, if the railroads could be forced 
by courts and legislatures to do their duty, the coal-oil business 
would not belong to Mr. Rockefeller. He had been one of the 
strongest factors in the great suits compromised in 1880, and 
his disgust at the outcome had been so great that he had washed 
his hands of the Producers' Union. Later he had been engaged 
by the state of Pennsylvania to collect evidence on which 

[17] 



THE HISTORY OF THE STANDARD OIL COMPANY 

to support a claim against the Standard Oil Company for 
some $3,000,000 of back taxes. The Standard had made Mr. 
Patterson's services unnecessary by coming forward and giv- 
ing the attorney-general all the information as to its finan- 
cial condition which he desired. Exasperated at the result of 
all his efforts, and feeling that he had been deserted by the 
public he had tried to serve, Mr. Patterson sent word to the 
Standard that he proposed still further to attack them (just 
how he never explained) unless they would give him, not to 
attack, as much as there was in the contract from the state.* 
They seem to have thought it worth while to buy peace, and 
agreed to give Mr. Patterson some $20,000 in all, and secure 
him a position for a term of years. The first payment was made 
at the end of April, 1882, and $5,000 of the money received 
Mr. Patterson paid to the Tidewater for stock he had taken 
at its organisation. No sooner was the stock in his hands than 
he began the preparation of the bill of complaint above re- 
ferred to, and in December the case was heard. 

The Oil Regions watched it with keenest interest. That 
Mr. Patterson had made some settlement with the Standard 
was generally known, and the charge was freely circulated 
that they had bribed him to bring this suit in hopes of blast- 
ing the credit of the Tidewater and getting its stock for a 
song. The testimony brought out in the trial did not bear out 
this popular notion. The case was rather more complicated. 
That the suit was backed by the Standard, one would have 
to be very na'ive to doubt, but they were using other and 
stronger parties than Mr. Patterson, and that was a faction 
of the company known as the "Taylor-Satterfield crowd." 
These men, controlling some $200,000 worth of Tidewater 
stock, had been professing themselves dissatisfied with the 
management of the business for some months, though always 

* Court of Common Pleas, Crawford County, Pennsylvania. Patterson vs. Tide- 
water Pipe Company, Limited. Testimony of E. G. Patterson, December, 1882. 

[18] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

refusing to sell their holdings at an advanced price. It was 
generally believed in the Oil Regions that their "dissatisfac- 
tion" was fictitious, that they were in reality in league with 
the Standard in an attempt to create a panic in Tidewater 
stock, a belief which was strengthened when it was learned 
that a big oil company, which the gentlemen controlled, the 
Union, had been sold about that time to the Standard Oil 
Trust for something like $500,000 in its stock. The first 
manoeuvre of the Taylor-Satterfield faction had been the 
attempt to dissuade the First National Bank from taking the 
Tidewater loan referred to above. Failing in this, they seem 
to have imbued Mr. Patterson thoroughly with their pre- 
tended dissatisfaction and to have persuaded him to bring 
the suit. For some reason which is not clear they failed prop- 
erly to support him in the suit, and when it came off they prac- 
tically deserted him. The Tidewater had no trouble in prov- 
ing that the complaints of insolvency and mismanagement 
were without foundation, and Judge Pierson Church, of 
Meadville, before whom the case was argued, refused to ap- 
point the receiver, intimating strongly that, in his judgment, 
the case was an attempt to levy a species of blackmail, in 
which it must not be expected that his court would co-operate. 
Judge Church's decision was given on January 15. Two 
days later a sensation came in Tidewater affairs, which quite 
knocked the Patterson suit out of the public mind; it was 
nothing less than a bold attempt by the Taylor party, or, as 
it was now known, "the Standard party," to seize the reins 
of government. It was a very cleverly planned coup. 

The yearly meeting for the election of officers in the com- 
pany was fixed for a certain Wednesday in January. By verbal 
agreement it had been postponed, in 1882, to some time in 
February, the controller, D. B. Stewart, a member of the 
Taylor faction, representing that he could not have his state- 
ment ready earlier. No notices were sent out to this effect, 

[19] 



THE HISTORY OF THE STANDARD OIL COMPANY 

although this should have been done. Taylor and his party, 
taking advantage of this fact perfectly well known to them, 
appeared at the Tidewater offices on January 17, and al- 
though one of the Benson faction, as the majority was known 
from the name of the company's president, was present with 
sufficient proxies to vote nearly two-thirds of the stock, they 
overruled him and elected themselves to the control. They 
also elected to the Board of Managers, Franklin B. Gowen, 
the president of the Reading, and James R. Keene, the famous 
speculator, both large holders of Tidewater bonds. They fol- 
lowed their election immediately by sending out notices to 
the banks with which the company did business not to honour 
checks drawn by the Benson party, and to the post-office to 
deliver mail to no one but themselves. 

The announcement caused a terrible commotion in oil 
circles. Both Mr. Keene and Mr. Gowen refused to recognise 
the new board, Mr. Gowen telegraphing in answer to the noti- 
fication of his election : 

JOHN SATTERFIELD, 

Titusville. 

At quarter of three o'clock to-day I received a despatch signed with your name 
as manager and chairman, stating that a meeting of the Board of Managers would 
be held at noon to-day. While the notice itself is sufficient to render invalid any action 
you may have attempted at such meeting as has been held, even if you had power to act 
at all, I deny your right to call any meeting or act in any manner as an officer of the 
company, and will hold you and all your associates responsible at law for the occur- 
rences of yesterday, and for your subsequent action thereunder. 

(Signed) F. B. GOWEN. 

The Benson party took immediate action, applying for an 
injunction restraining the new board from taking possession 
of the books and offices. This was granted and a date for a 
hearing appointed. Up to the hearing the old board did busi- 
ness behind barricaded doors! The case was heard in Mead- 
ville before Judge Pierson Church the same who had heard 

[20] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

the Patterson case. As it was a case to be decided on purely 
technical matters the rules governing elections no sensa- 
tion was looked for, but one came immediately. It was a long 
affidavit from James R. Keene, even more notorious then than 
now there were fewer of his kind for deals and corners 
and devious stock tricks, declaring that both the Patterson 
case and this attempt to obtain control were dictated by the 
"malicious ingenuity" of the Standard for the purpose of 
destroying the Tidewater and getting hold of its property: 

"From my first connection with the company," said Mr. Keene, "it has been ham- 
pered and embarrassed in its business by the unscrupulous competition of the Standard 
Oil Company. When it first began to transport and deliver oil at tidewater, the refiner- 
ies which purchased and refined oil were one after another bought up by the Standard 
Oil Company or driven out of business by vexatious and oppressive annoyances. The 
most private details of our business have been communicated to the officers of the 
Standard Oil Company, and they have, by every means in their power, interfered with 
our affairs. By the arrangement which they were able to make with the railroads 
leading from the Oil Regions, other than the Philadelphia and Reading Railroad 
Company and the Central Railroad of New Jersey, the Standard Oil Company have 
been able to obtain a control of the business of transporting and refining oil, with 
the exception of that part of the business which has been carried on by the Tidewater 
Pipe Company and their refineries, to which it had made deliveries. Repeated efforts 
have been made by parties in their interest to secure the control of the Tidewater 
Pipe Company, and if they could succeed, the monopoly thereby secured would add 
many million dollars a year to their profit." 

Mr. Keene's putting of the case was undoubtedly correct, 
but pious horror of commercial brigandage, coming from 
"Jim" Keene, was useful only to give joy to a cynical world, 
unencumbered by the possession of stock in either concern. 
The Keene sensation was followed by a second, an affidavit 
from John D. Archbold, of the Standard Oil Company, deny- 
ing that his company had any interest in the present suit, but 
adding that for some time the officers of the Tidewater had 
been seeking an alliance with the Standard: 

"Byron D. Benson and David McKelvy have at various times for the past years 
met me at their own instance, and have proposed to combine the business of the Tide- 

[21] 



THE HISTORY OF THE STANDARD OIL COMPANY 

water Pipe Company with that of the Standard Oil Company, desiring the Standard 
Oil Company to agree on a division of the business of transporting and refining oil, 
and to agree with the Tidewater Pipe Company in fixing the rate of transporting oil 
and the price of refined oils. These proposals were renewed to me by B. D. Benson 
during the summer of 1882, he coming to my office at his own instance and urging, by 
various arguments, such an arrangement. These proposals, in whatever shape made, 
have always been declined. This deponent has also had many interviews with James 
R. Keene, and always at his request, upon the same subject, in which interviews said 
Keene has earnestly urged such a combination and has used many arguments in favour 
of the advantage which would result from such a combination. These proposals have 
always been declined." 

Naturally they were declined the Standard was not seek- 
ing an alliance, it was seeking ownership of the Tidewater; 
and it expected so to discredit the company that it could buy 
in its stock for a song. Mr. Archbold's affidavit cooled popular 
sympathy for the hunted concern no little, however. A sug- 
gestion of any kind of a compromise with the Standard was 
looked upon as rank disloyalty by the Oil Regions, free com- 
petition in rates and in prices being, they contended, the only 
hope of the country. Mr. Archbold's affidavit must have some- 
thing in it, everybody thought, though it might be, as Mr. 
Benson immediately swore, "grossly inaccurate." 

Such was the character of the charges and countercharges 
in this purely technical case. The judge took little notice of 
them in his decision, but, after an exhaustive discussion of 
the points involved in the election, decided it was illegal and 
continued the injunction he had granted against the new 
board. Judge Church's decision aroused general exultation 
in the Oil Regions as any failure of the Standard to get what 
it wanted was bound to do, and with good reason. The Tide- 
water's growth in the face of the Standard's constant inter- 
ference with its business was proof that independent pipe- 
lines and independent refineries could be built up if men had 
sufficient brains and courage and patience. What one set of 
men had done, another could do. Their hope of restoring f ree- 

[22] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

dom of competition to the oil business was still further 
brightened in June by the news that the Legislature of Penn- 
sylvania had passed a free pipe-line bill the measure that 
they had been urging for twelve years without avail. With a 
sturdy example of independence, like the Tidewater, before 
them, and the right of eminent domain for pipes, the future 
of competition in oil seemed to be up to the oil men themselves. 

But the Oil Regions have always been prone to jump at 
conclusions. They were forgetting Mr. Rockefeller's record 
when they concluded that he was through with the Tide- 
water. Because he had failed in his old South Improvement 
Company trick, that is, failed to create a panic among Tide- 
water stockholders, and so get their property at panic prices, 
was no reason at all to suppose he had abandoned the chase. 
There still remained a legitimate method of getting into the 
company, and, as a last resort, Mr. Rockefeller accepted it. 
He bought the minority stock of the concern, held by the 
Taylor party. Up to this time Mr. Rockefeller had appeared 
in Tidewater affairs as a destroyer. He now appeared in a 
role in which he is quite as able as a pacifier, and his ex- 
traordinary persuasiveness was never exercised to better effect. 
"We own $200,000 worth of your stock," he could tell the 
people he had been fighting. "If you will consent to confine 
yourselves to a fixed percentage of our joint business, and will 
sustain pipage rates and the price of refined oil, we will let 
you alone. Let us dwell together in peace." 

The Tidewater, tired of the fight, accepted. And so these 
men to whom the oil business owes one of its most remark- 
able developments, who, in face of the most powerful and 
unscrupulous opposition, had in four years built up a business 
worth five and one-half millions of dollars signed contracts 
in October, 1883, fixing the relative amount of business they 
were henceforth to do as n l /2 per cent, of the aggregate, the 
Standard having 88^ per cent. The two simply became allies. 

[23] 



THE HISTORY OF THE STANDARD OIL COMPANY 

The agreement between them was the same in effect as all 
Mr. Rockefeller's running agreements it limited and kept 
up prices.* Any benefit the oil business might have reaped 
from natural and decent competition between the two was 
of course ended by the alliance. For all practical purposes 
the two were one. In the phrase of the region, the Tidewater 
had "gone over to the Standard," and there it has always 
remained. The contract was made for fifteen years, but since 
its expiration it has been lived up to honourably by both parties 
without other than a verbal understanding. For, note this: 
Mr. Rockefeller always keeps his word. Indeed, in studying 
his career, one is frequently reminded of Tom Sawyer's great 
resolution never to sully piracy by dishonesty! 

The Tidewater has prospered within the boundary Mr. 
Rockefeller drew for it, as those who have accepted sub- 
missively his boundaries have never failed to do. Mr. Rocke- 
feller is right when he says, as he does so often, that all who 
come with him prosper. That the company would have suc- 
ceeded in becoming eventually a formidable rival of the Stand- 
ard, and in controlling much more than eleven per cent, of 
the business, no one can doubt who knew Mr. Benson, Major 
Hopkins, Mr. McKelvy, and their colleagues. They were busi- 
ness men of the first order, as their tremendous work from 
1878 to 1883 shows. 

Once more the good of the oil business was secure, and Mr. 
Rockefeller at once proceeded to arrange his great house in 
the new order made necessary by the introduction of the sea- 
board pipe-line. The entire transportation department of the 
business had to be reorganised. When the seaboard pipe-line 
became a factor in the oil business, in 1879, the Standard Oil 

* See Appendix, Number 39 A. Agreement between Standard and Tidewater 
refineries. 

See Appendix, Number 39 B. Agreement between Standard and Tidewater Pipe 
Lines. 

[2 4 ] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

Company owned practically the entire system of oil-gathering 
pipe-lines that is, the lines carrying oil from the wells to the 
storing or shipping points. These lines were organised under 
the name of the United Pipe Lines, and the organisation was 
magnificent in both extent and in character of service ren- 
dered. Never, indeed, has the ability of the men Mr. Rocke- 
feller gathered into his machine shone to better advantage 
than in the building up and management of the pipe-line 
business. At the end of 1883, when the alliance was made with 
the Tidewater, the United Pipe Lines were taking from the 
wells of Pennsylvania fully a million and a half barrels of 
oil a month. Their pipes, of an aggregate length of 3,000 
miles, connected with thousands of wells scattered all over 
the wide Oil Regions. 

Whenever the oil men opened a new field, no matter how 
remote from those already developed, the United Pipe Lines 
immediately went there to care for the oil. In more than one 
case, in these years of rapid and excessive development of oil 
territory, the pipe-line company invested great sums in pre- 
paring to take care of oil fields whose yield never paid the 
cost of the pipe laid. Thus, in 1882, there was a tremendous 
excitement over the opening of the Cherry Grove field. The 
Standard spent $2,000,000 getting ready to take care of a great 
outpouring of oil which came, but did not stay. In 1882 
Cherry Grove produced 2,345,400 barrels; in 1883, 755,512! 
It cost the company forty-six cents a barrel to take care of the 
production of one short-lived group of wells in this field, on 
which they never realised more than twenty cents pipage. 

The Standard not only gathered this oil ; it stored it, to wait 
its owner's demand. At this date it controlled 40,000,000 bar- 
rels of iron tankage, in which it stored the enormous stocks, 
over 35,000,000 barrels, which had accumulated in the five pre- 
vious years. When the oil passed to the pipe-line, the owner 
received his money for it at once, if he wished, or the line 

[25] 



THE HISTORY OF THE STANDARD OIL COMPANY 

" carried" it. When a producer had 1,000 barrels in the line, 
he received a pipe-line certificate for it. In December of 
1883 the United Pipe Lines had issued certificates for nearly 
all of the 35,000,000 barrels of stocks above ground. The 
oil men thus had a bank for their oil, a bank recognised gener- 
ally as sound as any in the United States. 

Such were the returns from the pipe-line for its services 
that no business ever justified more fully the extraordinary 
outlays of money and energy which it had taken to perfect it. 
For each barrel of oil the United Pipe Lines gathered, they 
received, when it was taken from the lines, twenty cents. The 
service cost them perhaps two cents after installation, though 
in these years, when they were obliged to carry some 30,000,000 
barrels, they had constantly $6,000,000 on their books on which 
they did not at once realise. They could afford to let this sum 
stand because of the storage charge. For every 1,000 barrels 
carried in their tanks they received $6.25 each fifteen days 
$152 a year. Now, tankage did not cost over $250 per 1,000 
barrels, so that the storage more than paid its cost in two years. 
There were often great losses by fire, but these were paid 
by the owners of the oil a pro rata assessment being made. 
There was a deterioration in quantity and quality of oil from 
holding, but this again was paid by the owners in a shrinkage 
charge of three per cent., deducted from the quantity of oil 
when run. Thus on every side the pipe-line business was 
guarded. So long as it could keep out competition and hold 
up its prices, there was no better paying business in the United 
States than piping oil. 

As we have seen, Mr. Rockefeller began to add long- 
distance pipe-lines to his business as soon as the Tidewater 
demonstrated their feasibility, and before the time the Tide- 
water was brought into harmony he had a complete system to 
the seaboard and to his inland refinery points, organised under 
the name of the National Transit Company. The United Pipe 

[26] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

Lines and the National Transit Company were really one 
business, the former consisting of local lines and the other 
of trunk lines, and to make the organisation more compact 
the former was transferred to the latter on April i, 1884. The 
paid-up capital of the concern at this date was $31,00x3,000. 
Just as Mr. Rockefeller claimed, in 1878, that he was "pre- 
pared to enter into a contract to refine all the petroleum that 
could be sold in the markets of the world," so now he could 
announce that he was prepared to gather, store and transport 
all the crude petroleum not only that the markets of the world 
demanded, but that the producers took from the ground. As 
things now stood the only remaining point where he could 
possibly be affected by competition was the railroads. A new 
relation to the railroads was created by the new development. 
Mr. Rockefeller was not only independent of them, he was 
their competitor, for, like them, he was a common carrier 
obliged to transport what was offered. His open rate to New 
York was forty-five cents, to Philadelphia forty, though the 
actual service probably did not cost over ten cents. By the 
alliance with the Tidewater any danger of competition from 
a pipe-line, which could of course afford to cut the price, was 
shut off. The railroads might possibly, however, lower the 
prices a little and still make a profit. It was very necessary 
that the price be kept up in order that too much encourage- 
ment should not be given to outside refiners. The only group 
which threatened to grow to large proportions, at this time, 
was in the Oil Regions, a group which was the direct out- 
growth of the compromise of 1880. As will be remembered, 
the agreement with the Pennsylvania Railroad made then 
stipulated that all rates should be open, and that if a rebate 
was given to one shipper another could have it on demand. 
After the compromise the Pennsylvania had undertaken again 
to stimulate the growth of independent refineries, and several 
plants had been built in Titusville and Oil City. Having 

[27] 



THE HISTORY OF THE STANDARD OIL COMPANY 

removed the New York group from competition by the alli- 
ance with the Tidewater it was Mr. Rockefeller's business 
to make it as hard as possible for the independents in the Oil 
Regions to do business, and to do this he must make a contract 
with the Pennsylvania. 

Moreover, when Mr. Rockefeller entered New Jersey with 
his seaboard pipe-line, he had been obliged to cross the Penn- 
sylvania Railroad. He could not do so without the consent of 
the company, there being no free pipe-line in the country. 
He accordingly had been obliged to make a traffic arrange- 
ment with them to get his pipe through. A new arrangement 
was now necessary in order to prevent competition, and in 
August, 1884, a contract was signed, for "considerations mutu- 
ally interchanged," by which the National Transit Company 
agreed to give to the Pennsylvania Railroad twenty-six per 
cent, of "all petroleum brought to the Atlantic seaboard by 
all existing carriers, whether rail or pipe, now engaged in 
transporting such property, or which may hereafter engage 
in such transportation in conjunction with the Transit Com- 
pany's pipes." At the same time that the Transit Company 
agreed to give the railroad this amount of oil, it also signed 
an agreement to carry this oil for the railroad on a sliding 
scale. When the open rate of the pipe-line was forty cents 
to Philadelphia the railroad was to pay the company eight 
cents with each five cents difference, up or down, in the open 
rate, there was to be one cent difference to the railroad, the 
Transit never to receive less than six or more than ten cents.* 
Suppose, for example, that the entire seaboard shipment of 
oil in the month ending December 20, 1884, had been 1,000,000 
barrels. 260,000 barrels belonged to the Pennsylvania. If 
the Transit Company ran all the railroad's percentage it 
would get eight cents a barrel for the service, $20,800, 

* See Appendix, Number 40. Two agreements of even date, August 22, 1884, be- 
tween the Pennsylvania Railroad Company and the National Transit Company. 

[28] 



THE FIGHT FOR THE SEABOARD PIPE-LINE 

and it would pay the railroad $104,000 less $20,800, or 
$83,200. The pipe-line probably never ran the whole amount. 
More or less refined oil naphtha, benzine, and other petro- 
leum products would necessarily go by rail. Large sums 
were paid monthly by the National Transit, however, to the 
railroad. Mr. Rockefeller seems to have been paying the 
Pennsylvania Railroad this money not to compete with him 
as an oil carrier. It would be difficult to find in our variegated 
commercial history a more beautiful example of the benefi- 
cence of combination to those in the deal! 

With the removal of danger of any competition by the 
Pennsylvania Railroad, the transportation department of the 
Standard Oil Trust seems to have been as nearly a perfect 
machine, both in efficiency and in its monopolistic power, as 
ever has been devised. It was more perfect, indeed, than the 
refining end of the trust, for independent refiners did exist, 
and since 1880 they had been showing increasing vigour, 
whereas there seemed now no opportunity for an independent 
pipe-line ever again to develop. Who, with the Tidewater's 
story in mind, would be bold enough to attempt to reach the 
sea? For the time being, then, the Standard Oil Company 
had things all its own way. It collected with its ally, the Tide- 
water, practically the entire output of a great raw product. 
It manufactured fully ninety per cent, of this product, and 
aimed to manufacture 100 per cent. It was a common carrier, 
and so obliged to deliver oil to rival refineries if they called 
for it, but these refineries paid forty or forty-five cents for a 
service which cost the Standard Oil Trust not over one-fourth 
of the sum. 

Mr. Rockefeller had every reason to be satisfied with oil 
transportation in 1884, but there was a part of the oil business 
which was not so completely in his grasp. The markets of 
the country were still open. There the few independent refiners 
who had escaped strangulation were free to barter as they 

[29] 



THE HISTORY OF THE STANDARD OIL COMPANY 

could. But the right to make all the oil in the world, which 
Mr. Rockefeller claimed, carried with it the right to sell all 
the oil the world consumed. The independent was therefore a 
poacher in the market and must be driven out. 



[30] 



CHAPTER TEN 
CUTTING TO KILL 

ROCKEFELLER NOW PLANS TO ORGANISE OIL MARKETING AS HE HAD AL- 
READY ORGANISED OIL TRANSPORTING AND REFINING WONDERFULLY 
EFFICIENT AND ECONOMICAL SYSTEM INSTALLED CURIOUS PRACTICES 
INTRODUCED REPORTS OF COMPETITORS' BUSINESS SECURED FROM RAIL- 
WAY AGENTS COMPETITORS' CLERKS SOMETIMES SECURED AS ALLIES 
IN MANY INSTANCES FULL RECORDS OF ALL OIL SHIPPED ARE GIVEN 
STANDARD BY RAILWAY AND STEAMSHIP COMPANIES THIS INFORMA- 
TION IS USED BY STANDARD TO FIGHT COMPETITORS COMPETITORS 
DRIVEN OUT BY UNDERSELLING EVIDENCE FROM ALL OVER THE 
COUNTRY PRETENDED INDEPENDENT OIL COMPANIES STARTED BY THE 
STANDARD STANDARD'S EXPLANATION OF THESE PRACTICES IS NOT 
SATISFACTORY PUBLIC DERIVES NO BENEFIT FROM TEMPORARY LOWER- 
ING OF PRICES PRICES MADE ABNORMALLY HIGH WHEN COMPETITION 
IS DESTROYED. 






know every detail of the oil trade, to be able to 

reach at any moment its remotest point, to control 
even its weakest factor this was John D. Rocke- 
feller's ideal of doing business. It seemed to be 
an intellectual necessity for him to be able to direct the 
course of any particular gallon of oil from the moment 
it gushed from the earth until it went into the lamp of a 
housewife. There must be nothing nothing in his great 
machine he did not know to be working right. It was to 
complete this ideal, to satisfy this necessity, that he under- 
took, late in the seventies, to organise the oil markets of 



THE HISTORY OF THE STANDARD OIL COMPANY 

the world, as he had already organised oil refining and oil 
transporting. Mr. Rockefeller was driven to this new task 
of organisation not only by his own curious intellect; he was 
driven to it by that thing so abhorrent to his mind competi- 
tion. If, as he claimed, the oil business belonged to him, and 
if, as he had announced, he was prepared to refine all the oil 
that men would consume, it followed as a corollary that the 
markets of the world belonged to him. In spite of his bold 
pretensions and his perfect organisation, a few obstinate oil 
refiners still lived and persisted in doing business. They were 
a fly in his ointment a stick in his wonderful wheel. He must 
get them out; otherwise the Great Purpose would be unreal- 
ised. And so, while engaged in organising the world's mar- 
kets, he incidentally carried on a campaign against those who 
dared intrude there. 

When Mr. Rockefeller began to gather the oil markets into 
his hands he had a task whose field was literally the world, 
for already, in 1871, the year before he first appeared as an 
important factor in the oil trade, refined oil was going into 
every civilised country of the globe. Of the five and a half 
million barrels of crude oil produced that year, the world 
used five millions, over three and a half of which went to 
foreign lands. This v\as the market which had been built up 
in the first ten years of business by the men who had developed 
the oil territory and invented the processes of refining and 
transporting, and this was the market, still further developed, 
of course, that Mr. Rockefeller inherited when he succeeded 
in corralling the refining and transporting of oil. It was this 
market he proceeded to organise. 

The process of organisation seems to have been natural and 
highly intelligent. The entire country was buying refined oil 
for illumination. Many refiners had their own agents out look- 
ing for markets; others sold to wholesale dealers, or jobbers, 
who placed trade with local dealers, usually grocers. Mr. 

[32] 




JOHN D. ROCKEFELLER IN l88o 
FROM A PHOTOGRAPH BY SARONY 



CUTTING TO KILL 

Rockefeller's business was to replace independent agents and 
jobbers by his own employees. The United States was mapped 
out and agents appointed over these great divisions. Thus, 
a certain portion of the Southwest including Kansas, Mis- 
souri, Arkansas and Texas the Waters-Pierce Oil Company, 
of St. Louis, Missouri, had charge of; a portion of the South 
including Kentucky, Tennessee and Mississippi Chess, 
Carley and Company, of Louisville, Kentucky, had charge of. 
These companies in turn divided their territory into sections, 
and put the subdivisions in the charge of local agents. These 
local agents had stations where oil was received and stored, and 
from which they and their salesmen carried on their cam- 
paigns. This system, inaugurated in the seventies, has been 
developed until now the Standard Oil Company of each state 
has its own marketing department, whose territory is divided 
and watched over in the above fashion. The entire oil-buying 
territory of the country is thus covered by local agents report- 
ing to division headquarters. These report in turn to the head 
of the state marketing department, and his reports go to the 
general marketing headquarters in New York. 

To those who know anything of the way in which Mr. 
Rockefeller does business, it will go without saying that this 
marketing department was conducted from the start with the 
greatest efficiency and economy. Its aim was to make every 
local station as nearly perfect in its service as it could be. 
The buyer must receive his oil promptly, in good condition, 
and of the grade he desired. If a customer complained, the 
case received prompt attention and the cause was found and 
corrected. He did not only receive oil; he could have proper 
lamps and wicks and burners, and directions about using them. 

The local stations from which the dealer is served to-day 
are models of their kind, and one can easily believe they 
have always been so. Oil, even refined, is a difficult thing to 
handle without much disagreeable odour and stain, but the 

[33] 



THE HISTORY OF THE STANDARD OIL COMPANY 

local stations of the Standard Oil Company, like its refineries, 
are kept orderly and clean by a rigid system of inspection. 
Every two or three months an inspector goes through each 
station and reports to headquarters on a multitude of details 
whether barrels are properly bunged, filled, stencilled, 
painted, glued; whether tank wagons, buckets, faucets, pipes, 
are leaking; whether the glue trough is clean, the ground 
around the tanks dry, the locks in good condition; the horses 
properly cared for; the weeds cut in the yard. The time the 
agent gets around in the morning and the time he takes for 
lunch are reported. The prices he pays for feed for his horses, 
for coal, for repairs, are noted. In fact, the condition of every 
local station, at any given period, can be accurately known 
at marketing headquarters, if desired. All of this tends, of 
course, to the greatest economy and efficiency in the local 
agents. 

But the Standard Oil agents were not sent into a territory 
back in the seventies simply to sell all the oil they could 
by efficient service and aggressive pushing; they were sent 
there to sell all the oil that was bought. "The coal-oil business 
belongs to us," was Mr. Rockefeller's motto, and from the 
beginning of his campaign in the markets his agents accepted 
and acted on that principle. If a dealer bought but a barrel 
of oil a year, it must be from Mr. Rockefeller. This ambition 
made it necessary that the agents have accurate knowledge 
of all outside transactions in oil, however small, made in their 
field. How was this possible? The South Improvement scheme 
provided perfectly for this, for it bound the railroad to send 
daily to the principal office of the company reports of all oil 
shipped, the name of shipper, the quantity and kind of oil, 
the name of consignee, with the destination and the cost of 
freight.* Having such knowledge as this, an agent could 

* The Eighth Section of Article Second of this contract, defining the duties of the 
railroads reads: "To make manifests or way-bills of all petroleum or its products 

[34] 

' * 



CUTTING TO KILL 

immediately locate each shipment of the independent refiner, 
and take the proper steps to secure the trade. But the South 
Improvement scheme never went into operation. It remained 
only as a beautiful ideal, to be worked out as time and oppor- 
tunity permitted. The exact process by which this was done 
it is impossible to trace. The work was delicate and involved 
operations of which it was wise for the operator to say noth- 
ing. It is only certain that little by little a secret bureau for 
securing information was built up until it is a fact that infor- 
mation concerning the business of his competitors, almost 
as full as that which Mr. Rockefeller hoped to get when he 
signed the South Improvement Company contracts, is his 
to-day. Probably the best way to get an idea of how Mr. 
Rockefeller built up this department, as well as others of his 
marketing bureau, is to examine it as it stands to-day. First, 
then, as to the methods of securing information which are 
in operation. 

Naturally and properly the local agents of the Standard 
Oil Company are watchful of the condition of competition 
in their districts, and naturally and properly they report what 
they learn. "We ask our salesmen and our agents to keep their 
eyes open and keep us informed of the situation in their respec- 
tive fields," a Standard agent told the Industrial Commission 
in 1898. "We ask our agents, as they visit the trade, to make 
reports to us of whom the different parties are buying; princi- 
pally to know whether our agents are attending to their busi- 
ness or not. If they are letting too much business get away 
from them, it looks as if they were not attending to their 

transported over any portion of the railroads of the party of the second part or its 
connections, which manifests shall state the name of the consignor, the place of ship- 
ment, the kind and actual quantity of the article shipped, the name of the consignee, 
and the place of destination, with the rate and gross amount of freight and charges, 
and to send daily to the principal office of the party of the first part duplicates of all 
such manifests or way-bills." Proceedings in Relation to Trusts, House of Repre- 
sentatives, 1888. Report Number 3,112, page 360. 

[35] ' 




THE HISTORY OF THE STANDARD OIL COMPANY 

business. They get it from what they see as they go around 
selling goods." But there is no such generality about this part 
of the agent's or salesman's business as this statement would 
lead one to believe. As a matter of fact it is a thoroughly sci- 
entific operation. The gentleman who made the above state- 
ment, for instance, sends his local agents a blank like the 
following to be made out each month : 



EXHIBIT "B R."* 



IVtONTHLY REPORT. 



> 


DEALER 


ADDRESS 


Kstimatcd Silts 
per month of 


Brand or Kind 
.of Goods 


Price 


If by 
Tank 

IT* 

-T" 


BUY PROM 


k Oil 


Caso. 


Nime 


Shpm"l 





































































































































































'fsman fr Agent 



The local agent gets the information to fill out such a re- 
port in various ways. He questions the dealers closely. He 
watches the railway freight stations. He interviews everybody 
in any way connected with the handling of oil in his territory. 
All of which may be proper enough. When, in the early 
eighties, Howard Page, of the Standard Oil Company, was 
in charge of the Standard shipping department in Ken- 
tucky, his agents visited the depots once a day to see what oil 

* Record of pleadings and testimony in Standard Oil Trust quo warranto cases in 
the Supreme Court of Ohio, 1899, page68i. 

[36] 



CUTTING TO KILL 

arrived there from independent shippers. A record of these 
shipments was made and reported monthly to Mr. Page. He 
was able to tell the Interstate Commerce Commission, in 
1887, almost exactly what his rivals had been shipping by rail 
and by river. Mr. Page claimed that his agents had no special 
privileges; that anybody's agents would have been allowed to 
examine the incoming cars, note the consignor, contents and 
consignee. It did not appear in the examination, however, that 
anybody but Mr. Page had sent agents to do such a thing. The 
Waters-Pierce Oil Company, of St. Louis, once paid one of 
its Texas agents this unique compliment: "We are glad to 
know you are on such good terms with the railroad people that 
Mr. Clem (an agent handling independent oil) gains nothing 
by marking his shipments by numbers instead of names." In 
the same letter the writer said: "Would be glad to have you 
advise us when Clem's first two tanks have been emptied and 
returned, also the second two to which you refer as having 
been in the yard nine and sixteen days, that we may know 
how long they have been held in Dallas. The movement of 
tank cars enters into the cost of oil, so it is necessary to have 
this information that we may know what we are competing 
with." * 

The superior receiving the filled blanks carefully follows 
them by letters of instructions and inquiries, himself keeping 
track of each dealer, however insignificant, in the local agent's 
territory, and when one out of line has been brought in, never 
failing to compliment his subordinate. But however diligent 
the agent may be in keeping his eyes open, however he may 
be stirred to activity by the prodding and compliments of 
his superiors, it is of course out of the question that he get 
anything like the full information the South Improvement 
scheme insured. What he is able to do is supplemented by 
a system which compares very favourably with that famous 

* Trust Investigation of Ohio Senate, 1898, page 370. 
[37] 



THE HISTORY OF THE STANDARD OIL COMPANY 

scheme and which undoubtedly was suggested by it. For many 
years independent refiners have declared that the details of 
their shipments were leaking regularly from their own em- 
ployees or from clerks in freight offices. At every investigation 
made these declarations have been repeated and occasional 
proof has been offered; for instance, a Cleveland refiner, 
John Teagle, testified in 1888 to the Congressional Committee 
that one day in 1883 his bookkeeper came to him and told 
him that he had been approached by a brother of the secretary 
of the Standard Oil Company at Cleveland, who had asked 
him if he did not wish to make some money. The bookkeeper 
asked how, and after some talk he was informed that it would 
be by his giving information concerning the business of his 
firm to the Standard. The bookkeeper seems to have been a 
wary fellow, for he dismissed his interlocutor without arous- 
ing suspicion and then took the case to Mr. Teagle, who asked 
him to make some kind of an arrangement in order to find 
out just what information the Standard wanted. The man did 
this. For twenty-five dollars down and a small sum per year he 
was to make a transcript of Mr. Teagle's daily shipments with 
net price received for the same ; he was to tell what the cost of 
manufacturing in the refinery was ; the amount of gasoline and 
naphtha made and the net price received for them; what was 
done with the tar; and what percentage of different grades 
of oil was made; also how much oil was exported. This infor- 
mation was to be mailed regularly to Box 164 of the Cleveland 
post-office. Mr. Teagle, who at that moment was hot on the 
tracks of the Standard in the courts, got an affidavit from the 
bookkeeper. This he took with the money which the clerk 
had received to the secretary of the Standard Oil Company and 
charged him with bribery. At first the gentleman denied hav- 
ing any knowledge of the matter, but he finally confessed and 
even took back the money. Mr. Teagle then gave the whole 
story to the newspapers, where it of course made much noise. 

[38] 



CUTTING TO KILL 

Several gentlemen testified before the recent Industrial 
Commission to the belief that their business was under the 
constant espionage of the Standard Oil Company. Theo- 
dore Westgate, an oil refiner of Titusville, told the Commis- 
sion that all of his shipments were watched. The inference 
from his testimony was that the Standard Oil Company re- 
ceived reports direct from the freight houses. Lewis Emery, 
Jr., of Bradford, a lifelong contestant of the Standard, 
declared that he knew his business was followed now in the 
same way as it was in 1872 under the South Improvement 
Company contract. He gave one or two instances from his 
own business experience to justify his statements, and he added 
that he could give many others if necessary. Mr. Gall, of 
Montreal, Canada, declared that these same methods were in 
operation in Canada. "When our tank-cars come in," Mr. 
Gall told the Commission, "the Standard Oil Company have 
a habit of sending their men, opening a tank-car, and taking 
a sample out to see what it contains." Mr. Gall declared that 
he knew this a long time before he was able to get proof of it. 
He declared that they knew the number of cars that he 
shipped and the place to which they went, and that it was 
their habit to send salesmen after every shipment. Mrs. G. C. 
Butts, a daughter of George Rice, an independent refiner 
of Marietta, Ohio, told the Ohio Senate Committee which in- 
vestigated trusts in 1898 that a railroad agent of their town 
had notified them that he had been approached by a Standard 
representative who asked him for a full report of all inde- 
pendent shipments, to whom and where going. The agent re- 
fused, but, said Mrs. Butts: "We found out later that some- 
one was giving them this information and that it was being 
given right from our own works. ... A party writing us from 
the Waters-Pierce office wrote that we had no idea of the 
network of detectives, generally railroad agents, that his 
company kept, and that everything that we or our agents said 

[39] 



THE HISTORY OF THE STANDARD OIL COMPANY 

or did was reported back to the managers through a regular 
network of detectives who were agents of the railroads and 
oil company as well." 

But while the proofs the independents have offered of their 
charges show that such leaks have occurred at intervals all 
over the country, they do not show anything like a regular 
system of collecting information through this channel. From 
the evidence one would be justified in believing that the cases 
were rare, occurring only when a not over-nice Standard 
manager got into hot competition with a rival and prevailed 
upon a freight agent to give him information to help in his 
fight. In 1903, however, the writer came into possession of a 
large mass of documents of unquestionable authenticity, bear- 
ing out all and more than the independents charge. They 
show that the Standard Oil Company receives regularly 
to-day, at least from the railroads and steamship lines repre- 
sented in these papers, information of all oil shipped. A study 
of these papers shows beyond question that somebody having 
access to the books of the freight offices records regularly each 
oil shipment passing the office the names of consignor and 
consignee, the addresses of each, and the quantity and kind of 
oil are given in each case. This record is made out usually on 
a sheet of blank paper, though occasionally the recorder has 
been indiscreet enough to use the railroad company's station- 
ery. The reports are evidently intended not to be signed, 
though there are cases in the documents where the name of 
the sender has been signed and erased; in one case a printed 
head bearing the name of the freight agent had been used. 
The name had been cut out, but so carelessly that it was easy 
to identify him. These reports had evidently been sent to the 
office of the Standard Oil Company, where they had received 
a careful examination, and the information they contained 
had been classified. Wherever the shipment entered was from 
one of the distributing stations of the Standard Oil Company, 

[40] 



CUTTING TO KILL 

a line was drawn through it, or it was checked off in some 
way. In every other case in the mass of reports there was 
written, opposite the name of the consignee, the name of a 
person known to be a Standard agent or salesman in the terri- 
tory where the shipment had gone. 

Now what is this for? Copies of letters and telegrams ac- 
companying the reports show that as soon as a particular 
report had reached Standard headquarters and it was known 
that a carload, or even a barrel, of independent oil was on its 
way to a dealer, the Standard agent whose name was written 
after the shipment on the record had been notified. "If you 
can stop car going to X, authorise rebate to Z (name of dealer) 
of three-quarters cent per gallon," one of the telegrams reads, 
There is plenty of evidence to show how an agent receiving 
such information "stops" the oil. He persuades the dealer to 
countermand the order. George Rice, when before the House 
Committee on Manufactures in 1888, presented a number 
of telegrams as samples of his experience in having orders 
countermanded in Texas. Four of these were sent on the same 
day from different dealers in the same town, San Angelo. 
Mr. Rice investigated the cause, and, by letters from the vari- 
ous firms, learned that the Standard agent had been around 
"threatening the trade that if they bought of me they would 
not sell them any more," as he put it. 

Mrs. Butts in her testimony in 1898 said that her firm had a 
customer in New Orleans to whom they had been selling from 
500 to 1,000 barrels a month, and that the Standard representa- 
tive made a contract with him to pay him $10,000 a year for 
five years to stop handling the independent oil and take Stand- 
ard oil! Mrs. Butts offered as evidence of a similar transac- 
tion in Texas the following letter: 

" LOCKHART, TEXAS, November 30, 1894. 

" Mr. Keenan, who is with the Waters-Pierce people at Galveston, has made us sev- 
eral visits and made us propositions of all kinds to get us out of the business. Among 

[41] 



THE HISTORY OF THE STANDARD OIL COMPANY 

others, he offered to pay us a monthly salary if we would quit selling oil and let them 
have full control of the trade, and insisted that we name a figure that we would take 
and get out of the business, and also threatened that if we did not accept his proposition 
they would cut prices below what oil cost us and force us out of business. We asked 
him the question, should we accept his proposition, would they continue to sell oil as 
cheap as we were then selling it, and he stated most positively that they would advance 
the price at once should they succeed in destroying competition. 

"J. S. LEWIS AND COMPANY." 

In the Ohio Investigation of 1898 John Teagle, of Cleve- 
land, being upon his oath, said that his firm had had 
great difficulty in getting goods accepted because the Stand- 
ard agents would persuade the dealers to cancel the orders. 
"They would have their local man, or some other man, call 
upon the trade and use their influence and talk lower prices, 
or make a lower retail price, or something to convince them 
that they'd better not take our oil, and, I suppose, to buy 
theirs." Mr. Teagle presented the following letter, signed by 
a Standard representative, explaining such a countermand: 

"JOHN FOWLER, "DBS MOINES, IOWA, January 14, 1891. 

Hampton, Iowa. 

"Dear Sir: Our Marshalltown manager, Mr. Ruth, has explained the circum- 
stances regarding the purchase and subsequent countermand of a car of oil from our 
competitors. He desires to have us express to you our promise that we will stand all 
expense provided there should be any trouble growing out of the countermand of this 
car. We cheerfully promise to do this; we have the best legal advice which can be 
obtained in Iowa, bearing on the points in this case. An order can be countermanded 
either before or after the goods have been shipped, and, in fact, can be countermanded 
even if the goods have already arrived and are at the depot. A firm is absolutely obliged 
to accept a countermand. The fact that the order has been signed does not make any 
difference. We want you to absolutely refuse, under any circumstances, to accept the 
car of oil. We are standing back of you in this matter, and will protect you in every 
way, and would kindly ask you to keep this letter strictly confidential. . . . 

"Yours truly, E. P. PRATT." 

Peter Shull, of the Independent Oil Company of Mans- 
field, Ohio, testified before the same committee to experiences 
similar to those of Mr. Teagle. 

[42] 



CUTTING TO KILL 

"If I put a man on the road to sell goods for me," said 
Mr. Shull, "and he takes orders to the amount of 200 
to 300 barrels a week, before I am able to ship these goods 
possibly, the Standard Oil Company has gone there and com- 
pelled those people to countermand those orders under a threat 
that, if they don't countermand them, they will put the price 
of oil down to such a price that they cannot afford to handle 
the goods." 

In support of his assertion Mr. Shull offered letters from 
firms he has been dealing with. The following citations show 
the character of them : 

"TIFFIN, OHIO, February i, 1898. 
"INDEPENDENT OIL COMPANY, 

Mansfield, Ohio. 

"Dear Sirs: The Standard Oil Company, after your man was here, had the cheek 
to come in and ask how many barrels of oil we bought and so forth, then asked us to 
countermand the order, saying it would be for our best; we understand they have put 
their oil in our next door and offer it at six cents per gallon, at retail. Shall we turn 
tail or show them fight ? If so, will you help us out any ? . . . 

"Yours truly, 

"TALBOTT AND SON." 

"TIFFIN, OHIO, January 24, 1898. 
"INDEPENDENT OIL COMPANY. 

"Dear Sirs: . . I am sorry to say that a Standard Oil man from your city 
followed that oil car and oil to my place, and told me that he would not let me make 
a dollar on that oil, and was dogging me around for two days to buy that oil, and made 
all kinds of threats and talked to my people of the house while I was out, and per- 
suaded me to sell, and I was in a stew what I should do, but I yielded and I have been 
very sorry for it since. I thought I would hate to see the bottom knocked out of 
the prices, but that is why I did it the only reason. The oil was all right. I now see 
the mistake, and that is of getting a carload two carloads coming in here inside of 
a week is more than the other company will stand. . . . 

"Yours truly, 

"H. A. EIRICK." 

In case the agent cannot persuade the dealer to counter- 
mand his order, more strenuous measures are applied. The 

[43] 



THE HISTORY OF THE STANDARD OIL COMPANY 
letters quoted above hint at what they will be. Many letters 
have been presented by witnesses under oath in various inves- 
tigations showing that Standard Oil agents in all parts of the 
country have found it necessary for the last twenty-five years 
to act at times as these letters threaten. One of the most aggres- 
sive of these campaigns waged at the beginning of this war of 
exterminating independent dealers was by the Standard mar- 
keting agent at Louisville, Kentucky Chess, Carley and Com- 
pany. This concern claimed a large section of the South as its 
territory. George Rice, of Marietta, Ohio, had been in this 
field for eight or ten years, having many regular customers. 
It became Chess, Carley and Company's business to secure 
these customers and to prevent his getting others. Mr. Rice 
was handicapped to begin with by railroad discrimination. 
He was never able to secure the rates of his big rival on any 
of the Southern roads. In 1888 the Interstate Commerce Com- 
mission examined his complaints against eight different South- 
ern and Western roads, and found that no one of them treated 
him with "relative justice." Railroad discriminations were not 
sufficient to drive him out of the Southwest, however, and 
a war of prices was begun. According to the letters Mr. Rice 
himself has presented he certainly in some cases began the 
cutting, as he could well afford to do. For instance, Chess, 
Carley and Company were selling water-white oil in Septem- 
ber, 1880, in Clarksville, Tennessee, at twenty-one cents a gal- 
lon delivered in carloads export oil was selling in barrels in 
New York at that date at lo^s cents a gallon. Rice's agent 
offered at eighteen cents. The dealer to whom he made the 
offer, Armstrong by name, wished to accept, but as he had been 
buying of Chess, Carley and Company, went first to see them 
about the matter. He came back "scared almost out of his 
boots," wrote the agent to Rice. 

"Carley told him he would break him up if he bought oil of anyone else; that the 
Standard Company had authorised him to spend 10,000 to break up any concern 

[44] 



CUTTING TO KILL 

that bought oil from anyone else; that he (Carley) would put all his drummer* in 
the field to hunt up Armstrong's customers and sell his customers groceries at five per 
cent, below Armstrong's prices, and turn all Armstrong's trade over to Moore, Bre- 
maker and Company, and settle with Moore, Bremaker and Company for their 
losses in helping to break Armstrong up, every thirty days. 

"That if Armstrong sent any other oil to Clarksville, Tennessee, he (Carley) would 
put the price of oil so low in Clarksville as to make the party lose heavily, and that they 
(the Standard) would break up anyone that would sell him (Armstrong) oil, and that 
he (Carley) had told Stege and Reiling the same thing. Did you ever ? What do you 
think of that?" 

Very soon after this, Chess, Carley and Company took in 
hand a Nashville firm, Wilkinson and Company, which was 




buying of Rice. "It is with great reluctance," they wrote, "that 
we undertake serious competition with any one, and certainly 

[45] 



THE HISTORY OF THE STANDARD OIL COMPANY 
this competition will not be confined to coal-oil or any one 
article, and will not be limited to any one year. We always 
stand ready to make reasonable arrangements with any one 
who chooses to appear in our line of business, and it will be 
unlike anything we have done heretofore if we permit any one 
to force us into an arrangement which is not reasonable. Any 
loss, however great, is better to us than a record of this kind." 
And four days later they wrote: "If you continue to bring on 
the oil, it will simply force us to cut down our price, and no 
other course is left to us but the one we have intimated." 
Wilkinson and Company seem to have stuck to Rice's oil, for, 
sixteen months later, we find Chess, Carley and Company 'call- 
ing on the agent of a railroad, which already was giving the 
Standard discriminating rates, to help in the fight. 

The screw was turned, Mr. Rice affirms, his rate being raised 
fifty per cent, in five days. 

Rice carried on his fight for a market in the most aggressive 
way, and everywhere he met disastrous competition. In 1892 
he published a large pamphlet of documents illustrating 
Standard methods, in which he included citations from some 
seventy letters from dealers in Texas, received by him between 
1881 and 1889, showing the kind of competition his oil met 
toere from the Waters-Pierce Oil Company, the Standard's 
Texas agents. A dozen sentences, from as many different 
towns, will show the character of them all: 



wit r7 derful com P''ion on this car. As soon as my car arrived the 

Waters-Pterce 0,1 Company, who has an agent here, slapped the price down to *i.8o 



per C3sc 1 10. 



" . . . Oil was selling at this point for $2 . 50 per case, and as soon as your car 
it was put down to * .50, which it is selling at to-day." 

"The Waters-Pierce Oil Company reduced their prices on Brilliant oil from $2 60 
to ji .50 per case and is waging a fierce war." 

[46] 



CUTTING TO KILL 

"Waters- Pierce Oil Company has our state by the throat and we would like to 
be extricated." 



"I would like to handle your oil if I could be protected against the Waters- Pierce 
Oil Company. I am afraid if I would buy a car of oil from you this company would put 
the oil way below what I pay and make me lose big money. I can handle your oil in 
large quantities if you would protect me against them." 

"The Waters- Pierce Oil Company has cut the stuffing out of coal-oil and have 
been ever since I got in my last car. They put the price to the merchants at $1.80 
per case." 

"We have your quotations on oil. While they are much lower than what we pay, 
yet unless a carload could be engaged it would pay no firm to try and handle, as Waters- 
Pierce Oil Company would cut below cost on same." 

"The day your oil arrived here, their agent went to all my customers and offered 
their Eupion oil at ten cents per gallon in barrels and $>l .50 per case, and lower grades 
in proportion, and told them if they did not refuse to take the oil he would not sell 
them any more at any price, and that he was going to run me out of the business, 
and then they would be at his mercy." 

"Now we think Waters- Pierce Oil Company have been getting too high a price 
for their oil. They are able and do furnish almost this entire state with oil. They cut 
prices to such an extent when any other oil is offered in this state that they force the 
parties handling the oil to abandon the trade." 

"Trace and hurry up car of oil shipped by you. We learn it is possible that your 
oil is side-tracked on the line, that Waters-Pierce might get in their work." 

"If we were to buy a car or more, the Waters- Pierce Oil Company would manage 
to sell a little cheaper than we could, and continue doing so until they busted 
me up." 

"In regard to oil, we are about out now, and Waters- Pierce have put their oil up 
again and quote us at the old price." 

[47] 



THE HISTORY OF THE STANDARD OIL COMPANY 

"Jobbers say when they take hold of another oil they are at once boycotted by 
Waters-Pierce Oil Company, who not only refuse to sell them, but put oil below what 
they pay for it, and thus knock them out of the oil trade, unless they sell at a loss." 

"If I find that I can handle your oil in Texas without being run out and losing 
money by this infernal corporation, the Waters-Pierce Oil Company, I want to arrange 
with you to handle it extensively. I received verbal notice this morning from their 
agent that they would make it hot for me when my oil got here." 

Mr. Rice claims, in his preface to the collection of letters 
here quoted from, that he has hundreds of similar ones from 
different states in the Union, and the writer asked to examine 
them. The package of documents submitted in reply to this 
request was made up literally of hundreds of letters. They 
came from twelve different states, and show everywhere the 
same competitive method cutting to kill. One thing very 
noticeable in these letters is the indignation of the dealers at 
the Standard methods of securing trade. They resent threats. 
They complain that the Standard agents "nose" about their 
premises, that they ask impudent questions, and that they 
generally make the trade disgusting and humiliating. In Mis- 
sissippi, in the eighties, the indignation of the small dealers 
against Chess, Carley and Company was so strong that they 
formed associations binding themselves not to deal with them. 

These same tactics have been kept up in the Southwest 
ever since. A letter, dated April 28, 1891, from the vice- 
president of the Waters-Pierce Oil Company, A. M. Finlay, 
to his agent at Dallas, Texas, says bluntly: "We want to make 
the prices at Dallas and in the neighbourhood on Brilliant 
and water-white oil, that will prevent Clem (an independent 
dealer) from doing any business." And Mr. Finlay adds: 
"Hope you will make it a point to be present at the next meet- 
ing of the city council, to-morrow night, and do everything 
possible to prevent granting a permit to build within the city 
limits, unless building similar to ours is constructed, for it 
would not be fair to us to allow someone else to put up con- 

[48] 



CUTTING TO KILL 

structions for the storage of oil, when they had compelled us 
to put up such an expensive building as we have." * 

Mr. Rice is not the only independent oil dealer who has 
produced similar testimony. Mr. Teagle and Mr. Shull, in 
Ohio, have furnished considerable. "The reason we quit tak- 
ing your oil is this," wrote a Kansas dealer to Scofield, Shur- 
mer and Teagle, in 1896: "The Standard Oil Company noti- 
fied us that if we continued handling your oil they would cut 
the oil to ten cents retail, and that we could not afford to do, 
and for that reason we are forced to take their oil or do busi- 
ness for nothing or at a loss." "The Standard agent has re- 
peatedly told me that if I continued buying oil and gasoline 
from your wagon," wrote an Ohio dealer to the same firm 
in 1897, "they would have it retailed here for less than I could 
buy. I paid no attention to him, but yesterday their agent was 
here and asked me decidedly if I would continue buying oil 
and gasoline from your wagon. I told him I would do so; 
then he went and made arrangements with the dealers that 
handle their oil and gasoline to retail it for seven cents." 

Mr. Shull summed up his testimony before the same com- 
mittee to which Mr. Teagle gave the above, by declaring: 
"You take $10,000 and go into the business and I will guaran- 
tee you won't be in business ninety days. Their motto is that 
anybody going into the oil business in opposition to them 
they will make life a burden to him. That is about as near 
as you can get to it." 

Considerable testimony of the same sort of practices was 
offered in the recent "hearing before the Industrial Commis- 
sion," most of it general in character. The most significant 
special case was offered by Mr. Westgate, the treasurer of 
the American Oil Works, an independent refinery of Titus- 
ville, Pennsylvania. 

The American Oil Works, it seems, were in 1894 shipping 
oil called "Sunlight" in barrels to South Bend, Washington. 

* Trust Investigation of Ohio Senate, 1898, page 370. 
[49] 



THE HISTORY OF THE STANDARD OIL COMPANY 

This was in the territory of the Standard agents at Portland, 
Oregon, one of whom wrote to a South Bend dealer when 
he heard of the intrusion : "We will state for your information 
that never a drop of oil has reached South Bend of better 
quality than what we have always shipped into that territory. 
They can name it 'Sunlight,' 'Moonlight,' or 'Starlight,' it 
makes no difference. You can rest assured if another carload of 
'Sunlight' arrives at your place, it will be sold very cheap. 
We do not purpose to allow another carload to come into 
that territory unless it comes and is put on the market at one- 
half its actual cost. You can convey this idea to the young man 
who imported the carload of 'Sunlight' oil." 

When John D. Archbold, of the Standard Oil Com- 
pany, had his attention called to this letter by Professor Jenks, 
of the Industrial Commission, Mr. Archbold characterised 
the letter as "a foolish statement by a foolish and unwise man" 
and promised to investigate it. Later he presented the com- 
mission with an explanation from the superior of the agent, 
who declared that the writer of the letter did not have any 
authority to say that oil would be sold on the basis mentioned. 
"The letter," he continued, "was intended to be written in 
a jocular manner to deny a claim that he was selling oil infe- 
rior in quality to that sold by others." It is hard for the mere 
outsider to catch the jocularity of the letter, and it must have 
been much more difficult for the dealer who received it to 
appreciate it. 

Independent oil dealers of the present day complain bitterly 
of a rather novel way employed by the Standard for bringing 
into line dealers whose prejudices against buying from them 
are too strong to be overcome by the above methods. This is 
through what are called "bogus" oil companies. The obdurate 
dealer is approached by the agent of a new independent con- 
cern, call it the ABC Oil Company, for illustration. The 
agent seeks trade on the ground that he represents an inde- 

[50] 



CUTTING TO KILL 

pendent concern and that he can sell at lower prices than the 
firm from which the dealer is buying. Gradually he works 
his way into the independent's trade. As a matter of fact, 
the new company is merely a Standard jobbing house which 
makes no oil, and which conceals its real identity under a 
misleading name. The mass of reports from railroad freight 
offices quoted from in this article corroborate this claim of the 
independents. The ABC Oil Company is mentioned again 
and again as shipping oil, and in the audited reports it is 
always checked off in the same fashion as the known Standard 
companies, and none of its shipments is referred to Standard 
agents. Independents all over the country tell of loss of mar- 
kets through underselling by these "bogus" companies. The 
lower price which a supposedly independent concern gives 
to a dealer who will not, under any condition, buy of the 
Standard, need not demoralise the Standard trade in the 
vicinity if the concession is made with caution. After the 
trade is secure, that is, after the genuine independent is ousted, 
the masquerading concern always finds itself obliged to ad- 
vance prices. When the true identity of such a company 
becomes known its usefulness naturally is impaired, and it 
withdraws from the field and a new one takes its place. 

There is never a dealer in oil too small to have applied the 
above methods of competition. In recent years they have fre- 
quently been applied even to oil peddlers. In a good many 
towns of the country oil is sold from door to door by men 
whose whole stock in trade is their peddling wagons. Many 
of these oil peddlers build up a good trade. As a rule they 
sell Standard oil. Let one take independent oil, however, and 
the case is at once reported. His customers are located and 
at once approached by a Standard tank wagon man, who fre- 
quently, it is said, not only sells at a lower price than they 
have been paying, but even goes so far as to clean and fill the 
lamps! In these raids on peddlers of independent oil, refined 



THE HISTORY OF THE STANDARD OIL COMPANY 

oil has been sold in different cities at the doors of consumers 
at less than crude oil was bringing at the wells, and several 
cents per gallon less than it was selling to wholesale dealers 
in refined. It is claimed by independents that at the present 
time the "bogus" companies generally manage this matter 
of driving out peddlers, thus saving the Standard the unpopu- 
larity of the act and the dissatisfaction of the rise in price 
which, of course, follows as soon as the trade is secured. 

The general explanation of these competitive methods which 
the Standard officials have offered, is that they originate with 
"over-zealous" employees and are disapproved of promptly 
if brought to the attention of the heads of the house. The 
cases seem rather too universal for such an explanation to be 
entirely satisfactory. Certainly the system of collecting infor- 
mation concerning competitive business is not practised by 
the exceptional "over-zealous" employee, but is a recognised 
department of the Standard Oil Company's business. In the 
mass of documents from which the reports of oil shipments 
referred to above were drawn, are certain papers showing 
that the system is nearly enough universal to call for elab- 
orate and expensive bookkeeping at the headquarters of each 
Standard marketing division. For instance, on the next page 
is a fragment illustrating the page of a book kept at such a 
headquarters. 

What does this show? Simply that every day the reports 
received from railroad freight agents are entered in records 
kept for the purpose ; that there is on file at the Standard Oil 
headquarters a detailed list of the daily shipments which each 
independent refiner sends out, even to the initials and num- 
ber on the car in which the shipment goes. From this remark- 
able record the same set of documents shows that at least two 
sets of reports are made up. One is a report of the annual 
volume of business being done by each particular independent 
refiner or wholesale jobber, the other of the business of each 

[52] 



CUTTING TO KILL 

individual local dealer, so far as the detectives of the Standard 
have been able to locate it. For instance, among the docu- 
ments is the report on a well-known oil jobbing house in one 
of the big cities of the country reproduced on the next page. 



Competing Oil Receipts,- 




Territory 



DESTINATION 



Initial No. 



?' 



/i 



lii- 



* 



1/31. 



a* 



7* 



<?.*M 



The figures, dates, consignees and destination on the above are fictitious. The names of shippers were 
copied from the original in possession of the writer. 

A comparison of this report with the firm's own accounts 
shows that the Standard came within a small per cent, of an 
accurate estimate of the X Y Z's business. 

Another curious use made of these reports from the freight 
offices is forming a card catalogue of local dealers. (See form 
on page $$.) Oil is usually sold at retail by grocers. It is 
with them that the local agents deal. Now the daily reports 
from the freight offices show the oil they receive. The compe- 
tition reports from local agents also give more or less infor- 
mation concerning their business. A card is made out for each 
of them, tabulating the date on which he received oil, the 
name and location of the dealer he got it from, the quality, 
and the price he sells at. In a space left for remarks on the 
card there is written in red ink any general information about 

[53] 



THE HISTORY OF THE STANDARD OIL COMPANY 



Statement showing Receipts and Deliveries for December 

Barrels 



1901 1902 
Coal Oil 



1901 1902 
Gasoline 



Total Receipts of Competitor 

Leas shipments no_t in. our District 

Het Shipments in. our District 

Old Hew Car Less 

Places Places Load Car 

^ oa< * 

Territory ) 

Oil 

covered by ( 

Competitor ) 
Oaso) 



110-2, 

in 



3/ 




Balance 
Vet accounted 'for 

for Year 



1901 1902 
Coal Oil 



1 OS 



1901 1902 
Gasoline 



Reeeipts "7*7 

test Shipments not in our territory 



Lea* 

Old Hew Car Car 
Places Places Load Load 



^^^1 



* 



Territory ) 

Oil ( 

covered by 

competitor ((/' 
Oaso.) 



//7f 



loi-fi 



fjt 



Vet accounted for 



The above is simikr to the form compiled by the Standard Oil Company. 

the dealer the agent may have picked up. Often there is an 
explanation of why the man does not buy Standard oil not 

[54] 



CUTTING TO KILL 

infrequently this explanation reads: "Is opposed to monop- 
olies." It is impossible to say from documentary evidence how 
long such a card catalogue has been kept by the Standard; 
that it has been a practice for at least twenty-five years the 
following quotation from a letter written in 1903 by a promi- 
nent Standard official in the Southwest to one of his agents 
shows: "Where competition exists," says the official, "it has 
been our custom to keep a record of each merchant's daily 



Name- 
P.O_ 



.Sh. PL. 



Town 

Satesman- 



/ 

, </ 

<L 



1 Nearest 
tank Wagon 

Station- 



-Rate 



Date 
Shipped 



Shipped by 



No. 

Bbls. 




lo 



The names, figures, and locations on the above form are fictitious. The remarks are copied from cards in 

possession of the writer. 

purchase of bulk oil ; and I know of one town at least in the 
Southern Texas Division where that record has been kept, 
whether there was competition or not, for the past fifteen 
years." * 

The inference from this system of "keeping the eyes open" 
is that the Standard Oil Company knows practically where 

* Trust Investigation of Ohio Senate, 1898, page 371. 
[55] 



THE HISTORY OF THE STANDARD OIL COMPANY 

every barrel shipped by every independent dealer goes; and 
where every barrel bought by every corner-grocer from Maine 
to California comes from. The documents from which the 
writer draws the inference do not, to be sure, cover the entire 
country, but they do cover in detail many different states, and 
enough is known of the Standard's competitive methods in 
states outside this territory to justify one in believing that the 
system of gathering information is in use everywhere. That it 
is a perfect system is improbable. Bribery is not as dangerous 
business in this country as it deserves to be of course noth- 
ing but a bribe would induce a clerk to give up such informa- 
tion as these daily reports contain but, happily, such is the 
force of tradition that even those who have practised it for 
a long time shrink from discovery. It is one of those political 
and business practices which are only respectable when con- 
cealed. Naturally, then, the above system of gathering infor- 
mation must be handled with care, and can never have the 
same perfection as that Mr. Rockefeller expected when he 
signed the South Improvement Company charter. 

The moral effect of this system on employees is even a 
more serious feature of the case than the injustice it works to 
competition. For a "consideration" railroad freight clerks 
give confidential information concerning freight going 
through their hands. It would certainly be quite as legitimate 
for post-office clerks to allow Mr. Rockefeller to read the 
private letters of his competitors, as it is that the clerks of a 
railroad give him data concerning their shipments. Everybody 
through whose hands such information passes is contaminated 
by the knowledge. To be a factor, though even so small a 
one, in such a transaction, blunts one's sense of right and 
fairness. The effect on the local Standard agent cannot but 
be demoralising. Prodded constantly by letters and telegrams 
from superiors to secure the countermand of independent oil, 
confronted by statements of the amount of sales which have 

[56] 



CUTTING TO KILL 

gotten away from him, information he knows only too well 
to have been secured by underhand means, obliged to ex- 
plain why he cannot get this or that trade away from a 
rival salesman, he sinks into habits of bullying and wheedling 
utterly inconsistent with self-respect. "Is there nothing you 
independents can do to prevent our people finding out who 
you sell to?" an independent dealer reports a hunted Stand- 
ard agent asking him. "My life is made miserable by the 
pressure brought on to chase up your sales. I don't like such 
business. It isn't right, but what can I do?" 

The system results every now and then, naturally enough, 
in flagrant cases of bribing employees of the independents 
themselves. Where the freight office does not yield the infor- 
mation, the rival's own office may, and certainly if it is legiti- 
mate to get it from one place it is from the other. It is not 
an unusual thing for independent refiners to discharge a man 
whom they have reason to believe gives confidential informa- 
tion to the Standard. An outrageous case of this, which oc- 
curred some ten years ago, is contained in an affidavit which 
has been recently put at the writer's disposition. It seems that 
in 1892 the Lewis Emery Oil Company, an independent sell- 
ing concern in Philadelphia, employed a man by the name 
of Buckley. This man was discharged, and in September of 
that year he went into the employ of the leading Standard 
refinery of Philadelphia, a concern known as the Atlantic 
Refining Company. According to the affidavit made by this 
man Buckley, the managers of the Standard concern, some 
time in February, 1893, engaged him in conversation about 
affairs of his late employer. They said that if they could only 
find out the names of the persons to whom their rival sold, 
and for what prices, they could soon run him out of business I 
And they asked Buckley if he could not get the information 
for them. After some discussion, one of the Standard man- 
agers said: "What's the matter with the nigger?" alluding to 

[57] 



THE HISTORY OF THE STANDARD OIL COMPANY 

a coloured boy in the employment of the Lewis Emery con- 
cern. Buckley told them that he would try him. "You can tell 
the nigger," said one of the men, "that he needn't be afraid, 
because if he loses his position there's a position here for 
him." 

Buckley saw the negro and made a proposition to him. 
The boy agreed to furnish the information for a price. "Start- 
ing from February, 1893," says Mr. Buckley, "and lasting up 
to about August of the same year, this boy furnished me peri- 
odically with the daily shipments of the Lewis Emery con- 
cern, which I took and handed personally, sometimes to one 
and sometimes to the other manager. They took copies of them, 
and usually returned the originals." The negro .also brought 
what is known as the price-book to Buckley, and a complete 
copy of this was made by the Standard managers. "In short," 
says Mr. Buckley in his affidavit, "I obtained from the negro 
all the inside facts concerning the Lewis Emery Oil Com- 
pany's business, and I furnished them all to the Standard 
managers." In return for this information the negro lad was 
paid various sums, amounting in all to about ninety dollars. 
Buckley says that they were charged upon the Standard 
books to "Special Expenses." The transaction was ended by 
the discharge of the coloured boy by the Lewis Emery 
concern. 

The denouement of this case is tragic enough. The concern 
was finally driven out of business by these and similar tactics, 
so Mr. Emery and his partner both affirm. The negro was 
never taken into the Atlantic Refinery, and Buckley soon after 
lost his position, as he of course richly deserved to. A man 
who shows himself traitorous, lying, thieving, even for the 
"good of the oil business," is never kept long in the em- 
ployment of the Standard Oil Company. It is notorious in 
the Oil Regions that the people who "sell" to the Standard 
are never given responsible positions. They may be shifted 

[58] 



CUTTING TO KILL 

around to do "dirty work," as the Oil Regions phrase goes, 
but they are pariahs in the concern. Mr. Rockefeller knows 
as well as any man ever did the vital necessity of honesty in 
an organisation, and the Buckleys and negroes who bring 
him secret intelligence never get anything but money and 
contempt for their pains. 

For the general public, absorbed chiefly in the question, 
"How does all this affect what we are paying for oil?" the 
chief point of interest in the marketing contests is that, after 
they were over, the price of oil has always gone back with a 
jerk to the point where it was when the cutting began, and 
not infrequently it has gone higher the public pays. Sev- 
eral of the letters already quoted in this chapter show the 
immediate recoil of the market to higher prices with the 
removal of competition. A table was prepared in 1892 to show 
the effect of competition on the price of oil in various states 
of the Union. The results were startling. In California, oil 
which sold at non-competitive points at 26^2 cents a gallon, 
at competitive points brought iJ l /2 cents. In Denver, Colo- 
rado, there was an "Oil War" on in the spring of 1892, and 
the same oil which was selling at Montrose and Garrison at 
twenty-five cents a gallon, in Denver sold at seven cents. This 
competition finally killed opposition and Denver thereafter 
paid twenty-five cents. The profits on this price were cer- 
tainly great enough to call for competition. The same oil 
which was sold in Colorado in the spring of 1892 at twenty- 
five cents, sold in New York for exportation at 6.10 cents. Of 
course the freight rates to Colorado were high, the open rate 
was said to be nine cents a gallon, but that it cost the Standard 
Oil Company nine cents a gallon to get its oil there, one 
would have to have documentary proof to believe, and, even 
if it did, there was still some ten cents profit on a gallon 
five dollars on a barrel. In Kansas, at this time, the difference 
between the price at competitive and non-competitive points 

[59] 



THE HISTORY OF THE STANDARD OIL COMPANY 

was seven cents; in Indiana six cents; in South Carolina four 
and one-half cents.* 

In 1897 Scofield, Shurmer and Teagle, of Cleveland, pre- 
pared a circular showing the difference between prices at com- 
petitive and non-competitive points in Ohio, and sent it out 
to the trade. According to this circular the public paid from 
25 to 33^ per cent, more where there was no competition. 
The fact that oil is cheaper where there is competition, and 
also that the public has to pay the cost of the expensive "Oil 
Wars" which have been carried on so constantly for the last 
twenty-five years all over the country, is coming to be rec- 
ognised, especially in the Middle West of this country, by 
both dealers and communities. There is no question that the 
attempts of Standard agents to persuade or bully dealers into 
countermanding orders, or giving up an independent with 
whose oil they are satisfied, meet with much less general suc- 
cess than they once did. It even happens now and then that 
communities who have had experience with "Oil Wars" will 
stand by an independent dealer for months at a time, resisting 
even the temptation to have their lamps cleaned and filled 
at next to nothing. 

Briefly put, then, the conclusion, from a careful examina- 
tion of the testimony on Standard competitive methods, is this : 

The marketing department of the Standard Oil Company 
is organised to cover the entire country, and aims to sell all 
the oil sold in each of its divisions. To forestall or meet com- 
petition it has organised an elaborate secret service for locating 
the quantity, quality, and selling price of independent ship- 
ments. Having located an order for independent oil with a 
dealer, it persuades him, if possible, to countermand the order. 
If this is impossible, it threatens "predatory competition," 
that is, to sell at cost or less, until the rival is worn out. If 
the dealer still is obstinate, it institutes an "Oil War." In late 

* See Appendix, Number 41. Table showing prices of oil at competitive and non- 
competitive points in 1892. 

[60] 



CUTTING TO KILL 

years the cutting and the "Oil Wars" are often intrusted to 
so-called "bogus" companies, who retire when the real inde- 
pendent is put out of the way. In later years the Standard has 
been more cautious about beginning underselling than for- 
merly, though if a rival offered oil at a less price than it had 
been getting and generally even small refineries can contrive 
to sell below the non-competitive prices of the Standard it 
does not hesitate to consider the lower price a declaration of 
war and to drop its prices and keep them down until the rival 
is out of the way. The price then goes back to the former 
figure or higher. John D. Archbold's testimony before 
the Industrial Commission in 1898 practically confirms the 
above conclusion. Mr. Archbold said that the Standard was 
in the habit of fighting vigorously to hold and advance its 
trade even to the extent of holding prices down to cost until 
the rival gives way though he declared it to be his opinion 
that the history of the company's transactions would show that 
the competitor forces the fight. Mr. Archbold told the com- 
mission that he personally believed it was not advisable to 
sell below cost for the sake of freezing out a smaller rival, 
save in "greatly aggravated cases," though he admitted the 
Standard sometimes did it. The trouble is that, accepting Mr. 
Rockefeller's foundation principle that the oil business be- 
longs to him, any competition is "an aggravated case." All 
that is reassuring in the situation has come from the obstinate 
stand of individuals the refiners who insisted on doing an 
independent business, on the theory that "this is a free coun- 
try"; the grocers who resented the prying and bullying of 
Standard agents, and asserted their right to buy of whom they 
would; the rare, very rare, community that grasped the fact 
that oil sold below cost temporarily, meant later paying for 
the fight. These features of the business belong to the last 
decade and a half. At the period we have reached in this his- 
tory that is, the completion of the monopoly of the pipe- 
lines in 1884 and the end of competition in transporting oil 

[61] 



THE HISTORY OF THE STANDARD OIL COMPANY 

there seemed to the independents no escape from Mr. Rocke- 
feller in the market. 

The sureness and promptness with which he located their 
shipments seemed uncanny to them. The ruthlessness and 
persistency with which he cut and continued to cut their 
prices drove them to despair. The character of the competition 
Mr. Rockefeller carried on in the markets, particularly of 
the South and Middle West of this country, at this time, 
aggravated daily the feeble refining element, and bred con- 
tempt far and wide among people who saw the cutting, and 
perhaps profited temporarily by it, but who had neither the 
power nor the courage to interfere. The knowledge of it fed 
greatly the bitterness in the Oil Regions. Part of the stock 
in conversation of every dissatisfied oil producer or ruined 
refiner became tales of disastrous conflicts in markets. They 
told of crippled men selling independent oil from a hand 
cart, whose trade had been wiped out by a Standard cart which 
followed him day by day, practically giving away oil. They 
told of grocers driven out of business by an attempt to stand 
by a refiner. They told endless tales, probably all exaggerated, 
perhaps some of them false, yet all of them believed, because 
of such facts as have been rehearsed above. There came to be 
a popular conviction that the "Standard would do anything." 
It was a condition which promised endless annoyance to Mr. 
Rockefeller and his colleagues. It meant popular mistrust, 
petty hostilities, misinterpretations, contempt, abuse. There 
were plenty of people even willing to deny Mr. Rockefeller 
ability. That the Standard was in a venture was enough in those 
people's minds to damn it. Anything the Standard wanted 
was wrong, anything they contested was right. A verdict for 
them demonstrated the corruption of the judge and jury; 
against them their righteousness. Mr. Rockefeller, indeed, 
was each year having more reason to realise monopoly build- 
ing had its trials as wells as its profits. 

[62] 



CHAPTER ELEVEN 
THE WAR ON THE REBATE 

ROCKEFELLER'S SILENCE BELIEF IN THE OIL REGIONS THAT COMBINED 
OPPOSITION TO HIM WAS USELESS INDIVIDUAL OPPOSITION STILL CON- 
SPICUOUSTHE STANDARD'S SUIT AGAINST SCOFIELD, SHURMER AND 
TEAGLE SEEKS TO ENFORCE AN AGREEMENT WITH THAT FIRM TO LIMIT 
OUTPUT OF REFINED OIL SCOFIELD, SHURMER AND TEAGLE ATTEMPT 
TO DO BUSINESS INDEPENDENTLY OF THE STANDARD AND ITS REBATES 
FIND THEIR LOT HARD THEY SUE THE LAKE SHORE AND MICHIGAN 
SOUTHERN RAILWAY FOR DISCRIMINATING AGAINST THEM A FAMOUS 
CASE AND ONE THE RAILWAY LOSES ANOTHER CASE IN THIS WAR OF 
INDIVIDUALS ON THE REBATE SHOWS THE STANDARD STILL TO BE TAKING 
DRAWBACKS THE CASE OF GEORGE RICE AGAINST THE RECEIVER OF THE 
CINCINNATI AND MARIETTA RAILROAD. 



1 



apathy and inaction which naturally flow from 
a great defeat lay over the Oil Regions of North- 
western Pennsylvania long after the compromise 
with John D. Rockefeller in 1880, followed, as it 
was, by the combination with the Standard of the great 
independent seaboard pipe-line which had grown up under 
the oil men's encouragement and patronage. Years of war 
with a humiliating outcome had inspired the producers with 
the conviction that fighting was useless, that they were deal- 
ing with a power verging on the superhuman a power car- 
rying concealed weapons, fighting in the dark, and endowed 
with an altogether diabolic cleverness. Strange as the state- 
ment may appear, there is no disputing that by 1884 the Oil 
Regions as a whole looked on Mr. Rockefeller with super- 
stitious awe. Their notion of him was very like that which 

[63] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the English common people had for Napoleon in the first 
part of the i9th century, which the peasants of Brittany have 
even to-day for the English a dread power, cruel, omnis- 
cient, always ready to spring. 

This attitude of mind, altogether abnormal in daring, im- 
petuous, and self-confident men, as those of the Oil Regions 
were, was based on something more than the series of bold 
and admirably executed attacks which had made Mr. Rocke- 
feller master of the oil business. The first reason for it was 
the atmosphere of mystery in which Mr. Rockefeller had 
succeeded in enveloping himself. He seems by nature to 
dislike the public eye. In his early years his home, his office, 
and the Baptist church were practically the only places which 
saw him. He did not frequent clubs, theatres, public meet- 
ings. When his manoeuvres began to bring public criticism 
upon him, his dislike of the public eye seems to have in- 
creased. He took a residence in New York, but he was 
unknown there save to those who did business with him or 
were interested in his church and charities. His was per- 
haps the least familiar face in the Standard Oil Company. 
He never went to the Oil Regions, and the Oil Regions said 
he was afraid to come, which might or might not have been 
true. Certainly the Oil Regions never hesitated to express 
opinions about him calculated to make a discreet man keep 
his distance. 

Even in Cleveland, his home for twenty- five years, Mr. 
Rockefeller was believed to conceal himself from his towns- 
men. It is certain that the operations of his great business 
were guarded with the most jealous care. The New York 
Sun sent an "experienced observer" to Cleveland in 1882 to 
write up the Standard concern. He speaks with amazement 
in his letters of the atmosphere of secrecy and mystery which 
he found enveloping everything connected with Mr. Rocke- 
feller. You could not get an interview with him, the observer 

[64] 



THE WAR ON THE REBATE 

complained; even his home papers had ceased to go to the 
Standard offices to inquire about the truth of rumours which 
reached them from the outside. The hundreds of employees 
of the trust in the town were as silent as their master in all 
that concerned the business, and if one talked well, he was 
not long an employee of Mr. Rockefeller. There was between 
the Standard Oil Company and the town and press of Cleve- 
land none of the camaraderie, the mutual good-will and 
pride and confidence which usually characterise the relations 
between great businesses and their environment. 

In Cleveland, as in the Oil Regions, Mr. Rockefeller's care- 
ful effort to cover up his intentions and his tracks had been 
at first met with jeers and blunt rebuffs, but he had finally 
succeeded in silencing and awing the people. It is worth 
noting that while all of the members of the Standard Oil 
Company followed Mr. Rockefeller's policy of saying noth- 
ing, there was no such popular dread of any other one of 
them. In the Oil Regions, for instance, there was a bitter 
hatred of the Standard Oil Company as an organisation, but 
for the most part the people liked the men who served it, 
and certainly had no awe of them, for these men circulated 
freely among their fellow-townsmen; they were active in all 
the pleasures and enterprises of the communities in which 
they lived; they were generous, able, cordial, and whatever 
the people said of the concern they served, they generally 
qualified it by expressing their personal likings for the men 
themselves. 

A second reason for the popular dread of Mr. Rockefeller 
was that this man, whom nobody saw and who never talked, 
knew everything even unexpected and trivial things and 
those who saw the effect of this knowledge and did not see 
how he could obtain it, regarded him as little short of an 
omniscient being. There was really nothing in the least occult 
about Mr. Rockefeller's omniscience. He obtained part of 

[65] 



THE HISTORY OF THE STANDARD OIL COMPANY 

his knowledge of other people's affairs by a most extensive 
and thoroughly organised system of news-gathering, such as 
any bright business man of wide sweep might properly em- 
ploy. But he combined with this perfectly legitimate work 
the sordid methods of securing confidential information de- 
scribed in the last chapter. Certainly there is nothing of the 
transcendental in this kind of omniscience, and the feeling 
of supernaturalism which Mr. Rockefeller had inspired by 
1884 has entirely evaporated since, as evidence of his methods 
has been circulated. The source was, however, long secret, 
and when again and again men who could hardly suppose 
their existence known to Mr. Rockefeller saw movements 
anticipated which they believed known only to themselves 
and their confidential agents, they began to dread him and 
to invest him with mysterious qualities. If Mr. Rockefeller 
had been as great a psychologist as he is business manipu- 
lator he would have realised that he was awakening a ter- 
rible popular dread, and he would have foreseen that one 
day, with the inevitable coming to light of his methods, there 
would spring up about his name a crop of scorn which would 
choke any crop of dollars and donations which the wealth of 
the earth could produce. 

The effect of this dread was deplorable, for it intensified 
the feeling, now wide-spread in the Oil Regions, that it was 
useless to make further effort at a combined resistance. And 
yet these men, who were now lying too supine in Mr. Rocke- 
feller's steel glove even to squirm, had laid the foundation of 
freedom in the oil business. It has taken thirty years to 
demonstrate the inestimable value of the efforts which in 
1884 they regarded as futile thirty years to build even a 
small structure on the foundation they had laid, though that 
much has been done. 

The situation was saved at this critical time by individuals 
scattered through the oil world who were resolved to test the 

[66] 



2 THE WAR ON THE REBATE 

validity of Mr. Rockefeller's claim that the coal-oil business 
belonged to him. "We have a right to do an independent 
business," they said, "and we propose to do it." They began 
this effort by an attack on the weak spot in Mr. Rockefeller's 
armour. The twelve years just passed had taught them that 
the realisation of Mr. Rockefeller's great purpose had been 
made possible by his remarkable manipulation of the rail- 
roads. It was the rebate which had made the Standard Oil 
Trust, the rebate, amplified, systematised, glorified into a 
power never equalled before or since by any business of the 
country. The rebate had made the trust, and the rebate, in 
spite of ten years of combination, Petroleum Associations, 
Producers' Unions, resolutions, suits in equity, suits in quo 
warranto, appeals to Congress, legislative investigations 
the rebate still was Mr. Rockefeller's most effective weapon. 
If they could wrest it from his hand they could do business. 
They had learned something else in this period that the 
whole force of public opinion and the spirit of the law were 
against the rebate, and that the railroads, knowing this, feared 
exposure of discrimination, and could be made to settle rather 
than have their practices made public. Therefore, said these 
individuals, we propose to sue for rebates and collect charges 
until we make it so harassing and dangerous for the railroads 
that they will shut down on Mr. Rockefeller. 

The most interesting and certainly the most influential of 
these private cases was that of Scofield, Shurmer and Teagle, 
of Cleveland, one of the firms which, in 1876, entered into 
a "joint adventure" with Mr. Rockefeller for limiting the 
output and so holding up prices.* The adventure had been 
most successful. The profits were enormous. Scofield, Shur- 
mer and Teagle had made thirty-four cents a barrel out of 
their refinery the year before the "adventure." With the same 
methods of manufacture, and enjoying simply Mr. Rocke- 

* See Chapter V, page 165. 
[ 67 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

feller's control of transportation rates and the enhanced prices 
caused by limiting output, they made $2.52 a barrel the first 
year after. This was the year of the Standard's first great 
coup in refined oil. The dividends on 88,000 barrels this year 
were $222,047, against $41,000 the year before. In four years 
Scofield, Shurmer and Teagle paid Mr. Rockefeller $315,- 
345 on his investment of $10,000 and rebates. 

After four years the Standard began to complain that their 
partners in the adventure were refining too much oil the 
first year the books showed they had exceeded their 85,000- 
barrel limitation by nearly 3,000, the second year by 2,000, 
the third by 15,000, the fourth by 5,000. Dissatisfied, the 
Standard demanded that the firm pay them the entire profit 
upon the excess refined; for, claimed Mr. Rockefeller, our 
monopoly is so perfect that we would have sold the excess 
if you had not broken the contract, consequently the profits 
belong to us. Scofield, Shurmer and Teagle paid half the 
profit on the excess, but refused more, and they persisted in 
exceeding their quota; then Mr. Rockefeller, controlling by 
this time the crude supply in Cleveland through ownership 
of the pipe-lines, shut down on their crude supply. If they 
would not obey the contract of their own will they could not 
do business. The firm seems not to have been frightened. 
"We are sorry that you refuse to furnish us crude oil as 
agreed," they wrote Mr. Rockefeller; "we do not regard the 
limitation of 85,000 barrels as binding upon us, and as we 
have a large number of orders for refined oil we must fill 
them, and if you refuse to furnish us crude oil on the same 
favourable terms as yourselves, we shall get it elsewhere as 
best we can and hold you responsible for its difference in 
cost." 

Mr. Rockefeller's reply was a prayer for an injunction 
against the members of the firm, restraining them individu- 
ally and collectively "from distilling at their said works at 

[68] 




WILLIAM C. SCOFIELD 



Senior member of the firm of Scofield, Schurmer 
and Teagle, of Cleveland. Plaintiff in important 
suits against Lake Shore Railroad for freight dis- 
criminations. 



DANIEL SCHURMER 

Associate of Mr. Scofield and Mr. Teagle in the 
war on railroad rebates which the firm waged for 
nearly twenty years. 





JOHN TEAGLE 

Independent refiner of Cleveland, Ohio, promi- 
nent in struggle against freight discriminations by 
the railroads. 



CHARLES B. MATTHEWS 

Independent refiner of Buffalo. Plaintiff in 
"Buffalo case," where members of the Standard 
Oil Company were indicted for conspiracy. 



THE WAR ON THE REBATE 

Cleveland, Ohio, more than 85,000 barrels of crude petro- 
leum of forty-two gallons each in every year, and also from 
distilling any more than 42,500 barrels of crude petroleum 
of forty-two gallons each, each and every six months, and 
also from distilling any more crude petroleum until the expi- 
ration of six months from and after July 20, 1880, and also 
from directly and indirectly engaging in or being concerned 
in any business connected with petroleum or any of its prod- 
ucts except in connection with the plaintiff under their said 
agreement, and that on the final hearing of this case the said 
defendants may in like manner be restrained and enjoined 
from doing any of said acts until the expiration of said agree- 
ment, and for such other and further relief in the premises 
as equity can give." In this petition, really remarkable for 
its unconsciousness of what seems obvious that the agree- 
ment was preposterous and void because confessedly in re- 
straint of trade the terms of the joint adventure are renewed 
in a way to illustrate admirably the sort of tactics with 
refiners which, at this time, was giving Mr. Rockefeller his 
extraordinary power over the price of oil.* 

Scofield, Shurmer and Teagle did not hesitate to take up 
the gauntlet, and a remarkable defence they made. In their 
answer they declared the so-called agreement had at all times 
been "utterly void and of no effect as being by its terms in 
restraint of trade and against public policy." They declared 
that the Standard Oil Company had never kept the terms of 
the agreement, that it had intentionally withheld the benefits 
of the advantages it enjoyed in freight contracts, and that it 
now was pumping crude oil from the Oil Regions to Cleve- 
land at a cost of about twelve cents a barrel and charging 
them (Scofield, Shurmer and Teagle) twenty cents. They 
denied that the Standard had sustained any damage through 

* See Appendix, Number 42. Standard Oil Company's petition for relief and in- 
junction. 

[6 9 ] 






THE HISTORY OF THE STANDARD OIL COMPANY 

them, but claimed that their business had been carried on at 
a large profit. "There is such a large margin between the 
price of crude oil and refined," declared the defendants, 
"that the manufacture and sale of refined oil is attended with 
large profit; it is impossible to supply the demand of the 
public for oil if the business and refineries of both plaintiff 
and defendant are carried on and run to their full capacities, 
and if the business of the defendants were stopped, as prayed 
for by the plaintiff, it would result in a still higher price for 
refined oil and the establishment of more perfect monopoly 
in the manufacture and sale of the same by plaintiff." To 
establish such a monopoly, the defendants went on to declare, 
had been the sole object of the Standard Oil Company in 
making this contract with them, and similar ones with other 
firms, to establish a monopoly and so maintain unnaturally 
high prices,* and certainly Scofield, Shurmer and Teagle 
knew whereof they swore, for they had shared in the spoils 
of the winter of 1876 and 1877, and at this very period, Octo- 
ber, 1880, they were witnessing an attempt to repeat the coup. 
The charge of monopoly Scofield, Shurmer and Teagle 
sustained by a remarkable array of affidavits the most dam- 
aging set for the Standard Oil Company which had ever been 
brought together. It contained the affidavits of various indi- 
viduals who had been in the refining business in Cleveland 
at the time of the South Improvement Company and who 
had sold out in the panic caused by it. It contained a review 
of the havoc which that scheme and the manipulation of the 
railroads by the Standard which followed it had caused in 
the refining trade in Pennsylvania, and it gave the affidavits 

of Mrs. B and of her secretary and others concerning 

the circumstances of her sale in 1878 (see Chapter VI). The 
affidavits filed by John D. Rockefeller, Oliver H. Payne 
and Henry M. Flagler in reply to the set presented by Sco- 

* See Appendix, Number 43. Answer of William C. Scofield ft al. 

[70] 



THE WAR ON THE REBATE 

field, Shurmer and Teagle are curious reading. From the 
point of view of our present knowledge they deny a number 
of things now known to be true.* 

It was not necessary, however, for the defendants to have 
presented their elaborate array of evidence to support the 
charge of intended monopoly. The character of the agree- 
ment itself was sufficient to prevent any judge from attempt- 
ing to enforce it. The amazement was that the Standard Oil 
Company ever had the hardihood to ask for its enforcement. 
"That it should venture to ask the assistance of a court of 
equity to enforce a contract to limit the production and raise 
the price of an article of so universal use as kerosene oil," 
said the Chicago Tribune, "shows that the Standard Oil 
Company believed itself to have reached a height of power 
and wealth that made it safe to defy public opinion." This 
case is not the only one belonging to the period which goes 
to support the opinion of the Tribune. 

Scofield, Shurmer and Teagle were now obliged to stand 
on their own feet. They could refine all the oil they wished, 
but they must make their own freight contracts, and they 
found rates when you worked with Mr. Rockefeller were 
vastly different from rates when you competed with him. 
The agent of the Lake Shore Railroad, by which most of 
their shipments went, told them frankly that they could not 
have the rates of the Standard unless they gave the same vol- 
ume of business. The discrimination against them was serious. 
For instance, in 1880, when the Standard paid sixty-five 
cents a barrel from Cleveland to Chicago, Scofield, Shurmer 
and Teagle paid eighty. From April i to July i, 1881, the 
Standard paid fifty-five cents and their rival eighty cents; 
from July i to November i, 1881, the rates were thirty- five 
and seventy cents respectively, and so it went on for three 
years, when the firm, despairing of any change, took the case 

* See Appendix, Number 44. Affidavit of John D. Rockefeller. 

[71] 



THE HISTORY OF THE STANDARD OIL COMPANY 

into court. This case, fought through all the courts of Ohio, 
and in 1886 taken to the Supreme Court of the United States, 
is one of the clearest and cleanest in existence for studying 
all the factors in the rebate problem the argument and 
pressure by which the big shipper secures and keeps his 
advantage, the theory and defence of the railroad in grant- 
ing the discrimination, the theory on which the suffering 
small shipper protests, and finally the law's point of view. 
The first trial of the case was in the Court of Common Pleas, 
and the refiners won. The railroad then appealed to the Dis- 
trict Court (the present Circuit Court), where it was argued. 
So "important and difficult" did the judges of the District 
Court find the questions involved to be, that on the plea of 
the railroad they sent their findings of the facts in the case 
to the Supreme Court of the state for decision a privilege 
they had under the law in force at that time. 

These findings are elaborate, including some twenty-three 
propositions.* They have been confused by certain writers 
with the opinion on them given later by the Supreme Court; 
for instance, in an economic study recently published 
"The Rise and Progress of the Standard Oil Company," the 
twelfth and thirteenth and part of the fourteenth proposition 
which the District Court sent up to the Supreme Court in its 
"findings of facts" are quoted separately, and the inference 
from the context is that the writer supposed he was citing part 
of the court's opinion. As the reader will see from what fol- 
lows, the paragraphs in question are important, for, taken as 
quoted, they seem to show that the rebate the Standard re- 
ceived, and which Scofield, Shurmer and Teagle wanted, was 
on account of facilities it gave which the other refiners could 
not give: 

''The court further find that prior to 1875 it was a question whether the Standard 
Oil Company would remain in Cleveland or remove its works to the oil-producing 

* See Appendix, Number 45, Findings of Fact. 
[72] 



country, and such question depended mainly upon rates of transportation from Cleve- 
land to market; that prior thereto said Standard Company did ship large quantities 
of its products by water to Chicago and other lake points, and from thence distributed 
the same by rail to inland markets; that it then represented to defendant the prob- 
ability of such removal; that water transportation was very low during the season of 
navigation; that unless some arrangement was made for rates at which it could ship 
the year round as an inducement, it would ship by water and store for winter 
distribution; that it owned its tank-cars and had tank stations and switches, 
or would have, at Chicago, Toledo, Detroit and Grand Rapids, on and into 
which the cars and oil in bulk could be delivered and unloaded without expense 
and annoyance to defendant; that it had switches at Cleveland leading to its works 
at which to load cars, and would load and unload all cars; that the quantity of oil 
to be shipped by the company was very large, and amounted to ninety per cent, or 
more of all the oil manufactured or shipped from Cleveland, and that if satisfactory 
rates could be agreed upon it would ship over defendant's road all its oil products 
for territory and markets west and northwest of Cleveland, and agree that the quantity 
for each year should be equal to the amount shipped the preceding year; that upon 
the faith of these representations the defendant did enter into the contract and arrange- 
ment substantially as set forth in defendant's answer; that the rates were not fixed 
rates, but depended upon the general card tariff rates as charged from time to time, 
but substantially to be carried from time to time for about ten cents per barrel less 
than tariff rates, and, in consideration of such reduced rates as to bulk oil, the Standard 
Company agreed to furnish its own cars and tanks, load them on switches at dis- 
tributing points, and unload them into distributing tanks, and was also to load and 
unload oil shipped in barrels, and without expense to defendant, and with, by reason 
thereof, less risk to defendant, which entered into the consideration, and was also to 
ship all its freight to points west and northwest of Cleveland, except small quantities 
t3 lake ports not reached by rail, and to so manage the shipments, as to cars and times, 
as would be most favourable to defendant; that defendant then agreed to said terms; 
that said agreement so made in 1875 has remained in force ever since. 

"That, at a cost exceeding $100,000, said Standard Company had and constructed 
the terminal facilities promised and herein found; that, in fact, the risk of danger 
from fire to defendant, the expense of handling, in loading and unloading, and in the 
use of the Standard tank-cars is less (but how much the testimony does not show) 
than upon oil shipped without the use of such or similar terminal facilities; that said 
Standard Company commenced by shipping about 450,000 barrels a year over de- 
fendant's road, which increased from year to year until, in 1882, the year before filing 
the petition in this action, the quantity so shipped on defendant's road amounted to 
742,000 barrels, equal to 2,000 barrels or one full train-load per day. 

"That said arrangement was not exclusive, but was at all times open to others 

[73] 



THE HISTORY OF THE STANDARD OIL COMPANY 

shipping a like quantity and furnishing like service and facilities; that it was not made 
or continued with any intention on the part of the defendant to injure the plaintiffs 
in any manner." 

Now, as a matter of fact, other propositions in this same 
set from which the above are quoted, find that Scofield, 
Shurmer and Teagle offered the railroad exactly the same 
facilities as the Standard, a switch, loading racks, exemption 
from loss by fire or accident.* "The manner of making ship- 
ments for plaintiffs and for the Standard Oil Company was 
precisely the same, and the only thing to distinguish the 
business of the one from the other was the aggregate yearly 
amounts of freight shipped," said Judge Atherton, of the 
Supreme Court, who gave the decision on the findings of 
fact, and he held in common with his predecessors that a 
rebate on account of volume of business only was "a dis- 
crimination in favour of capital," and contrary to a sound 
public policy, violation of that equality of rights guaranteed 
to every citizen, and a wrong to the disfavoured person. "We 
hold, . . ." he said, "that a discrimination in the rate of 
freights resting extensively on such a basis ought not to be 
sustained. The principle is opposed to sound public policy. 
It would build up and foster monopolies, add largely to the 
accumulated power of capital and money, and drive out all 
enterprise not backed by overshadowing wealth. With the 
doctrine, as contended for by the defendants, recognised and 
enforced by the courts, what will prevent the great grain 
interest of the Northwest, or the coal and iron interests of 
Pennsylvania, or any of the great commercial interests of 
the country bound together by the power and influence of 
aggregated wealth and in league with the railroads of the 
land, driving to the wall all private enterprises struggling for 
existence, and with an iron hand thrusting back all but them- 
selves?" Judge Atherton was scathing enough in his opinion 

* See Appendix, Number 45. 
[74] 



THE WAR ON THE REBATE 

of the contract between the Lake Shore and the Standard. 
Look at it, he said, and see just what is shown. In con- 
sideration of the company giving to the railroad its entire 
freight business in oil, they transport this freight about ten 
cents a barrel cheaper than for any other customer. "The 
understanding was to keep the price down for the favoured 
customer, but up for all others, and the inevitable tendency 
and effect of this contract was to enable the Standard Oil 
Company to establish and maintain an overshadowing mon- 
opoly, to ruin all other operators and drive them out of 
business in all the region supplied by the defendant's road, 
its branches and connecting lines." 

Judge Atherton was particularly hard on the portion of 
the contract * which pledged the Standard to give the Lake 
Shore all its freight in return for the rebates, and for this 
reason: In 1883 a new road Westward was opened from 
Cleveland, the New York, Cincinnati and St. Louis. It might 
become an active competitor in transporting petroleum for 
customers other than the Standard Oil Company. It might 
establish such a tariff of rates that other operators in oil 
might successfully compete with the Standard Oil Company. 
To prevent this, the Lake Shore road, on the completion of 
the new road, entered into a tariff arrangement giving to it 
a portion of the Westward shipments of the Standard Oil 
Company, on condition of its uniting in carrying out the 
understanding in regard to rebates to the Standard Oil Com- 
pany. "How peculiar!" exclaimed Judge Atherton. "The 
defendant, by a contract made in 1875, was entitled to all 
the freights of the Standard Oil Company, and yet, say the 
District Court, 'for the purpose of securing the greater part 
of said trade,' they entered into a contract to divide with 
the new railroad, if the latter would only help to keep the 
rates down for the Standard and up for everybody else." 

* Number 20, Findings of Facts. See Appendix, Number 45. 
[75] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Such a contract so carried out was, in the opinion of the 
court, "not only contrary to a sound public policy, but to 
the lax demands of the commercial honesty and ordinary 
methods of business." 

Another fact found by the District Court incensed Judge 
Atherton. This was that the contract "was not made or con- 
tinued with any intention on the part of the defendant to 
injure the plaintiffs in any manner." It does not "make any 
difference in the case," he declared. "The plaintiffs were not 
doing business in 1875, when the contract was entered into, 
and, of course, it was not made to injure them in particular. 
If a man rides a dangerous horse into a crowd of people, or 
discharges loaded firearms among them, he might, with the 
same propriety, select the man he injures and say he had no 
intention of wounding him. And yet the law holds him to 
have intended the probable consequences of his unlawful act 
as fully as if purposely directed against the innocent victim, 
and punishes him accordingly. And this contract, made to 
build up a monopoly for the Standard Oil Company and to 
drive its competitors from the field, is just as unlawful as if 
its provisions had been aimed directly against the interests 
of the plaintiffs." * 

Having lost their case in the Supreme Court of the state, 
the Lake Shore now appealed to the Supreme Court of the 
United States, and the record was filed in November, 1886. 
It was never heard ; the railroad evidently concluded it was 
useless, and finally withdrew its petition, thereby accepting 
the decision of the Supreme Court of Ohio restraining it 
from further discrimination against Scofield, Shurmer and 
Teagle. 

This case, which was before the public constantly during 
the six or seven years following the breaking up of the Pro- 
ducers' Union, in which the Oil Regions presented no united 

* Ohio State Reports, 43, pages 571-623. 
[76] 




BURST IN A PIPE LINE 



THE WAR ON THE REBATE 

front to Mr. Rockefeller, served to keep public attention on 
the ruinous effect of the rebate and to strengthen the feeling 
that drastic legislation must be taken if Mr. Rockefeller's 
exploit was to be prevented in other industries. 

One other case came out in this war of individuals on the 
rebate system which heightened the popular indignation 
against the Standard. It was a case showing that the Standard 
Oil Company had not yet abandoned that unique feature of 
its railroad contracts by which a portion of the money which 
other people paid for their freight was handed over to them! 
This peculiar development of the rebate system seems to have 
belonged exclusively to Mr. Rockefeller. Indeed, a careful 
search of all the tremendous mass of materials which the 
various investigations of railroads produced shows no other 
case so far as the writer knows of this practice. It was 
the clause of the South Improvement contracts which pro- 
voked the greatest outcry. It was the feature of Mr. Cas- 
satt's revelations in 1877 which dumfounded the public and 
which no one would believe until they saw the actual agree- 
ments Mr. Cassatt presented. The Oil Regions as a whole 
did not hesitate to say that they believed this practice was 
still in operation, but, naturally, proof was most difficult to 
secure. The demonstration came in 1885, through one of the 
most aggressive and violent independents which the war in 
oil has produced, George Rice, of Marietta, Ohio. Mr. 
Rice, an oil producer, had built a refinery at Marietta in 
1873. He sold his oil in the state, the West, and South. Six 
years later his business was practically stopped by a sudden 
raise in rates on the Ohio roads an advance of fully 100 
per cent, being made on freights from Marietta, where there 
were several independent refineries, although no similar 
advance was made from Wheeling and Cleveland, where 
the Standard refineries were located. These discriminations 
were fully shown in an investigation by the Ohio State Legis- 

[77] 



THE HISTORY OF THE STANDARD OIL COMPANY 

lature in 1879. From that time on Mr. Rice was in constant 
difficulty about rates. He seems to have taken rebates when 
he could get them, but he could never get anything like what 
his big competitors got. 

In 1883 Mr. Rice began to draw the crude supply for his 
refinery from his own production in the Macksburg field of 
Southeastern Ohio, not far from Marietta. The Standard had 
not at that time taken its pipe-lines into the Macksburg 
field; the oil was gathered by a line owned by A. J. Brun- 
dred, and carried to the Cincinnati and Marietta Railroad. 
Now, Mr. Brundred had made a contract with this railroad 
by which his oil was to be carried for fifteen cents a barrel, 
and all other shippers were to pay thirty cents. Rice, who 
conveyed his oil to the railroad by his own pipe-line, got a 
rate of twenty-five cents by using his own tank-car. Later he 
succeeded in getting a rate of 17^ cents a barrel. Thus 
the rebate system was established on this road from the 
opening of the Macksburg field. In 1883 the Standard Oil 
Company took their line into the field, and soon after Brun- 
dred retired from the pipe-line business there. When he went 
out he tried to sell the Standard people his contract with the 
railroad, but they refused it. They describe this contract as 
the worst they ever saw, but they seem to have gone Mr. 
Brundred one better, for they immediately contracted with 
the road for a rate of ten cents on their own oil, instead of 
the fifteen cents he was getting, and a rate of thirty-five on 
independent oil. And in addition they asked that the extra 
twenty-five cents the independents paid be turned over to 
them! If this was not done the Standard would be under the 
painful necessity of taking away its shipments and building 
pipe-lines to Marietta. The Cincinnati and Marietta Rail- 
road at that time was in the hands of a receiver, one Phineas 
Pease described as a "fussy old gentleman, proud of his 
position and fond of riding up and down the road in his 

[78] 



THE WAR ON THE REBATE 

private car." It is probably a good description. Certainly it 
is evident from what follows that the receiver was much 
"fussed up" ethically. Anxious to keep up the income of his 
road, Mr. Pease finally consented to the arrangement the 
Standard demanded. But he was worried lest his immoral 
arrangement be dragged into court, and wrote to his counsel, 
Edward S. Rapallo, of New York City, asking if there was 
any way of evading conviction in case of discovery. 

"Upon my taking possession of this road," the receiver wrote, "the question came 
up as to whether I would agree to carry the Standard Company's oil to Marietta for 
ten cents per barrel, in lieu of their laying a pipe-line and piping their oil. I, of course, 
assented to this, as the matter had been fully talked over with the Western and Lake 
Erie Railroad Company before my taking possession of the road, and I wanted all 
the revenue that could be had in this trade. 

"Mr. O'Day, manager of the Standard Oil Company, met the general freight agent 
of the Western and Lake Erie Railroad and our Mr. Terry, at Toledo, about February 
12, and made an agreement (verbal) to carry their oil at ten cents per barrel. But 
Mr. O'Day compelled Mr. Terry to make a thirty-five cent rate on all other oil going 
to Marietta, and that we should make the rebate of twenty-five cents per barrel on all 
oil shipped by other parties, and that the rebate should be paid over to them (the 
Standard Oil Company), thus giving us ten cents per barrel for all oil shipped to 
Marietta, and the rebate of twenty-five cents per barrel going to the Standard Oil 
Company, making that company say twenty-five dollars per day clear money on 
George Rice's oil alone. 

"In order to save the oil trade along our line, and especially to save the Standard 
Oil trade, which would amount to seven times as much as Mr. Rice's, Mr. Terry 
verbally agreed to the arrangement, which, upon his report to me, I reluctantly 
acquiesced in, feeling that I could not afford to lose the shipment of 700 barrels 
of oil per day from the Standard Oil Company. But when Mr. Terry issued in- 
structions that on and after February 23 the rate of oil would be thirty-five cents per 
barrel to Marietta, George Rice, who has a refinery in Marietta, very naturally 
called on me yesterday and notified me that he would not submit to the advance, 
because the business would not justify it, and that the move was made by the Standard 
Oil Company to crush him out. (Too true.) Mr. Rice said : ' I am willing to continue 
the 17^ cent rate which I have been paying from December to this date.' 

"Now, the question naturally presents itself to my mind, if George Rice should see 
fit to prosecute the case on the ground of unjust discrimination, would the receiver be 
held, as the manager of this property, for violation of the law ? While I am determined 

[79] 



THE HISTORY OF THE STANDARD OIL COMPANY 

to use all honourable means to secure traffic for the company, I am not willing to do 
an illegal act (if this can be called illegal), and lay this company liable for damages. 
Mr. Terry is able to explain all minor questions relative to this matter." * 

Mr. Rapallo, after consulting his partner and "represen- 
tative bondholders," "fixed it" for the receiver in the follow- 
ing amazing decision: 

"You may, with propriety, allow the Standard Oil Company to charge twenty-five 
cents per barrel for all oil transported through their pipes to your road; and I under- 
stand from Mr. Terry that it is practicable to so arrange the details that the company 
can, in effect, collect this direct without its passing through your hands. You may 
agree to carry all such oil of the Standard Oil Company, or of others, delivered to 
your road through their pipes, at ten cents per barrel. You may also charge all other 
shippers thirty-five cents per barrel freight, even though they deliver oil to your road 
through their own fifes; and this, I gather from your letter and from Mr. Terry, would 
include Mr. Rice." f 

Now, how was this to be done "with propriety"? Simply 
enough. The Standard Oil Company was to be charged ten 
cents per barrel, less an amount equivalent to twenty-five 
cents per barrel upon all oil shipped by Rice. "Provided your 
accounts, bills, vouchers, etc., are consistent with the real 
arrangement actually made, you will incur no personal re- 
sponsibility by carrying out such an arrangement as I sug- 
gest." Even in case the receiver was discovered nothing 
would happen to him, so decided the counsel. "It is possible 
that, by a proper application to the court, some person may 
prevent you, in future, from permitting any discrimination. 
Even if Mr. Rice should compel you, subsequently, to refund 
to him the excess charge over the Standard Oil Company, 
the result would not be a loss to your road, taking into con- 
sideration the receipts from the Standard Oil Company." 

* Proceedings in Relation to Trusts, House of Representatives, 1888. Report Num- 
ber 3,112, pages 575-576. 

t See Appendix, Number 46. Letter of Edward S. Rapallo to General Phineas 
Pease, receiver Cleveland and Marietta Railroad Company. 

[80] 



THE WAR ON THE REBATE 

Fortified by his counsel, Receiver Pease put the arrange- 
ment into force, and beginning with March 20, 1885, a joint 
agent of the Standard pipe-line and of the Cincinnati and 
Marietta road collected thirty-five cents per barrel on the oil 
of all independent shippers from Macksburg to Marietta. 
Ten cents of this sum he turned over to the receiver and 
twenty-five cents to the pipe-line. When Mr. Rice found that 
the rate was certainly to be enforced he began to build a pipe 
of his own to the Muskingum River, whence he was to ship by 
barge to Marietta. By April 26 he was able to discontinue 
his shipments over the Cincinnati and Marietta road. This 
was not done until a rebate of twenty-five cents a barrel had 
been paid to the Standard Oil Company on 1,360 barrels of 
his oil $340 in all. 

Mr. Rice, outraged as he was by the discrimination, was 
looking for evidence to bring suit against the receiver, but it 
was not until October that he was ready to take the matter 
into court. On the i3th of that month he applied to Judge 
Baxter of the United States Circuit Court for an order that 
Phineas Pease, receiver of the Cleveland and Marietta Rail- 
road, report to the court touching his freight rates and other 
matters complained of in the application. The order was 
granted on the same day the application was made. It was 
specific. Mr. Pease was to report his rates, drawbacks, methods 
of accounting for discrimination, terms of contracts, and all 
other details connected with his shipment of oil. No sooner 
was this order of the court to Receiver Pease known than 
the general freight agent, Mr. Terry, hurried to Cleveland, 
Ohio, to meet Mr. O'Day of the Standard Oil Company, 
with whom he had made the contract. The upshot of that 
interview was that on October 29, twelve days after the 
judge had ordered the contracts produced, a check for $340, 
signed by J. R. Campbell, Treasurer (a Standard pipe-line 
official), was received from Oil City, headquarters of the 

[81] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Standard pipe-line, by the agent who had been collecting 
and dividing the freight money. This check for $340 was the 
amount the pipe-line had received on Mr. Rice's shipments 
between March 20 and April 25. The agent was instructed 
to send the money to the receiver, and later, by order of the 
court, the money was refunded to Mr. Rice. But the Stand- 
ard was not out of the scrape so easily. 

Receiver Pease filed his report on November 2, but the 
judge found it "evasive and unsatisfactory," and further 
information was asked for. Finally the judge succeeded in 
securing the correspondence between Mr. Pease and Mr. 
Rapallo, quoted above, and enough other facts to show the 
nature of the discrimination. He lost no time in pronouncing 
a judgment, and he did not mince his words in doing it: 

" But why should Rice be required to pay 250 per cent, more for the carriage of his 
oil than was exacted from his competitor ? The answer is that thereby the receiver could 
increase his earnings. This pretence is not true; but suppose it was, would that fact 
justify, or even mitigate, the injustice done to Rice ? May a receiver of a court, in the 
management of a railroad, thus discriminate between parties having equal claim 
upon him, because thereby he can accumulate money for the litigants ? It has been 
repeatedly adjudged that he cannot legally do so. Railroads are constructed for the 
common and equal benefit of all persons wishing to avail themselves of the facilities 
which they afford. While the legal title thereof is in the corporation of individuals 
owning them, and to that extent private property, they are by the law and consent of 
the owners dedicated to the public use. By its charter and the general contemporaneous 
laws of the state which constitute the contract between the public and the railroad 
company the state, in consideration of the undertaking of the corporators to build, 
equip, keep in repair and operate said road for the public accommodation, authorised 
it to demand reasonable compensation from everyone availing himself of its facilities, 
for the service rendered. But this franchise carried with it other and correlative obliga- 
tions. 

"Among these is the obligation to carry for every person offering business under 
like circumstances, at the same rate. All unjust discriminations are in violation of the 
sound public policy, and are forbidden by law. We have had frequent occasions to 
enunciate and enforce this doctrine in the past few years. If it were not so, the managers 
of railways in collusion with others in command of large capital could control the 
business of the country, at least to the extent that the business was dependent on 

[82] 



THE WAR ON THE REBATE 

railroad transportation for its success, and make and unmake the fortunes of men at 
will. 

"The idea is justly abhorrent to all fair minds. No such dangerous power can be 
tolerated. Except in the modes of using them, every citizen has the same right to demand 
the service of railroads on equal terms that they have to the use of a public highway 
or the government mails. And hence when, in the vicissitudes of business, a railroad 
corporation becomes insolvent and is seized by the court and placed in the hands 
of a receiver to be by him operated pending the litigation, and until the rights of the 
litigants can be judicially ascertained and declared, the court is as much bound to 
protect the public interests therein as it is to protect and enforce the rights of the 
mortgagers and mortgagees. But after the receiver has performed all obligations due 
the public and every member of it that is to say, after carrying passengers and 
freight offered, for a reasonable compensation not exceeding the maximum author- 
ised by law, if such maximum rates shall have been prescribed, upon equal terms 
to all, he may make for the litigants as much money as the road thus managed is 
capable of earning. 

" But all attempts to accumulate money for the benefit of corporators or their creditors, 
by making one shipper pay tribute to his rival in business at the rate of twenty-five 
dollars per day, or any greater or less sum, thereby enriching one and impoverishing 
another, is a gross, illegal, inexcusable abuse of a public trust that calls for the severest 
reprehension. The discrimination complained of in this case is so wanton and oppres- 
sive it could hardly have been accepted by an honest man having due regard for the 
rights of others, or conceded by a just and competent receiver who comprehended the 
nature and responsibility of his office; and a judge who would tolerate such a wrong 
or retain a receiver capable of perpetrating it ought to be impeached and degraded 
from his position. 

"A good deal more might be said in condemnation of the unparalleled wrong com- 
plained of, but we forbear. The receiver will be removed. The matter will be referred 
to a master to ascertain and report the amount that has been as aforesaid unlawfully 
exacted by the receiver from Rice, which sum, when ascertained, will be repaid to 
him. The master will also inquire and report whether any part of the money collected 
by the receiver from Rice has been paid to the Standard Oil Company, and if so- 
how much, to the end that, if any such payments have been made, suit may be in- 
stituted for its recovery." * 

On December 18 George K. Nash, a former governor of 
Ohio, was appointed master commissioner to take testimony 

* Proceedings in Relation to Trusts, House of Representatives, 1880. Report 
Number 3,112, pages 577-578. 

[83] 



THE HISTORY OF THE STANDARD OIL COMPANY 

and clear up the point doubtful in the judge's mind to whom 
had the extra money paid by Rice been paid; the receiver 
declared that he never paid the Standard Oil Company any 
part of Rice's money. Mr. Nash summoned a large number 
of witnesses and gradually untangled the story told above. Mr. 
Pease spoke truly, he had never paid the Standard Oil Com- 
pany any part of Mr. Rice's money. A joint agent of the rail- 
road and the pipe-line had been appointed, at a salary of 
eighty-five dollars a month, sixty dollars paid by Pease and 
twenty-five dollars by the Standard, who collected the freight 
on independent shipments and divided the money between 
the two parties. It was from this agent that it was learned 
that, twelve days after Judge Baxter ordered Receiver 
Pease to bring his contracts into court, the money paid on 
Mr. Rice's oil had been returned by the Standard Oil 
Company.* While the investigation in regard to Mr. Rice's 
oil was going on, complaints came to Commissioner Nash 
from two other oil works at Marietta that they had been 
suffering a like discrimination for a much longer time. 
The commissioner investigated the cases and found the com- 
plaints justified. The Standard Oil Company had received 
$649.15 out of the money paid by one concern to the railroad 
for carrying its oil, and $639.75 out of the sum paid by 
another concern! Both of these sums were returned by the 
Standard.! 

Of course the case aroused violent comment. In 1888 it 
came before the Congressional Committee which was inves- 
tigating trusts, and an effort was made to explain the twenty- 
five cents extra as a charge of the pipe-line for carrying oil 
to the railway. Now, the practice in vogue in the Oil Regions 

* See Appendix, Number 47. Testimony of F. G. Carrel, freight agent of the 
Cleveland and Marietta Railroad Company. 

I See Appendix, Number 48. Report of the Special Master Commissioner George 
K. Nash to the Circuit Court. 

[84] 



THE WAR ON THE REBATE 

then and now is that the purchaser of the oil pays the pipe- 
line charge. The railroad has nothing to do with it. Even if 
the Standard Oil Company puts a tax on railroads for allow- 
ing them to take oil carried by its pipe-lines thus collecting 
double pay the tax would not apply in Mr. Rice's case, for 
the oil came to the Cincinnati and Marietta road not through 
Standard pipes but through Mr. Rice's own pipes. This much 
Mr. O'Day was obliged to admit in 1888: 

Q. But did that other oil which was in competition with you pass through your 
pipe? 

A. No, sir. 

Q. Did not they, therefore, on that oil which only passed over their railroad and 
not through your pipe-line, pay to you the same allowance or rebate that they did on 
your oil which did pass ? 

A. They did, but we returned it through the advice of our counsel, Mr. Dodd. 

Q. Now, out of that sum how much did you get from the railroad out of what they 
had received from Mr. Rice ? 

A. We did not get any; that is, we did not retain any. The railroad company agreed 
to account to us for the oil that went over its lines, and they did make an accounting, 
to my recollection, of about $200, or something like that, on oil other than that which 
passed through the lines. Our counsel, Mr. Dodd, advised me that we could not do 
that business, and we refunded the money. 

Soon after the report of the Congressional Committee 
was published John D. Rockefeller himself explained the 
case in an interview published in the New York World for 
March 29, 1890: "When the arrangement was reported to 
the officers of the company at New York," Mr. Rockefeller 
told the interviewer, "it was not agreed to because our coun- 
sel pronounced it illegal in so far as it embraced oil carried 
by the pipe-line. Some $250 had been paid to the pipe-line 
under this contract on oil which the line had not transported. 
This was refunded. We repudiated the contract before it was 
passed upon by the courts and made full recompense. In a 
business as large as ours, conducted by so many agents, some 

[85] 



THE HISTORY OF THE STANDARD OIL COMPANY 

things are likely to be done which we cannot approve. We 
correct them as soon as they come to our knowledge. The 
public hears of the wrong it never hears of the correction." 
In the Digest of Evidence made by the Industrial Commis- 
sion in its report published in 1900 (page 158), it is stated that 
the money collected was refunded before suit was brought. 
The facts show that the statement in the report of the Indus- 
trial Commission that the money was refunded before suit 
was brought is wrong, and that, while Mr. Rockefeller is 
technically correct in stating that the Standard repudiated 
the contract before it was passed on by the courts, he should 
have added they did not repudiate the contract until eight 
months after it was made, and did not refund the money until 
twelve days after it became certain that the contract would 
be produced in court. He also does not explain why the 
Standard Oil Company did not return the money unjustly 
paid to them on the shipments of the other independent oil 
concerns of Marietta until exposure by Commissioner N ash's 
investigation made it inevitable.* 

But it was not only manipulation of the railroads by the 
Standard Oil Company of which the public was complain- 
ing at this time. The policy of making it impossible for even 
small independent concerns to do business was attracting 
more and more attention. Indeed, there was going on in 
Buffalo, New York, simultaneously with these two cases, a 
most sensational trial, growing out of an indictment for the 
crime of conspiracy, by the Grand Jury of Erie County, 
New York, of three prominent members of the Standard Oil 
Company H. H. Rogers, John D. Archbold and Ambrose 
McGregor with two refiners with whom they were associ- 
ated H. B. Everest and C. M. Everest. The case is reported 

* The documents from which the statements are drawn are all on file in the office 
of the Clerk of the United States Circuit Court for the Southern District of Ohio, 
Eastern Division. 

[86] 



THE WAR ON THE REBATE 

in the next chapter at some length, because of the importance 
it has assumed in the popular controversy which has been 
going on for the last twenty years over "Standard methods," 
it being the case on which is based the often-repeated charge 
that Mr. Rockefeller, to win his point, has been known to 
burn refineries. 



[87] 



CHAPTER TWELVE 

THE BUFFALO CASE 

THE STANDARD BUYS THREE-FOURTHS OF THE VACUUM OIL WORKS OF 
ROCHESTER TWO VACUUM EMPLOYEES ESTABLISH BUFFALO LUBRICAT- 
ING OIL COMPANY AND TAKE WITH THEM AN EXPERIENCED STILLMAN 
FROM THE VACUUM THE BUFFALO LUBRICATING OIL COMPANY HAS 
AN EXPLOSION AND THE STILLMAN SUDDENLY LEAVES THE BUFFALO 
LUBRICATING OIL COMPANY IS SUED BY VACUUM FOR INFRINGEMENT 
OF PATENTS MATTHEWS SUES THE EVERESTS OF THE VACUUM FOR 
DELIBERATELY TRYING TO RUIN HIS BUSINESS MATTHEWS WINS HIS 
FIRST CIVIL SUIT HE FILES A SECOND SUIT FOR DAMAGES, AND SECURES 
THE INDICTMENT OF SEVERAL STANDARD OFFICIALS FOR CRIMINAL 
CONSPIRACY ROGERS, ARCH BOLD AND McGREGOR ACQUITTED THE 
EVERESTS FINED. 

VERY soon after Mr. Rockefeller began to "acquire" 
independent refineries, whose owners were loath 
to sell or go out of business, unpleasant stones began 
to be circulated in the oil world of the methods 
used in getting the offending plants out of the way. When 
freight discriminations, cutting off of crude supply, and price 
wars in the market failed, other means were tried, and these 
means included sometimes, it was whispered, the actual de- 
struction of the plants. The only case in which this charge 
was made which ever came to trial was that of the Buffalo 
Lubricating Oil Company, Limited. For sake of clearness, a 
narrative of the case has been drawn from the testimony of- 
fered, no statements being admitted which were not brought 
out in the trials. 

It seems that some time in 1879 the owners of the Vacuum 

[88] 



THE BUFFALO CASE 

Oil Works, of Rochester, New York H. B. and C. M. 
Everest, father and son sold to H. H. Rogers, J. D. Arch- 
bold and Ambrose McGregor of the Standard Oil Company, 
for $200,000, a three-fourths interest in that concern. The 
purchase was not made for the gentlemen in whose names 
it appeared, but for the Standard. Thus, when on the witness- 
stand J. D. Archbold was questioned as to the real owner- 
ship of the stock which had been bought in his name, the 
examiner wanted to know whether the purchasers represented 
themselves or somebody else. 

"Mr. Archbold," he asked, "you made the contract, did you not, with reference 
to the transfer of the seventy-five shares of the Vacuum Oil Company's stock by the 
Messrs. Everest?" 

A . I bought the seventy-five shares, yes, sir. 

Q. Whom did you represent in that transaction ? 

A. I represented the shareholders of the Standard Oil Company. 

Q. After this purchase was made did you continue to represent the purchasers 
in the management of the affairs of the Vacuum Oil Company ? 

A. I did. 

Q. By virtue of power delegated to you, or by virtue of being a member of the board 
of directors or trustees of the Vacuum ? 

A. By the virtue of power delegated to me. 

Q. By the purchasers ? 

A. By the purchasers. 

The Vacuum manufactured principally lubricating oils 
used on harness and car wheels. It controlled several valuable 
patents and had been doing a prosperous business for a num- 
ber of years. By the terms of the sale in 1879 the Everests 
remained as managers of the refinery, on a salary of $10,000 
a year. They also contracted to enter into no outside oil business 
for ten years. The business policy of the Vacuum, including 
the fixing of salaries, was dictated by a board of directors made 
up of Messrs. Rogers, Archbold, McGregor and the two Ever- 
ests. The meetings of this board were held at the office of the 

[89] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Standard Oil Company, in New York or in Rochester, as 
convenient. 

So far as can be inferred from the testimony, the works 
were well managed, the dividends large, and the employees 
well treated. In 1880 the salesman of the concern, J. Scott 
Wilson, decided to leave the Vacuum and go into business 
for himself. The decision seems natural, for until 1878 Mr. 
Wilson had carried on an independent oil business of one kind 
or another. He had been a partner in a refinery and under- 
stood making oils. He had been a jobber on his own account 
before going with the Everests, and as such had had a con- 
siderable clientele. Wilson told one of his fellow employees, 
Charles B. Matthews, of his decision, and asked him to go 
with him. Matthews had been with the Everests about the 
same length of time as Wilson some two years. Previous to 
this engagement he had been a farmer, and his acquaintance 
with the Vacuum people had come about by his drilling on 
his farm for oil. Matthews was worth some $20,000, but he 
had had no experience in oil refining, for his duties at the 
Vacuum had been mainly looking after outside business for 
instance, he had several times gone to New York to consult 
J. D. Archbold and H. H. Rogers concerning business mat- 
ters, and particularly concerning patents owned by the 
Vacuum, of whose validity there was some doubt. For some 
time Matthews had been dissatisfied with his salary he had 
asked for a raise, but had not got it a fact which probably 
made him more favourable to Wilson's suggestion. 

The two men decided finally to form a company and to 
build an oil refinery at Buffalo. Wilson said on the witness- 
stand that he did not want to handle the Vacuum processes 
in the new works, but to make only the oils with which he 
was familiar. Matthews, however, had convinced himself that 
the patents which covered certain of the Vacuum processes 
and apparatus were invalid, and insisted that they build at 

[90] 



THE BUFFALO CASE 

least one Vacuum still. The question of what steps the Vacuum 
might take to stop them was discussed, and according to Wil- 
son's testimony Matthews remarked that he expected they 
would pay $100,000 or $150,000 to prevent their going into 
business. Matthews's remark was natural enough, considering 
the conditions under which outside refiners were forced to 
do business. It is probable that no man undertook any kind of 
independent oil business at that time, particularly oil refin- 
ing, without considering the possibility of being driven to sell. 

The new firm needed an experienced stillman accustomed 
to the Vacuum processes, and early in 1881 they asked one 
Albert Miller, a stillman in the Vacuum works, to join them. 
"If we have Miller," they told each other, "we can go to the 
customers of the Vacuum Oil Company and say to them : 'We 
have the same process and the same apparatus and the same oils 
as the Vacuum Oil Company, and we have their former super- 
intendent, Mr. Miller, to manufacture the oils.' " Miller had 
been with the Everests for several years, having worked his way 
up from a labourer at two dollars a day to a position where, 
as stillman, he was paid by the hour, and earned from $1,200 
to $1,400 a year. He and his wife had been thrifty, and had 
several thousand dollars in property. Miller thought there 
was money in the new venture, and consented to join Wilson 
and Matthews. The three set about carrying out their plans 
before they notified their employers of their intention to leave 
Miller going so far as to order certain iron castings needed 
in the construction of their works, made after patterns owned 
by the Everests. He had these made at the foundry patronised 
by the Everests. He paid for them himself, and carried them 
away, presumably giving the impression that they were for 
his employers. 

Early in March Matthews and Miller notified C. M. Ever- 
est, who was in charge, his father being in California, that 
they were going to leave and establish at Buffalo an inde- 

[90 



THE HISTORY OF THE STANDARD OIL COMPANY 

pendent oil refinery. Mr. Everest, surprised out of discretion 
by the news, told them plainly that although he had nothing 
against them personally, he should do all in his power to 
injure the proposed concern. He asked them where they ex- 
pected to get oil, and they replied that they would get it 
from the Atlas Refining Company, an independent concern 
in Buffalo, which had its own pipe-line. "You will wake up 
some morning and find it is in the Standard," replied Mr. 
Everest. Apparently Mr. Everest's threat had little influence 
on the men, for they pushed the building of the works in 
Buffalo as rapidly as possible. On March 15 they signed an 
agreement to carry on the proposed business for five years, 
each man to put in $2,000. A month later the three men, with 
two relatives of Matthews, organised a stock company the 
Buffalo Lubricating Oil Company, Limited with a capital 
of $40,000. 

Although Miller had gone to Buffalo the first of March 
with Matthews and Wilson, he returned frequently to Roches- 
ter to see his family. On several of these visits he saw C. M. 
Everest, who never failed to ask about the progress of the new 
concern, and to warn him that the Vacuum Company would 
never allow it to do business. "Don't you think, Miller," Ever- 
est said to him once, "that it would be better for you to leave 
those men and have $20,000 deposited to your wife's credit 
than to go to these parties?" Miller affirms that he answered 
that he had gone with the new firm in good faith, and thought 
he ought not to leave them. 

About two months after the new firm began building, the 
elder Everest, who had been in California, returned to Roches- 
ter, and soon after had several interviews with Miller. He 
impressed on the man, as his son had done, that the Buffalo 
Lubricating Works would never succeed. He told him that 
the Vacuum meant to bring suit against them for infringing 
their patents, and would get an injunction and stop the works; 

[92] 




BLEACHING TANK 




CONSTRUCTING AN IRON TANK FOR 
STORING OIL 





OIL AGITATORS 



FIVE-BARREL STILL 

USED IN THE FIFTIES IN DISTILLING 
CRUDE OIL AS A LUMINANT 



THE BUFFALO CASE 

that Miller would lose all the money he had put in. To save 
himself, Everest advised Miller to come back to the Vacuum. 
"But that would leave them in a pretty bad fix," Miller said. 
"That is exactly what I want to do," replied Everest. The fear 
that the new concern might be ruined through the hostility of 
the Vacuum, and he lose his savings, seems to have preyed 
on Miller's mind. He took his wife into his confidence, and 
she, too, became alarmed. He began to neglect his work in 
Buffalo. He was often away at nights. Matthews began to 
be worried by Miller's neglect and absence, and to watch the 
stations to find, if possible, where he went. Miller's question 
now became, how could he get away from the Buffalo firm? 
He had signed for the company a note for $5,000. He was 
under contract for a term of years. He discussed the question 
with the Everests, and they advised him to see his lawyer. 
On the seventh of June, according to H. B. Everest,* 
who went with him to help present the case, Miller did con- 
sult George Truesdale, a lawyer of Rochester, who had always 
handled his business. Mr. Truesdale afterwards told in court 
what occurred : 

"Mr. Everest stated that Miller had left his employ, and got engaged with another 
oil concern in the City of Buffalo; that he desired to get back again; he wanted him to 
come back; and he said he supposed Miller had explained to me his situation, and 
the obligations he was under to the Buffalo company. I told him that he had made 
some statements to me about his contract with the parties in Buffalo; that he had spoken 
about being an endorser or party to the note made by, I think he said, Matthews and 
Wilson and himself, and I think another party four or five of them had made, endorsed 
a note to raise money, done to start the Buffalo business, and that he had a contract 
or an arrangement with them to go into a company at Buffalo to manufacture oil, 
and that he wanted to know how he could get out of that arrangement. I stated what 
I had said to Miller, that he would, of course, be liable on the note, if he was charged 
properly when it became due, and that if he wanted to get out of that arrangement 
my advice to him had been to see if he couldn't get released; if they wouldn't release him 

* Proceedings in Relation to Trusts, House of Representatives, 1888. Report 
Number 3,112, page 864. 

[93] 



THE HISTORY OF THE STANDARD OIL COMPANY 

or buy out his interest; then, if he couldn't do that, the only other way I saw was 
for him to leave them and take the consequences. I told him that I did not know 
the exact terms of his contract, but, if he had entered into a contract and violated it, 
I presumed there would be a liability for damages, as well as a liability for the debts 
of the Buffalo party. Mr. Miller and Everest both talked on the subject, and Mr. 
Everest says, 'I think there is other ways for Miller to get out of it.' I told him I saw 
no way except either to back out or to sell out; no other honourable way. Mr. Everest 
says, substantially, I think, in these words: 'Suppose he should arrange the machinery 
so it would bust up, or smash up, what would the consequences be ?' something to 
that effect. 'Well,' I says, 'in my opinion, if it is negligently, carelessly done, not 
purposely done, he would be only civilly liable for damages caused by his negligence; 
but if it was wilfully done, there would be a further criminal liability for malicious 
injury to the property of the parties, the company.' Mr. Everest said he thought 
there wouldn't be anything only civil liability, and said that would he referred to 
the fact that I had been police justice, had some experience in criminal law and he 
said that he would like to have me look up the law carefully on that point, and that 
they would see me again." 

Miller's version of this interview is similar: 

"I think Mr. Truesdale or myself, I am not positive which, asked the question 
what means I could take to get out of the company. H. B. says, 'There is a good many 
ways he could get out.' Either Mr. Truesdale or myself asked him how. 'Well,' 
he says, 'he can cut up something or do something to injure them; something of that 
kind, to get out'; H. B. said this. Mr. Truesdale spoke up and said, 'You must be 
very careful what you do or you will lay yourself criminally liable.' Mr. Everest says 
to me, 'There is ways that you can get out.' I says to him, 'You wouldn't want me 
to do anything, would you, to lay myself liable?' I think Mr. Truesdale spoke up 
and says, 'You must be very careful or you will end in state's prison,' that is, I. 
There was considerable conversation I cannot just exactly remember; I have told all 
I recollect at present. Mr. Truesdale asked me if I had a contract with the Buffalo 
parties; I told him I had; 'Well/ he says, 'the best thing you can do is to stay there, 
then,' or something of that kind. I cannot say those were his exact words. H. B. 
Everest says, 'If he comes back with us, why, we will look after him.' I think Mr. 
Truesdale said that these men would be after me for leaving them. I think I told him 
the terms of the contract. . . . Mr. Everest says, 'They will have to catch Miller 
before they can do anything to him; we will take care of him.'" * 

* Proceedings in Relation to Trusts, House of Representatives, 1888. Report 
Number 3,112, page 864. 

[94] 



THE BUFFALO CASE 

In a talk with Miller a little while after this, C. M. Everest 
said to him: "You go back to Buffalo and construct the pipes 
so that they cannot make a good oil, and then, I think, if you 
would give them a little scare. You might scare them a little, 
they not knowing anything about the business, and you know 
how to do it." On account of Miller's neglect, the first still 
in the new refinery was not ready to be fired until June 15 
it was an ordinary still, as was the second one built the third 
only was built for the Vacuum process. As soon as the still 
was ready it was filled with some 175 barrels of crude oil 
and a very hot fire "inordinary hot" was the droll descrip- 
tion of the fireman built under it. Miller, who superintended 
the operations, swore at the fireman once or twice because the 
fire was not hot enough, and then disappeared. While he was 
gone the brickwork around the still began to crack. The safety 
valve finally blew off, and a yellow gas or vapour escaped in 
such quantities that the superintendent of a neighbouring re- 
finery came out and warned the fireman that he was endanger- 
ing property. Miller was hunted up. He had the safety valve 
readjusted it was thought by certain witnesses that he had 
it too heavily weighted and ordered the fires to be rebuilt, 
hot as before. He again disappeared. In his absence the safety 
valve again blew off. The run of oil was found to be a failure. 
It was not a pleasant augury, but oil refiners are more or less 
hardened to explosions and no one seems to have thought much 
of the accident. Nobody was injured; nothing was burned, 
nothing but 175 barrels of oil spoiled; that, in an oil refinery, 
is getting off easy. 

On the 23d of June Miller made the transfer of property ad- 
vised by the Everests, talked over things with Truesdale, and a 
week later left the Buffalo Works suddenly on receipt of 
a telegram, and joined H. B. Everest at the Union Square 
Hotel in New York. Here Everest advised him to telegraph 
his wife to move at once to Rochester lest Matthews attach 

[95] 



THE HISTORY OF THE STANDARD OIL COMPANY 

their household goods, and then proposed the two go to Boston. 
The only event of interest at the Union Square Hotel was 
an entirely casual meeting with H. H. Rogers, one of the 
directors of the Vacuum Oil Company. Mr. Rogers seems 
to have had no conversation with Miller other than to remark, 
in leaving, that he would see him the next day if he did not go 
to Boston. The men did, however, go to Boston, where they 
registered as "H. B. Everest and friend," and where several 
times, at least, Everest introduced Miller under an assumed 
name. They junketed about for some days on what Everest 
tried, with indifferent success, to persuade Miller was a pleas- 
ure excursion! While they were amusing themselves, Everest 
hired Miller at $1,500 a year to "do any fair job we put him 
at, either at Rochester or some other place." The job turned 
out to be a rambling one a few weeks of semi-idleness in 
Boston then nothing until September, when he undertook 
to supervise the drilling of a salt well in Leroy, New York. 
This lasted until February, 1882; then nothing until May, 
when, on the advice of H. B. Everest, who had returned to 
California, Miller went there: "Pack up, sell your property 
there and come on. Come right to my house and I will help 
you to get a place and show you how to raise fruit and be an 
independent man." Miller went, the Vacuum Oil Company 
paying his expenses. On his arrival he was put to work in a 
cannery. The Everests explained that they made this arrange- 
ment because they thought it would put Miller where he could 
not be brought back to trouble them any more. 

In the meantime things were going badly with the Buffalo 
Lubricating Works. Miller's loss was a severe one. The men 
were all novices in making oil, save Wilson, and he was on the 
road, and they seem to have been unable to find a competent 
manager. The Everests soon succeeded, too, in getting Wilson 
out of the new firm by bringing a suit against him for damag- 
ing its business by unlawfully leaving it. The suit was with- 

[96] 



THE BUFFALO CASE 

drawn and the costs paid, when Wilson consented, in Decem- 
ber, 1 88 1, to leave the Buffalo Works. Wilson's loss was 
particularly serious, as he was a salesman of experience. 

The suits for infringing the Vacuum patents and processes, 
which Everest at the start had warned Matthews would be 
brought, were begun in September, 1881 four separate suits 
within a year. Matthews, as has been said, had convinced him- 
self that the patents were not valid, and some time in the spring 
of 1882 he saw H. H. Rogers in New York concerning the 
suits. "I told him I had come in to talk with him about the 
patent litigation, or suits that were begun by the Vacuum Oil 
Company against my company," Matthews said in his testi- 
mony. " 'Well,' he said, 'well, what about it?' something like 
that. I told him that the product patent, that I well knew, was 
without merit, and that he knew it was without merit, and I 
could not see what object or good they could get out of it by 
bringing suit on that patent. And also the steam patent I 
considered was without value, and that he knew it was without 
value. He said that if one court did not sustain the patents 
they would carry along up until we got enough of it that 
was the substance of that talk." 

Matthews was evidently discouraged by the result of his 
talk with Mr. Rogers, for, meeting Benjamin Brewster, of the 
Standard Oil Company, he offered to sell the Buffalo Lubri- 
cating Works for $100,000. The offer was refused, and the 
suits against which Mr. Matthews protested were pushed. On 
the aist of February, 1882, the Vacuum Oil Company filed 
a complaint in the United States Circuit Court of the North- 
ern District of New York, asking that the Buffalo company be 
prevented from manufacturing lubricating oils, on the ground 
that the Vacuum Oil Company had a patent covering the pro- 
cess of manufacturing lubricating oils. The action was re- 
garded as unfounded by the court, and was dismissed on 
July 1 6, 1884, "the ground being that the letters sued on in this 

[97] 



THE HISTORY OF THE STANDARD OIL COMPANY 

cause are void." April 25, 1882, another action was commenced 
by the Vacuum Oil Company against the Buffalo company 
to obtain an injunction and an accounting for damages 
upon the ground that the Buffalo company was using an 
apparatus covered by a patent belonging to the Vacuum Oil 
Company, but this action also was dismissed March 17, 1885, 
upon the ground that the letters patent sued upon were "null 
and void." On February 23, 1883, the Vacuum Oil Company 
commenced still another action against the Buffalo company 
asking for an injunction to prevent the Buffalo company from 
using a label advertising "The Acme Harness Oil made by 
the Vacuum Process," because the Vacuum Company had 
long used a somewhat similar label advertising "The Vacuum 
Harness Oil manufactured by Vacuum Oil Company," but the 
judge in the case decided that the Vacuum Company had no 
more right to use labels than the Buffalo company. This deci- 
sion has since been affirmed by the General Term of the Su- 
preme Court. Still another action was brought against the Buf- 
falo company April 25, 1882, for infringing a patent on a steam 
process, also a patent upon a fire test. This action resulted in 
a decree sustaining the fire-test patent, but declaring the steam 
patent void. The case was then referred to James Breck Per- 
kins, of the Rochester bar, to decide the amount which 
the Buffalo company had infringed on this patent. Mr. Per- 
kins on a number of different occasions took a large amount 
of proof there in behalf of the Vacuum Company upon which 
its counsel claimed that it was entitled to $12,000 damages 
upon the accounting. The Buffalo company submitted no 
proof in contradiction, but insisted that the whole proof showed 
nothing more than a purely technical infringement of the pat- 
ent, and this view was sustained by Mr. Perkins in his report 
which awarded six cents damages against the Buffalo com- 
pany. 

The disappearance of Miller, the man on whom the firm 

[98] 



THE BUFFALO CASE 

had depended for superintending building and refining, the 
withdrawal of Wilson, with whom the enterprise had origi- 
nated and on which it had staked its hopes of finding a ready 
market, and the series of suits for infringement of patents, 
suits which cost Matthews thousands of dollars as well as 
much embarrassment and delay, were troubles brought on 
him, so he believed, as the result of a deliberate attempt on 
the part of the Vacuum Oil Company to make good C. M. 
Everest's threat to do all in his power to ruin the Buffalo 
Lubricating Works, and, in the spring of 1883, he brought 
a civil suit against the Everests for $100,000. While Matthews 
was working up his case he learned that Miller had returned 
from California, that he had left the Everests because he 
claimed they had "not treated him right," and that he was 
idle in Rochester. Miller seems to have left California chiefly 
because he had gotten it into his head that the information 
he had about the measures the Vacuum had taken to prevent 
the Buffalo Works carrying on their business was valuable. 
H. B. Everest testified that Miller once said to him after he 
was settled in California: "Mr. Everest, you have always been 
kind to me, and I shall do nothing to injure you, but I am 
going to bust the Standard." I said: "Al, how will you go to 
work to do that?" "More ways than one," he said; "they can't 
afford to let me loose," he said. "Sha'n't be bought off, either, 
unless I get something for it. It will cost them more than twenty- 
five or fifty thousand dollars before they get through with 
me." I said : "Al, I think you can make more money raising 
fruit in California than you can fighting the Standard." This 
conversation was held immediately after the Vacuum had paid 
Miller $1,000, in addition to the salary of $1,500 they gave 
him, and for no apparent purpose except to keep him quiet. 
When Matthews learned of Miller's return he asked him 
to come to Buffalo, and evidently got from him then, for the 
first time, the story of the pressure the Everests had brought 

[99] 



THE HISTORY OF THE STANDARD OIL COMPANY 

to bear on him to leave the Buffalo Lubricating Works, the 
"fixing" of the still at their advice so that something would 
"smash," the transfer of his property, his two years of semi- 
idleness on $1,500 a year and a bonus of $1,000, paid for a 
reason which can only be surmised, and his final breaking in 
California, because, as he claimed, he saw no settled employ- 
ment in view and no prospect of the Everests doing more for 
him than they were, and, as they claimed, because he believed 
he could get a big sum from the Standard to keep silent. To all 
of this Miller made deposition in July, 1884. 

The first civil suit was brought to trial early in March, 
1885, and it resulted in the jury giving a verdict of $20,000 
to Matthews for damages. The court set the sum aside, claim- 
ing that they had proved only $4,000 in damages and that he 
would not sustain an award of punitive damages. Matthews's 
counsel now obtained a stay of proceedings and finally a 
new trial. Now about this time Matthews secured evidence 
which emboldened him to give his suit a much wider 
range than he had at first intended. This was the testimony 
of the lawyer Truesdale, quoted above, that in his office 
Everest had suggested that Miller "arrange the machinery 
so that it would bust up or smash up." The explosion 
of June 15 was immediately construed as the result of 
this counsel. On the strength of this evidence Matthews insti- 
tuted a second civil suit for damages of $250,000 caused by 
conspiracy to blow up the works of the Buffalo company, to 
entice away its employees, to bring unfounded suits against 
it, and to slander the company's product, and he added 
to the original defendants the three other directors of the 
Vacuum Works H. H. Rogers, J. D. Archbold and 
Ambrose McGregor and the Standard Oil Company of 
New York, the Acme Oil Company of New York and 
the Vacuum Oil Company. Matthews seems to have argued 
that, as Rogers, Archbold and McGregor were directors with 

[too] 



THE BUFFALO CASE 

the Eve rests in the Vacuum Oil Company, they had probably 
been consulted by the Everests concerning Miller, and could be 
included in the conspiracy, and, as the Vacuum, Standard Oil 
Company and Acme Oil Company were all concerns in the 
Standard Oil Trust, they, too, could be included. He also went 
before the Grand Jury of Erie County in opposition to the 
advice of his counsel and secured there an indictment of 
H. H. Rogers, J. D. Archbold, Ambrose McGregor and 
the two Everests for criminal conspiracy. The defendants 
succeeded in getting the indictment set aside the first time, 
but Matthews re-presented the case, and a second indictment 
was found of the same persons. It should be noted that Mr. 
McGregor was indicted only because he was a director of 
the Vacuum Works, his name not being mentioned in the 
evidence presented to the Grand Jury. 

An indictment for conspiracy of three men of such promi- 
nence as Mr. Rogers, Mr. Archbold and Mr. McGregor 
riveted the attention of the whole country on the coming trial. 
It was apparent from the first that the Standard meant to put 
up a big fight to have the indictment quashed. They had, 
indeed, set a strong machinery at work immediately to get 
evidence on which to bring a counter charge of conspiracy; 
that is, that Matthews's intention in starting the Buffalo Lubri- 
cating Works was never to do business, but to force the Stand- 
ard to buy him out at a big price. They at once set a detective 
to work on the case, one item of his instructions reading: "We 
have reason to believe that the suit is brought for the purpose 
of forcing the Standard to purchase the works of the Buffalo 
Lubricating Company, and Matthews has made certain state- 
ments to that effect; would like reports of any statements or 
admissions by him in relation to his objects in these suits." 
Under the direction of this detective, a man employed in 
Matthews's works for some months made daily reports of what 
he saw and heard there, copies of which were forwarded to 

[101] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the Standard office in New York. A detective was also put 
on Miller's track. Miller was now employed in a refinery in 
Corry, Pennsylvania, and here he was for a long time under 
espionage. The chief expression obtained from him was by 
luring him into a saloon one Sunday afternoon and getting 
him half drunk. While in this condition, the saloon-keeper 

testified, he said the Buffalo suit was a humbug, but there 

was money in it and that they (he and the persons who were 
drinking with him) might as well make it as anybody. 

It was on May 2, 1886, that the trial began. The array of 
wealth and legal learning in the Buffalo court-room during 
the fourteen days' case set not only the town, but the country 
agape. There were not only the Standard men indicted for 
conspiracy H. H. Rogers, J. D. Archbold, Ambrose Mc- 
Gregor but Mr. Rockefeller himself was there, quiet, 
steady, watchful. The hostile said the accused and their counsel 
were disdainful of the proceedings nobody charged Mr. 
Rockefeller with disdain. With him were other strong men 
of the concern, William Rockefeller, Daniel O'Day, J. P. 
Dudley. There was a great array of legal learning five emi- 
nent lawyers Wilson S. Bissell, a former law partner of ex- 
President Cleveland; W. F. Cogswell, of Rochester, counted 
then one of the ablest lawyers of the state; Theodore Bacon 
and F. G. Outerb ridge, both of Rochester; Daniel Lockwood, 
famous in politics as well as law; and, of course, S. C. T. 
Dodd. This for the accused. For the people was the district- 
attorney of Erie County, George T. Quinby, with one assist- 
ant. For fourteen days witnesses were examined, and the above 
story was dragged from them by dint of questioning and cross- 
questioning. On May 10 the testimony for the prosecution 
ended, and the "people rested." The Standard lawyers imme- 
diately applied for the acquittal of Mr. Rogers, Mr. Arch- 
bold and Mr. McGregor, on the ground that no fact or cir- 
cumstance had been proved that connected them in the slightest 

[ 102] 



THE BUFFALO CASE 

degree with the charge of conspiracy to lure Miller away 
or to destroy the Buffalo Works. The district-attorney com- 
bated the proposition vigorously. These gentlemen, he con- 
tended, owned three-fourths of the Vacuum Works; they were 
always present at directors' meetings; it was a fair presump- 
tion that they knew what was done to persuade Miller to leave 
the Buffalo Works; they must have known the moneys paid 
him while he was doing little work. Mr. Rogers had certainly 
threatened Matthews that he would carry up the patent suits 
until the Buffalo Works got enough of it. Judge Haight, how- 
ever, advised the jury to acquit Mr. Rogers, Mr. Archbold 
and Mr. McGregor. "The indictment charges a conspiracy," 
the judge said. "It also charges certain overt acts. One of 
the acts charged in the indictment is the enticing away from 
the Buffalo company of a servant. Another of the acts alleged 
is an attempt to blow up or destroy the Buffalo Works, and 
another act that of bringing false suits against the corpo- 
ration. So far as the agreement or combination to entice 
away a servant from the Buffalo company is concerned, 
I have not been able to recall any evidence which shows 
that either of these three defendants ever knew of it, ever 
heard of it, or ever took any part in it at all. So far as 
the charge of an attempt to blow up the Buffalo Works is 
concerned, I have been unable to recall any evidence that 
has been given in which either of these three defendants ever 
knew of it, ever heard of it, ever advised it, or ever took any 
part in it whatever. The only thing about which I have had 
any doubt was in reference to the maintaining of actions which 
have been brought upon patent rights which were formerly 
owned by the Everests, and by the Everests transferred to the 
Vacuum Oil Company, and it appears that two suits were 
brought upon patents, and that there was another suit, a third 
one, in reference to a trade-mark. It appears from the evidence 
that upon one occasion Mr. Matthews went to New York and 

[ 103] 



THE HISTORY OF THE STANDARD OIL COMPANY 

had a talk with Mr. Rogers, and that his conversation has 
already been discussed and related in your hearing. The query 
in my mind was as to whether or not the inference could not 
be drawn, from this conversation, that Rogers did know of 
the bringing of these actions, acquiesced in their being 
brought, and in that way became a party to them; but, even 
conceding that the actions were brought with his knowledge 
and consent, I am inclined still to think that the evidence is 
hardly sufficient to warrant his conviction, for the reason that 
it does not appear that the actions were brought without proba- 
ble cause; in other words, the bringing of an action and being 
defeated in the action is not of itself sufficient to authorise a 
jury to say that it was a false action. That standing alone is 
not sufficient to authorise a jury to say that it is a false action, 
but there must be shown in addition to that that there was a 
want of probable cause; in other words, that the party bring- 
ing the action knew and understood beforehand that he had 
no good cause of action. ... I am inclined to the opinion 
that the evidence would not warrant his conviction upon that 
ground." 

The acquittal of the three Standard gentlemen was followed 
by an application for the acquittal of the Everests, but the 
case with them was different. It had been proved conclusively 
that they threatened at the start to ruin the new concern, and 
that they had counselled Miller "to arrange the machinery 
so it would bust up or smash up" ; there was a strong presump- 
tion that Miller, acting on this advice, had arranged for the 
explosion of June 15, though, as he claimed, he meant only 
to "give them a scare." The judge denied the application in 
their case, therefore, and the trial went on. The whole force 
of the defence was now thrown to proving that Matthews had 
gone into the Buffalo Lubricating Company merely to sell 
out. His offer to Mr. Brewster in 1882, his talk of making the 
Standard settle, were rehearsed. Two witnesses were pro- 

[104] 



THE BUFFALO CASE 

duced also who told of seeking Matthews in 1885, after the 
criminal suit was brought, and of offering, on the ground that 
they knew the Standard defendants, to attempt to settle the 
affair. Matthews had told these men that if the Standard would 
give him $250,000 for his refinery, he would withdraw the civil 
suit, but that he could not touch the criminal suit, as it was in 
the hands of the district-attorney. The jury was not greatly 
influenced by the evidence produced to show that Matthews 
was a blackmailer. Evidently they concluded that, granting 
that the Everests had cause of complaint against the men for 
using their processes they certainly had no just cause in the 
fact of the three men setting up in business for themselves 
granting that the enterprise was started for blackmailing pur- 
poses and there was no proof offered that it was the Everests 
should have taken their case into the courts not plotted the 
destruction of the refinery by any such underhand methods as 
they employed. Whatever the jury's process of reasoning, how- 
ever, it is certain that on May 16 they brought in a verdict of 
"guilty as charged by the indictment." 

The most strenuous efforts were made to set the verdict 
aside. The judge granted a stay, and an attempt to get a new 
trial was made, but unsuccessfully. The sentence was stayed 
until May, 1888. The statute provided a penalty of one year's 
imprisonment or $250 fine, or both. Efforts were at once made 
to soften the sentence. A petition signed by over forty "lead- 
ing citizens" of Rochester, New York, the home of the Ever- 
ests, was sent to Judge Haight, praying him, on account of 
the "untarnished fidelity and integrity" of the convicted men, 
to make the penalty as light as the court was authorised by 
law to fix. Six of the jurors were induced by Standard agents 
to sign a paper claiming that in their belief the jury in render- 
ing its verdict of guilty did not mean to pronounce the Everests 
guilty of an attempt to blow up or burn the works of the 
Buffalo company, but guilty only of enticing Miller away, and 

[105] 



THE HISTORY OF THE STANDARD OIL COMPANY 

they recommended that the sentence, therefore, be a fine and 
not imprisonment. District- Attorney Quinby offered to prove 
on a hearing for a new trial that the Standard's representatives 
used money in getting these affidavits. The result was that the 
two Everests were each fined $250. This sentence was made 
light, the judge explained, because of the civil suits brought 
to recover damages for the very same acts a person could 
not be punished twice for the same offence. 

The first civil suit referred to above resulted in an award 
by the jury of $20,000 to Matthews. The second civil suit was 
for $250,000, but before it was tried Matthews's business had 
become so involved by all this trouble that in January, 1888, 
it was put into the hands of a receiver. The defendants finally 
offered to settle the civil suits for $85,000. The judge ordered 
the receiver to acept the offer, on the ground that the Everests 
had already been declared guilty of criminal conspiracy and 
had been fined, and that a person could not be punished twice 
for the same offence! 

It was not until June, 1889, that the receiver filed his account 
of the settlement of the affairs of the Buffalo Works. Of the 
$85,000 paid by the Standard, Matthews seems not to have 
gotten a cent. The entire sum went to settle the debts of the 
concern and pay the lawyers. The leading claimants among- 
the lawyers were Thomas Corlett, Edward W. Hatch and 
Adelbert Moot, all of Buffalo. Their claims aggregated 
nearly $35,000. The receiver thought these fees exorbitant, 
and a referee was appointed by the court to take the testimony 
of the claimant as to their services. The testimony was volumi- 
nous, and the upshot was that the referee cut these claims to 
about $22,000. The final account filed by the receiver shows 
that the three gentlemen finally were paid about $15,000. 

The large claims made by the lawyers and certain circum- 
stances of the settlement have led the Standard, in later years, 
to advance a counter charge of conspiracy of much more seri- 

[ 106 ] 



THE BUFFALO CASE 

ous nature than that which they depended on in the trial. 
This new charge makes Matthews's counsel his fellow con- 
spirators, and alleges that at least two of them used important 
official positions to influence the verdict. In the present year 
(1904) the Standard's official organ, the Oil City Derrick, 
published a supplement containing the evidence on which 
this counter charge is based, and editorially accused the writer 
of bias in not using this material in the story of the Buffalo 
case which was published practically as it stands here in 
McClure's Magazine for March, 1904. It is true, as the 
Derrick claims, that through the courtesy of the Standard Oil 
Company this material was placed in the writer's hands be- 
fore the article was published. It was not used because it was 
not thought it established the charge. 

The points brought out in the evidence published by the 
Derrick which are held by the Standard to establish the charge 
of a conspiracy between Matthews and his counsel are the fol- 
lowing: In the first place, they declare it a conspiracy because 
Corlett, who was called to the bench in January, 1884, and 
Hatch, who was called to the bench in January, 1886, were 
both in consultation with their successors after they became 
judges. That this is true there is no doubt whatever. Mr. Moot 
in his full statement of his services made to the referee refers 
again and again to consultations with Corlett and Hatch after 
they had given up the case. Hatch speaks freely in his state- 
ment to the referee of counselling with Quinby and Moot* 
If there was an impropriety in what he did, he certainly 
made no effort to conceal it, nor did the referee, the court, 
or the receiver, to whom this statement was submitted, raise 
any question of impropriety. The counsel which both Judge 
Corlett and Judge Hatch gave Quinby and Moot they 

* The Derrick published in a four-page supplement to the issue of April 23, 
1904, the full text of both statements under the title "More of Tarbell's Tergiversa- 
tions." 

[ 107] 



THE HISTORY OF THE STANDARD OIL COMPANY 

owed Matthews. They had been his counsel for years. They 
were obliged to give up his cases because of their election 
to the bench. They were debarred by their relation to the 
case, of course, from hearing it, but there was no reason 
why their knowledge and experience should not be drawn 
upon to a reasonable degree by the new attorneys. Certainly 
this is a universal practice in law courts. It is difficult to see 
how it could be otherwise. If either judge had used his posi- 
tion to influence his fellow judge who heard the case there 
would be a just criticism, but no such intimation has ever 
been made, to the writer's knowledge. 

The second proof of conspiracy drawn from this testimony 
to the referee is the statements of both Hatch and Moot that 
they had no contracts for compensation and that they knew 
they would receive nothing if they lost. For instance, when 
Moot was examined by the referee he was asked : 

Q. Did you have any contract or agreement as to how you should be compensated ? 

A. Not the slightest. I never had such a contract in my life, except that I should 
be liberally paid if I succeeded. If I did not succeed, the party being poor, my work 
would be without compensation. . . . 

Q. Did you ever have any conversation with Matthews or with any officer of the 
company with reference to that ? 

A. No, sir. I feel very clear that I never had a conversation with a single member 
of this company about what we should receive for our services, except to this extent: 
Mr. Matthews once said, in referring to or commenting on these litigations, that they 
were like any other independent company, as I very well knew; that if the lawyers could 
not keep them alive with litigation, the Standard would beat them we would not 
get anything. 

Judge Hatch in his statement said: "Matthews and I or 
any one for his company never had any talk with respect to 
compensation for services at the time of their commencement 
or during their rendition. I knew, however, that the payment 
for services was largely contingent upon the success of the 
litigation, and the company was not able to pay much more 

[108] 



THE BUFFALO CASE 

than the actual expenses in the event they failed to succeed, 
and that we would get a very meagre compensation unless 
we succeeded in the actions. I think no conversation was ever 
had except Mr. Matthews stating that if we should succeed 
we should be well paid. I think he mentioned that once or 
twice." 

It is not an unusual thing for lawyers to take cases they 
believe just, knowing that their compensation depends on their 
winning. Many clients with just cases would be deprived of 
counsel if they had to insure a fixed compensation, for not in- 
frequently all that a client has is involved in a suit. The prac- 
tice is so common among reputable lawyers that it certainly 
cannot be regarded as a proof of a conspiracy, unless there is a 
reason to suppose that they have taken a case of whose merits 
they themselves are suspicious. There is absolutely no evidence 
that Matthews's counsel were not convinced from the first that 
they had a strong case. Quinby, the district-attorney who tried 
the criminal case, certainly conducted it with a fire and a logic 
which nothing but conviction could have inspired. Moreover, 
it must be remembered that these attorneys never failed to con- 
vince the juries before whom they appeared of the merits of 
their case. Four juries, two grand juries and two petit juries 
gave unanimous verdicts of conspiracy against the defendants 
in the course of the litigation. A case backed by evidence which 
would convince such diversified bodies of men could hardly 
be called a speculation. Their claims were large, but lawyers 
are not proverbial for the modesty of their charges, and in the 
cases of Hatch and Moot, the two making the largest claims, 
the labour had been very great and had extended over long 
periods, as one can see who will examine the testimony pub- 
lished by the Derrick; and besides, exorbitant charges can 
hardly be construed as a proof of conspiracy. 

This, then, in outline, is the history of the case on which 
are based all charges, so far as the writer knows, that the 

[109] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Standard Oil Company has deliberately destroyed property 
to get rid of rivals. The case is of importance not only as 
showing to what abuses the Standard policy of making it 
hard for a rival to do business will lead men like the Everests, 
but it shows to what lengths a hostile public will go in inter- 
preting the acts of men whom it has come to believe are law- 
less and relentless in pursuing their own ends. The public, 
particularly the oil public, has always been willing to believe 
the worst of the Standard Oil Company. It read into the 
Buffalo case deliberate arson, and charged not only the Ever- 
ests, but the three co-directors, with the overt acts. They re- 
fused to recognise that no evidence of the connection of Mr. 
Rogers, Mr. Archbold and Mr. McGregor with the overt 
acts was offered, but demanded that they be convicted on 
presumption, and when the judge refused to do this they cursed 
him as a traitor. To-day, in spite of the full airing this case 
has had in the courts and investigations, Judge Haight is 
still accused of selling himself to a corporation, and Mr. 
Rogers is accused daily in Montana of having burned a re- 
finery in Buffalo. As a matter of fact, no refinery was burned 
in Buffalo, nor was it ever proved that Mr. Rogers knew any- 
thing of the attempts the Everests made to destroy Matthews's 
business. 



[no] 



CHAPTER THIRTEEN 
THE STANDARD OIL COMPANY AND POLITICS 

OIL MEN CHARGE STANDARD WITH INTRENCHING ITSELF IN STATE AND 
NATIONAL POLITICS ELECTION OF PAYNE TO SENATE IN OHIO IN 1884 
CLAIMED TO ESTABLISH CHARGE OF BRIBERY FULL INVESTIGATION OF 
PAYNE'S ELECTION DENIED BY UNITED STATES SENATE COMMITTEE ON 
ELECTIONS PAYNE HIMSELF DOES NOT DEMAND INVESTIGATION POPU- 
LAR FEELING AGAINST STANDARD IS AGGRAVATED THE BILLINGSLEY 
BILL IN THE PENNSYLVANIA LEGISLATURE A FORCE BILL DIRECTED 
AGAINST THE STANDARD OIL MEN FIGHT HARD FOR IT THE BILL IS 
DEFEATED STANDARD CHARGED WITH USING MONEY AGAINST IT A 
GROWING DEMAND FOR FULL KNOWLEDGE OF THE STANDARD A RESULT 
OF THESE SPECIFIC CASES. 



1 



^ HE cases described in the last two chapters naturally 
aroused intense interest in the Oil Regions. The two 
in Ohio demonstrated afresh the chief grievances 
which the oil men had against the Standard Oil 
Company since 1872 that they were securing rebates on their 
own shipments and drawbacks on those of their competitors. 
The Buffalo case demonstrated that when their ordinary 
advantages failed to get a rival out of the way they winked 
at methods which a jury called criminal. It was fresh proof 
of what the oil men had always claimed, that the Standard 
Oil Company was a conspiracy! At the same time that these 
cases were arousing their indignation anew there occurred 
in Ohio an affair which gave them new evidence of their 
old charge that the Standard was steadily intrenching itself 

[in] 



THE HISTORY OF THE STANDARD OIL COMPANY 

in state and national politics in order to direct the course of 
legislation to suit itself. There had been many evidences of 
this, satisfactory enough to the initiated. There was no doubt 
that the investigation of 1876 and the first bill to regulate in- 
terstate commerce introduced at that time had been squelched 
largely through the efforts of two members of Congress, one 
of them directly and the other indirectly interested in the 
Standard these were J. N. Camden of West Virginia, head 
of the Camden Consolidated Oil Company, now one of the 
constituent companies of the Standard Oil Trust, and H. B. 
Payne of Ohio, the father of the treasurer of the Standard, 
Oliver H. Payne. It had certainly used its influence to oppose 
the free pipe-line bill which the independent oil men had 
been fighting for since the early days of the industry. In 
1878 and 1879, during the prosecution of the suits against 
the railroads and the Standard by the Petroleum Producers' 
Union, there had been incessant charge of the use of political 
influence to secure delay. It was a matter of constant com- 
ment in Ohio, New York and Pennsylvania that the Stand- 
ard was active in all elections, and that it "stood in" with 
every ambitious young politician, that rarely did an able 
young lawyer get into office who was not retained by the 
Standard. The company seems to have taken a hand in poli- 
tics even before the days of the South Improvement Com- 
pany, for Mr. Payne once said in the United States Senate 
that when he was a candidate for the House of Representa- 
tives in 1871, "no association, no combination" in his district 
did more to bring about his defeat or spent so much money 
to accomplish it as the Standard Oil Company! * 

But all of the examples they quoted were more or less poor 
in evidence. Of no one of them perhaps could they have 
produced satisfactory proof. Now, however, simultaneously 
with the three cases outlined in the last two chapters there 

* Congressional Globe, September 12, 1888, pages 8520-8604. 
[112] 



THE STANDARD OIL COMPANY AND POLITICS 

came a case of bribery in an election which they held estab- 
lished their charge. The case was the familiar one of the 
election of H. B. Payne of Ohio to the United States Senate in 
January, 1884. Mr. Payne was at the time of his election the 
aristocrat par excellence of Cleveland, Ohio. He had birth 
and education, distinction of manner and mind. His fine old 
mansion still remains one of the most distinguished houses 
in a city of beautiful homes. He had been active in Demo- 
cratic politics for many years a member of the state Senate 
and a member of Congress, and he had been mentioned as the 
Democratic candidate for the presidency in 1880, receiving 
eighty-one votes on the first ballot. At the time of his election 
to the Senate he was a man seventy-four years old. Now Mr. 
Payne's son, Oliver H. Payne, was one of the thirteen orig- 
inal members of the South Improvement Company, and one 
of the rare Cleveland refiners who had a strong enough 
stomach to go into the Standard Oil Company when it swept 
up the oil trade of Cleveland in 1872, and he had gathered 
in his share of the spoils of that raid. Oliver Payne was 
proud of his father, and it was well known that he wanted 
to see him in the Senate of the United States, but there had 
been no movement to nominate him, and in 1883 he seems to 
have made up his mind to see what he could do. 

A United States Senator was to be elected in Ohio in 
November. In October a new State Legislature was chosen, 
and the Democratic members were instructed for one of two 
candidates for the Senate, George H. Pendleton or General 
Durbin Ward, both men of prominence and long service in 
the public life of the state. Mr. Payne's name was not men- 
tioned in the canvass. Nevertheless, hardly had the Legisla- 
ture convened when there sprang up at the Neil House in 
Columbus an extraordinary Payne boom. Its backers were 
Senator Payne's own son, Oliver H. Payne, at that time treas- 
urer of the Standard Oil Company, and Colonel Thompson, 

[113] 



THE HISTORY OF THE STANDARD OIL COMPANY 

a prominent personage in the same concern. Their lieuten- 
ants were also members of the company in one capacity or 
another. Large sums of money were alleged to have been cir- 
culated. There was a rumour that Oliver Payne said the 
election cost him $100,000. It was claimed that it could be 
proved that a check for $65,000 had been cashed in Cleve- 
land by one of the men most prominent in the Payne boom, 
and that the whole sum had been spent in Columbus. 

A perfect uproar of indignation followed the announce- 
ment of Mr. Payne's choice. All over the state the Standard 
Oil Company was charged with the election. The Demo- 
cratic press was particularly bitter: 

Said the Butler County Democrat: "It was simply a question whether Pendleton, 
Ward, Thurman, Converse, Follett, Geddes, or any other capable and honest Demo- 
crat, should receive the compliments of a seat in the Senate, or that the Standard Oil 
Company should buy the place for Henry B. Payne. It was an honest and divided 
Democracy against a hydra-headed dictatorship of rich men on whose banner was 
inscribed 'Money Talks.'" 

The Carroll County Chronicle in commenting on the election said: "It is a great 
mistake to suppose Standard Oil has captured the Democratic party of Ohio. It 
may have captured a score or two of men elected to the Legislature, but they are not 
the Democracy of Ohio by a long shot. When the British got General Benedict Arnold 
they imagined they had captured the United States army, but it was a mistake." 

"The monopoly of the Standard Oil Company must be destroyed," declared the 
Columbus Times. "Its intrusion into political circles must be prevented. There 
must be no later acceptance of this outrage. Political purity and perpetuity permit no 
complacency. These pernicious foreign elements must be eradicated, and until they 
are no Democrat will enter the capitol of Ohio or of the nation. The rottenness that 
uncovered itself last night has not its confines in Ohio." 

The comments were not confined to papers of the state. 
The New York Sun, under the head "Was Payne's Election 
Bought?" said: 

"The subjoined communication from a source which we always respect is worthy 
of more attention than is usually bestowed upon the animated expressions of those 
whose preferences have not been realised : 

"' It is now believed, and I believe, that the Standard Oil Company recently bought 

[H4] 



THE STANDARD OIL COMPANY AND POLITICS 

with money Ohio's seat in the Senate of the United States for Mr. Payne. Now, can 
the social respectability of a man make such a crime respectable ? Or is there to be 
one standard of political morality for Republicans and another for Democrats ? Or 
are Democrats expected to condemn corruption only when practised by Republicans, 
and to condone, defend, and cover it up when practised by Democrats, or when it 
is found only in the Democratic party ? In my opinion there is no danger so threatening 
to free institutions as the sale and purchase of political power, and nothing more to 
be condemned.' " 

Although these charges were kept up for two years neither 
the Standard Oil Company, Mr. Payne, nor the Legislature 
which had elected him noticed them. The scandal became 
one of the issues of the next campaign and was instrumental 
in making the next Legislature of Ohio Republican. As soon 
as the new Legislature convened at the opening of 1886 an 
investigation of the Payne case was ordered. Some fifty-five 
witnesses were examined, and the resulting testimony turned 
over to the Senate of the United States for its examination. 
The testimony did not prove the charge of bribery, the Ohio 
Legislature said, but it was of such a nature as to require the 
Senate's attention. The matter went to the Senate Committee 
on Elections, and in July, 1886, a majority reported against 
the further investigation asked by the state of Ohio.* Against 
this decision two members of the committee, Senators Hoar 
and Frye, protested: 

" Is the Senate to deny to the people of a great state, speaking through their Legisla- 
ture and their representative citizens, the only opportunity for a hearing of this momen- 
tous case which can exist under the constitution ? We have not prejudged the case, nor 
do we mean to prejudge it. We sincerely trust that the investigation, which is as much 
demanded for the honour of the sitting members as for that of the Senate or the state 
of Ohio, may result in vindicating his title to his seat and the good name of the Legis- 
lature that elected him. 

* Report Number 1490, United States Senate, Forty-ninth Congress. This report, 
and Miscellaneous Documents Number 106, United States Senate, Forty-ninth Con- 
gress, 1886, contain the evidence of bribery collected by the Ohio Legislature and 
the majority and minority reports of the committee. 



THE HISTORY OF THE STANDARD OIL COMPANY 

"How can a question of bribery ever be raised or ever be investigated if the argu- 
ments against this investigation prevail ? You do not suppose that the men who bribe 
or the men who are bribed will volunteer to furnish evidence against themselves ? 
You do not expect that impartial and unimpeachable witnesses will be present at the 
transaction ? Ordinarily, of course, if a claim like this be brought to the attention of 
the Senate from a respectable quarter that a title to a seat here was obtained by 
corrupt means, the Senator concerned will hasten to demand an investigation. But 
that is wholly within his own discretion and does not affect the due mode of procedure 
by the Senate. From the nature of the case, the process of the Senate must compel 
the persons who conducted the canvass and the persons who made the election to 
appear and disclose what they know; and until that process issue, you must act 
upon such information only as is enough to cause inquiry in the ordinary affairs 
of life. 

"The question now is not whether the case is proved; it is only whether it shall be 
inquired into. That has never yet been done. It cannot be done until the Senate 
issues its process. No unwilling witness has ever yet been compelled to testify; no 
process has gone out which could cross state lines. The Senate is now to determine, 
as the law of the present case and as the precedent for all future cases, as to the great 
crime of bribery a crime which poisons the waters of republican liberty in the foun- 
tain that the circumstances which here appear are not enough to demand its atten- 
tion." 

For three oppressive July days the Senate gave almost all 
of its time to a bitter debate on the report. The name of the 
Standard was freely used. "The Senate of the United States," 
said Senator Frye, "when the question comes before it as this 
has been presented, whether or not the great Standard Oil 
Company, the greatest monopoly to-day in the United States 
of America, a power which makes itself felt in every inch 
of territory in this whole republic, a power which controls 
business, railroads, men and things, shall also control here; 
whether that great body has put its hands upon a legislative 
body and undertaken to control, has controlled, and has 
elected a member of the United States Senate, that Senate, 
I say, cannot afford to sit silent and let not its voice be heard 
in an inquiry as to the truth of the allegation." The majority 
report was adopted, however, by a vote of forty-four to seven- 

[116] 



THE STANDARD OIL COMPANY AND POLITICS 

teen. "The most unfortunate fact in the history of the Senate," 
said Senator Hoar.* 

For the time the matter rested, but only for the time. The 
failure to investigate rather intensified the convictions that 
Payne's seat was bought by the Standard Oil Company. In 
1887 Mr. Payne vo'ted against the Interstate Commerce Bill. 
"That is why he was put in the Senate," people said bitterly. 
The feeling became still more intense in 1888. The question 
of trusts was before Congress. The Republicans had come 
out with an anti-trust plank in their platform; the Demo- 
crats, in response to Mr. Cleveland's message, were declar- 
ing the tariff the greatest trust-builder in existence, and call- 
ing on their opponents for reform there if they were sincere 
in their anti-trust attitude. In this agitation the Standard Oil 
Company undoubtedly exerted its influence against all trust 
investigation and legislation. The charge became general that 
they were helping the Democrats. This is why they wanted 
a Democratic Senate. In September, 1888, when a phase of 
the question was before the Senate, Mr. Hoar, with his 
genius for asking far-reaching questions, said one day: "Is 
there a Standard Oil Trust in this country or not? ... If 
there be such a trust, is it represented in the Cabinet at 
this moment? Is it represented in the Senate? Is it repre- 
sented in the councils of any important political party in the 
country?" 

It was the first time that Mr. Payne had been sufficiently 
aroused to reply. "There is nothing whatever to sustain the 
insinuation which the honourable Senator conveys. I make 
the declaration now for the first time, and it will be the last 
time I shall ever take notice of it. The Standard Oil Com- 
pany is a very remarkable and wonderful institution. It has 
accomplished within the last twenty years of commercial en- 
terprise what no other company or association of modern times 

* Congressional Globe, July, 1886. 



THE HISTORY OF THE STANDARD OIL COMPANY 

has accomplished, but, Mr. President, I never had a dollar's 
interest in that company. I never owned a dollar of its stock; 
I never rendered it any service, and that company never ren- 
dered me any service. On the contrary, when a candidate 
for the other House in 1871, no institution, no association, no 
combination in my district did more to bring about my defeat 
and went to so large an expense in money to accomplish it 
as the Standard Oil Company. . . . 

"As a matter of fact, nine-tenths of the stockholders of 
the Standard Oil Company are now and always have been 
Republicans. Within my knowledge there are but two Demo- 
crats who have ever been stockholders in that company." 
Farther on Mr. Payne interpolated this irrelevant remark: 
"Not only are the majority Republicans, but they are very 
liberal in their philanthropic contributions to charities and 
benevolent works, and I venture the assertion that two gen- 
tlemen in that company have donated more money for philan- 
thropic and for benevolent purposes than all the Republican 
members of the Senate put together." 

Mr. Payne's denial was not sufficient to silence Senator 
Hoar. He returned to the attack. It was a "general public 
belief," he declared, that the Standard Oil Company was 
represented in the Cabinet and Senate. He called attention 
to the newspapers' charge to that effect, and declared that he 
had received many personal letters charging that the Stand- 
ard was helping the Democrats. He asked for information 
when he asked his question; he made no charges. Mr. Whit- 
ney was the member of Mr. Cleveland's Cabinet to whom 
Senator Hoar referred, and he promptly, in a public letter, 
disclaimed all connection with the Standard Oil Company. 
Mr. Hoar said he "cheerfully accepted" the denial. As for 
Mr. Payne, he was not satisfied, and when Mr. Payne in 
heat replied to him, Senator Hoar closed his lips forever in 
a burst of biting sarcasm: 

[118] 



THE STANDARD OIL COMPANY AND POLITICS 

" A Senator who, when the Governor of his state, when both branches of the Legis- 
lature of his state complained to us that a seat in the United States Senate had been 
bought, when the other Senator from the state rose and told us that that was the 
belief of a very large majority of the people of Ohio without distinction of party, failed 
to rise in his place and ask for the investigation which would have put an end to those 
charges if they had been unfounded, sheltering himself behind the technicalities which 
were found by some gentlemen on both sides of this chamber, that the investigation 
ought not to be made, but who could have had it by the slightest request on his own 
part and then remained dumb, I think should forever after hold his peace. ... I 
think few men ever sat in the Senate who would refrain from demanding an inves- 
tigation under such circumstances, even if it were not required by the Senate itself. 
. . . There were Senators who thought that the admission of that Senator, the 
continuance of that Senator in his seat without investigation, indicated the low-water 
mark of the Senate of the United States itself." * 

And there the Payne case rested. It was never proved that 
the Standard Oil Company had contributed a cent to his 
election. It was never proved that his seat was bought, but 
the fact that, in the face of such serious charges, rehearsed 
constantly for four years, neither Mr. Payne nor the Standard 
Oil Company had done aught but keep quiet, convinced a 
large part of the country that the suspicion under which they 
rested was less damaging than the truth would be. In the 
minds of great numbers this silence was a confession of guilt. 
The Payne case certainly aggravated greatly the popular 
feeling that the Standard Oil Company was using the legis- 
lative bodies of the country in its own interest. 

This feeling was intensified in 1887 by a terrific battle 
between the oil producers and Standard forces in the Legis- 
lature of the state of Pennsylvania. Since the compromise 
of 1880 the body of the oil producers had been taking no 
concerted action against the Standard. But their inaction was 
not due to reconciliation to Standard domination. As a mat- 
ter of fact they were almost as bitter in 1886 as they had been 
in 1878, when they formed the Union which for two years 

* Congressional Globe, September, 1886, pages 8520-8604. 



THE HISTORY OF THE STANDARD OIL COMPANY 

fought so good a fight. The specific complaint of the oil 
producers at this time was that they were being "robbed" by 
the National Transit Company the big Standard pipe-line 
consolidation, which had secured by the series of manoeuvres 
already outlined the monopoly of handling and transporting 
crude oil. If the oil producers had been making money at 
this time it is quite possible that they would have paid little 
attention to the profits of the National Transit Company. 
The service they got was about as perfect as any human 
machine could render, and they would probably have recog- 
nised this and been willing to pay high if they too had been 
prosperous. But the condition of the oil producer in these 
days was in glaring contrast to that of Mr. Rockefeller. 
They had piled up oil until there were in 1886 over 33,- 
000,000 barrels on hand. Naturally this had driven prices 
down. The average price for the last years had been under 
a dollar a barrel. In 1886 it fell down to 71^, and everyone 
said it must go lower. Embittered and discouraged, the pro- 
ducers fell to comparing what they were getting out of the 
business with what Mr. Rockefeller was getting. It was not 
a consoling showing. The Standard Oil Trust had from its 
organisation in 1882 paid dividends on its $70,000,000 capital. 
In spite of the extraordinary outlay for tank-building and 
seaboard pipe-lines made from 1881 to 1884 $30,000,000 it 
is computed to have been the trust paid 10^2 per cent, in 
1885, ten per cent, in 1886, and Standard Oil stock stood 
near 200! In contrast, the oil producer, in 1886, is estimated 
to have lost about six per cent, on his expenditures, and oil 
property depreciated one-third in value.* 

Something was wrong. They could not charge the Stand- 
ard with the price of oil. As long as over 33,000,000 barrels 
in stock lay on the market it could not rise. But they could 

* See Appendix, Number 49. A statement from an oil-producer's stand-point for 
1886. 

[120] 




JOHN D. ROCKEFELLER 
By Eastman Johnson 



THE STANDARD OIL COMPANY AND POLITICS 
and did complain of what it cost them to handle this oil, of 
storage and carrying charges, of the deductions for shrink- 
age and for loss by fire. If the Standard had not forced out 
every competing line, there would have been sufficient com- 
petition to have lowered these items which at the present 
prices soon ate up the value of oil. And they fell to rehears- 
ing the raids by which the various transporting companies 
which had fought themselves into independent positions had 
been forced into combination, their chief grievances being 
naturally the affair of the Tidewater. In this state of mind, 
and incited by the Buffalo, the Payne, and the Rice cases, it 
was natural enough that when suddenly, at the opening of 
1887, a bill evidently intended to strike a blow at the Standard 
was introduced into the Legislature of Pennsylvania, the oil 
producers rushed pell-mell to support it. The opening sen- 
tence was enough for them. It was "An act to punish cor- 
porations." * This was what they had always sought, some 
way to punish Mr. Rockefeller for what they believed to 
be a conspiracy against their interests. The way in which the 
Billingsley Bill, as it was called from the name of its father, 
proposed to punish the Standard was to make it a criminal 
offence to charge in excess of certain rates it fixed ten cents 
a barrel for gathering and delivering oil to storing points 
(the current rate was twenty cents) ; one-sixtieth of one per 
cent, per barrel a day for storage, with no storage charge for 
the first thirty days (one-half of one per cent, was the current 
rate) ; one-half of one per cent, shrinkage, instead of three 
per cent. Besides, the bill required the Standard to go to any 
well on application of the owner, it made the company liable 
for damage, and it required it to deliver oil of like kind and 
quality as that received. 

The enthusiasm with which the bill was greeted was 
cooled a little by the announcement that as it stood it was 

* See Appendix, Number 50. The Billingsley Bill. 
[121] 



THE HISTORY OF THE STANDARD OIL COMPANY 

unconstitutional acts to punish being forbidden by the con- 
stitution of the state as well as by an immediate realisation 
that the prices fixed for services were in nearly every case 
less than cost. The bill was immediately amended. When it 
came back it was at once apparent that, in spite of this pre- 
liminary hitch, a tremendous fight to carry it was being 
organised by the oil men. Then determination to push it 
grew in proportion to the Standard opposition. The Stand- 
ard, indeed, realised immediately that unless a hard fight 
was made the bill would go through by popular clamour, 
and they turned their big lawyer, Mr. Dodd, against it, set 
their newspapers the Oil City Derrick, Titusville Herald 
and Bradford Era, all of them by this time subsidised organs 
to argue against it, and sent Mr. Scheide, one of the ablest 
of their pipe-line managers, to present their side at Harris- 
burg. They also secured the services of a well-known young 
Republican member of the Legislature, Wallace Delemater, 
of Crawford County, one of the counties in the Oil Regions, 
to organise an opposition to the bill in the Legislature. * 
In February a hearing was given the bill, Mr. Dodd pre- 
senting the Standard side. It is rare that so able a lawyer 
has to fight so weak a measure, and Mr. Dodd riddled it 
easily. As a matter of fact the Billingsley Bill was as bad 
as it could be. It was characterised by all sorts of constitu- 
tional, legal and practical difficulties. The pipe-line business 
was an interstate business, and this bill attempted to regu- 
late it which evidently it could not do. It could, of course, 
regulate Pennsylvania oil, but, by so doing, it created two 
classes of oil in the lines, a situation which would have been 
confusing and undesirable. It was evidently intended that the 
prices it fixed should apply to the 30,000,000 barrels of stocks 
on hand, but these were held under contract, and could not 
be touched. There were many other objections to the bill. 
Even Judge Heydrick, the able lawyer whom the oil men 

[122] 



THE STANDARD OIL COMPANY AND POLITICS 

had engaged to defend it, was obliged to apologise for it at 
every point, and its most valiant supporter, Senator Lewis 
Emery, Jr., said frankly that the framer of the bill knew 
too little of the oil men's needs to be able to make a bill, 
and that this would have to be thoroughly revised. > 

In spite of all the reasonable, indeed overwhelming, objec- 
tions to the Billingsley Bill, the oil men clung to it. Mass- 
meetings were held nightly from one end of the region to 
the other, petitions flooded the Legislature, a big delegation 
was kept constantly in Harrisburg lobbying for it. The sup- 
port was intemperate, bitter, unreasonable. In March it was 
intensified by the knowledge that a self-constituted committee 
of leading oil men were in New York treating with the 
Standard in regard to certain of the abuses the bill aimed 
to cure. These men felt that the Standard was unjust in its 
dealings with the oil men, excessive in its charges, and 
arbitrary in its service, but they felt that the confusion the 
Billingsley Bill would bring into the business more than off- 
set the grievances it righted, and they had gone to Mr. 
Rockefeller to see if matters could not be compromised. 
Now nothing could have more effectually added to the war- 
like spirit abroad in the Oil Regions at that moment than 
the suggestion of a compromise. Their cause was being 
"sold." It was "compounding with felony," and when, after 
a three days' sitting in New York, the committee came home 
with an agreement from the National Transit Company, 
making certain concessions as two per cent, instead of three 
for shrinkage, twenty-five cents a day per 1,000 barrels, in- 
stead of forty, for storage, and with a promise that certain 
other points should be settled by joint committees two of 
the leading members were hung in effigy in Titusville! 

In April the final vote on the Billingsley Bill came. Har- 
risburg was alive with oil men determined that the bill 
should go through. The Standard was present, and if it had 

[ 123] 



THE HISTORY OF THE STANDARD OIL COMPANY 

less of a claque, it had more of the "sinews of war." Indeed, 
it was charged later by Senator Lewis Emery that the leader 
of the Standard forces in the Senate received $65,000 for his 
services a charge which, so far as the writer knows, has never 
been either proved or disproved. The bill came to a vote after 
a passionate wrangle. It was defeated eighteen to twenty- 
five. A storm of violent protest from the oil men's repre- 
sentatives followed the defeat, and the lobbies, the hotels, 
and even the streets of Harrisburg were scenes in the next 
hours of bitter quarrels and excited gatherings. When finally 
the oil men withdrew from the town it was with the under- 
standing that they were to meet two weeks later in Oil City 
to organise a new protective association. The protests and 
resolutions passed at their final gatherings foreshadowed no 
intention of reviving the Billingsley Bill. Indeed, the bill 
itself had received scant attention from them in the violent 
campaign over its passage which they had carried on for 
three months. All their passion had been expended on the 
Standard. This was a question of whether the Standard Oil 
Company ruled the Legislature of Pennsylvania or whether 
the people ruled it so declared the oil men ; and when their 
bill was defeated they charged it was by bribery, and hence- 
forth quoted the defeat of the Billingsley Bill along with 
the Payne case as proof of the corrupt power of the Standard 
Oil Company in politics. Their outbreak, for it was nothing 
else, was the culmination of their indignation and resent- 
ment at fifteen years of unfair play on the part of the Stand- 
ard Oil Company, of resentment at the South Improvement 
Company, at forced combination of refineries and pipe-lines, 
at railroad rebates and drawbacks, at the immediate ship- 
ment outrages, at the Tidewater defeat. It was revolt against 
the incessant pressure of Mr. Rockefeller's pitiless steel grip. 
It was bitterness at the idea that it was he who was reaping 
all the profit of a business in which they were taking the 

[124] 



THE STANDARD OIL COMPANY AND POLITICS 

chief risks, and if things went on as they were that it was he 
who always would. Out of their burst of passion was to grow 
a solid determined effort, but for the moment they were de- 
feated, and the defeat, which really was merited, was another 
added to their series of just and unjust complaints against Mr. 
Rockefeller. 

All of these bitter and spectacular struggles aroused intense 
public interest. The debate on the Interstate Commerce Bill 
was contemporaneous with them the bill was passed in 
1887, and had its effect. The feeling grew all over the coun- 
try that whatever the merits of these specific cases, there was 
danger in the mysterious organisation by which such immense 
fortunes and such excessive power could be built up on one 
side of an industry, while another side steadily lost money 
and power. A new trial was coming to Mr. Rockefeller, one 
much more serious than any trial for overt acts, for the very 
nature of his great creation was to be in question. It was 
a hard trial, for all John D. Rockefeller asked of the 
world by the year 1887 was to be let alone. He had com- 
pleted one of the most perfect business organisations the 
world has ever seen, an organisation which handled prac- 
tically all of a great natural product. His factories were the 
most perfect and were managed with the strictest economy. 
He owned outright the pipe-lines which transported the 
crude oil. His knowledge of the consuming power of the 
world was accurate, and he kept his output strictly within 
its limit. At the same time the great marketing machinery 
he had put in operation carried on an aggressive campaign 
for new markets. In China, Africa, South America, as well 
as in remote parts of Europe and the United States, Standard 
agents carried refined oil. The Standard Oil Company had 
been organised to do business, and if ever a company did 
business it was this one. From Mr. Rockefeller himself, sit- 
ting all day in his den, hidden from everybody but the 

[125] 



THE HISTORY OF THE STANDARD OIL COMPANY 

remarkable body of directors and heads of departments 
which he had "acquired" as he wiped up one refinery and 
one pipe-line after another, to the humblest clerk in the office 
of the most remote marketing agency, everybody worked. 
There was not a lazy bone in the organisation, nor an in- 
competent hand, nor a stupid head. It was a machine where 
everybody was kept on his mettle by an extraordinary system 
of competition, where success met immediate recognition, 
where opportunity was wide as the world's craving for a 
good light to cheer its hours of darkness. The machine was 
pervaded and stimulated by the consciousness of its own 
power and prosperity. It was a great thing to belong to an 
organisation which always got what it wanted, and which 
was making money as no business in the country had ever 
made it. 

What more, indeed, could Mr. Rockefeller ask than to be 
let alone? And why not let him alone? He had the ability 
to keep together the wide-spread interests he had acquired 
not only to keep them together, but to unify and develop them; 
why not let him alone? Many people even in the Oil Re- 
gions were inclined to do so, some because they feared him 
rumour said Mr. Rockefeller was vindictive and never for- 
got opposition; others because they were canny and foresaw 
that they might want his help one day; still others because 
criticism of success is an ungracious business and arouses a 
suspicion that the critic may be envious or bitter. But there 
were a few people, as there always are, whom no cowardice, 
no self-interest, no fear of public opinion could keep quiet, 
and these people insistently urged that the Standard Oil 
Company was a menace to the commerce of the country. We 
have been and are being wronged, they repeated. We have 
a right to do an independent business. Interference to drive 
us out is conspiracy. Let Mr. Rockefeller succeed in the oil 
business and he will attack other industries; he will have 

[126] 



THE STANDARD OIL COMPANY AND POLITICS 

imitators. In fifty years a handful of men will own the 
country. 

Mr. Rockefeller handled his critics with a skill bordering 
on genius. He ignored them. To see them, to answer them, 
called attention to them. He was too busy to answer them. 
"We do not talk much we saw wood." This attitude of 
serene indifference is supremely wise. It belittles the critic 
and it gives the outsider who watches the game a feeling that 
a serenity so high must come from an impregnable position. 
There is no question but many a mouth opened to testify 
against the Standard Oil Company has been closed by Mr. 
Rockefeller's policy of silence. Only the few irreconcilables 
withstood his sphinx-like attitude, and yearly, from the com- 
promising of 1880, these warnings and accusations were 
louder and more fierce. Probably the greatest trial Mr. 
Rockefeller has ever had has come from the persistency with 
which the few malcontents kept him before the public. They 
interfered with two of his great principles "hide the prof- 
its" and "say nothing." It was they who had ruined the South 
Improvement Company; it was they who had indicted him 
for conspiracy and compelled him to compromise in 1880. 
It was they who now, after the splendid pipe-line organisa- 
tion was completed and his market machinery was in order, 
kept up their agitation and their cursing. Their work 
began to tell. The feeling grew that the Standard Oil Com- 
pany, or Trust, as it was by this time generally called, must be 
looked into. Even those who, dazzled by Mr. Rockefeller's 
achievement, were inclined to overlook its ethical side and to 
refuse to consider to what aggregation of power and abuse 
it might lead, began to feel that it would be quite as well 
to have the matter thrashed out, to have it settled once for 
all, whether the thing had been so bad in its making and 
was so dangerous in its tendencies as the "oil-shriekers" pre- 
tended. In the House of Representatives, when the question of 

[127] 



THE HISTORY OF THE STANDARD OIL COMPANY 

ordering an investigation of trusts by the Committee on Manu- 
factures was up in 1887, the liveliest concern was shown as 
to whether the Standard Oil Company, "the most important 
case" of all, would escape. More than one member asked to 
be assured before consenting to the investigation that the 
Standard would be put on the rack. The same interest was 
shown in the Senate of New York State, where an investiga- 
tion was ordered for February, 1888. It was certain indeed 
now that Mr. Rockefeller would not be allowed much longer 
to work in the dark. He was to be dragged into the open, 
much as he might deplore it, to explain what his trust really 
was, to prove to a suspicious and hostile public that he had 
a right to exist. 



[128] 



CHAPTER FOURTEEN 
THE BREAKING UP OF THE TRUST 

EPIDEMIC OF TRUST INVESTIGATION IN 1888 STANDARD INVESTIGATED BY 
NEW YORK STATE SENATE ROCKEFELLER'S REMARKABLE TESTIMONY- 
INQUIRY INTO THE NATURE OF THE MYSTERIOUS STANDARD OIL TRUST 
ORIGINAL STANDARD OIL TRUST AGREEMENT REVEALED INVESTIGA- 
TION OF THE STANDARD BY CONGRESS IN 1888 AS A RESULT OF THE 
UNCOVERING OF THE STANDARD OIL TRUST AGREEMENT ATTORNEY- 
GENERAL WATSON OF OHIO BEGINS AN ACTION IN QUO WARRANTO 
AGAINST THE TRUST MARCUS A. HANNA AND OTHERS TRY TO PER- 
SUADE WATSON NOT TO PRESS THE SUIT WATSON PERSISTS COURT 
FINALLY DECIDES AGAINST STANDARD AND TRUST IS FORCED TO MAKE 
AN APPARENT DISSOLUTION. 



r* "^ HERE was no characteristic of Mr. Rockefeller and 
his great corporation which from the beginning had 
J been more exasperating to the oil world than the se- 
crecy with which operations were conducted. The 
plan of the South Improvement Company had only been re- 
vealed to those who signed an agreement to keep secret all 
transactions they might have with it. The purchase in 1874 and 
1875 by the Standard Oil Company of Lockhart, Frew and 
Company of Pittsburg, of Warden, Frew and Company of 
Philadelphia, and of Charles Pratt and Company of New York 
was so thoroughly concealed that Mr. Rockefeller, five years 
after it occurred, dared make an affidavit that it had never 
occurred ! * Men who entered into running arrangements with 
Mr. Rockefeller were cautioned "not to tell their wives," and 
correspondence between them and the Standard Oil Company 

* See Appendix, Number 44. 
[129] 



THE HISTORY OF THE STANDARD OIL COMPANY 

was carried on under assumed names! Whenever the subject 
of the relations between the various companies came up in 
a lawsuit or an investigation, a candid and straightforward 
answer was always avoided by both Mr. Rockefeller and the 
men known to be associated with him in some way. For 
instance, in 1879, when H. H. Rogers was before the Hep- 
burn Committee, an effort was made to find out what rela- 
tion the firm of Charles Pratt and Company, of which he 
was a member, sustained to the Standard Oil Company. Mr. 
Rogers's testimony was a masterpiece of good-natured eva- 
sion,* and all that the examiners could get, though they re- 
turned again and again to the inquiry, was that Charles Pratt 
and Company worked "in harmony" with the Standard Oil 
Company. 

When ex-Governor Nash of Ohio was investigating the 
relations of the Cleveland and Marietta Railroad and the 
National Transit Company, try his best he could not find out 
anything definite. In his report Mr. Nash said: "I have pur- 
posely referred to the parties who entered into this arrange- 
ment with Receiver Pease and his freight agent, J. E. Terry, 
as the parties represented by O'Day and Scheide, for the rea- 
son that I have not been able to ascertain who or what the 
parties are." That they were officers of the National Transit 
Company he had evidence, but what relation had the National 
Transit Company to the Standard Oil Company? Was it a 
part of it? Mr. Nash was unable to find from Mr. O'Day, 
closely as he might question him.f 

In the Buffalo case, when John D. Rockefeller was on the 
stand, he was put through a questioning in regard to the rela- 
tions of the persons concerned in the suit to the Standard Oil 
Trust, whose existence he admitted. Mr. Rockefeller answered 
all the questions his lawyers would allow, but at the end the 

*See Appendix, Number 51. Extracts from testimony of H. H. Rogers, 
f See Appendix, Number 48. 



THE BREAKING UP OF THE TRUST 

plaintiffs had gained little or nothing, and there was a strong 
impression, from the attitude of his lawyers rather than from 
that of Mr. Rockefeller, that an effort was making to conceal 
the nature of the agreement or charter or whatever it was 
under which the companies involved were working. Naturally 
enough this attitude inspired resentment and aggravated the 
feeling that this secrecy meant evil-doing. When the epidemic 
of trust investigation broke out in 1888, and the Standard Oil 
Trust was brought up for examination, there was a general 
public demand to have the matter cleared up. The first inves- 
tigation of importance took place in February, 1888, in New 
York City, and by the direction of the Senate of New York 
State. A list of more than a score of trusts was in the hands of 
the committee, and, with the limited time at their disposal, it 
was certain that they could not look into more than half a 
dozen. There seems to have been no hesitation about including 
the Standard Oil Trust. "This is the original trust," wrote the 
committee. "Its success has been the incentive to the formation 
of all other trusts or combinations. It is the type of a system 
which has spread like a disease through the commercial sys- 
tem of this country." 

There were several things the committee wanted to know 
about the Standard Oil Trust, and its president was summoned 
for examination, (i) What was it? Was it an organisation 
recognised by any law of the land? Long ago men had decided 
that partnerships, corporations, companies, in which men 
united to do business, must be regulated by law and subjected 
to a certain amount of publicity, if the public good was to be 
protected. Was the Standard Oil Trust within or without the 
law? (2) By the testimony of its own members, in other years 
the Standard Combination controlled from eighty to ninety 
per cent, of the oil business of the country. Was this supremacy 
due in any measure to special privileges, such as discrimina- 
tion in railroad rates? (3) Was its power used to manipulate 

[131] 



THE HISTORY OF THE STANDARD OIL COMPANY 

production and prices, and to prevent men outside entering 
the oil business? 

It was to learn these things that the commission summoned 
Mr. Rockefeller. Flanked by Joseph H. Choate, present 
Ambassador to the Court of King Edward and the most emi- 
nent lawyer of the day, and S. C. T. Dodd, a no less able 
if a less well-known lawyer, Mr. Rockefeller submitted him- 
self to his questioners. In no case where he has appeared on 
the stand can his skill as a witness be studied to better advan- 
tage. With a wealth of polite phrases "You are very good," 
"I beg with all respect" Mr. Rockefeller bowed himself to 
the will of the committee. With an air of eager frankness 
he told them nothing he did not wish them to know. The com- 
mittee had a desire to begin at the beginning. It evidently had 
heard that a short-lived organisation, called the South Im- 
provement Company, had given Mr. Rockefeller his whip- 
hand in the oil business as far back as 1872, enabling him in 
three months' time to raise his daily capacity as a refiner from 
1,500 to 10,000 barrels, and so they asked Mr. Rockefeller: 

Q. There was such a company ? 
A . I have heard of such a company. 
Q. Were you not in it ? 
A. I was not.* 

It is a perfectly well-known fact that Mr. Rockefeller owned 
1 80 shares in the South Improvement Company, of which he 
was a director; that, when a public uprising caused the de- 
struction of the company, he was one of the two men who 
tried to save it; also that the Standard Oil Company of Ohio 
was the only concern which profited by the short-lived con- 
spiracy. 

Another staggering bit of testimony concerned railroad 
rates. Asked if there had been any arrangements by which 

* Report on Investigation Relative to Trusts, New York Senate, 1888 pages 
419-420. 

[ 132] 



the trust or the companies controlled by it got transportation 
at any cheaper rates than was allowed to the general public, 
Mr. Rockefeller answered: "No, sir." As a matter of fact, 
the three great oil-carrying systems of the country the Cen- 
tral, Erie and Pennsylvania had all of them, for much of 
the period between 1872 and 1888, granted to Mr. Rocke- 
feller rebates calculated to keep freight rates down for the 
Standard Oil Company and up for its competitors. Con- 
tracts and agreements to this effect are easily accessible to 
any one caring to investigate the quality of Mr. Rockefeller's 
"no." "No," said Mr. Rockefeller, "we have had no better 
rates than our neighbours," and then, with that lack of the 
sense of humour which, ethical qualities aside, is his chief 
limitation, he hastened to add: "But, if I may be allowed, 
we have found repeated instances where other parties had 
secured lower rates than we had." 

Later in the day the committee, which seems to have known 
something of Mr. Rockefeller's former contracts with the 
railroads, returned to the subject, and the following colloquy, 
worthy of the study of all witnesses interested in how not 
to tell what you know, took place: 

Q. Has not some company or companies embraced within this trust enjoyed from 
railroads more favourable freight rates than those rates accorded to refineries not in 
the trust ? 

A. I do not recall anything of that kind. 

Q. You have heard of such things ? 

A . I have heard much in the papers about it. 

Q. Was there not such an allegation as that in the litigation or controversy recently 
disposed of by the Interstate Commerce Commission, Mr. Rice's suit; was not there 
a charge in Mr. Rice's petition that companies embraced within your trust enjoyed 
from railroad companies more favourable freight rates ? 

A. I think Mr. Rice made such a claim; yes, sir. 

Q. Did not the commission find that claim true ? 

A. I think the return of the commission is a matter of record; I could not give it. 

Q. You don't know it; you haven't seen that they did so find ? 

[133] 



THE HISTORY OF THE STANDARD OIL COMPANY 

A. It is a matter of record. 

Q. Haven't you read that the Interstate Commerce Commission did find that 
charge to be true ? 

A. No, sir; I don't think I could say that. I read that they made a decision, but I 
am really unable to say what that decision was. 

Q. You did not feel interested enough in the litigation to see what the decision 
was ? 

A. I felt an interest in the litigation; I don't mean to say that I did not feel an interest 
in it. 

Q. Do you mean to say that you don't know what the decision was ? that you did 
not read to see what the decision was ? 

A. I don't say that; I know that the Interstate Commerce Commission had made 
a decision; the decision is quite a comprehensive one, but it is questionable whether 
it could be said that that decision in all its features results as I understand you to 
claim. 

Q. You don't so understand it ? Will you say, as a matter of fact, that none of the 
companies embraced within this trust have enjoyed more favourable freight rates 
than the companies outside of your trust ? Will you say, as a matter of fact, that it is 
not so ? 

A. I stated in my testimony this morning that I had known of instances where 
companies altogether outside of the trust had enjoyed more favourable freights than 
companies in this trust; and I am not able to state that there may not have been arrange- 
ments for freight on the part of companies within this trust as favourable as, or more 
favourable than, other freight arrangements; but, in reply to that, nothing peculiar 
in respect to the companies in this association; I suppose they make the best freight 
arrangements they can." * 

The committee had a vague idea that refineries outside of 
the Standard Combination had had a hard time to live, and 
asked if the trust had sought in any way to make the opera- 
tions of outsiders so unprofitable that they would either have 
to come in or go out of the business. 

"They have not; no, sir, they have not," replied Mr. Rocke- 
feller. 

"And they have lived on good terms with their competi- 
tors?" 

* Report on Investigation Relative to Trusts, New York Senate, 1888, pages 
420-421. 

[134] 



THE BREAKING UP OF THE TRUST 

"They have, and have to-day very pleasant relations with 
those gentlemen." 

It would have been interesting to have heard the com- 
ments of a number of gentlemen trying to carry on an inde- 
pendent business in 1888 on that answer: of the refiners in 
Oil City and Titusville, at that time preparing to carry their 
troubles to the Interstate Commerce Commission; of George 
Rice and others at Marietta, Ohio; of H. H. Campbell, of 
the Bear Creek Refining Company at Pittsburg; of Scofield, 
Shurmer and Teagle at Cleveland. 

If all of Mr. Rockefeller's testimony had been of the nature 
of the above, the investigation would have been worth little 
to the people who demanded it. But when it came to the 
questions which, after all, it was most essential to have an- 
swered at that moment, Mr. Rockefeller, after some skirmish- 
ing, gave the committee as frank testimony as is on record 
from him. The information wanted was in regard to the 
organisation of the Standard Oil Trust. As pointed out in a 
previous chapter, there had been some kind of an agreement 
adopted in 1882, binding together the varied interests which 
controlled the oil business. But what it was, where it was 
kept, by what authority it lived, nobody knew. For six years 
it had succeeded in hiding itself. What was the understand- 
ing which had made a trust of a company? The committee 
asked to know. Mr. Rockefeller and his counsel were the 
soul of amiability under the demand. They had only one 
request, and Mr. Choate made it persuasively: 

"If the committee please," he said, "I do not arise to make an objection to a request 
of the committee; we think that it is very proper that the committee should be made 
acquainted with this document and everything pertaining to it in order to advise 
them as to the nature and operation of this trust; at the same time, there are private 
interests and controversies involved which might be seriously prejudiced by a public 
exposition of its details, and therefore, in producing it, we, without asking the committee 
to make any promise or to commit themselves at all, request that while they make what- 
ever use of it they please, it shall not be in all its details made a matter of public record 

[135] 



THE HISTORY OF THE STANDARD OIL COMPANY 

or exhibition unless in their final judgment, after consideration of the matter, they 
shall consider it necessary. There are very important private interests involved that 
ought not, under the guise of a public investigation, to be interfered with." 

The committee examined the document and concluded to 
include it in its report.* Like all great things, it was simplicity 
itself an agreement which anybody could understand, by 
which some fifty persons holding controlling interests in 
corporations, joint stock associations, and partnerships of dif- 
ferent states, placed all their stock in the hands of nine trus- 
tees, receiving in return trust certificates. These nine trustees 
themselves owned a majority of the stock and had complete 
control of all the property. Mr. Rockefeller, when questioned, 
stated that one of the trustees was a responsible officer in 
almost every refinery or organisation in the trust; that the 
trustees, as a body, knew by reports and correspondence, and 
by frequent consultation in New York with active promoters 
of each concern, just how the business was going on. "We 
all know how the business goes," said Mr. Rockefeller; "we 
get reports once in thirty days showing what it has cost for 
everything." 

The trustees evidently ran the entire great combination un- 
der the agreement. But consider the anomaly of the situation. 
Thirty-nine corporations, each of them having a legal exist- 
ence, obliged by the laws of the state creating it to limit its 
operations to certain lines and to make certain reports, had 
turned over their affairs to an organisation having no legal 
existence, independent of all authority, able to do anything 
it wanted anywhere; and to this point working in absolute 
darkness. Under their agreement, which was unrecognised by 
the state, a few men had united to do things which no incor- 
porated company could do. It was a situation as puzzling as 
it was new. The committee in reporting on what it discovered 
did nothing to solve the puzzle. It simply sounded a warning: 

* See Appendix, Number 52. The Trust Agreement of 1882. 
[136] 



THE BREAKING UP OF THE TRUST 

"The actual value of property in the trust control at the present time is not less 
than one hundred and forty-eight millions of dollars, according to the testimony of 
the trust's president before your committee. This sum in the hands of nine men, 
energetic, intelligent, and aggressive and the trustees themselves, as has been said, 
own a majority of the stock of the trust which absolutely controls the one hundred 
and forty-eight millions of dollars is one of the most active and possibly the most 
formidable moneyed power on this continent. Its influence reaches into every state 
and is felt in remote villages, and the products of its refineries seek a market in almost 
every seaport on the globe. When it is remembered that all this vast wealth is the 
growth of about twenty years, that this property has more than doubled in value 
in six years, and that with this increase the trust has made aggregate dividends during 
that period of over fifty millions of dollars, the people may well look with apprehension 
at such rapid development and centralisation of wealth wholly independent of legal 
control, and anxiously seek out means to modify, if not to prevent, the natural 
consequence of the device producing it, a device of late invention, namely, the aggrega- 
tion of great corporations into partnerships with unbounded resources and a field 
of operations quite as extended as its resources. So much for the nature of the Standard 
Oil Trust. The committee regret that they are not able to make a more complete 
and satisfactory report as to the method of its operations and its effect upon public 
interests. 

"The brevity of the time within which the investigation was required to be made 
rendered it impossible for your committee to do more than examine the persons most 
prominent in the management of its affairs. Its cause was thus presented to the most 
favourable light possible, and it is only fair to conclude that nothing was left unsaid 
by them that could be said in its favour. No witness came forward to accuse it of the 
great offences commonly laid to its charge. No proofs were made of its rapacity or 
of the greed with which it lays hold of every competitive industry, except such as might 
be drawn from the fact that it is the almost sole occupant of the field of oil operations, 
from which it has driven nearly every competitor. No witness appeared to prove its 
power over railroad and transportation companies and to wring from already im- 
poverished lines better terms than other shippers, except such as might be drawn 
from the admission of its officers, made with hesitation, that this wealth and the amount 
of its business enabled it to obtain better terms than its poorer competitors." * 

The New York Senate made its investigation of trusts in 
February, 1888. In March the Committee on Manufactures 
of the House of Representatives began a similar inquiry. This 
committee, like the earlier one, made the Standard its princi- 

* Report on Investigation Relative to Trusts, New York Senate, 1888, pages 9-10. 

[137] 



THE HISTORY OF THE STANDARD OIL COMPANY 

pal subject. Fully 1,000 pages of a report of 1,500 pages are 
devoted to Mr. Rockefeller's creation five times the space 
given to the Sugar Trust, ten times that given to the Whiskey 
Trust. The testimony was wide in range. Indeed, from the 
volume alone, a pretty complete history of the Standard Oil 
Company up to 1888 could be written. Here are found the 
South Improvement Company charter and contracts in full. 
Here is Mr. Cassatt's testimony, taken in the case of the 
Commonwealth of Pennsylvania vs. the Pennsylvania Rail- 
road, showing the character of the rebates the Standard Com- 
bination was able to secure from the railroads at that time. 
Here is a partial history of the growth of the Standard pipe- 
lines. Many personal histories of refiners driven out of busi- 
ness by the conditions brought about by railroad discrimina- 
tions; full accounts of the war of the producing element on 
the Standard; all of the testimony in the Buffalo case, where 
two refiners were found guilty of conspiring to ruin an inde- 
pendent refining concern ; the reports of the Interstate Com- 
merce Commission in the cases of George Rice; and much 
interesting explanation of various matters by leading Stand- 
ard Oil officials appear in the report. 

Mr. Rockefeller was on the stand, and one item of his testi- 
mony affords a curious comparison. On the 28th of February, 
when before the New York Senate committee, Mr. Rocke- 
feller was asked if he was not a member of the South Improve- 
ment Company. 

"I was not," he replied. 

On the 30th of the April following, when before the House 
Committee, the following colloquy took place : 

Q. I want the names particularly of gentlemen who either now or in the past have 
been interested with you gentlemen who were in the South Improvement Company ? 

A. I think they were O. T. Waring, W. P. Logan, John Logan, W. G. Warden, O. 
H. Payne, H. M. Flagler, William Rockefeller, J A. Bostwick, and myself. 

It was in this investigation that Henry M. Flagler gave 

[138] 



THE BREAKING UP OF THE TRUST 

explanations of various operations of the Standard, which 
have been quoted in the course of this narrative, notably ex- 
planations of the South Improvement Company, of the ten- 
cent rebate secured from all the railroads in 1875, of the pur- 
chase of the Empire Transportation Company, of the rebate 
on other people's shipments enjoyed in 1878 by the American 
Transfer Company. Some of Mr. Flagler's testimony in this 
investigation compares as curiously with affidavits of his made 
in 1880 as does that of his great chief. For instance, in 1880 
Mr. Flagler swore that "the Standard Oil Company owns 
and operates its refineries at Cleveland, Ohio, and also a refin- 
ery at Bayonne in the state of New Jersey. That at no other 
place in the United States does the said Standard Oil Com- 
pany own, operate, or control any refinery or refineries." * 
But in this investigation the following colloquy took place : 

Q. When did the Standard Company of Ohio first enter into an alliance with other 
refineries ? 

A. If you mean (by) an alliance, Mr. Gowen, I should say never. 

Q. I am only endeavouring to aid your friends in getting at what they want. Here, 
I notice, they propose to prove by you I will give it in this way that on account of 
the disastrous condition of the refining business, the Standard, on October 15, 1874, 
entered into an alliance with a number of Pittsburg refineries. 

A. That is more correctly stated by saying that the Standard Oil Company purchased 
the refineries owned by the parties in Pittsburg. 

Q. \Jho were they ? 

A. Lockhart, Frew and Company, I think, was the company. Wait a moment. 
It was the Standard Oil Company of Pittsburg, it being a corporation, and Warden, 
Frew and Company, of Philadelphia, and, I should say, Charles Pratt and Company, 
of New York. 

Q, Any others? 

A. That is all. 

Q. All those gentlemen, Warden, Frew and Company, and the Standard Oil Com- 
pany of Pittsburg, Charles Pratt and Company, of New York, are now associated 
with you as parties interested in the present Oil Trust ? 

* Affidavit of Henry M. Flagler in the case of the Standard Oil Company vs. William 
C. Scofield et al., in the Court of Common Pleas, Cuyahoga County, Ohio, 1880. 

[ 139] 



THE HISTORY OF THE STANDARD OIL COMPANY 

A . They are stockholders. The property formerly owned by them was at that time 
purchased by the Standard Oil Company. 

Q. When you speak of purchasing their interest, you do not exclude them from 
their interest ? They united with you and remained as your associates in the business ? 

A. If it was not from the fact that ours was a corporation, we might call it a 
copartnership. 

Q. They becoming interested in yours, and you in theirs ? 

A . Yes, sir. 

Q. And you simply used your name to represent the joint ownership, as it was a 
corporation ? 

A. Yes, sir.* 

Full as the testimony on the Standard Oil Trust gathered 
by the Federal committee of 1888 is, its report touched but 
one point, and that was its organisation. To the committee 
it seemed that the agreement under which the trust operated 
was such as to make it exempt from the anti-trust legislation 
which was then contemplated by Congress. The legislation 
proposed was directed against "combinations to fix the price 
or regulate the production of merchandise or commerce." Now 
a mass of testimony had been presented showing that, from 
the starting-point of the Standard's history with the South 
Improvement Company, its aim has been to regulate the out- 
put of refined oil so as to fix the price, but this testimony, the 
committee saw clearly enough, did not apply to the trust which 
it was investigating. For so swore the trustees they had 
nothing to do with the business operations of the separate con- 
cerns. They simply held the stock of the various corporations, 
exercised their right as stockholders, received and distributed 
the dividends. Each company did its own business in its own 
way. The trustees were not responsible for it. There was some- 
thing humorous to those familiar with the oil world, in the 
idea of J. D. Rockefeller, William Rockefeller, J. D. Arch- 
bold, Henry H. Rogers, Charles Pratt, H. M. Flagler, Ben- 

* Proceedings in Relation to Trusts, House of Representatives, 1888. Report 
Number 3,112, page 770. 

[ 



THE BREAKING UP OF THE TRUST 

jamin Brewster, W. H. Tilford and O. B. Jennings, having 
nothing to do, as trustees of the Standard Oil Trust, but to 
receive and divide dividends, engrossing and interesting a task 
as that undoubtedly was. But, as a matter of fact, nothing else 
could be settled on them by anything in the testimony. For 
instance, in 1887 there was an alliance formed between the Oil 
Producers' Protective Association and the Standard for limit- 
ing the production of crude oil (a movement of which we 
shall hear more later) . This certainly was in restraint of trade. 
But, on examination, the committee found the contract had 
been signed by the Standard Oil Company of New York. The 
trustees had nothing to do with it! Taking up, point by point, 
the conditions of which the oil producers complained, not one 
of them could be fixed on the trust. It had made no agree- 
ments, signed no contracts, kept no books. It had no legal 
existence. It was a force powerful as gravitation and as in- 
tangible. You could argue its existence from its effects, but 
you could never prove it. You could no more grasp it than 
you could an eel. Certainly the Committee on Manufactures 
was justified in confining its report to pointing out the fact 
that the Standard Oil Trust agreement was a shrewd and 
slippery device for evading responsibility. 

And there the investigations of 1888 ended. There had been 
much noise over them, and for what good? So asked the dis- 
contented oil public. It simply had secured the form of an 
agreement which could no more be touched by legislation 
than human greed. It was characteristic that the oil public, 
intent on immediate remedies, should be discouraged. If they 
had applied to their cause the same patience and foresight 
Mr. Rockefeller did to his, they would have realised that, 
as a matter of fact, a respectable first step had been taken 
toward their real goal, a goal which has not by any means 
been reached that is, a legal form of organisation for corpo- 
rations doing interstate business which would enable the pub- 



THE HISTORY OF THE STANDARD OIL COMPANY 

lie to know promptly if they were securing special privileges 
or were restricting trade. This first step was in securing the 
famous trust agreement. That was now in the hands of people 
given to thinking about things, and something came of it, even 
more quickly than the philosophical observer of public events 
might expect, and in this wise: 

In 1887 there was elected to the attorney-generalship of 
Ohio a lawyer, something under forty years of age, named 
David K. Watson. Two years later Mr. Watson was a candi- 
date for re-election. One day, while busy with his campaign, 
he came out of his office in the state-house on the public square 
in Columbus, and, crossing the street, stopped, as he often did, 
at a book-shop to look over new publications. He happened 
there on a small yellow leatherette volume entitled "Trusts." 
It was written by William W. Cook, of the New York bar, 
and cost fifty cents. Mr. Watson bought the book and spent 
the evening reading it. At the end he found the Standard Oil 
Trust agreement. It was the first time he had ever seen it. 
He read it carefully and saw at once that, if it was a bona fide 
agreement, the Standard Oil Company of Ohio was and had 
been for seven years violating the laws of the state of Ohio 
by taking the affairs of the company from the directors and 
placing them in the hands of trustees, nearly all of whom were 
non-residents of the state. Mr. Watson knew on the instant 
that, if this were a bona fide agreement and he were re-elected 
attorney-general of Ohio, it would be his duty to bring an 
action against the Standard Oil Company of the state. He laid 
the little book away until he knew the result of the election. 

A few weeks later Mr. Watson was re-elected attorney- 
general. He at once began a search into the authenticity of 
the documents in Mr. Cook's little volume. He sent for the 
reports of the investigations by the committees of the New 
York Senate and of Congress. He read the testimony word for 
word. But he still doubted the correctness of the document, 

[142] 




DAVID K. WATSON 

Attorney-General of Ohio from 1887 to 1891. Mr. 
Watson brought suit against the Standard Oil Com- 
pany in May, 1890, in the Supreme Court of Ohio. 




FRANK S. MONNETT 

Attorney-General of Ohio from 1895 to 1899. 
Mr. Monnett brought suit against the Standard Oil 
Company in 1897 in the Supreme Court of Ohio. 





LEWIS EMERY, JR. 

Independent oil operator and refiner. Leader in 
movement for free pipe-line bill and anti-discrimina- 
tion laws. Founder of the United States Pipe Line. 



GEORGE RICE 

Plaintiff in numerous cases brought against the 
Standard Oil Company. Prominent independent 
witness in various State and congressional investi- 
gations. 



THE BREAKING UP OF THE TRUST 

fearing that, even if it were in the main correct, there might 
be some loophole by which the Standard Oil Company could 
escape. Now, in reading the report of the House investiga- 
tions, Mr. Watson had been particularly impressed with the 
clearness and directness of the questions put by one of the mem- 
bers of the investigating committee, Mr. Buchanan, of New 
Jersey. He accordingly went to Washington, inquired from a 
friend if Mr. Buchanan could be relied upon, and, receiving 
the assurance of his high character, sought an interview with 
him. "Was the Standard trust agreement as published in the 
committee's report bona fide?" was the inquiry. "Yes," said 
Mr. Buchanan. "But why do you ask?" "Because if it is," 
replied Mr. Watson, "I believe the Standard Oil Company of 
Ohio has violated the laws of the state, and on my return to 
Columbus I shall file an action in quo warranto against it in 
the Supreme Court of the state." 

"You would not dare do that, would you?" exclaimed Mr. 
Buchanan. 

"I was young then," Mr. Watson told the writer in describ- 
ing this interview, "and I supposed it was expected of a pub- 
lic officer to perform his duty. So I explained to Mr. 
Buchanan that there was a statute in Ohio which required an 
attorney-general to bring suit against any corporation which 
he had reason to believe was violating the laws of the state; 
that I had no personal feeling against the Standard Oil Com- 
pany, but I meant to enforce the law against it as I would 
against any other company which I believed to be violating 
the law." 

"I admire your courage," said Mr. Buchanan, "but I would 
not do it." 

On May 8, 1890, Mr. Watson filed his petition in the 
Supreme Court of Ohio.* The petition averred that, in viola- 

* The full style of the case was : The State of Ohio on the Relation of David K. 
Watson, Attorney-general, Plaintiff, against the Standard Oil Company, Defendant. 

[143] 



THE HISTORY OF THE STANDARD OIL COMPANY 

tion of the law of Ohio, the Standard Oil Company had en- 
tered into an agreement by which it had transferred 34,993 
shares out of 35,000 to the trustees of the Standard Oil Trust, 
most of whom were non-residents of the state; that it was these 
trustees who chose the board of directors of the Standard Oil 
Company of Ohio, and directed its policy, and prayed that, 
on account of this violation of law, the company should be 
"adjudged to have forfeited and surrendered its corporate 
rights, privileges, powers and franchises, and that it be ousted 
and excluded therefrom, and that it be dissolved." 

The petition came on the trust like a thunderbolt. There 
had been already more or less erratic and ill-advised anti-trust 
legislation in various states, but it had been framed in igno- 
rance of the actual organisation of the trust, and carried out 
with a crude notion that the trust, in spite of the fact that it 
was already thoroughly intrenched in the business life of the 
country, could be destroyed by a hostile act of a Legislature. 
Mr. Watson's suit was something very different. It was an 
application of recognised laws to admitted facts. It brought 
the Standard Oil Company face to face with several legal 
propositions it did not like to meet. After a long delay an 
answer was filed by the Standard. To Mr. Watson's joy, the 
one thing he feared the denial of the correctness of the agree- 
ment made no part of this answer. It admitted the agree- 
ment, but it denied that the Standard Oil Company of Ohio 
was a party to it. The agreement was signed by the individual 
stockholders of the Standard Oil Company, not by the com- 
pany in its corporate capacity. The Standard Oil Company of 
Ohio had nothing to do with the Standard Oil Trust. True, 
certain of its stockholders had turned over their stock to the 
nine trustees, but the company did its business as before, dis- 
charging all its duties as its charter required. This was the 
essential point of the defendant's answer. This, and the claim 
that if the court should hold that the action of the stockholders 

[ H4] 



THE BREAKING UP OF THE TRUST 

in becoming parties to the agreement in their individual 
capacity was a corporate act of the Standard Oil Company, 
even then the charter should not be forfeited, since the law 
barred an act committed more than five years before a peti- 
tion was filed. 

Anticipating that the trust would get together a strong array 
of counsel to defend its attacked member, Mr. Watson re- 
tained his personal and professional friend, John W. War- 
rington, an eminent lawyer of Cincinnati, to assist him. They 
were opposed by Joseph H. Choate, S. C. T. Dodd and Virgil 
P. Kline of Cleveland. 

But, while the preparation for the argument of the case 
was going on, the courageous young attorney-general was 
beset on all sides for an explanation. Why had he brought the 
suit? What was the influence which had controlled him? Men 
in power took him aside to question him, incapable, evidently, 
of believing that an attorney-general could be produced in 
Ohio who would bring a suit solely because he believed it was 
his duty. Some suggested that some big interest, hostile to the 
Standard, was behind him; others said the suit was suggested 
by Senator Sherman, then interested in his anti-trust bill. 
Along with this speculation came the strong and subtle re- 
straining pressure a great corporation is sure to exert when 
its ambitions are interfered with. From all sides came power- 
ful persuasion that the suit be dropped. Mr. Watson has never 
made public the details of this influence in any documentary 
way, but the accounts he at the time gave different friends of 
it led to so much gossip in Ohio that in 1899 the attorney- 
general of the state, F. S. Monnett, made detailed charges 
of six deliberate attempts to bribe Mr. Watson to withdraw 
the suits.* But one bit of documentary proof of the efforts 
to reach the attorney-general ever reached the public that 

* See annual report of the attorney-general to the governor of the state of Ohio, 
1899. 

[145] 



THE HISTORY OF THE STANDARD OIL COMPANY 

came out without his knowledge or consent, Mr. Watson 
claims, seven years after the suit was brought. It is interest- 
ing enough as evidence of the character of the pressure Mr. 
Rockefeller can set in motion when he will. Among Mr. 
Rockefeller's Ohio friends was the late Marcus A. Hanna, 
who was even then a strong factor in the Republican party of 
the state. A few months after the suit was brought he wrote 
Mr. Watson a letter of remonstrance. Many of Mr. Watson's 
friends saw this letter at the time and felt deep indignation 
over its contents. In 1897, when Mr. Hanna was a candidate 
for the United States Senate, an enterprising newspaper man 
of Ohio recalled that during 1890 it was common gossip in 
Ohio that Mr. Hanna had written the attorney-general a 
letter asking him to withdraw his suit against the Standard 
Oil Company. The correspondent sought Mr. Watson, who, so 
he avers, let him read the letter through, although he refused 
to allow him to copy it for publication. "No one could read 
it and ever forget it," said the correspondent; but to reinforce 
himself he sought persons who were associated with Mr. Wat- 
son at the time yes, they remembered the letter perfectly. 
Certain of them said that they could never forget some of 
its expressions. Between them they pieced up the following 
portions of the letter which they declared correct and which 
the correspondent published in the New York World for 
August 11, 1897: 

"I noticed some time ago that you had brought suit to take away the charter of 
the Standard Oil Company. I intended at the time to write you about it, but it slipped 
my memory. A few days ago while in New York I met a friend, John D. Rockefeller, 
and he called my attention to the fact that you had brought the suit, but did not ask 
me to influence you in any way." 



"I have always considered you in the line of political promotion," said Hanna, 
and then went on to intimate that unless the suit against the Standard was withdrawn, 
Watson would be the object of vengeance by the corporation and its friends forever 

[I 4 6] 




GROUP OF CLEVELAND CITIZENS 

Who called on John D. Rockefeller at his residence, "Forest Hill," on July 25, 1896, to 
thank him for his gift of park lands to the city. Mr. Rockefeller is in the centre of the 
group, the late Senator Marcus A. Hanna in the right lower corner, and Governor Myron 
T. Herrick in the centre of the top row. 



THE BREAKING UP OF THE TRUST 

after. As if to clinch his threat and argument, Hanna wrote: "You have been in poli- 
tics long enough to know that no man in public office owes the public anything." 

The letter concluded with a reference to the present Secretary of State, John 
Sherman. Hanna wrote: " I understood that Senator Sherman inspired and instigated 
this suit. If this is so I will take occasion to talk to him sharply when I see him." 

The letter was written on the typewriter and letter-heads of Banna's business 
office in Cleveland. 

Having secured this much, the correspondent, thinking it 
possible Mr. Watson might have answered Mr. Hanna's let- 
ter, undertook a bit of original investigation. He sought the 
files of the attorney-general's official correspondence for 1890, 
and the following is what he found. This letter certainly is 
evidence enough of the sort of letter Mr. Hanna had written 
even if the above restoration is not absolutely accurate: 

HON. MARK HANNA, December 13, 1890. 

Cleveland, Ohio. 

My dear Sir: Your communication of the 2ist ult. came to hand. The delay in 
answering it has been caused largely by my being ill for several days. I did not intend 
that bringing the action to which you refer in your letter should be an attack on my 
part on "organised capital," for I am aware that great business transactions require 
the union and concentration of moneyed interests, and fully appreciate what has 
been done in that direction, yet I cannot but feel that I am justified in bringing the suit 
against the Standard Oil Company, and believe that there are many things relating 
to the case which, if you understood, would cause you to entertain different views 
concerning it and my relation to it. Let me impress one thing on you with special 
particularity, and you may depend absolutely on its truthfulness. Senator Sherman 
never suggested or encouraged this suit, either directly or indirectly. This must be 
understood in its broadest sense. The report probably arose from the fact that the 
action was brought shortly after the Senator made his great speech in support 
of his anti-trust bill. You will hardly receive my statement with favour, I fear, but 
I am alone responsible for the action. No one encouraged me to bring it or knew that it 
would be brought until I determined to do so, and it is unfair to other persons to charge 
them with suggesting it or encouraging it. With the highest appreciation of your 
personal friendship, I am, with great respect, 

Truly yours, 

DAVID K. WATSON. 

[147] 



THE HISTORY OF THE STANDARD OIL COMPANY 
The part which the terse phrase attributed to Mr. Hanna, 

"NO MAN IN PUBLIC OFFICE OWES THE PUBLIC ANYTHING," 

played in the Senatorial campaign of 1897 is familiar to those 
who follow politics. It was kept standing for days in black- 
faced capitals at the head of the opposition newspapers in 
Ohio, and remained a potent weapon in the hands of Mr. 
Hanna's enemies to the time of his death. 

Whatever the pressure Mr. Watson encountered, it had no 
effect on his purpose. He quietly went ahead, presented his 
brief, and, when the time came, he and Mr. Warrington 
argued the case. The following proposition from the brief 
presented by Mr. Watson and Mr. Warrington show tersely 
the line of their argument: 

"Where the manifest object of an agreement is to unite corporations, partnerships 
and individuals into, or include them in a common enterprise, and control them through 
an agency unknown to the law of their creation, and all the officers, directors and 
stockholders of such corporations sign the agreement, and, in furtherance of its provi- 
sions, transfer their stock to such agency, permit the corporate executive agencies to 
make such transfers on the corporate books, submit without objection to the domination 
of the agency to which the stock is so transferred in the selection of directors and 
officers, and in the management of the corporate affairs and business suffer the cor- 
porate earnings to go to such agency and be placed and mingled with the earnings 
of the other parties in the combination so created, and, after deductions for uses of 
the combination, be divided as part of such common earnings among the persons 
interested, in such case the corporations become and are or at least will be treated 
by the courts as parties to such agreement and actors in its performance, although 
their corporate names are withheld therefrom. Such proceedings constitute actual 
corporate conduct, if not formal corporate action, on the part of each corporation. 

"An agreement is in violation of law and void which in effect creates a partnership 
between corporations, or where its probable operation and effect much more where 
its inevitable tendency is to create a substantial monopoly, or is in restraint of trade 
or otherwise injurious to the public. 

"Where a corporation, either directly or indirectly, submits to the domination of 
an agency unknown to the statute, or identifies itself with and unites in carrying out 
an agreement whose performance is injurious to the public, it thereby offends against 

[I 4 8] 



THE BREAKING UP OF THE TRUST 

the law of its creation and forfeits all rights to its franchises, and judgment of ouster 
should be entered against it. 

"Even if the statute which prescribes a time within which an action against a cor- 
poration for forfeiture of its charter shall be commenced, be applicable to a case of 
this kind, yet, where the offences or acts committed or omitted by a corporation 
for which forfeiture of its charter is sought at the suit of the state, are concealed, or 
are of such character as to conceal themselves, such offences and acts as against the 
state are frauds, and such statute does not begin to run until the frauds are discovered." 

Joseph H. Choate appeared for the defence. The most 
eminent lawyer in the country, his argument must have been 
anxiously awaited by Mr. Watson. Curiously enough, as it 
seems to the non-legal mind, Mr. Choate began his plea by a 
prayer for mercy. Whatever the sins of the Standard Oil 
Company of Ohio, pleaded Mr. Choate, do not take away its 
charter. Mr. Choate then proceeded with a strong argument 
in which he claimed "absolute innocence and absolute merit 
for everything we have done within the scope of the matters 
brought before the court by these pleadings." 

The argument did not convince the court of the innocence 
of the Standard in the questions at issue. The court showed, 
out of the mouth of the trust agreement itself, that the Standard 
Oil Company of Ohio was "managed in the interest of the 
Standard Oil Trust irrespective of what might be its duties 
to the people of the state from which it derives its corporate 
life." The court gave as its opinion that an act of a majority 
of the stockholders of a corporation affects the property of 
a company in the same way that a resolution by the board of 
directors affects it. "By this agreement," said the court, "indi- 
rectly, it is true, but none the less effectually, the defendant 
is controlled and managed by the Standard Oil Trust, an 
association with its principal place of business in New York 
City, and organised for a purpose contrary to the policy of 
our laws. Its object was to establish a virtual monopoly of 
the business of producing petroleum, and of manufacturing, 
refining and dealing in it and all its products, throughout 

[ 149] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the entire country, and by which it might not merely control 
the production, but the price, at its pleasure. All such associ- 
ations are contrary to the policy of our state and void. 



"Much has been said in favour of the objects of the Stand- 
ard Oil Trust and what it has accomplished. It may be true 
that it has improved the quality and cheapened the cost of 
petroleum and its products to the consumer. But such is not 
one of the usual or general results of a monopoly; and it is 
the policy of the law to regard, not what may, but what usu- 
ally happens. Experience shows that it is not wise to trust 
human cupidity where it has the opportunity to aggrandise 
itself at the expense of others. The claim of having cheapened 
the price to the consumer is the usual pretext on which 
monopolies of this kind are defended." * 

From all this the court decided the Standard Oil Company 
deserved punishment. The charter was not taken away the 
statute of limitations being advanced as a reason for this leni- 
ency, although, as Mr. Watson and Mr. Warrington showed, 
the statute of limitations could hardly be pleaded in this case, 
when the state had been kept in ignorance by the concealment 
of the agreement. The company was allowed to live, but it 
was ousted from the privilege of entering into the trust agree- 
ment, from the power of recognising the transfer of the stock, 
and from the power of permitting the trustees to control its 
affairs. It was also ordered to pay the costs of the action. 

The judgment of the court was not rendered until March 
2, 1892, almost two years after the filing of the petition. As 
soon as it was received Virgil P. Kline, the chief counsel of 
the Standard Oil Company of Ohio, went to New York for 
consultation with the trustees. Five days later he wrote to 

* History of Standard Oil Case in the Supreme Court of Ohio, 1897-1898. Part I, 
pages 27-28. Original opinion of the court. 

[150] 



THE BREAKING UP OF THE TRUST 

Judge Spear, the chief justice of the Ohio Supreme Court, 
saying: "Decisive steps will be taken at once not only to re- 
lease the Standard Oil Company from any relations to the 
trust, but to terminate the entire trust." But there were "prac- 
tical difficulties" in the task. The company pleaded for a 
"temporary recognition," and he asked an interview where 
he could explain the situation. This was granted, and on the 
i6th of March Mr. Kline explained to the judges in cham- 
bers, to Mr. Watson, and to his successor in office, the situation 
of the company. The trustees had all but seven shares of its 
stock. Trust certificates had been issued for these ten years 
before. The Standard Oil Company did not know who held 
these certificates, and could only know through the trustees, 
therefore the trust certificates must be transferred back, the 
owners hunted up, and each one induced to make an exchange. 
A system must be devised for doing this. Anybody could see 
this would take time. The court was friendly in the matter, 
and Chief Justice Spear gave to Mr. Kline an informal note 
granting an extension. "The court is not disposed to change its 
order at this time," the chief justice wrote, "but, so long as 
those in control appear to be engaged, as now, in an honest 
effort to dissever the relations of the company with the trust, 
and liquidate and wind up the affairs of the trust, the court 
will not be disposed to interfere." Thus time was gained. 

While Mr. Kline was securing time, the trustees were push- 
ing a liquidation scheme. On March 1 1 the following notice 
was mailed to all holders of Standard Oil Trust certificates, 
and was published in a newspaper in each state where a Stand- 
ard Oil Company had been organised: 

NOTICE 

A special meeting of the holders of Standard Oil Trust certificates will be held 
at the office of the trust, Number 26 Broadway, in the City of New York, on Monday, 
March 21, 1892, at eleven o'clock A.M., for the purpose of voting upon a resolution 



THE HISTORY OF THE STANDARD OIL COMPANY 

to terminate the trust agreement, in accordance with the terms of said agreement, 
and to take such further action as may be thereby rendered necessary. 

H. M. FLAGLER, Secretary. 

The meeting was held as called. Mr. Rockefeller was in 
the chair, and Mr. Dodd, who had drawn the trust agreement, 
now presented the resolution which was to dissolve it. The re- 
marks with which Mr. Dodd introduced his resolution denied 
every point which the courts had charged against the com- 
bination : 

"Something over ten years ago," said Mr. Dodd, "a few individuals owning stocks 
in a number of corporations engaged in transporting and refining oil, entered into 
an agreement by which their stocks were placed in the hands of trustees, and certificates 
were issued by said trustees showing the amount of each owner's equitable interest 
in the stocks so held in trust. This was not done in order to vest the voting power in 
the hands of a few persons, because the persons chosen as trustees then held, and always 
have held, the voting power by virtue of their absolute ownership of a majority of 
the stocks. It was not done to reduce competition, because the companies whose 
stocks were placed in trust were not competing companies, and could not be so long 
as their stocks were owned by these few persons. It was not done to limit production 
or to increase prices, but, on the contrary, was done to increase production, cheapen 
cost of manufacture, and to lower prices, and it has been successful in that object 
far beyond the anticipations of those who originated the plan. It was called a trust, 
because it was a trust in the sense in which the word was then understood. It vested 
a fiduciary obligation in a few for the benefit of many, and the trustees thus created 
have faithfully observed the trust confided in them. 

"Other persons, however, found this trust plan a convenient one, and it is alleged 
that it has been adopted for and adapted to purposes quite different from those which 
actuated the framers of this trust. Whether these allegations be true or false, it is true 
that a trust is now defined to be a combination to suppress competition and to reduce 
production, and to increase prices. Public opinion has not unwisely been aroused against 
combinations for such purposes, and legislation of more or less severity, and rather 
more or less peculiarity, has been directed against them in seventeen or eighteen states 
of the Union. All such arrangements are now miscalled trusts, and all trusts are 
popularly supposed to partake of the same nature. For this reason, if for no other, 
it should be seriously considered whether this trust should not be terminated. So 
long as it exists, misconception of its purposes will exist. 

" But another reason exists which seems to make it desirable to dissolve this trust. 



THE BREAKING UP OF THE TRUST 

Some two years ago a quo warrants issued in the name of the state of Ohio against 
the Standard Oil Company, a corporation of the state of Ohio, setting forth this trust 
agreement and alleging that that corporation, by becoming a party thereto, had done 
an act beyond its power, and thereby had forfeited its charter. The defendant cor- 
poration denied that it was a party to the agreement, and alleged that the agreement 
was on its face, and plainly, an agreement only between individuals, owners of corpo- 
rate stocks, relating to their personal property, and was neither made by the corporation 
nor for the corporation. The court, however, held that the agreement was a corporate 
agreement, and decreed, among other things, that the corporation must cease to permit 
trustees to vote upon stocks held in trust. 

"As this agreement was not entered into as a corporate agreement, and as this 
decision gives it an effect quite different from the intent of the parties who entered 
into it, it seems better to end it." * 

It is probable that Mr. Dood had foreseen from the first 
just such an attack on his agreement as had come, for he had 
put into that instrument a paragraph providing for a disso- 
lution, and it was in accordance with that article that the trust 
was now dissolved. The trustees were to continue to exist 
under a new name: "Liquidating trustees." The property they 
had to take care of was vastly in excess of what it had been 
ten years before. Then the capital of the thirty-nine constitu- 
ent companies was $70,000,000. These companies had been 
combined until they had been reduced to twenty, and their 
combined capital was now $102,233,700.! Property of about 
$20,000,000 in excess of the capital was held by the trustees. 
Mr. Dodd's resolution provided for the division of this prop- 
erty, and for the transfer of the trust certificates back to the 
corporations to which they belonged. The individual holders 
of the trust certificates were to get in exchange a proportionate 
share in each of the twenty companies. "A will not get stock 
in one corporation and B in another; each will get his due 

* Proceedings of meeting dissolving trust. History of Standard Oil Case in the 
Supreme Court of Ohio, 1897-1898. Part I, pages 80-81. 

f See Appendix, Number 53. List of constituent companies of the Standard Oil 
Trust, with assets and capitalisation in 1892. 

[153] 



THE HISTORY OF THE STANDARD OIL COMPANY 

proportion in the stocks of all," said Mr. Dodd. All of this 
change would make no difference with the management of 
affairs. Mr. Dodd assured the stockholders: "Your interests 
will be the same as now. The various corporations will con- 
tinue to do the same business as heretofore, and your propor- 
tion of the earnings will not be changed." 

The trustees went about liquidating at once, but it was not 
until the following November that the immense number of 
certificates held by them personally were exchanged. The pro- 
cess followed can be easily illustrated by Mr. Rockefeller's 
case. When the trust was ordered dissolved Mr. Rockefeller 
held 256,854 of the 972,500 shares of Standard Oil Trust 
which were out. He turned over to an attornev an assignment 
of this amount, with instructions to secure f iom each of twenty 
companies in the trust stock certificates for the portion be- 
longing to him. The corporate stocks were turned over to Mr. 
Rockefeller, and the assignment of certificate, a properly 
framed and numbered document, was turned over to the liqui- 
dating trustees. This assignment of legal title, for all practical 
purposes, was the same thing as the trust certificate. It en- 
abled the trustees to collect dividends from the various com- 
panies and pay them just as they had before. The documents 
showing the formal procedure in the case of Mr. Rockefeller's 
stocks are printed in the Appendix.* 

At the end of the first year, after the dissolution of the trust, 
477,881 shares were uncancelled. At the end of the second year 
it was the same; at the end of the third, 477,881 were still 
out. At the end of the fourth, 477,881. The dissolution of the 
trust seemed to have come to a stand-still. Mr. Dodd was right; 
things were going on as they did before ; dividends were issued 
exactly as before. Nor was there any indication of an inten- 

* See Appendix, Number 54. Forms of Mr. Rockefeller's certificate of holdings 
in the Standard Oil Trust, with assignment of legal title which took its place in 
1892. 

[154] 



THE BREAKING UP OF THE TRUST 

tion on the part of the liquidating trustees to change this state 
of things. If the monopolistic power of the Standard Oil 
Trust was to be broken, it was evidently not to be by any order 
of dissolution by the courts. Something more powerful than 
the courts was at work, however. The spirit of individualism 
was beginning to reassert itself in the oil industry a new 
war for independence had been begun, was indeed well un- 
der way even before the state of Ohio made the dissolution 
of the trust necessary. 



[155] 



CHAPTER FIFTEEN 
A MODERN WAR FOR INDEPENDENCE 

PRODUCERS' PROTECTIVE ASSOCIATION FORMED A SECRET INDEPENDENT 
ORGANIZATION INTENDED TO HANDLE ITS OWN OIL AGREEMENT MADE 
WITH STANDARD TO CUT DOWN PRODUCTION RESULTS OF AGREEMENT 
NOT AS BENEFICIAL TO PRODUCERS AS EXPECTED PRODUCERS PROCEED 
TO ORGANISE PRODUCERS' OIL COMPANY, LIMITED INDEPENDENT RE- 
FINERS AGREE TO SUPPORT MOVEMENT PRODUCERS AND REFINERS' 
COMPANY FORMED LEWIS EMERY, JR.'S, FIGHT FOR SEABOARD PIPE-LINE 
THE UNITED STATES PIPE LINE STANDARD'S DESPERATE OPPOSITION- 
INDEPENDENT REFINERS ALMOST WORN OUT THEY ARE RELIEVED BY 
FORMATION OF PURE OIL COMPANY PURE OIL COMPANY FINALLY BE- 
COMES HEAD OF INDEPENDENT CONSOLIDATION INDEPENDENCE POSSIBLE, 
BUT COMPETITION NOT RESTORED. 

JOHN D. ROCKEFELLER'S one irreconcilable enemy 
in the oil business has always been the oil producer. There 
is no doubt that Mr. Rockefeller has sincerely deplored 
this. And well he might, for he learned in his first great 
raid on the industry in 1872 that the producers aroused and 
united made a powerful and dangerous foe. 

No doubt, if it had been practical, Mr. Rockefeller would 
have begun at the start to take over oil production as he did 
oil refineries and pipe-lines, and thus would have gotten his 
enemy out of the way; but during the first fifteen years of 
his work it was not practical. The oil fields were too vast 
and undefined. It not being practical to own the oil fields, 
and yet essential that those who did own them, and of whose 
oil he aspired to be the only buyer, should be kept sufficiently 
satisfied not to interfere with his domination or to attempt to 

[156] 



A MODERN WAR FOR INDEPENDENCE 

handle the oil for themselves, Mr. Rockefeller, whenever he 
had the chance, sought to persuade the producers to do what 
he would have done had he owned the oil fields that was, 
to keep the supply of crude oil short. 

"The dear people," he said once when asked by an investi- 
gating committee if his monopoly of oil refining and oil 
transportation had not prevented the producer from getting 
his full share of the profits "the dear people," he said, "if 
they had produced less oil than they wanted, would have got 
their full price; no combination in the world could have pre- 
vented that, if they had produced less oil than the world 
required." * 

It is quite possible that if Mr. Rockefeller had been able 
to convert the majority of the producing body to this theory, 
and the supply of crude oil had been kept scarce and prices 
consequently high, the oil producers would have forgotten 
their resentment at his early raids and would have relapsed 
into indifference toward his control. Material prosperity is 
usually benumbing in its effects. There always has been a 
factor in the great game playing in the Oil Regions, how- 
ever, which not even Mr. Rockefeller could match. Nature 
has been in the oil game, and she has taken pains to prevent 
the only situation which would have enabled Mr. Rocke- 
feller to reconcile the oil producers. Again and again when 
it seemed as if the limits of oil production were set, and when 
Mr. Rockefeller and his colleagues must have believed that 
they would soon have the industry sufficiently well in hand 
to pay the producers a satisfactory price for crude oil, their 
calculations have been upset by the discovery of a great de- 
posit of oil which flooded the market and put down the prices. 
This happened so often between Mr. Rockefeller's first pub- 
lic appearance in the business and the time when he com- 
pleted his control of transportation, refineries and markets, 

* Report on Investigation Relative to Trusts, New York Senate, 1888, page 445. 

[1571 



THE HISTORY OF THE STANDARD OIL COMPANY 

that the yearly production of crude oil had risen from five 
and a half million barrels to thirty million barrels, and 
instead of a half million barrels above ground in stocks there 
were in 1883 over thirty-five million barrels, in 1884 nearly 
thirty-seven million, in 1885 thirty-three and a half million. 
The low price for crude which these vast stocks caused, the 
high charges for gathering, transporting and storing, all 
services out of which the Standard was making big profits, 
the fact that the profit on refined oil steadily increased in 
these years the result of the overthrow of independent 
refiners and pipe-lines while the profit on crude steadily 
diminished, were facts which the oil producers brooded over 
incessantly, and the more bitterly because they felt they could 
do nothing to help themselves. Every enterprise looking to 
relief which they had undertaken had, for one reason or 
another, failed. They had no faith that relief was possible. 
The Standard would never allow any outside interest to get 
a foothold. It was the bitterness which this conviction caused 
which was at the bottom of the outburst over the Billingsley 
Bill described in Chapter XIII. The Billingsley Bill was 
defeated, as it deserved to be, but the work done was by no 
means lost. For the first time since 1880 the Oil Regions were 
aroused to concerted action. The support of the Billingsley 
Bill had been a spontaneous movement, a passionate, unor- 
ganised revolt against the tyranny of the Standard, but it 
served to bring into action men who for six long years had 
been saying it was no use to resist, that Mr. Rockefeller's grip 
was too strong to be loosened. It revived their confidence in 
united action and steeled them to a determination to take hold 
of the industry and force into it again a fair competition in 
handling oil. 

On the very night after the defeat of the bill (April 28, 
1887) the oil men who had gathered in Harrisburg to support 
the measure, angry and sore as they were, arranged to call an 

[158] 



A MODERN WAR FOR INDEPENDENCE 

early meeting in Oil City and organise. The meeting was 
held. It was large, and it was followed by others. In a very 
short time 2,000 oil men were enrolled in a Producers' Pro- 
tective Association, and thirty-six local assemblies were hold- 
ing regular meetings throughout the region. There were sev- 
eral important points about the new association, aside from 
the enthusiasm and determination which animated it: 

(1) It was a secret order. 

(2) Its membership was composed entirely of persons out- 
side of and opposed to the Standard Oil Trust, one of its 
by-laws reading: "No person connected with the Standard 
Oil Company or any of its allies, as partners, stockholders, 
or employees, and friendly thereto, shall be elected to mem- 
bership ; and members becoming such shall be liable to 
expulsion." 

(3) It proposed "to defend the industry against the aggre- 
gations of monopolistic transporters, refiners, buyers and 
sellers" by handling its own oil. 

Hardly had the Producers' Protective Association been 
organised before Mr. Rockefeller had an opportunity to try 
his plan for conciliation. An independent movement had 
been started in the summer of 1887 by certain large produc- 
ers in favour of a general "shut-down," its object, of course, 
being to decrease the oil stocks. The president of the Pro- 
ducers' Association, Thomas W. Phillips, who at that time 
was the largest individual producer in the oil country, his 
production averaging not less than 6,000 barrels a day, was 
called into consultation with the leaders of the "shut-down" 
movement. Mr. Phillips promptly told the gentlemen inter- 
ested that he would not join in such an undertaking unless 
the Standard went into it. He pointed out that the Standard 
owned a large proportion of the 30,000,000 barrels of oil 
above ground. They had bought it at low prices. If the pro- 
duction was shut down prices would go up and the Standard 

[159] 



THE HISTORY OF THE STANDARD OIL COMPANY 
would reap largely on the oil they owned. The producers 
would, as usual, be standing all the loss. 

The upshot of the council was that the Producers' Protec- 
tive Association took hold of the shut-down movement, its 
representative seeking an interview with the Standard offi- 
cials as to their willingness to share in the cost of reducing 
the production. Here was a chance for Mr. Rockefeller to 
apply his theory of handling the oil producers conciliate 
them when possible encourage them in limiting their pro- 
duction. The oil men's representatives were met half-way, 
and an interesting and curious plan was worked out; the 
producers were to agree to limit their production by 17,500 
barrels a day. They were to do this by shutting down their 
producing wells a part or all of the time and by doing no 
fresh drilling for a year. If they would do this the Standard 
agreed to sell the association 5,000,000 barrels of oil at sixty- 
two cents, and let them carry it at the usual rates as long as 
they wanted to. Whatever advance in price came from the 
shut-in movement the producers were to have on their oil, 
and it was to be shared by them according to the amount 
each shut in his production. Mr. Phillips, before agreeing 
to this arrangement, demanded that provision be made for 
the workingmen who would be thrown out of employment 
by the shut-down, and he proposed that the association set 
aside for their benefit 1,000,000 barrels of the oil bought 
from the Standard, and that the Standard set aside another 
million; all the profits above sixty-two cents and the carry- 
ing charges on the 2,000,000 barrels were to go to the work- 
ingmen. A memorandum covering the above points of the 
agreement was drawn up, and it was accepted by the two 
interests represented.* 

Mr. Rockefeller's reason for signing the contract he gave 

* See Appendix, Number 55. Agreement of 1887 between the Standard Oil Com- 
pany and producers. 

[160] 



A MODERN WAR FOR INDEPENDENCE 

to the New York State Trust Investigating Committee four 
months later: 

Q. . . . What was the inducement for the Standard Oil Trust to enter into such 
an agreement as that ? 

A. The inducement was for the purpose of accomplishing a harmonious feeling 
as between the interests of the Standard Oil Trust and the producers of petroleum; 
there was great distress throughout the oil-producing region; as an instance of that 
distress there was an outcry that our interest was getting a return, that theirs was not 
in the business, and we did not know, as a matter of fact, that the oil-producing interest 
was abnormally depressed, and we felt it to be to the interests of the American oil 
industry that a reasonable price should be had by the producer for the crude material, 
and we wanted to co-operate to that end. 

Q. By advancing the price of the crude material you necessarily advance the price 
of the refined ? 

A. Yes, sir.* 

The shut-down went into effect the first of November, 
1887. The effect on stocks and the market was immediate 
stocks fell off at the rate of a million barrels a month, and 
prices rose by January, 1888, some twenty cents. But at the 
end of the year, though oil was higher and stocks consider- 
ably less, the benefits of the shut-down had not been con- 
spicuous enough to produce that "harmonious feeling" Mr. 
Rockefeller so much desired; not sufficient to distract the 
minds of the producers from the idea they had in forming 
their association, and that was a co-operative enterprise for 
taking care of their own oil. Throughout 1888 and 1889 two 
schemes, known as the Co-operative Oil Company, Limited, 
and the United Oil Company, Limited, were under consid- 
eration. By the end of the latter year it looked as if some- 
thing could be done with the second, and it was turned over 
by the executive board of the association to a special com- 
mittee, of which H. L. Taylor, of the Union Oil Company, 
one of the largest and oldest producing concerns of the Oil 
Regions, was chairman. How Mr. Taylor had succeeded in 

* Report on Investigation Relative to Trusts, New York Senate, 1888, page 449. 

[161] 



THE HISTORY OF THE STANDARD OIL COMPANY 

getting into the Producers' Protective Association it is hard 
to say, for it was he and his partner, Mr. Satterfield, who 
in 1883 had tried to throw the Tidewater Pipe Line into the 
hands of the Standard Oil Company, and who, when that 
unworthy scheme failed, had sold their stock to the Standard, 
thus giving that company its first holdings in the Tidewater.* 
The independents had forgotten or overlooked this fact, for 
Taylor was a member of the Producers' Protective Associa- 
tion and prominent in its councils. 

The special committee, of which Mr. Taylor was chair- 
man, went actively to work. Lawyers were employed to con- 
sider the safest form of organisation for a company doing 
an interstate pipe-line business and carrying on refineries. 
Certain German capitalists, owners of tank-steamers and in- 
terested in foreign marketing agencies, were brought into 
the scheme. Things were going well, when suddenly the com- 
mittee found the chairman cooling toward the enterprise. 
Then came the rumour that Mr. Taylor and his partners 
Mr. Satterfield and J. L. and J. C. McKinney had sold 
the Union Oil Company to the Standard. A meeting of the 
executive board was at once called, Messrs. Taylor and J. L. 
McKinney both being present. They acknowledged the truth 
of the report and were promptly informed their resignations 
would be accepted. 

The rumour of the secret desertion of strong members of 
the Producers' Protective Association, while holding posi- 
tions of trust, soon spread through the Oil Regions. It was 
a staggering blow. It took from them one of the largest single 
interests represented. It deprived them of men of ability on 
whom they had depended. It introduced a fear of treachery 
from others. It brought them face to face with a new and 
serious element in the oil problem the Standard as an oil 
producer. Up to 1887, the year of the organisation of the 

* See Chapter IX. 
[162] 



A MODERN WAR FOR INDEPENDENCE 

Producers' Protective Association, Mr. Rockefeller had not 
taken his great combination into oil production to any ex- 
tent, and wisely enough from his point of view. It was a 
business in which there were great risks, and as long as he 
could control the output by being its only buyer, why should 
he take them? Now, however, the situation was changing. 
A number of sure fields had been developed Bradford, 
Ohio, West Virginia. Their value was depressed by over- 
production. Mr. Rockefeller had money to invest. The pro- 
ducers were threatening to disturb his control by a co-opera- 
tive scheme. It was certain that he had not yet produced a 
"harmonious feeling." It was not sure he would. If he failed 
in that they might one day even shut off his supply of oil, 
as they had done in 1872, and Mr. Rockefeller, with great 
foresight, determined to become a producer. In 1887 he went 
into Ohio fields. Soon after he began quietly to buy into 
West Virginia. When he learned, in 1890, from Mr. Taylor 
and his partners, that a co-operative company of producers 
was on foot, he naturally enough concluded that the best way 
to dismember it was to buy out the largest interest in it. The 
Union Oil Company saw the advantage of being a member 
of the Standard Oil Trust, and sold. In this one year, 1890, 
over 40,000 shares of Standard Oil Trust certificates were 
issued to oil-producing companies,* as follows: 

For stock of Union Oil Company 18,249 shares 

" " " Forest Oil Company 1 7,378 " 

" " " North Pennsylvania Oil Company 2,647 " 
" " " Midland Oil Company 2,000 " 

40,274 " 

There was general consternation in producing circles, and 
if there had not been a number of men in the organisation 
who realised that the life of the independent effort was at 

* Plaintiff's Exhibit Number 52 in the case of James Corrigan vs. John D. Rocke- 
feller in the Court of Common Pleas, Cuyahoga County, Ohio, 1897. 



THE HISTORY OF THE STANDARD OIL COMPANY 

stake, and who turned all their strength to saving it, the 
association would undoubtedly have gone to pieces. Chief 
among these men were Lewis Emery, Jr., and C. P. Collins, 
of Bradford, Pennsylvania; J. W. Lee and David Kirk, of 
Pittsburg; A. D. Wood, of Warren; Michael Murphy, of 
Philadelphia; Rufus Scott, of Wellsville; J. B. Aiken, of 
Washington; R. J. Straight, of Bradford; Roger Sherman 
and M. W. Quick, of Titusville. They urged an immediate 
meeting of the General Assembly, at which a plan for co- 
operative action should be adopted and at once put into force. 

On January 28, 1891, the General Assembly convened at 
Warren, Pennsylvania. The whole miserable story of the 
co-operative plan which the executive board had worked out, 
and its destruction by the desertion of the Union Oil Com- 
pany, came out. It was at once evident that, instead of dis- 
heartening the Assembly, it was going to harden their deter- 
mination and spur them to action ; that they would not leave 
Warren until they had something to work on. The session 
lasted three days, and before finally adjourning it had 
adopted a drastic plan, framed by a committee of nine, of 
which Mr. Quick was chairman. This plan aimed, so the 
resolution adopted by the Assembly stated, to cut off the 
supplies of the producers' oil from the Standard Trust! This 
was to be accomplished by forming a limited partnership, 
whose subscribers should all be trusted members of the Pro- 
ducers' Protective Association (only persons having no affili- 
ation with the Standard Oil Company were members of the 
Producers' Protective Association, it will be remembered), 
and which should aim to take care of the crude oil from the 
wells of the producers who went into the movement, furnish 
it local transportation, and find a market for it either by 
building independent refineries or by alliance with those 
already in existence. 

From Warren the delegates went home to work for the 

[164] 




MICHAEL MURPHY 
The present President of the Pure Oil Company. 




DAVID KIRK 
The first President of the Pure Oil Company. 





JAMES W. LEE 

The chief counsel of the Pure Oil Company. Presi- 
dent of the company from 1897 to 1901. 



THOMAS W. PHILLIPS 

A leader in the independent movement, which resulted 
in the Pure Oil Company. 



A MODERN WAR FOR INDEPENDENCE 

new scheme. J. W. Lee and J. R. Goldsborough, the sec- 
retary of the association, at once made a tour of the Oil 
Regions to explain the project and solicit subscriptions. The 
response was immediate. In a few weeks over 1,000 pro- 
ducers had subscribed to the new company, which was at 
once organised as the Producers' Oil Company, Limited, its 
capital being $600,000. 

But it is one thing to organise a company, and another to 
do business. Where were they to begin? Where to set foot? 
The only thing of which they were sure was a supply of 
crude oil, and in order to take care of that they began opera- 
tions by putting up four iron tanks at Coraopolis, Pennsyl- 
vania, near the rich McDonald oil field. But they must have 
a market for it, and their first effort was to ship it abroad. 
At Bayonne, New Jersey, on the border of the territory 
occupied by the Standard's great plant, stands an independent 
oil refinery, the Columbia Oil Company. The Columbia has 
"terminal privileges," that is, a place on the water-front 
from which it can ship oil an almost impossible privilege 
to secure around New York harbour. The Producers' Oil 
Company now obtained from Hugh King, the president of 
the Columbia, the use of his terminal. They at once had fifty 
tank-cars built, and prepared to ship their crude oil, but the 
market was against them, stocks were increasing, prices 
dropping. The railroad charged a price so high for running 
their cars that there was no profit, and the fifty tank-cars 
were never used in that trade. A futile effort to use their 
crude oil as fuel in Pittsburg occupied their attention for a 
time, but it amounted to nothing. It was becoming clearer 
daily that they must refine their oil. The way opened to this 
toward the end of their first year. 

In and around Oil City and Titusville there had grown 
up since 1881 a number of independent oil refineries. They 
had come into being as a direct result of the compromise 

[165] 



THE HISTORY OF THE STANDARD OIL COMPANY 

made in 1880 between the producers and the Pennsylvania 
Railroad, a clause of which stipulated that thereafter rail- 
road rates should be open and equal to all shippers. The 
Pennsylvania seems to have intended at first to live up to 
this agreement, and it encouraged refiners in both the Oil 
Regions and Philadelphia to establish works. At first things 
had gone very well. There were economies in refining near 
the point where the oil was produced, and so long as the 
young independents had a low rate to seaboard for their 
export oil they prospered. But in 1884 things began to 
change. In that year the Standard Pipe Line made a pool- 
ing arrangement with the Pennsylvania Railroad, by which 
rates from the Oil Regions were raised to fifty-two cents a 
barrel, an advance of seventeen cents a barrel over what they 
had been getting, and in return for this raise the Standard 
agreed to give the railroad twenty-six per cent, of all the 
oil shipped Eastward, or pay them for what they did not get. 
This advance put the independents at a great disadvantage. 
In September, 1888, another advance came. Rates on oil in 
barrels were raised to sixty-six cents, while rates on oil in 
tanks were not raised. The explanation was evident. The rail- 
road owned no tank-cars, but rented them from the Standard 
Oil Company. It refused to furnish these tank-cars to the 
independents, but forced them to ship in barrels, and now 
advanced the price on oil in barrels. This second advance 
was more than the refiners could live under, and they com- 
bined and took their case to the Interstate Commerce Com- 
mission, a hearing being given them in Titusville in May, 
1889. No decision had as yet been rendered, and they in the 
meantime were having a more and more trying struggle for 
life, and their exasperation against the Standard was increas- 
ing with each week. When, therefore, the representatives of 
the Producers' Oil Company proposed a league with the 
independent refiners they were cordially welcomed. 

[166] 



A MODERN WAR FOR INDEPENDENCE 

We have oil in tanks at Coraopolis, said the producers, 
plenty of it, but we have no market. If we build a pipe-line 
from our tanks to Oil City and Titusville and give you pip- 
age at fifteen cents a barrel, five cents less than the Standard 
charges, will you enter into an agreement with us to take 
our oil for five years? The refiners saw at once the possible 
future in such an arrangement, and in a short time they had 
gone individually into a company to be called the Producers' 
and Refiners' Company, with a capital of $250,000, of which 
the Producers' Oil Company held $160,000, and whose ob- 
ject was the laying of a pipe-line from the fields in which 
the producers were interested to the refineries at Oil City 
and Titusville. The new plan was carried out with the great- 
est secrecy and promptness. Before the Standard men in the 
region realised what was going on, a right of way was secured 
and the pipe was going down. On January 8, 1893, the first 
oil was run. Here, then, was the first link in a practical co- 
operative enterprise independent producers and refiners of 
oil joined by a pipe-line of which they were the owners. 

While this enterprise was being carried out in Western 
Pennsylvania, in the northern part of the state a still more 
ambitious, independent project was under way, nothing less 
than a double pipe-line, one for refined and the other for 
crude oil, from the Oil Regions to the sea. This plan had 
originated with Lewis Emery, Jr., one of the most im- 
placable and intelligent opponents Mr. Rockefeller's pre- 
tensions have ever met. Mr. Emery sympathised with the 
idea that there was no way for the producer to get his share 
of the profits in the oil business except by handling the 
product entirely himself. In his judgment a pipe-line to the 
seaboard was the first important link in such an attempt, and 
in 1891, on his own responsibility, he set out to see what 
hopes there were of securing a right of way. The Columbia 
Oil Company, through whom the Producers and Refiners 

[167] 



THE HISTORY OF THE STANDARD OIL COMPANY 

were exporting, favoured such a scheme. It was certain many 
producers would go into it; but on all sides there was much 
scepticism about the Standard allowing a line to go through. 
Mr. Emery's first idea was a line from Bradford to Williams- 
port, on the Reading road. He consulted the railroad offi- 
cials. They would be glad of the freight, they told him, and 
a preliminary contract was drawn up. The contract was 
never completed. Mr. Emery returned to find out why. "If 
we give you this contract," the Reading officials told Mr. 
Emery, "we shall disturb our relations with the Standard Oil 
Trust. We cannot do it." 

Turning from the Reading, he projected a new route, a 
pipe-line from Bradford to the New York, Ontario and 
Western Railway near Hancock, New York, thence by rail 
to the Hudson River, and from there by water to New York 
harbour. The New York, Ontario and Western officials wel- 
comed the proposal. It gave them a new and valuable freight. 
But the pipes must cross the Erie road near both its ter- 
minals. Mr. Emery saw the president of the road. "Yes," 
the president told him, "we are disposed to assist all prog- 
ress. Go ahead." Thus encouraged, he sent his men into the 
field to get the right of way. They had made a good begin- 
ning before the project was known, but as soon as it was 
rumoured there appeared promptly on the route surveyed 
a number of men known to be Standard employees. They, 
too, wanted a right of way, the same as Mr. Emery wanted. 
They bought strips of land across his route, they bought up 
mortgages on farms where rights had already been acquired, 
and, mortgage in hand, compelled farmers to give them 
rights. It was an incessant harassing by men who never used 
the rights acquired who did not want them save to hinder 
the independent project. This sort of hindrance by the 
Standard was certain, whatever route was taken, and Mr. 
Emery went ahead undismayed, and in September, 1892, 

[168] 



A MODERN WAR FOR INDEPENDENCE 

organised his company the United States Pipe Line Com- 
pany with a capital of $600,000. Among the incorporators 
were representatives of the independents' interests, both in 
New York and in the Oil Regions, and much of the stock 
was soon placed in the hands of the men who were inter- 
ested in the independent concerns described above. 

It looked very much as if the United States Pipe Line 
were to be laid. Now, the strength of the Standard Oil Trust 
had always been due to its control of transportation. An 
independent pipe-line, especially to the seaboard, was con- 
sidered rightly as a much more serious menace to its power 
than an independent refinery. The United States Pipe Line 
could not be allowed, and prompt and drastic measures were 
taken to hinder its work. There is no space here for an 
account of the wearisome obstructive litigation which con- 
fronted the company, for the constant interference, even by 
force, which followed them for months. It culminated when 
an attempt was made to join the pipes laid to each side of 
the Erie tracks near Hancock, New York, the Eastern ter- 
minal of the pipe-line. Mr. Emery, relying on the promise 
of the Erie's president to allow a crossing, sent his men to 
the railway to connect the pipes. Hardly had they arrived 
before there descended on them a force of seventy-five rail- 
road men armed for war. These men took possession of the 
territory at the end of the pipes and intrenched themselves 
for attack. The pipe-line men camped near by for three 
months, but they never attempted to join the pipes. Mr. 
Emery had concluded, on investigation, that the Erie officials, 
like the Reading, had found that it would be unwise to dis- 
turb their relations with the Standard, and while his men 
were keeping attention fixed on that point he was executing 
a flank movement, securing a right of way from a point 
seventy miles back to Wilkesbarre, on the Jersey Central. 
This new movement was executed with such celerity that by 

[169] 



THE HISTORY OF THE STANDARD OIL COMPANY 

June, 1893, the United States Pipe Line had a crude line 
1 80 miles long connecting the Bradford oil fields with a 
friendly railway, and a refined line 250 miles long connect- 
ing the independent refiners of Oil City, Titusville, Warren 
and Bradford with the same railway. 

With the completion of the refined line a question of vital 
importance was to be settled: Could refined oil be pumped 
that distance without deteriorating? The Standard had in- 
sisted loudly that it could not. When the day came to make 
the experiment an anxious set of men gathered at the Wilkes- 
barre terminal. They feared particularly that the oil would 
lose colour, but, to their amazement, not only was the colour 
kept, but it was found on experiment that the fire test was 
actually raised by the extra agitation the oil had undergone 
in the long churning through the pipes. A new advance had 
been made in the oil industry the most substantial and revo- 
lutionary since the day the Tidewater demonstrated that 
crude oil could be pumped over the mountains. This new 
discovery, it is well to note, was not the work of the Standard 
Oil Trust, but it was accomplished in the face of their ridi- 
cule and opposition by men driven to find some way to escape 
from their hard dealings. 

The success of the United States refined line aroused the 
greatest enthusiasm among the independent interests. It gave 
them access to the seaboard, and there was immediate talk 
of a closer union between them. Why should the Producers' 
and Refiners' Pipe Lines not be sold to the United States 
Line and completed to Bradford? By the spring of 1894 the 
project seemed certain of realisation. 

The new movement was serious. Let this consolidation take 
place, and the producers had exactly what they had set out 
in 1887 to build up a complete machine for handling the 
oil they produced. As the undertaking grew in solidity and 
completeness, the war upon it grew more systematic and 

[ 170] 



A MODERN WAR FOR INDEPENDENCE 

determined. It took two main lines discrediting the enter- 
prise in the eyes of stockholders so that they would sell the 
stock to Standard buyers, the object being, of course, to get 
control of the companies; cutting the refined market until 
the refiners in the alliance should fail, or, becoming discour- 
aged, sell. The work of discrediting the enterprise was turned 
over to the Standard organs in the Oil Regions, chief among 
which is the Oil City Derrick. Since 1885 the editor of this 
interesting sheet has been a picturesque Irishman, Patrick 
C. Boyle by name. Mr. Boyle's position as editor and pro- 
prietor of the Derrick is due to the generosity of the Stand- 
ard Oil Trust, and he has discharged his allegiance to his 
benefactor with a zeal which, if it has not always' contributed 
to the enlightenment of the Oil Regions, has, materially, to 
its gaiety. Mr. Boyle now turned all his extraordinary power 
of vituperation on three of the independents whose activity 
was particularly offensive to him Mr. Emery, Mr. Wood 
and Mr. Lee and he went so far that each of the three 
gentlemen finally sued him for libel. They all got judgments. 
In Mr. Emery's case, Mr. Boyle, after signing a bond of 
$5,000 to keep the peace which bond he was obliged later 
to pay, with half as much more in costs published the 
following retraction t 

TO THE PUBLIC 

For many years past there have appeared in the editorial and news columns of 
the Oil City Derrick various articles reflecting on the business, social and political 
character and integrity of Lewis Emery, Jr. 

P. C. Boyle, the editor of the Derrick, was indicted and convicted for the publica- 
tion of certain of such articles, and civil suit for damages was instituted by Mr. Emery 
against P. C. Boyle for damages for such publications. 

The litigation has now been adjusted, and Mr. Boyle voluntarily retracts in toto 
all matters and things which he has said derogatory to the character, standing, or 
responsibility of Lewis Emery, Jr., published by him or under his direction in the past. 

Mr. Boyle is fully satisfied that such articles have been published under a mis- 



THE HISTORY OF THE STANDARD OIL COMPANY 

apprehension of the facts, and is satisfied that Mr. Emery has been wronged, and 
should be vindicated, and this retraction is freely made as such. 

Many of the articles have been republished in various papers in this country and 
Europe, and it is the desire of Mr. Boyle that this retraction shall be as freely and 
fully printed and published as were the original articles reflecting on Mr. Emery. 

(Signed) P. C. BOYLE. 

It is a satisfaction to the writer to be able to help gratify 
Mr. Boyle's laudable desire to have this document well cir- 
culated! 

Although the greater part of the Oil Regions never took 
Mr. Boyle himself seriously, the conviction that his attacks 
were inspired, that this was the Standard's way of saying to 
the producers that their enterprise would not be allowed to 
live, gave a sinister look to what he said. More damaging 
still was the quiet confidence with which the solid men of 
the Standard smiled at the independent effort. What were 
their puny hundreds compared to the millions of the trust? 
What was a band of scattered "oil-shriekers" against the 
cold-blooded deliberation of Mr. Rockefeller's solid pha- 
lanx? The oil men were conscious enough of the inadequacy 
of their capital and their organisation, but they hung on, 
many of them because their blood was up, and they preferred 
spending their lafct cent to yielding; others on the principle 
which Mr. Phillips confesses held him, "that God some- 
times chooses the weak things of the world to confound the 
mighty"; or that "one might chase a thousand, and two put 
ten thousand to flight." 

The efforts which the Standard made to discredit the in- 
dependent companies and their leaders were accompanied 
by a persistent, though quiet, attempt of Standard agents to 
buy in all the stock in the Producers' Oil Company and the 
United States Pipe Lines which timid, indifferent, or finan- 
cially embarrassed stockholders could be induced to give up. 
The movement began to be rumoured and caused no little 

[ 172] 



A MODERN WAR FOR INDEPENDENCE 

uneasiness in independent circles. How much would the 
Standard get? What would they do with it? They were 
soon to find out. 

Before the use to be made of the stock developed, how- 
ever, the Standard turned against the independents the most 
powerful and cruel weapon it wields its control of the 
markets. The refiners were to be driven from the combina- 
tion. The extent to which cutting was carried on for two 
years, beginning with the fall of 1893, is clear from a com- 
parison of prices. In January of 1893 crude oil was selling 
at 53^ cents a barrel and refined oil for export at 5.33 cents 
a gallon. Throughout the year the price of crude advanced 
until in December it was 78^/8 cents. Refined, on the con- 
trary, fell, and it was actually eighteen points lower in Decem- 
ber than it had been twelve months before. Throughout 1894 
the Standard kept refined oil down; the average price of 
the year was 5.19 cents a gallon, in face of the average crude 
market of 83^- cents* lower than in January, 1893, with 
crude at 53^ cents a barrel! 

This much for the New York end of the export business. 
In Germany, where the export oil of the independents all 
went, it being handled there by one dealer, Herr Poth, whose 
depot was Mannheim, on the Rhine, prices were cut at every 
point which the independent oil reached. It was a matter of 
life and death to keep the foreign market they had devel- 

* The following table shows the variation from 1890 to 1897 in price of crude oil 
per barrel of 42 gallons, and the price of refined oil per gallon in barrels in New York: 

1890 1891 1892 1893 

Jan. Dec. Jan. Dec. Jan. Dec. Jan. Dec. 

Crude... i.o5i 67$ 74$ 59i 62$ 53! 53* 78! 

Refined.. 7* -j\ 7.42 6.44 6.45 5.45 5.33 5.15 



1894 J 895 J 8Q6 1897 

Jan. Dec. Jan. Dec. Jan. Dec. Jan. Dec. 

Crude 80 gif 98! i-43f i-45f 97$ 88J 65 

Refined.... 5.15 5.61 5.87 7.77 7.85 6.35 6.13 5.40 



THE HISTORY OF THE STANDARD OIL COMPANY 

oped, and for twenty months the independent refiners met 
the demand of their export agents and foreign dealers for 
lower prices with cut cargoes. For twenty months they lost 
money on every barrel they sold. Oil was sold by the Titus- 
ville refiners as low as 1.98 cents a gallon. The Lewis Emery 
works at Bradford sold one cargo at 1.07 cents net, and 
many at or below two cents. Had it not been for the union 
with pipe-lines such prices would have been impossible, but 
all through the struggle in the market the United States 
Pipe Line and the Producers' and Refiners' lines carried oil 
at cost or below. The pipe-lines were heavily in debt to the 
Reading Iron Works, but that company stood by them val- 
iantly, extending their notes until the struggle was over and 
the pipe-lines able to meet them. 

Such a situation could not go on forever, evidently. It 
had come apparently to be a question of how long the re- 
finer had money to lose, and, as month after month the inde- 
pendents saw their bank accounts diminishing, and no relief 
in sight, the courage of a few began to ooze. Finally, late 
in 1894, a committee of the Western refiners, consisting of 
John Fertig of Titusville, H. P. Burwald of Titusville and 
S. W. Ramage of Oil City, went to New York to consult 
the Standard. Is there no hope of a better market? Is there 
any chance for us? None whatever, they were told, except 
to sell. We will buy the refineries and the stock of the in- 
dependent concerns, but that is all we can do. The com- 
mittee came home to report. The situation was hopeless, 
they said, and, as for them, they should sell. As they repre- 
sented three of the largest concerns in the Union, and all car- 
ried stock in the allied enterprises, their withdrawal seemed 
at the moment a death-blow. It was a glum and beaten body 
of men which listened to the report, surrender written in 
every line of their faces. 

Now Mr. Lee and Mr. Wood, two active men of the Pro- 



A MODERN WAR FOR INDEPENDENCE 

ducers Oil Company, had been invited to the meeting of the 
refiners. They realised fully that if the refiners pulled out 
of the Union now, the independent effort would in all proba- 
bility go to pieces, and before a vote to sell could be taken 
Mr. Lee was on his feet. In an impassioned speech he pleaded 
for one more effort. He pointed out the fact that the abnor- 
mal condition of the oil market could not remain, that crude 
oil was steadily rising, and that no monopoly could perma- 
nently hold down a manufactured product in the face of the 
rising raw product. The Standard had done this for nearly 
two years but it was contrary to the laws of nature that 
they do it for two years more. He told them that already 
conditions were better in Germany; that Mr. Emery had 
recently gone with Herr Poth, their foreign buyer, to sev- 
eral members of the German government, and presented to 
them the discrimination in prices of oil practised in the em- 
pire, oil from one and a half to three cents higher on the 
Elbe than on the Rhine, at points where freights were the 
same. He told the refiners of the interest that had been taken 
by the government in their case, and how they said, "Go home, 
gentlemen, and this shall stop," and that it had stopped. 
If criminal underselling can be checked in Germany, Mr. 
Lee argued, we can keep our market. He reminded the re- 
finers that it was not merely a business they were establish- 
ing; it was a cause they were defending the right of men 
to work in their own way without unlawful interference. 
The honour not only of themselves but of the Oil Regions 
was at stake. They were struggling for great principles. 
They were demonstrating that pluck, patience, and energy 
and brains can conquer any combination that ability and 
unscrupulousness can devise. "Do not give in," pleaded Mr. 
Lee. "Hold on, and we will go to the producers, lay your 
plight before them, and raise money to keep up the fight." 
Aroused by his plea, all of the refiners, excepting Messrs. 

[175] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Fertig, Burwald and Ramage, who had seen the Standard, 
decided to make another effort if the producers would help 
them out. In the next few days the leading men of the inde- 
pendent alliance worked with fury to call the Oil Regions 
into a mass-meeting. They travelled from assembly to assem- 
bly exhorting to action; they circulated dodgers announcing 
the gathering, and finally, in January, 1895, ran special 
trains to Butler, the rallying place. There was no lack of 
enthusiasm and blunt talk at the Butler mass-meeting. All 
the bitterness and determination of the region poured forth 
against the Standard, and when a resolution was offered by 
David Kirk, one of the most active and forceful of the inde- 
pendents, to raise money to form a new company, to be called 
the Pure Oil Company, its immediate object being to take 
care of the refiners in the tight place where they were, it 
went through with a whoop, and in a few moments $75,000 
had been subscribed. A few days later this sum was raised 
to $200,000. 

The objects of the company, as set forth in its prospectus 
issued at this time, were: 

To maintain and uphold the inherent right to do business, the right to transport 
and market the producer's own product, and his right to the just reward of his labour 
and capital invested. 

Another clause of the prospectus is interesting: 

To prevent any interference of that monopoly which has obtained control of the 
oil business, the voting power of one-half of the stock of the Pure Oil Company is 
placed by the owners in the hands of five champions of this right of independence, 
who are bound by the terms of a permanent trust bond to vote only for such men 
and measures as shall forever make this company INDEPENDENT, so that no sales 
of interest will carry with them any power to jeopardise the policy or existence of the 
company, or the investments of its remaining members. 

The Pure Oil Company had been organised none too soon. 
It was but a few months after it was well under way before 

[176] 



A MODERN WAR FOR INDEPENDENCE 

a hurried meeting of the independents was called in New 
York. With scared faces the members learned that the Ger- 
man dealer, who for four years had been handling ninety 
per cent, of their export oil, had sold to the Standard mar- 
keting concern, the Deutsche-Amerikanische Company. Con- 
sternation was great. The independents had depended on the 
loyalty of Herr Poth as they did on that of each other. He 
had been enlisted in their cause by Mr. Emery, who, with 
the tragic earnestness which had characterised his entire 
struggle for independence, had asked him for an oath of 
loyalty, and, hand on his heart, Herr Poth had pledged his 
faith. In every respect he had served them loyally. His deser- 
tion was inexplicable and disheartening. Later they learned 
the truth, that Herr Poth had been informed, by what he 
supposed to be reliable authority, that the American inde- 
pendent interests had sold to the Standard. Believing that 
this would cut off his supply, he had turned over his concern 
to the Deutsche-Amerikanische. A few weeks later Herr 
Poth died suddenly. The story goes in independent circles 
that when he learned the truth he literally died of grief, 
believing he had perjured himself. 

Herr Poth's sale left the independents in serious shape. 
They had cargoes of oil ready for Europe and no tankage 
in Europe to take it nobody there to sell it. A meeting was 
at once called in Pittsburg to raise money, and in a few days 
Mr. Emery and Mr. Murphy went abroad, and, as quickly 
as such work could be done, they secured privileges in Ham- 
burg and Rotterdam to erect tanks and establish marketing 
stations. The Pure Oil Company was in Europe. Once more 
the independents had been driven to depend on themselves, 
and once more they had proved sufficient to the emergency. 
But war was by no means over. With the establishment of the 
Pure Oil Company came the foreshadowing of a still closer 
union of the companies. At all hazards this was to be pre- 

[i77] 



THE HISTORY OF THE STANDARD OIL COMPANY 

vented. The Standard determined to play the stock of the 
Producers' Oil Company, Limited, and the United States Pipe 
Line, which it had been picking up quietly. 

Already one attempt had been made to get into the former 
concern through one of the most conspicuous and successful 
producers of the oil country Colonel John J. Carter, of 
Titusville, the president of the Carter Oil Company. Colonel 
Carter owned 300 shares of the stock of the Producers' Oil 
Company, Limited, and had been elected a member on it; 
according to the rules governing limited partnership in 
Pennsylvania, a stockholder must be elected to membership 
before he can vote his stock. In February, 1894, when a 
union of the pipe-lines had first been voted, he suddenly 
appeared in court and got an injunction against the sale. In 
the hearings on the injunction there came out a fact in re- 
gard to Colonel Carter which aroused a storm of wrath 
against him among the independents. The Standard Oil 
Company owned sixty per cent, of the Carter Oil Company! 
A harder fact was to be digested. On April n, 1894, the 
company met in Warren, Pennsylvania. Colonel Carter was 
present and voted not only his 300 shares, but 13,013 more! 
Where had he got them? There was but one conclusion, and 
it proved to be true the 13,013 belonged to the Standard 
Oil Company. They had been loaned to Mr. Carter; there 
was a form of transfer, but no sale, not even a price having 
been decided on evidently in the hope that he, with a few 
other stockholders who were disaffected, would control the 
meeting and prevent the union of the pipe-lines. The attempt 
failed, for the Carter-Standard faction succeeded in getting 
together only 21,848 shares, while the independents held 
30,560. The bitterness over this attack aroused terrible ex- 
citement. More than one member of the Warren meeting 
shouted "traitor" at Colonel Carter, and when the news of 
what happened reached the Producers' Protective Associa- 



A MODERN WAR FOR INDEPENDENCE 

tion there was a general demand that he be expelled from 
the Titusville assembly. It was done promptly, Mr. Carter 
not being given even a hearing. 

The Standard took back its 13,013 shares and patiently 
went on picking up more. By January, 1896, they held 
29,764 shares, enough, with Colonel Carter's 300, to give 
them a clean majority. Colonel Carter appeared at 26 Broad- 
way at this opportune moment and offered to buy the stock 
at 100. Mr. Archbold and his colleagues thought it worth 
150. (They are said to have paid as high as 220 for some of 
it.) Mr. Carter, in his frank colloquial testimony when on 
the witness-stand, described the conversation over the price: 

"Mr. Archbold says, 'I don't know, John, but what you are asking us to sell that 
stock too cheap. Don't you think it is worth more money ?' I says, 'Not to me, it is 
not.' I says, 'I am willing to start in on this thing and put it on a paying basis and 
pay par for it.' 'Well/ he says, 'I guess that we will have to think that thing over/ 
and it dropped right there." 

There were several interviews between Mr. Archbold, 
Mr. Rogers and Mr. Carter. They wanted to know how he 
proposed to run the Producers' Oil Company if he obtained 
a majority of the stock. "If I run that pipe-line," Mr. Car- 
ter reports himself as saying, "I am going to run it accord- 
ing to law and business principles. Any man that wants oil 
of me, and has the money to pay for it, shall have it." 

"Will you let Mr. Emery have some oil if he wants it?" 
asked Mr. Rogers. "Yes, I will." "And all the outside re- 
finers?" "Yes, I will. I shall make no discrimination against 
the outside refiner and in favour of the Standard Oil Com- 
pany, or vice versa" 

The Standard Oil seems to have been convinced that 
Colonel Carter was their friend they probably never had 
any doubt of their ability to manage him, and it is evident 
from the Colonel's testimony that he never had any doubt 
about his own ability to manage both independents and 



THE HISTORY OF THE STANDARD OIL COMPANY 

Standard and the sale was made at 100, Colonel Carter 
giving his check for $297,640 on the Seaboard Bank. 

Stock in hand, Colonel Carter went back to the Oil Regions 
to take possession. It was not so easy as he anticipated. The 
secretary refused to transfer the stock. He sought the presi- 
dent, Mr. Lee. What took place Colonel Carter himself told 
later on the witness-stand : 

"Senator Lee and myself retired to my room in the hotel and we had quite a pre- 
liminary conversation on the situation and in regard to the Producers' Pipe Line. 
Then I stated to him my ownership of the majority of the stock of the Producers' 
Oil Company, Limited, and stated furthermore that I purchased it from the National 
Transit Company; that my desire was to stop all contention on the part of the producers 
and myself, to run the business on a business principle, so that the stock belonging to the 
various members and myself might pay something, instead of dragging its slow length 
along as it had been for the past six years. I told him, furthermore, that I was perfectly 
willing that he should elect what portion of the directors that his stock would warrant 
him, and I would elect those that I could. The Senator replied then: 'You propose 
to take charge of the association ?' 'Yes,' I said; 'I did.' The Senator then stated 
emphatically that I could not do it; he would not permit it; if he had to spend the whole 
capital of the company he would resist it. ... He gave me to understand em- 
phatically that there was not anything except the management of the company by 
himself and his associates that would be tolerated, and 1 told him then 1 was sorry 
that I would have to go into court and determine my rights in court. That was about 
all, but it is only fair, furthermore, to say that at the time the Senator was rather warm, 
and I presume I was warm in the collar myself. I stated to him plainly that if there 
was any attempt to eject me from a legally constituted meeting in which I was there, 
I would resist it if I killed the man that attempted to put me out." 

Mr. Carter's cool announcement that he meant to run the 
company "from a business stand-point, and not from the stand- 
point of a gadfly" there seems to be a doubt about its being 
the producers who had played the part of the gadfly exas- 
perated the independents to the last degree, and in June, 
1896, they met the colonel in court. His ownership of a 
majority of the company's stock was admitted, but it was 
urged by the independents that the Producers' Oil Company 
was a limited partnership, and that under the Pennsylvania 

[180] 



A MODERN WAR FOR INDEPENDENCE 

law no one owning stock can become a member without 
being elected by a majority in number and value of the in- 
terests. Colonel Carter had been elected member on only 300 
shares. Both the lower and supreme courts sustained the 
independents, and Colonel Carter found himself an owner 
of a majority of the concern's stock without the right of con- 
trol. Under those circumstances neither he nor the Standard 
wanted the stock, and the company bought it below par. 

The winning of the Carter case gave encouragement that 
a similar suit brought by the Standard pipe-lines against the 
United States Pipe Line might fail. As already noted, the 
Standard began to buy into that company as soon as it was 
under way, and by the summer of 1895 they had collected 
2,613 shares. In August of that year the annual meeting of 
the company was held, and the agent of the Standard Oil 
Company who had been buying the stock, J. C. McDowell, 
presented himself prepared to vote. He was stopped at the 
door by Michael Murphy, the present president of the Pure 
Oil Company, and told emphatically that they considered 
that he was sent there by the Standard Oil Company to spy 
on their actions ; that, legal or illegal, they would throw him 
out if he crossed the threshold. Mr. Murphy is well known 
to be a man of his word, and as he was backed by young and 
athletic independent stockholders, Mr. McDowell discreetly 
withdrew. Naturally a suit followed, but this time the inde- 
pendents lost. The United States Pipe Line, being a corpo- 
ration, was obliged to recognise the Standard interest in the 
concern and eventually to allow them a director on its board. 

The humiliation and disgust over this result shook the 
independents' interests to their foundation. There perhaps 
was never a period of more heart-breaking discouragement 
for many of the men than when they saw their dearest hopes 
frustrated, and a Standard representative in their councils. 
This defeat came, too, when they were smarting under a con- 

[181] 



THE HISTORY OF THE STANDARD OIL COMPANY 

tinued and intolerable interference by the Standard with the 
extension of their pipe-lines to the seaboard. That both the 
crude and refined lines should ultimately reach the sea had, 
of course, been the intention from the first. But it was not 
until 1895 that the company felt firm enough in its finances 
to push the extension. The route laid out was from Wilkes- 
barre to Bayonne, New Jersey, by way of Hampton Junc- 
tion, on the Jersey Central Railroad. By this course two 
railroads were to be crossed, the Pennsylvania and the Dela- 
ware, Lackawanna and Western. Under both of them ran 
the pipe-lines of the Standard and the Tidewater, and the 
United States Pipe Line officials believed they had an equal 
right to go under, but they took it for granted they would 
be opposed, and prepared for it. Looking over the titles of 
the land along the Pennsylvania, Mr. Emery, the president 
of the company, who was personally directing the extension, 
found one for an acre; the owner did not know of his pos- 
session and was glad to sell it. This gave the United States 
people a crossing, but even then they were obliged to carry 
on a long litigation in the courts before they were free to 
use their right. 

Coming to the Delaware, Lackawanna and Western, they 
decided to test their position by laying a pipe. It was 
promptly torn out. A farm over which the railroad passed 
was then purchased and preparations made to lay the pipe 
in a roadway under the tracks. As this road was some seven- 
teen feet below the rails, any claim that there was possible 
danger from the oil seemed feeble. Knowing that the point 
was watched, Mr. Emery tried strategy. Taking fifty men 
with him he went in the night to the culvert under which 
he meant to cross, laid his pipes four feet under ground, 
fastened them down with heavy timbers, piled rocks on them, 
anchored them with chains, established a camp on each side 
of the track, and prepared for war. They soon had it. First, 

[182] 



A MODERN WAR FOR INDEPENDENCE 

with a body of railroad men armed with picks and bars, 
who invaded the camp. "I told the boys," said Mr. Emery 
in describing the incident to the Industrial Commission in 
1899, " to take tne me n by the shoulders and the seat of the 
pants, and take them out and lay them down carefully, which 
they did." The next day two wrecking-cars, with 250 men, 
came down the road and charged the camp, but again they 
were routed. The matter was taken by mutual agreement 
into court, and while Mr. Emery was before the justice of 
the peace, two locomotives were run down and the camp 
attacked with hot water and coals! 

By this time the whole countryside was aroused. The un- 
fairness of the thing was so patent that even the railroad 
employees engaged in it did not hestitate to say, in excuse of 
their employers, that it was the Standard Oil Company which 
was at the bottom of the opposition! As for the inhabitants, 
they offered any aid they could give. The local G. A. R. sent 
forty-eight muskets to the scene of war. Mr. Emery bought 
eighteen Springfield rifles, the camp was barricaded, and for 
seven months the pipes were guarded while the courts were 
deciding the legal title to the crossing. 

This interim was employed by the pipe-line people in an 
attempt to get a free pipe-line bill through the New Jersey 
Legislature. If this could be done they could go under the 
Delaware, Lackawanna and Western without its consent. 
The bill was introduced in February, 1896, J. W. Lee, Hugh 
King and Lewis Emery, Jr., all appearing before the com- 
mittee to argue for it. At first there seemed to be no opposi- 
tion to it. Everybody agreed it was a just and proper meas- 
ure. Then, suddenly, within a few days of the end of the 
session, a violent opposition sprang up. Trenton became alive 
with lobbyists men well enough known to politicians. The 
newspapers came out boldly with the charge that the rail- 
roads and Standard were going to defeat the bill. Its friends 

[183] 




rar 



TRUNK AND LOCAL PIPE LINES 
There are two lines from Oil City to Marcus Hook, 



[184] 



S Y L V, 



PHARRISBURC 



OF THE PURE OIL COMPANY. 

near Philadelphia, one for crude and one for refined oil. 



[185] 



THE HISTORY OF THE STANDARD OIL COMPANY 

could not believe it, nor did they until they found, the morn- 
ing it was to be presented, that the Senator having it in 
charge had disappeared, taking with him the bill and every- 
thing concerning it. Four days later the Legislature adjourned, 
and the precious Senator, when next heard from, was in the 
far West! 

Deprived of this hope, and condemned to a litigation 
which was certain to be made as long, as vexatious, and as 
costly as lawyers could make it, the chief counsel of the 
United States Pipe Line, Roger Sherman, advised a bold 
move to bring suit against the Standard Trust under the 
Sherman anti-trust law. The summons was issued in July, 
1897, by John Cunneen, of Buffalo. A very pretty list of 
wrongs it was of which the plaintiff complained: the in- 
stigation of lawsuits and the causing of injunctions with- 
out cause, and solely for the purpose of preventing the inde- 
pendent line from doing business; the publishing of libellous 
matter concerning the company and its officers in newspapers 
controlled by the trust; engaging bodies of men to tear up 
parts of pipe-line already laid; enticing away from the en- 
terprise officers, agents and employees; chartering or pur- 
chasing any vessels carrying independent oil, solely for the 
purpose of interfering with the independent market; intimi- 
dating merchants by threats of underselling until they refused 
to buy the oil contracted for; criminal underselling solely 
for destroying the plaintiff's markets. 

It was a serious case Mr. Sherman made out, and the 
evidence he collected was elaborate and detailed. But, for a 
sad reason, it was never to come to trial. Less than two 
months after the summons was issued Mr. Sherman died 
suddenly in New York City. The shock of his death was 
such that the independent companies had no heart for the 
suit, but allowed it to lapse. 

There was nothing now but the slow course of Jersey jus- 

[186] 



A MODERN WAR FOR INDEPENDENCE 

tice for the United States Pipe Line, and for four long years 
it dragged itself through the courts. Twice it won, but at 
last, in 1899, tne decisions of the lower courts were reversed 
and the pipe-line had to come up. Ordered out of New Jer- 
sey, the independents had to turn back to Pennsylvania. In 
that state there is a free pipe-line bill. Philadelphia is a 
shipping point. Luckily for the company, Mr. Murphy had, 
some time before this, and in anticipation of a defeat in New 
Jersey, bought on his own responsibility the land for a ter- 
minal at Marcus Hook, on the Delaware. This terminal he 
now sold to the company at the nominal price he had paid 
for it, and the United States Pipe Line was started again 
from Wilkesbarre to the sea. Finally, on May 2, 1901, after 
nine years of struggle in the face of an interference intoler- 
able and unjust, after a quarter of a million dollars spent in 
litigation, in useless surveys, in laying and pulling up pipes, 
in loss of business, the first refined oil ever piped from the 
Oil Regions to the seaboard reached Philadelphia. 

Mr. Emery, in telling his story of the difficulties of the 
United Pipe Line to the Industrial Commission in 1899, did 
not hesitate to attribute them to the Standard Oil Trust. 
John D. Archbold made a "general denial": "We have not 
at any time had any different relations with reference to any 
obstruction or effort at obstruction of their line than would 
attach to any competitor in a line of business engaging against 
another" * "We asked our friends on the railroad and in 
the New Jersey Legislature to look after our interests, of 
course," a Standard official told the writer in discussing this 
case. "That was our right." Mr. Boyle, the editor of the 
Derrick, took the stand before the Industrial Commission 
that the Standard Oil Trust's opposition to the United States 

* See Appendix, Number 56. John D. Archbold's statement to the Industrial Com- 
mission concerning the Standard's opposition to the building of the United States 
Pipe Line. 

[187] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Pipe Line was merely fair competition, as justifiable as 
offering a higher price for land which your competitor is 
after. 

From the Standard point of view it is evident that all this 
is legitimate business. They do not wish the United States 
Pipe Line to reach New York. They say to their friends of 
the Delaware, Lackawanna and Western, and in the Legis- 
lature of New Jersey: "These people are our competitors." 
Apparently neither the Delaware, Lackawanna and Western 
nor the New Jersey Legislature can afford to forget who are 
the competitors of the Standard Oil Trust. When the case 
becomes public and clamour is raised against such methods, 
the Standard disclaims all responsibility. It was the railroad 
who fought the pipe-line! 

It was not only from without that trouble came upon these 
men. There were the inevitable internal struggles. They saw 
their stockholders diminish from discontent and timidity. 
One of their staunchest members withdrew because of his 
disbelief in the wisdom of a majority action, and twice they 
were robbed by death of their most valued members. In 
December, 1895, A. D. Wood, of Warren, died. Mr. Wood 
had been one of the most inspiring members in the inde- 
pendent work, and there was nobody left who could do what 
he had been doing there. In 1897 the chief counsel, Roger 
Sherman, died. He had conducted the enormous and vexa- 
tious litigation of the various concerns with consummate 
skill, and there was nobody to take his place. Mr. Emery, 
overwhelmed by the death of Roger Sherman and worn out 
by his six years of work and worry over the United States 
Pipe Line, fell ill and was obliged to resign. On every side 
it was fight and loss and despair, and yet these men hardened 
under it. Not only hardened, they expanded. Ten years after 
the unorganised uprising which brought them together in 
1887 and forced from them the resolution to take care of 
their own product, what had they? A company of nearly 

[188] ' 






A MODERN WAR FOR INDEPENDENCE 

600 individual oil producers organised on a business basis, 
and connected by pipe-lines with some dozen individual 
oil refineries. For transporting this oil they had pipe-lines 
carrying both crude and refined from the Oil Regions to 
within fifty miles of the sea, and for markets they had those 
they had themselves worked up in the United States and 
Europe. They had something more. In spite of the continued 
hostility of the Standard they had the conviction that there 
was a future for their venture; but they saw clearly that to 
realise it they must get themselves into still more compact 
form that their holdings must be put into the hands of 
trustees in a single company if they were to be free from the 
danger of the eventual dominance of the Standard. Now, in 
November, 1895, as we have seen, the independents had in- 
corporated in New Jersey a marketing concern called the 
Pure Oil Company. After months of discussion it was de- 
cided to enlarge the capital of this company to $10,000,000, 
$2,000,000 in preferred and $8,000,000 in common stock, and 
put into this concern all their interests. There was opposition 
to the consolidation from some of the strongest interests con- 
cerned, but finally the idea prevailed, and in 1900 a majority 
of the stock of the Producers' Oil Company, the Producers' 
and Refiners' Company, and the United States Pipe Line 
was turned over to the Pure Oil Company. 

The purpose of the combination was frankly stated to be 
the maintenance of the independence of the company. This 
was to be effected in the following way: the holders of 
16,000 shares of stock more than a majority vested the 
voting power of these shares in fifteen persons for twenty 
years, and it was agreed that one-half of all shares thereafter 
subscribed should be transferred to those same trustees. 
Shares can be sold and transferred, but this transfer does not 
give the purchaser any right other than provided in the trust 
agreement. Any trustee may be summarily removed by three- 
fifths of the trustees, together with three-fifths of the share- 

[189] 



THE HISTORY OF THE STANDARD OIL COMPANY 

holders in trust. It certainly looks as if the Pure Oil Com- 
pany has devised an organisation which will effectually 
preserve its independence so long as its shareholders desire 
that independence. Mr. Archbold, in describing this voting 
trust of the Pure Oil Company to the Industrial Commission, 
called it "iniquitous." It is difficult to understand just how 
it is iniquitous, unless it is because of its success so far in 
keeping the Standard out of its councils. It is not a secret 
arrangement. It aims at no monopoly, at no restraint of trade. 
It claims only to be a device for protecting its obvious right 
to handle its own product. Of course, if we admit that the 
oil business belongs to the Standard, as Mr. Rockefeller 
claims, then the Pure Oil Company is certainly in the wrong! 
As it stands to-day, the independents have a good showing 
for their fight. They have fully 900 stockholders, most of 
them producers. They handle a daily production of 8,000 
barrels of crude oil; operate 1,500 miles of crude pipe-line 
and 400 miles of refined; are allied with some fourteen 
refineries, in some of which all the by-products of oil, as well 
as naphtha and illuminating oils, are produced; own one 
tank-steamer, the Pennoil, with a capacity of 42,000 fifty- 
gallon barrels, and charter several others; own oil barges on 
the Rhine, the Elbe and the Baltic; have fully equipped 
stations in Europe at Hamburg, Mannheim, Riesa, Stettin 
and Dusseldorf, in Germany; Rotterdam and Amsterdam, 
Holland; London and Manchester, England; and, in the 
United States, New York and Philadelphia. With conserva- 
tive and loyal management, there seems to be no reason that 
the Pure Oil Company should not become a permanent inde- 
pendent factor in the oil business. Such a thing is worth the 
best efforts of the men who have made it. Their courageous 
and persistent struggle no doubt seems to most of them as of 
purely personal and local meaning. All they asked was to 
get a fair share of the profits in their business. They knew 

[ 190] 



A MODERN WAR FOR INDEPENDENCE 

they did not get it, and they believed it was because there 
was not fair play on the part of the railroads and the 
Standard Oil Company. Aroused, they each fought for the 
particular thing which would give them relief. They only 
combined because driven to. They have become a strong 
organisation almost solely because of the persistent opposi- 
tion of the Standard Oil Trust. The Standard's efforts to 
break up the Producers' Protective Association by buying 
out the biggest producers precipitated a co-operative com- 
pany for handling oil. Its efforts to drive out the independent 
refineries by the manipulation of the railroads drove the 
producers and refiners to combine. The heavy charges for 
handling oil by the Standard pipe-line and by the railways 
drove these independents to build a seaboard pipe-line for 
both refined and crude, and to demonstrate that refined as 
well as crude could be pumped to the sea in pipes. The buy- 
ing out of their foreign agents forced them to develop their 
own market in Europe. The secret buying in of their stock, 
and the combined effort to force the Standard directors on 
them, compelled them into their present close trust organisa- 
tion. It looks very much as if in trying to make way with 
several small scattered bodies Mr. Rockefeller had made one 
strong, united one. 

But while the experience of the Pure Oil Company demon- 
strates that it is possible to-day to build up an independent 
oil business if men have the requisite patience and fighting 
quality, it by no means follows that the success of the Pure 
Oil Company has restored competition in the oil business or 
that by its success the public is getting any marked reduction 
in the price of oil. That the control of that price within 
limits is now and has been almost constantly since 1876 in 
the hands of the Standard Oil Company is demonstrated, the 
writer believes, by the figures and diagrams of the next 
chapter. 

[191] 



CHAPTER SIXTEEN 
THE PRICE OF OIL 

EARLIEST DESIGNS FOR CONSOLIDATION INCLUDE PLANS TO HOLD UP THE 
PRICE OF OIL SOUTH IMPROVEMENT COMPANY SO INTENDS COM- 
BINATION OF 1874-1873 MAKES OIL DEAR SCHEME FAILS AND PRICES 
DROP THE STANDARD'S GREAT PROFITS IN 1876-1877 THROUGH ITS 
SECOND SUCCESSFUL CONSOLIDATION RETURN OF COMPETITION AND 
LOWER PRICES STANDARD'S FUTILE ATTEMPT IN 1880 TO REPEAT RAID 
OF 1876-1877 STANDARD IS CONVINCED THAT MAKING OIL TOO DEAR 
WEAKENS MARKETS AND STIMULATES COMPETITION GREAT PROFITS OF 
1879-1889 LOWERING OF THE MARGIN ON EXPORT SINCE 1889 BY REASON 
OF COMPETITION MANIPULATION OF DOMESTIC PRICES EVEN MORE 
MARKED HOME CONSUMERS PAY COST OF STANDARD'S FIGHTS IN FOR- 
EIGN LANDS STANDARD'S VARIOUS PRICES FOR THE SAME GOODS AT 
HOME HIGH PRICES WHERE THERE IS NO COMPETITION AND LOW 
PRICES WHERE THERE IS COMPETITION. 

IT is quite possible that in keeping the attention fixed 
so long on Mr. Rockefeller's oil campaign the reader 
has forgotten the reason why it was undertaken. The 
reason was made clear enough at the start by Mr. Rocke- 
feller himself. He and his colleagues went into their first 
venture, the South Improvement Company, not simply be- 
cause it was a quick and effective way of putting everybody 
but themselves out of the refining business, but because, every- 
body but themselves being put out, they could control the 
output of oil and put up its price. "There is no man in this 
country who would not quietly and calmly say that we ought 
to have a better price for these goods," the secretary of the 
South Improvement Company told the Congressional Com- 

[ 192] 



THE PRICE OF OIL 

mittee which examined him when it objected to a combina- 
tion for raising prices. 

Four years after the failure of the first great scheme, a 
similar one went into effect. What was its object? J. J. 
Vandergrift, one of the directors of the Standard Oil Com- 
pany at that time, questioned once under oath as to what 
they meant to do, said: "Simply to hold up the price of oil 
to get all we can for it." Nobody pretended anything 
else at the time. "The refiners and shippers who are in 
the association intend there shall be no competition." "It 
is a struggle for a margin." "The scope of the association 
is an attempt to control the refining of oil, with the ulti- 
mate purpose of advancing its price and reaping a rich 
harvest in profits." These are some of the comments of the 
contemporary press. The published interviews with the lead- 
ers confirm these opinions. Mr. Rockefeller, always discreet 
in his remarks, denied that the scheme was to make a "cor- 
ner" in oil; it was "to protect the oil capital against specu- 
lation and to regulate prices." H. H. Rogers was more 
explicit: "The price of oil to-day is fifteen cents per gallon" 
(March, 1875). "The proposed allotment of business would 
probably advance the price to twenty cents. . . . Oil to yield 
a fair profit should be sold for twenty-five cents per gallon." 

What was the exact status of this refining business out of 
which it was necessary to make more in the year 1871, when 
the first scheme to control it was hatched? The simplest and 
safest way to study this question is by means of the chart of 
prices on pages 194 and 195.* On this chart the line A 
shows the variation in the average monthly price, per gallon, 
of export oil in barrels in New York from 1866 to June i, 
1904. The line B shows the average monthly price, per gal- 
lon, of crude oil in bulk at the wells. A glance at the chart 

* Adapted from chart printed in Volume I of Report of Industrial Commission, 
and brought up to date. 

[ 193] 



THE HISTORY OF THE STANDARD OIL COMPANY 




1868 



I869\/8W 



1871 



1872. 



1873 



/874- 



J87S /876 \/877 



/37S J879 



/8&O 



J883 








CHART SHOWING PRICE OF 

The above chart is adapted from one published in the Report of the Industrial Commission, Volume 
cents. The dates are placed at the top. The figures on which the export and crude lines are based are 
are from the Oil, Paint and Drug Reporter. 

A shows the variations in the price per gallon of refined oil for export in barrels in New York. The 

B shows the variations in the price per gallon of crude oil in bulk at the wells. 

C shows the variations in the price per gallon of water-white oil ( 1 50 test) in barrels in New York. 

The margin or difference between the price of crude and refined is easily calculated. Thus at the end 
the margin was therefore twenty cents. 

will show the difference or margin between the two prices. 
It is out of this difference that the refiner must pay the cost 
of transporting, manufacturing, barrelling and marketing 
his product, and get his profits. Now in 1866, the year after 
Mr. Rockefeller first went into business, he had, as this 
chart shows, an average annual difference of 35 cents a gal- 
lon between what he paid for his oil and what he sold it for. 
In 1867 he had from 26^ to 20 cents; in 1868, from 20 to 
22*4; in 1869, from 21 to 18; in 1870, from 20 to 15.* 

There were many reasons why this margin fell so enor- 
mously in these years. All of the refiners' expenses had rapidly 
decreased. In 1866 but two railroads came into the oil coun- 

* See Appendix, Number 57. Tables of yearly average prices of crude and refined. 

[ 194] 



THE PRICE OF OIL 



85 S3S6 /837 1888 /889 /890 IS9I 1892. /893 /394- /89S /896 /S97 J898 1899 /900 J9O/ 1902. /9O3 IS>04- 



35 



25 




OIL FROM 1866 TO 1904. 

I, 1900, and is brought up to date. The figures at the right and left stand for the price per gallon in 
those taken from the "Oil City Derrick Hand- Book." Those on which the water-white line is based 

price of barrels varies slightly, but is usually estimated at a^ cents per gallon. 

This is the usual domestic oil. 

of 1 876 the crude line shows the price of crude to be about nine cents the price of refined about twenty-nine ; 



try; by 1872 there were four connections, and freights fell 
in consequence. In 1866 carrying oil from the wells by pipe- 
lines was first practised with success, by 1872 all oil was gath- 
ered by pipes, thus saving the tedious and expensive opera- 
tions of teaming. Tank-cars for carrying crude oil in bulk 
had replaced barrels and rack-cars. The iron tank, holding 
20,000 barrels, was used instead of the wooden tank holding 
1,000 barrels. On every side there had been economies, and 
because of them the margin had fallen. But not only were 
the expenses coming down; so were the profits. The money 
which had been made in refining oil had led to a rapid multi- 
plication of refineries at all the centres. In 1872 there was a 
daily refining capacity of about 46,000 barrels in the coun- 

[195] 



THE HISTORY OF THE STANDARD OIL COMPANY 

try, and the daily consumption of that year had been but 
15,000 barrels. This large capacity produced the liveliest 
competition in selling, and every year the margin of profit 
grew smaller. 

Now it is natural that men should struggle to keep up a 
profit. The refiners had become accustomed to making from 
twenty-five per cent, to fifty per cent., and even more, on 
every gallon of oil they put out. They had the same extrava- 
gant notion of what they should make as the oil producers 
of those early days had. No oil producer thought in the six- 
ties that he was succeeding if his wells did not pay for them- 
selves in six months! And as their new industry slowly but 
surely came under the laws of trade, increased its produc- 
tion, was subjected to severe competition, as they saw them- 
selves, in order to sustain their business, forced to practise 
economies and to accept smaller profits, they loudly com- 
plained. There was never a set of men who found it harder 
to accept the limitations of economic laws than the oil pro- 
ducers of Pennsylvania. The oil refiners showed the same 
dislike of the harness, and in 1871, as we have seen, Mr. 
Rockefeller and a few of his friends combined to throw it 
off. What they proposed to do was simply to get all the 
refineries of the country under their control, and thereafter 
make only so much oil as they could sell at their own inter- 
pretation of a paying price. 

There was not enough profit in the margin of 1871. Now 
what was the profit? According to the best figures accessible 
of the cost of oil refining at that day, the man who sold a 
gallon of oil at 24*4 cents (the average official price for that 
year) made a profit of not less than i^ cents 52^ cents a 
barrel.* Josiah Lombard, a large independent refiner of 
New York City, when questioned by the Congressional 

* Figures used in computing this profit are from the Oil City Derrick of the 
period, and from practical oil refiners of that day. 

[I 9 6] 



THE PRICE OF OIL 

Committee which, in 1872, looked into Mr. Rockefeller's 
scheme for making oil dearer, said that his concern was 
making money on this margin. "We could ship oil and do 
very well." A. H. Tack told the Congressional Committee 
of 1888, which was trying to find out why he had been 
obliged to go out of the refining business in 1873, that he 
could have made twelve per cent, on his capital with a profit 
of ten cents a barrel. Scofield, Shurmer and Teagle, of Cleve- 
land, made a profit of thirty-four cents a barrel in 1875, an( ^ 
cleared $40,000 on an investment of $65,000. Fifty-two cents 
a barrel profit then was certainly not to be despised. The 
South Improvement Company gentlemen were not modest in 
the matter of profits, however, and they launched the scheme 
whose basic principles have figured so largely in the devel- 
opment of the Standard Oil Trust. 

The success which Mr. Rockefeller had in getting the 
refiners of the country under his control, and the methods he 
took to do it, we have traced. It will be remembered that for 
a brief period in 1872 and 1873 he held together an associa- 
tion pledged to curtail the output of oil, but that in July, 
1873, it went to pieces.* It will be recalled that three years 
after, in 1875, he put a second association into operation, 
which in a year claimed a control of ninety per cent, of the 
refining power of the country, and in less than four years 
controlled ninety-five per cent.f This large percentage Mr. 
Rockefeller has not been able to keep, but from 1879 to the 
present day there has not been a time when he has not con- 
trolled over eighty per cent, of the oil manufacturing of the 
country. To-day he controls about eighty-three per cent. 

Now it is generally conceded that the man or men who 
control over seventy per cent, of a commodity control its 
price within limits, very strict limits, too, such is the force 
of economic laws. In the case of the Standard Oil Company 

* See Chapter IV. f See Chapter V. 

[ 197] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the control is so complete that the price of oil, both crude 
and refined, is actually issued from its headquarters. 

Now, with the help of the chart, let us see what Mr. 
Rockefeller and his colleagues have been able to do from 
1872 to 1904 with their power over the price of oil. The first 
association which worked was brought about late in 1872. 
What happened? Prices for refined oil were run up from 
23 cents a gallon in June to 27 cents a gallon in November, 
and the margin increased from 13.6 cents to 17.7 cents. From 
a profit of about i*/2 cents a gallon they rose to one of over 
4 cents. Unfortunately, however, the refiners of that period 
were not educated to the self-restraint necessary to carry out 
this scheme. They very soon failed to keep down their out- 
put of oil and overstocked the market, and the whole machine 
went to pieces. Mr. Rockefeller had been able to make oil 
dear for a short time, but only for a short time. Worse than 
that, what he had been able to do brought severe public con- 
demnation. It had, indeed, produced exactly the result the 
economists tell us too high prices must produce limitation 
of the market and stimulation of competition in rival goods. 
Mr. Rockefeller's second scheme to work out the good of the 
oil business by making oil dear resulted in decreasing oil 
exports for the first time since the discovery of oil.* It also 
increased one of the chief grievances of the American re- 
finery that was, the exporting of the crude oil to be refined 
in Europe. Where the exports of crude had been something 
over eleven million gallons in 1871, they were now over six- 
teen millions. And it set the shale-oil factories of Scotland 
to work merrily. It was cheaper for Great Britain to use oil 
from Scottish shales than to buy oil sold under Mr. Rocke- 
feller's great plan for benefiting the oil business. So for the 
time the scheme fell down. 

* In 1871 there was something over 1 32,000,000 gallons of illuminating oil exported. 
In 1872 it fell to about 1 18,000,000 gallons. 

[I 9 8] 



THE PRICE OF OIL 

As the diagram shows, the margin dropped rapidly back 
after this brief success from eighteen to thirteen cents, nor 
did it stay there. With the return of competition, in the fall 
of 1873, it continued to drop rapidly. By the end of the year 




1871 



1873 



/874- 



J87S 



1876 



J877 




1866 TO 1872. 



1872 TO 1877. 
Fragment of oil chart, showing decline in mar- 



Fragment of oil chart, showing decline of mar- 
gin between crude and refined oil in the first seven gin after the failure of the Refiners' Association in 
years after the pipe-line was proved practical. No- 1871, and the abnormal increase in the margin in 
tice sudden rise in refined oil in 1872 caused by the 1876, when the next combination was perfected, 
first Refiners' Association. 

it was down to eleven cents; by the end of 1874 to nine. What 
had done it? A decline in expenses, coming from the multi- 
plication of pipe-lines, reduction in freight charges, and free 
competition in the markets. Nothing else. 

In spite of the obvious economic effects of his scheme in 
1872 Mr. Rockefeller did not give up his theory that to make 
oil dear was for the good of the business. He went steadily 
ahead, developing quietly his plan of a union of all refiners, 
pledged to limit their output of oil to an allotment he should 
assign, to accept the freight rates he should arrange for, to 



THE HISTORY OF THE STANDARD OIL COMPANY 

buy and sell at the prices he set. It was a year before the 
alliance was nearly enough complete to make its power felt. 
By the summer of 1876 it claimed to have nine-tenths of the 
refiners in the country in line. At that time a situation rose 
in the crude oil market well calculated to help it in its 
intention to raise prices. This was a falling off in the pro- 
duction of crude oil. An advance in its price had come in 
the summer of 1876. Refined had, of course, responded to 
the rise. But as the fall came on and the exporters prepared 
to load their cargoes, the syndicate demanded a price for 
refined much above that for which the market price of 
crude called. The embargo which followed has already been 
described in Chapter VII of this narrative. It was as straight 
a hold-up as our commercial history offers, rich as it is in 
that sort of operations. From October to February refined 
oil was held at a price purely arbitrary. It was the first fruits 
of the Great Scheme. 

The winter's work was a great one for the Standard Com- 
bination. It not only demonstrated that Mr. Rockefeller was 
correct in his theory that the way to make oil dear was to 
refuse to sell it cheap, but not since the coup of 1872, with 
the South Improvement Company, had Mr. Rockefeller 
reaped such rewards. The profits were staggering. One of the 
leading gentlemen in this pretty affair told the writer once 
that he had sold one cargo at thirty-five cents a gallon, oil 
which cost him on board the ship a trifle under ten cents. 
To-day one-fourth of a cent profit a gallon is considered 
large on export oil. The Standard Oil Company of Ohio had 
always paid a good dividend,* but the year of this raid, 

* According to the statement of the Standard Oil Company, made in a suit for 
taxes brought by the state of Pennsylvania in 1881, it declared dividends as follows: 
In 1873, year ending the first Monday in November, $347,610; in 1874, 358,605; 
in 1875 (the capital stock was raised from $2,500,000 to $3,500,000 in 1875), $514,230; 
in 1876, $501,285; in 1877, $3,248,650.01; in 1878, $875,000; in 1879, $3,150,000; 
in 1880, $1,050,000. 

[ 2OO ] 



THE PRICE OF OIL 

1877, it surpassed all bounds. On a capitalisation of $3,500,- 
ooo it paid $3,248,650.01, only a fraction less than 100 per 
cent. One of its stockholders, the late Samuel Andrews, when 
on the witness-stand in 1879, said they might have paid the 
dividend twice over and had money to spare. 

The profits were great, but notice the forces set in motion 
by this coup. The exporters were angry. The buyers in 
Europe were angry. If the Americans are going to force up 
prices in this way, they said, we will not buy their refined 
oil. We will import their crude and refine it ourselves. We 
will go back to shale oil. A first result, then, of this attempt 
to hold prices up to a point conspicuously out of proportion 
to the raw product was that the exports of illuminating oil 
fell off they were less by a million gallons in 1878 than in 
1877. In the United States the market was threatened in the 
same way. There had been much trouble in the years just 
preceding these events with extortionate prices for gas 
particularly in New York and Brooklyn. Illuminating oil 
was so much cheaper that it had been largely substituted, but 
this artificial forcing of the oil market in 1876-1877 caused 
a threat to return the next year to gas. 

The effect on the refiners who were operating with Mr. 
Rockefeller in running arrangements was decidedly bad. 
Each refiner was under bonds to use only a certain percent- 
age of his capacity, and to shut down entirely if Mr. Rocke- 
feller said so. Scofield, Shurmer and Teagle, independents 
of Cleveland, who had yielded to the attractiveness of Mr. 
Rockefeller's scheme, and had gone into a running arrange- 
ment with him to limit their output, made $2.52 a barrel 
on their oil from July, 1876, to July, 1877! They had been 
satisfied with thirty-four cents profit a barrel the year before. 
Since making oil paid so well, why not make more? Why 
keep their allotment down to exactly 85,000 barrels, as they 
had agreed, when they were prepared to make 180,000? 

[201 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

They did not. They put out a few extra thousand barrels 
each year. Others did the same. It was, of course, fatal to 
the "good of the oil business." Not only did these profits 
tempt many refiners to overrun their allotment; the few 
independents left profited by the prices and increased their 
plants; the great Empire Transportation Company combined 
refineries with its pipe-lines as Mr. Rockefeller was adding 
pipe-lines to his refineries. Thus competition was stimulated. 

The effect on the men who produced oil was, of course, 
bad. They had found it impossible at any time, while the 
refined was kept so high, to force crude up to a correspond- 
ing point, though every effort was made. The producers 
threatened to combine and refine their own oil. When the 
Empire Transportation Company went into refining the pro- 
ducers heartily favoured the movement, and throughout the 
next year a severe competition kept prices down. The Em- 
pire was finally wiped out; the producers, aroused by this 
failure, combined against the Standard in one of the greatest 
associations they ever had. From 1878 to 1880 they fought 
continuously to restore competition. They secured the intro- 
duction into Congress of a bill to regulate interstate com- 
merce; they fought for more drastic laws against railroad 
discrimination in the state of Pennsylvania; they persuaded 
the state to prosecute the Pennsylvania Railroad for dis- 
crimination; they indicted Mr. Rockefeller and eight of his 
colleagues for criminal conspiracy; and they supported by 
money and influence a scheme for a seaboard pipe-line con- 
nected with the independent refineries.* 

If one will look at the chart he will see graphically the 
effect on Mr. Rockefeller's ambition of this fundamentally 
sound independent movement. The margin between crude 
and refined, thrust up to over twenty cents by the combina- 
tion of 1878, fell rapidly under the combined efforts of the 

* See Chapter VII. 
[ 2O2 ] 



THE PRICE OF OIL 

independents through 1877, 1878 and 1879. In the latter 
year it touched five cents for the first time in the history of 
the business. Competition resulting in economies, in a revo- 
lutionising transportation invention the seaboard pipe-line 




1876 TO 1880. 

Fragment of chart, showing decline in margin after the coup 
of 1876 1877, caused by alliance of independent oil men and 
the success of the first seaboard pipe-line. 

in a greatly extended foreign market, brought down this 
margin in 1879. Nothing else. 

Those who have read this history know what became of 
the competitive movement of these years of 1878-1879. They 
remember how the Producers' Union compromised its suits 
and abandoned its efforts for interstate commerce regulation. 
They remember, too, how, just before the great seaboard 
pipe-line project was proved to be a success, all but one of 
the independent refineries were, by one means or another, 
persuaded to sell or to combine with the Standard, leaving 
the Tidewater without an outlet for its oil. Before the end 

[203] 



THE HISTORY OF THE STANDARD OIL COMPANY 

of 1879 the Standard claimed ninety-five per cent, of the 
refining business. Now examine the chart for the effect on 
the price of oil in 1880, of this doing away with competition 
another sudden uplift of the price of refined, this time 
without the excuse of a rise or probable rise in crude. For 
three years oil had not been sold so high as it was in 1880, 
when the exporters began to take on their winter's supply. 
An interesting contemporary account of this coup of 1880, 
and the way in which it was managed, is found in the excel- 
lent monthly Petroleum Trade Report, published by John 
C. Welch. It is dated November, 1880, and headed "Very 
Sharp Practice": 

"There is made each day in New York what is known as an official quotation 
for refined oil, this official quotation being made as a matter of convenience in cabling 
the price of refined oil throughout the world. Refined oil not being sold at an open 
board, it is sometimes difficult to quote it accurately, but by having an ' official quotation ' 
this can be quoted, and the difficulty is supposed to be, in a measure at least, remedied. 
The 'official quotation' is made by three petroleum brokers appointed by the Produce 
Exchange for that purpose, who meet each day after exchange hours for the purpose 
of establishing it. There is one party, and one party only, that have very large lots 
to sell, and so important a position do they hold in the business that their prices are 
ordinarily the market. Of course, to make transactions, their prices and buyers' prices 
have to come together, and transactions establish a market much better than prices 
offered to buy or sell at, but without transactions. At many times, if the Standard 
do not sell, there are no transactions, and, consequently, the Standard's asking price 
is leaned upon to establish an official quotation. During September, the official quota- 
tion went up from Q| cents to nj cents, with comparatively little demand, as the 
foreign stocks were large, and very little oil was required to supply the world's wants. 
The upward movement was, consequently, purely arbitrary. Arbitrary prices are, 
however, a part of the Standard's every-day life, and I am not taking at this time any 
exception to them. All through October and up to November 13, the official quotation 
was 12 cents, or sometimes a little over and sometimes a little under, and as this price 
did not meet the views of buyers to but slight extent, the Standard were supposed to be 
exercising a Roman virtue in not selling. Twelve cents continued as the official quota- 
tion to November 13, without any wavering, but from the I3th to the i8th, while ' 12 
cents asked by refiners' continued in the quotation, such sentences as these were 
included at different dates: 'Other lots obtainable at II cents.' 'Sales at 10} cents, 

[20 4 ] 



THE PRICE OF OIL 

offered at that.' 'Other lots obtainable at irregular prices, from 10 to loj cents.' 
On November 18, the quotation was ' 10 to 12 cents.' I give the following quotation 
of the New York refined market as published in my Oil City daily report of November 
II : 'The New York market yesterday closed, secretly offered and unsalable at ni 
cents, and probably at 1 1 1 cents by resales and outside refiners, and likely by Standard, 
though they openly ask 12.' 

"The point that seems apparent is that the official quotation of 12 cents ceased 
to be an honest quotation a considerable time before it was abandoned. The committee 
making the quotation can probably justify their position by the custom of the trade 
of regarding the prices the Standard openly ask as the market, nevertheless they, 
and the Produce Exchange whom they represent, were the bulwark from behind 
which the Standard were able to get off their hot shot against the consuming trade 
in the United States and the consuming trade in Europe, who all this time were buying 
Standard oil on the basis of 12 cents at New York, the supplies at the time being 
drawn from their stock in Europe and from their various depots in the United States." 

But the performance of 1876 and 1877 was not forgotten 
in Europe. In 1879 tne exporters and buyers from all the 
great foreign markets had met in Bremen in an indignation 
meeting over the way the Standard was handling the oil 
business. Remonstrances came from the consuls at Antwerp 
and Bremen to our State Department concerning even the 
quality of oil which had been sent to Europe by the Stand- 
ard. John C. Welch, who was abroad in 1879, was told by 
a prominent Antwerp merchant: "I am of the opinion that 
if the petroleum business continues to be conducted as it 
has been in the past in Europe, it will go to smash." * The 
attempt to repeat in 1880 what had been done in 1876 failed. 
The exports of illuminating oil that year fell much below 
what they had been the year before. In 1879, 365,000,000 gal- 
lons of refined oil were exported; in 1880, only 286,000,000 
gallons. Exports of crude, on the contrary, rose from about 
28,000,000 gallons to nearly 37,000,000 gallons. The foreign- 
ers could export and refine their own oil cheaper than they 
could buy from Mr. Rockefeller. Competition was after him, 

* Report of the Special Committee on Railroads, New York Assembly, 1879. Vol- 
ume IV, page 3680 

[205] 



THE HISTORY OF THE STANDARD OIL COMPANY 

too, for the Tidewater, whose refineries he had cut off, had 
stored their oil, built new plants, and were again ready to 
compete in the market. 

This third corner of the oil market seems to have con- 
vinced Mr. Rockefeller and his colleagues at last that, how- 
ever great the fun and profits of making oil very dear, in 
the long run it does not pay; that it weakens markets and 
stimulates competition. They learned a lesson in these years 
they have never forgotten that when you make a scoop it 
must not be so big that you will never have a chance to make 
another one ; that if you want to keep your power to manipu- 
late the market you must use that power so modestly that 
the public in general will not realise you have it. Again and 
again the effect of the experiences of 1872, 1876 and 1880 
crops out in the testimony of Standard officials. Benjamin 
Brewster once said to a Federal Investigating Committee, 
which had asked if the Standard could not fix the price of 
oil as it wished : "At the moment many things may be done, 
but the reaction is like a relapse of typhoid fever. The 
Standard Oil Company can never afford to sell goods dear. 
The people would go to dipping tallow candles in the old- 
fashioned way if we got the price too high." The after-effects 
of the first great raids, then, were salutary. The Standard 
learned the limitations set on monopolies by certain great 
economic laws. 

But if the Standard Oil Company learned in its first at- 
tempts to raise the price of oil that they could not in 
the long run afford to make from 100 to 350 per cent., 
they by no means gave up their attempt to keep their con- 
trol, and to hold up profits as high as they could without 
injuring the market or inviting too strong competition. If 
one will look at the chart showing the fluctuations from 
1879, when control was achieved, to the beginning of 1889, 
one will find that for ten years the margin between refined 

[206] 



THE PRICE OF OIL 

oil and crude never fell below the point reached by com- 
petitive influences in the former year, though frequently it 
rose considerably above. Yet it is in this period that the 
Standard did all its great work in extending markets, in 
developing by-products, and in introducing the small and 
varied economies on which it rests its claim to be a great 



1879 



/880 



1881 



J88Z 



1883 /884 



/88S /886 



/887 



1888 



/889 



1879 TO 1889. 

Fragment of chart, showing how margin reached in 1879 by 
competition was raised and sustained for ten years under the monopoly 
achieved by the Standard Oil Company in 1880. The sudden rise in 
refined in the fall of 1880 was a purely arbitrary price. Notice that 
crude was stationary at the time. 

public benefactor. The first eight years of its existence had 
been spent in bold and relentless warfare on its competitors. 
Competition practically out of the way, it set all its great 
energies to developing what it had secured. In this period it 
brought into line the foreign markets and aided in increas- 
ing the exports of illuminating oil from 365,000,000 gallons 
in 1879 to 455,000,000 in 1888; of lubricating, from 3,000,000 
to 24,000,000, and yet this great extension of the volume of 

[207] 



THE HISTORY OF THE STANDARD OIL COMPANY 

business profited the consumer nothing. In this period it 
laid hands on the idea of the Tidewater, the long-distance 
pipe-lines for transporting crude oil, and so rid itself prac- 
tically of the railroads, and yet this immense economy prof- 
ited the public nothing. In spite of the immense develop- 
ment of this system and the enormous economies it brought 
about a system so important that Mr. Rockefeller himself 
has said: "The entire oil business is dependent upon this 
pipe-line system. Without it every well would shut down, 
and every foreign market would be closed to us" the mar- 
gins never fell the fraction of a cent from 1879 to 1889, though 
it frequently rose. In this period, too, the by-products of oil 
were enormously increased. The waste, formerly as much as 
ten per cent, of the crude product, was reduced until practi- 
cally all of the oil is worked up by the Standard people, and 
yet, in spite of the extension of by-products between 1879 and 
1889, the margin never went below the point competition had 
forced it to in 1879. 

The enormous profits which came to the Standard in these 
ten years by keeping out competition are evident if we 
consider for a moment the amount of business done. The 
exports of illuminating oil in this period were nearly 
5,000,000,000 gallons; of this the Standard handled well 
toward ninety per cent. Consider what sums lay in the abil- 
ity to hold up the price on such an amount even an eighth 
of a cent a gallon. Combine this control of the price of re- 
fined oil with the control over the crude product, the ability 
to depress the market for purchasing, an ability used most 
carefully, but most constantly; add to this the economies and 
development Mr. Rockefeller's able and energetic machine 
was making, and the great profits of the Standard Oil Trust 
between 1879 and 1889 are easily explained. In 1879, on a 
capital of $3,500,000, the Standard Oil Company paid 
$3,150,000 dividends; in 1880 it paid $1,050,000. In 1882 it 

[208] 



THE PRICE OF OIL 

capitalised itself at $70,000,000. In 1885, three years later, 
its net earnings were over $8,000,000; in 1886, over $15,- 
000,000; in 1888, over $16,000,000; in 1889, nearly $15,000,- 
ooo. In the meantime the net value of its holdings had 
increased from $72,000,000; in 1883, to over $101,000,000. 
While the Standard was making these great sums, the men 
who produced the oil saw their property depreciating, and the 
value of their oil actually eaten up every two years by the 
prices the Standard charged for gathering and storing it. 

But to return to the chart. With the beginning of 1889 
the margin begins to fall. This is so in spite of a rising crude 
line. It would look as if the Standard Oil Company had sud- 
denly had a change of heart. In the report of that year's 
business made to the trustees of the Standard Oil Trust, the 
following elaborate and interesting calculation was presented: 

"The quantity of crude oil consumed by the Standard manufacturing interests in 
1889 was 896,250,325 gallons, or 20,339,293 barrels, an increase over the previous year 
of 1 19, 073,589 gallons, or 2,835,085 barrels, an increase of 15 . 3 per cent. 

"The sales of crude oil by our interests for purposes other than their own manu- 
facture were 135,788,959 gallons, or 3,232,832 barrels, an increase of 43 i per cent, 
over the previous year, making the total consumption of crude oil through our 
interests 1,032,029,284 gallons, or 24,572,126 barrels, an increase over 1888 of 3,809,- 
917 barrels, or 18.35 percent., and exceeding the consumption of 1887, which was 
the largest of any previous year, by 12.7 per cent. 

"The quantity of refined oil produced was 666,742,547 gallons, or 13,334,851 barrels 
of 50 gallons each; of lubricating paraffine and compounded oils 43,862,795 gallons, 
or 877,256 barrels, and of other products 160,712,183 gallons, or 3,214,243 barrels, 
making a total of all products of 871,371,525 gallons, or 17,426,350 barrels, valued at 
over $46,000,000. 

"The average cost of the crude consumed in refining was .211 of a cent more than 
in 1888, while the average price realised per gallon of crude was .090 of a cent less, 
showing a decrease in the margin between the crude and finished product of .301 
of a cent. This represents a saving to the consumer over what the finished products 
would have cost him if the same margin had been maintained on the increased price 
of crude of $2,697,000. This has been done without a corresponding loss to our interests 
by a decrease in cost of manufacturing and marketing, and by the increased quantity 

[209] 



THE HISTORY OF THE STANDARD OIL COMPANY 

handled .204 of a cent, effecting a saving of $>r,86o,ooo, and the difference has been 
more than made up by further reductions of cost of marketing by our distributing 
interests, as well as in the increased quantity handled. Although the average price 
of crude has been the highest this year of any of the last five years, the increase over 
the price of 1887 (when the price on both crude and refined was the lowest for that 
period) being about 22\ per cent., the average price of products has increased but 
12! per cent., showing a saving to the consumer of 10 per cent. We have therefore 
continued to make good the claim that the Standard has heretofore maintained of 
cheapening the cost of the products to the consumers by giving them the benefits 
of the saving in costs effected by consolidation of interests." * 

This certainly sounds just even philanthropic. It is ex- 
actly what the consumer claims is his due to have a share 
of the economies which undoubtedly may be effected by 
such complete and intelligent consolidation as Mr. Rocke- 
feller has effected. But was it combination that caused this 
falling of the margin? As a matter of fact this lowering of 
the margin was the direct result of competition. In 1888 a 
German firm, located in New York City, erected large oil 
plants in Rotterdam and Bremerhaven. They put up storage 
tanks at each place of 90,000 barrels' capacity. They also 
established a storage depot of 30,000 barrels at Mannheim, 
and took steps to extend their supply stations in Germany 
and Switzerland. They built tank steamers in order to ship 
their oil in bulk. These oil importers allied themselves with 
certain independent refiners, and interested themselves also in 
the co-operative movement which the producers of Pennsyl- 
vania were striving to get into operation at this time. The 
extent of the undertaking threatened serious competition. In 
the same year imports of Russian oil into the markets of West- 
ern Europe began for the first time to assume serious pro- 
portions. Russian oil had, from the beginning, been a possible 
menace to American petroleum, for the wonderful fields on 
the Caspian were known long before oil was "struck" in 

* Plaintiff's Exhibit, Number 51, in the case of James Corrigan vs. John D. Rocke- 
feller in the Court of Common Pleas, Cuyahoga County, Ohio, 1897. 

[210] 



THE PRICE OF OIL 

Pennsylvania. They did not begin to be exploited in a way 
to threaten competition until late in the eighties. In 1885 
consuls at European ports began to report its appearance 
fifty barrels were landed at Bremen that year as against 
180,855 f American oil. In this year, too, the first Russian 
oil went to Asia Minor, where "Pratt" oil had long held sway. 
The first cargo reported at Antwerp was in March, 1886. In 
April, 1890, the consul at Rotterdam, in calling attention to 
the independent American competition, said of Russian oil: 
"It is no longer a serious competitor for the petroleum trade 
of Western Continental Europe." The consul said that while 
the American oil shipments to the five principal continental 
ports were fully 4,000,000 barrels per year, those of Russian 
were less than a tenth of that number. However, a growth 
of 400,000 barrels in five years was something, and the 
Standard Oil Trust was the last to underestimate such a 
growth. Prices- of export oil immediately fell. There was 
nothing in the world that gave oil consumers the benefit of 
the Standard's savings by economies in 1889 but the compe- 
tition threatened by Russia and the American and German 
independent alliance. The Standard, to offset it, not only 
lowered its price, but it followed the German company to 
Rotterdam in order to put up an oil plant similar to the one 
which had been erected by those independents. They also 
purchased at this time the great oil establishments at Bremen 
and Hamburg which had hitherto been owned and operated 
by Germans. A full account of this new development in the 
oil trade was reported by the American consul at Rotterdam 
in April of 1890, and is to be found in the consular reports 
of that year. 

Follow the lines a little farther. Notice how, in 1892, the 
price of refined oil begins to fall, although crude is station- 
ary. Notice how the refined line remains steady throughout 
1893 and 1894, although the crude line steadily rises. This 

[211] 



THE HISTORY OF THE STANDARD OIL COMPANY 

went on for nearly three years, until there was a margin of 
only three cents between crude and refined oil. The barrel, 
which is always reckoned in the official quotations of export 
refined oil, costs two and a half cents per gallon, and the price 
of manufacturing is usually put at one-half a cent. The cost 
of transporting the oil was not covered by the margin the 



30 



15 



/890 /89I S8JZ /8S3 /S94- /895 /896 /897 /898 /899 J90O /9O/ /90Z. J9O3 /fiOj 




35 



25 



1890 TO 1904. 

Fragment of chart, showing relation between crude and refined oil in the last fourteen years. Notice 
effect on margin from 1890 to 1894 of rise of strong competitive forces. Notice also how margin be- 
tween price of crude and of domestic oil increased in the winter of 1903-1904, during the coal famine. 

greater part of the year 1894. Now, the Standard Oil Com- 
pany were not selling oil at a loss at this time out of love for 
the consumers, although they made enough money in 1894 
on by-products and domestic oil to have done so their net 
earnings were over $15,000,000 in 1894, and they reckoned 
an increase in net value of property of over $4,000,000 they 
were fighting Russian oil and the independent combination 
started in 1889. By 1892 this combination was in active oper- 
ation. The extent of this movement was described in the last 
chapter of this narrative. At the same time certain large pro- 

[212] 



THE PRICE OF OIL 

ducers in the McDonald oil field built a pipe-line from Pitts- 
burg to Baltimore, the Crescent Line, and began to ship crude 
oil to France in great quantities. It looked as if both com- 
binations meant to do business, and the Standard set out to 
get them out of the way. One method they took was to prevent 
the refiners in the combination making any money on ex- 
port oil. 

The extent to which cutting was carried on for two years, 
beginning with the fall of 1892, has been referred to in the 
last chapter, but is perhaps worth repeating in this connec- 
tion. In January of 1892 crude oil was selling at 53^ cents 
a barrel at the wells, and refined oil for export at 5.33 cents 
a gallon in barrels. Throughout the year the price of crude 
advanced, until in December it was 78^ cents. Refined, on 
the contrary, fell, and it was actually 18 points lower in 
December than it had been twelve months before. Through- 
out 1894 the Standard kept refined oil down; the average 
price of the year was 5.19 cents a gallon, in face of an aver- 
age crude market of 83^ cents, lower than in January, 1893, 
with crude at 53^/2 cents a barrel. 

After two years they gave it up. It was too expensive. The 
Crescent Line sold to them, but the other independents were 
too plucky. They had lost money for two years, but they were 
still hanging on like grim death, and the Standard concluded 
to concentrate their attacks on other points of the combina- 
tion rather than on this export market where it was costing 
them so much. 

About the end of 1894 the depression of export oil was 
abandoned, as the chart shows. Notice that from 1895 to 
1898 the margin remained at about four cents, that in 1900 
it rose to six cents, and from that time until June, 1904, 
it swung between four and a half and five. The increasing 
competition in Western Europe of independent American 
oils, and the rapid rise since 1895, particularly of Russian 



THE HISTORY OF THE STANDARD OIL COMPANY 

oil, are what has kept this margin down. It is doubtful, 
such is the growing strength of these various competitive 
forces, if the Standard Oil Trust will ever be able to put up 
the margin on export oils. If there were only the American 
independents to reckon with, a compromise might be possible, 
but Russia, Burmah and Sumatra are all in the game. By 
1896 Russia was exporting 210,000,000 gallons of petroleum 
products (America in that year exported over 931,000,000 
gallons), and these products were going to nearly every part 
of Europe and Asia. They began to cut heavily into the trade 
of the Standard in China, India, Great Britain and France. 
By 1899 the exports of Russian oil were over 347,000,000 
gallons; in 1901, over 428,000,000 gallons. In China, India, 
and Great Britain particularly, has the Russian competition 
increased. While at one time the Standard Oil Company had 
almost the entire oil trade at the port of Calcutta, last year, 
1903, out of 91,500,000 gallons imported, only about 6,500,- 
ooo gallons were of American oil. In China, Sumatra oil is 
now ahead of American, the report for 1903 being: Ameri- 
can, 31,060,527 gallons; Sumatra, 39,859,508. 

For the Standard there is good profit in this margin of 
four and a half cents for export oil. The expenses the margin 
must cover are the transportation of the crude from the wells 
to New York, the cost of manufacture, the barrel and the 
loading. For twenty-five years the published charge of the 
Standard Oil Company for gathering oil from the wells has 
been twenty cents a barrel. The charge for bringing it to 
New York has been forty cents, a little less than one and a 
half cents a gallon. It costs, by rough calculation, one-half a 
cent to make the oil and load it. The barrel is usually reck- 
oned at two and a half cents. Here are four and a half cents 
for expenses the entire margin. Where the Standard has 
the advantage is in its ownership of oil transportation. A 
common carrier gathering and transporting in 1902 all but 

[214] 



THE PRICE OF OIL 

perhaps 10,000 barrels of the 150,000 barrels' daily produc- 
tion of Eastern oil, the service for which the outsider pays 
sixty cents, costs it from ten to twelve cents at the most lib- 
eral estimate. Here is over a cent saved on a gallon, and a 
cent saved, where millions of gallons are in question, makes 
not only great profits, but keeps down competition. The re- 
finer who to-day must pay the Standard rates for transporta- 
tion cannot compete in export oil with them. In January 
of 1904, when the chart shows the margin to have been 
about four and three-quarter cents, an independent refiner 
in the state of Ohio, dependent on the Standard for oil, 
gave the writer a detailed statement of costs and selling 
prices of products in his refinery. According to his statement 
he lost one and three-fifth cents on his export oil. He was 
forced, of course, to pay Standard transportation prices for 
crude and railroad charges for refined from Ohio to New 
York harbour.* 

That there would have been such a transportation situation 
to-day had it not been for the discrimination by the railways, 
which threw the pipes into the Standard's hands in the first 
place, and the long story of aggression by which the Standard 
has kept out rival pipes, and so been able for twenty-five 
years to sustain the price for transportation, is of course evi- 
dent. To-day, as thirty years ago, it is transportation advan- 
tages, unfairly won, which give the Standard Oil Company 
its hold. It is not only on transportation that the Standard 
to-day has great advantages over the independent refiner in 
the export market. As said at the beginning of this chapter, 
the Standard Oil Company "makes the price of refined oil" 
within strict limits. Of course, making the market, it has 
all the advantages of the "inside track." Its transactions can 

* It costs the Cleveland refiner .64 of a cent a gallon to bring oil in bulk from the 
Oil Regions to his refinery, and 1 . 44 cents per gallon to send it refined in bulk to 
New York. 

[215] 



THE HISTORY OF THE STANDARD OIL COMPANY 

be carried on in anticipation of the rise or fall. For in- 
stance, in January of 1904, when there were strong fluc- 
tuations in the water-white (150 degrees test) prices, the 
agent of an independent refiner, who was in Wall Street try- 
ing to keep track of markets for out-of-town competitors, 
reported the price as 9.20 cents a gallon. The refiners' goods 
were refused on the ground that this was above the market. 
The Standard Oil export man and a broker who worked with 
the company were consulted. The market was 9.20. Further 
investigation, however, showed that at headquarters the fig- 
ure given out privately was 8.70 cents. The disadvantage 
of the outsider in disposing of his goods is obvious. The 
Standard makes the official market, and undersells it. The 
situation seems to be the same in practice as that described 
by Mr. Welch, in 1880, though now the fiction of a committee 
of brokers has been done away with. Of course there is noth- 
ing else to be expected when one body of men control a 
market. 

Thus far the illustrations of Mr. Rockefeller's use of his 
power over the oil market have been drawn from export oil. 
It is the only market for which "official" figures can be ob- 
tained for the entire period, and it is the market usually 
quoted in studying the movement of prices. It is of this grade 
of oil that the largest percentage of product is obtained in 
distilling petroleum. For instance, in distilling Pennsylvania 
crude, fifty-two per cent, is standard-white or export oil, 
twenty-two per cent, water-white the higher grade com- 
monly used in this country thirteen per cent, naphtha, ten 
per cent, tar, three per cent. loss. The runs vary with dif- 
ferent oils, and different refiners turn out different products. 
The water-white oils, while they cost the same to produce, 
sell from two to three cents higher. The naphtha costs the 
same to make as export oil, but sells at a higher price, and 
many refiners have pet brands, for which, through some 

[216] 



THE PRICE OF OIL 

marketing trick, they get a fancy price. The Standard Oil 
Company has a great number of fancy brands of both illu- 
minating and lubricating oils, for which they get large prices 
although often the oil itself comes from the same barrels 
as the ordinary grade. Now it is from the extra price ob- 
tained from naphtha, water-white, fancy brands, and by- 
products that the independent refiner makes up for his loss 
on export oil, and the Standard Oil Trust raises its dividends 
to forty-eight per cent. The independent refiner quoted above, 
who in January of 1904 lost i^ cents on export oil, made 
enough on other products to clear 8.3 cents a barrel on his 
output eighty-three dollars a day clear on a refinery of 1,000 
barrels capacity, which represents an investment of $150,000. 
Turn now to the price of domestic oil, and examine the 
chart to see if we have fared as well as the exporters. The 
line C on the chart represents the price per gallon in New 
York City of 150 water-white oil in barrels from the 
beginning of 1881 to June, 1904.* The figures used are those 
of the Oil, Paint and Drug Reporter. A glance at the chart 
is enough to show that the home market has suffered more 
violent, if less frequent, fluctuations than the export market. 
A suggestive observation for the consumer is the effect of a 
rise in crude on the price of domestic oil. The refined line 
usually rises two or three points to every one of the crude 
line. It is interesting to note, too, how frequently high do- 
mestic prices are made to offset low export prices; thus, in 
1889, when the Standard was holding export oil low to 
fight competition in Europe, it kept up domestic oil. The 
same thing is happening to-day. We are helping pay for the 
Standard's fight with Russian, Roumanian and Asiatic oils. 
But this line, while it shows what the New York trade has 
paid, is a poor guide for the country as a whole. Domestic 
oil, indeed, has no regular price. Go back as far as anything 

* Trustworthy and regular quotations are not to be obtained earlier than 1881. 

[217] 



THE HISTORY OF THE STANDARD OIL COMPANY 

like trustworthy documents exist, and we find the most aston- 
ishing vagaries, even in the same state. For instance, in a 
table presented to a Congressional Committee in 1888, and 
compiled from answers to letters sent out by George Rice, 
the price of 110 oil in barrels in Texas ranged from 10 
to 20 cents; in Arkansas, of 150 oil in barrels, from 8 to 
18; in Tennessee, the same oil, from 8 to 16; in Mississippi, 
the same, from n to 17. In the eighties, prime white oil 
sold in barrels, wholesale, in Arkansas, all the way from 8 
to 14 cents; in Illinois, from jy 2 to 10; in Mississippi, from 
7/4 to ! 3^25 m Nebraska, 7^ to 18; in South Carolina, 8 
to i2 l /2 ; and in Utah, 13 to 23. Freight and handling might, 
of course, account for one to two cents of the difference, but 
not more. 

A table of the wide variation in the price of oil, compiled 
in 1892, showed the range of price of prime white oil in 
the United States to be as follows : 

In barrels 6 to 25 cents 

In cases 14 to 345 cents 

In bulk 3$ to 25 cents 

The same wide range was found in water-white oil: 

In barrels 6i to 30 cents per gallon 

In cases 16 to 35 cents per gallon 

In bulk 3^ to 29 cents per gallon 

In 1896 an investigation of prices of oil sold from tank- 
wagons in the different towns of Ohio, in the same week, 
was made, and was afterward offered as sworn testimony in 
a trust investigation in that state. The price per gallon 
ranged from 4^ cents to 8^4 cents. 

The most elaborate investigation of oil prices ever made 
was that instigated by the recent Industrial Commission. In 
February, 1901, the commission sent out inquiries to 5,000 
retail dealers, scattered from the Atlantic to the Pacific and 

[218] 



THE PRICE OF OIL 

from the Lakes to the Gulf, asking the prices of certain com- 
modities, among them illuminating oils; 1,578 replies were 
received. The tables prepared offered striking examples of 
the variability of prices thus: 

In Colorado the wholesale price of illuminating oil (150 
test) varied from 13 to 20 cents; in Delaware, 8 to 10; in 
Illinois, 6 to 10; in Alabama, 10.50 to 16; in Michigan, 5.50 
to 12.25; m Missouri, 7.50 to 12.50; in Kentucky, 7 to 11.50; 
in Ohio, 5.50 to 9.75; in California, 12.50 to 20; in Utah, 
20 to 22; in Maine, 8.25 to 12.75 (freight included in all 
these prices). 

The difference between the highest and the lowest whole- 
sale prices in the same states varies from 8 cents in Oregon 
(12.50 to 20.50) to 1.50 in Rhode Island (8.50 to 10). Of 
course, in the former case, two or even three cents of the 
difference may be due to freight, but hardly more. Take 
adjoining states, for instance. In Vermont there is a differ- 
ence of 4.50 cents between the highest and lowest price of 
oil; in New Hampshire, only 1.75. In Delaware there is a 
difference of 2 cents; in Virginia, of 6. 

Compare, now, the lowest price in different states. In Ohio 
and Pennsylvania oil was sold as low as 5.50; 6.50 is the 
lowest in New York State, 8.50 the lowest in Rhode Island, 
and 7 the lowest in New Jersey. In Indiana oil sells as low 
as 5.50, but in Kansas nothing below 8.50 is reported (the 
freight rate to Atchison, Kansas, from Whiting, Indiana, 
which supplies both of these states, is 1.7 per gallon. The 
freight rate from Whiting to Indianapolis is .5 per gallon). 

Not long ago there fell into the writer's hands a sheet from 
one of the ledgers forming a part of the Standard Oil Com- 
pany's remarkable system of bookkeeping. This sheet gave 
the cost and selling price per gallon of different grades of 
refined oil at over a dozen stations in the same state in 
October, 1901. In the account of cost of oil were included 

[219] 



THE HISTORY OF THE STANDARD OIL COMPANY 

net cost, freight, inspection, cost of barrels and cost of mar- 
keting. The selling price was given and the margin of profit 
computed. The selling price of water-white from tank-wagons 
(it is customary for Standard tank-wagons to deliver oil from 
their stations to local dealers) ranged from % l / 2 to n l /2 cents, 
and the profit on the oil sold from the wagons varied from 
about one-half cent to over three cents. 

Now, in considering these differences, liberal allowance 
for freight rates must be made. Something of what these 
allowances should be can be judged from the table of oil 
freights which the Industrial Commission published with its 
schedule of prices. From this table many interesting com- 
parisons can be made. For instance, it cost the Standard Oil 
Company (if they paid the open rate their rivals did) 1.5 
cents to send a gallon of oil from Whiting, Indiana, their 
supply station, to Mobile, Alabama. They sold their oil in 
Alabama at wholesale from n l /2 to 16 cents. The net cost of 
this oil was under five cents in February, 1901. It cost them 
the same 1.5 cents to send a gallon of oil to Des Moines, 
Iowa (if they paid the open rate), but in Iowa they sold it 
from 7 to n. The freight from Whiting to New Orleans 
was the same 1.5 cents, but prices in Louisiana ranged from 
9 to 14 cents. According to the investigation the average 
wholesale price of oil, including freight, ranged from 8.27 
in Pennsylvania to 25.78 in Nevada. 

Freights and handling considered, there is, it is evident, 
nothing like a settled price or profit for illuminating oil in 
the United States. Now, there is no one who will not admit 
that it is for the good of the consumer that the normal mar- 
ket price of any commodity should be such as will give a 
fair and even profit all over the country. That is, that freights 
and expense of handling being considered, oil should sell at 
the same profit in Texas as in Ohio. That such must be the 
case where there is free and general competition is evident. 

[ 220 ] 



THE PRICE OF OIL 

But from the beginning of its power over the market the 
Standard Oil Company has sold domestic oil at prices vary- 
ing from less than the cost of the crude oil it took to make 
it up to a profit of 100 per cent, or more. Wherever there 
has been a loss, or merely what is called a reasonable profit 
of, say, ten per cent., an examination of the tables quoted 
above shows conclusively it has been due to competition. The 
competition is not, and has not been since 1879, very great. 
In that year the Standard Oil Company claimed ninety-five 
per cent, of the refining interests of the country. In 1888 they 
claimed about eighty per cent; in 1898, eighty-three per 
cent. This five to seventeen per cent, of independent interest 
is too small to come into active competition, of course, at all 
points. So long as one interest handles eighty-three per cent, 
of a product it is clear that it has the trade as a whole in its 
hands. The competition it encounters will be local only. But 
it is this local competition, unquestionably, that has brought 
down the price of oil at various points and caused the strik- 
ing variation in prices recorded in the charts of the Indus- 
trial Commission and other investigations. The writer has 
before her a pile of a hundred or more letters written in the 
eighties by dealers in twelve different states. These letters 
tell the effect on the prices of the introduction of an inde- 
pendent oil into a territory formerly occupied exclusively 
by the Standard: 

Calvert, Tenn. The Waters-Pierce Oil Company (Standard) so reduced the price 
of their oil here when mine arrived that I will have some trouble to dispose of mine. 

Chattanooga, Tenn. . . . Cut the price of oil that had been selling at 21 
cents to 17 cents. 

Pine Bluff, Ark. While the merchants here would like to buy from some other 
than the Standard they cannot afford to take the risks of loss. We have just had an 
example of one hundred barrels opposition oil which was brought here, which had 
the effect of bringing Waters-Pierce Oil Company's oil down from 18 to 13 cents 
one cent less than cost of opposition, with refusal on their part to sell to anyone that 
bought from other than their company. 

[221 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Vicksburg, Miss. The Chess Carley Company (Standard) is now offering 110 
oil at nine cents to any and every one. Shall we meet their prices ? All they want is 
to get us out of the market, then they would at once advance price of oil. 

These are but illustrations of the entire set of letters; 
prices dropped at once by Standard agents on the introduc- 
tion of an independent oil. A table offered to Congress in 
1888, giving the extent of their cutting in the Southwest, 
shows that it ranged from 14 to 220 per cent. 

Every investigation made since shows that it is the touch 
of the competitor which brings down the price. For in- 
stance, in the cost and profit sheet from a Standard ledger 
referred to above, there was one station on the list at which 
oil was selling at a loss. On investigation the writer found 
it to be a point at which an independent jobber had been 
trying to get a market. If one examines the tables of prices 
in the recent report of the Industrial Commission, he finds 
that wherever there is a low price there is competition. Thus, 
at Indianapolis, the only town in the state of Indiana report- 
ing competition, the wholesale price of oil was 5^ cents, 
although forty out of the fifty-three Indiana towns reporting 
gave from 8 cents to io*/2 cents as the wholesale price per 
gallon. (These prices included freight. Taking Indianapolis 
as a centre, the local freight on oil to any point in Indiana 
is in no case over a cent.) In April, 1904, inquiry showed 
the same striking difference between prices in Indianapolis, 
where six independent companies are now established, and 
neighbouring towns to which competition has not as yet 
reached. 

The advent of an independent concern in Morristown, 
New Jersey, brought down the price to grocers to 7^ cents 
and to housewives to 10, but in the neighbouring towns of 
Elizabeth and Plainfield, where only the Standard is re- 
ported, the grocers pay 9 cents and the housewives 12 and 
11, respectively. In Akron, Ohio, where an independent com- 

[ 222 ] 



THE PRICE OF OIL 

pany was operating at the time the investigation was made, 
oil was sold at wholesale at 5% cents; at Painesville, nearer 
Cleveland, the shipping point, at 9^4 cents. In Richmond, 
Virginia, one dealer reported to the commission a wholesale 
price of 5 cents, and added: "A cut rate between oil com- 
panies; has been selling at 9 and 10 cents." 

In the month of April of 1904 150 oil was selling from 
tank-wagons in Baltimore, where there is competition, at 9 
cents. In Washington, where there is no competition, it sold 
at 10^2 cents, and in Annapolis (no competition) at n cents. 
In Seaford, Delaware, the same oil sold at 8 cents under 
competition. The freight rates are practically the same to all 
these points. And so one might go on indefinitely, showing 
how the introduction of an independent oil has always re- 
duced the price. As a rule, the appearance of the oil has led 
to a sharp contest or "Oil War," at which, not infrequently, 
both sides have sold at a loss. The Standard, being able to 
stand a loss indefinitely, usually won out. 

An interesting local "Oil War," which occurred in 1896 
and 1897 m New York and Philadelphia, figured in the re- 
ports of the Industrial Commission, and illustrates very well 
the usual influence on Standard prices of the incoming of 
competition. On March 20, 1896, the Pure Oil Company 
put three tank-wagons into New York City. The Standard's 
price of water-white oil from tank-wagons that day was 
f) l / 2 cents, and the Pure Oil Company followed it. In less 
than a week the Standard had cut to 8 cents * along the route 
of the Pure Oil Company wagons. In April the price was 
cut to 7 cents. By December, 1896, it had fallen to 6 cents; 
by December, 1897, to 5.4. It is true that crude oil was fall- 
ing at this time, but the fall in water-white was out of all 
proportion. For, while between the price of refined on March 
20 and the average price of refined in April along the Pure 

* Report of the Industrial Commission, 1900. Volume I, page 365. 
[223] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Oil Company route, there was a fall of 2^2 cents, in crude 
there was a fall of but four-tenths of a cent. Refined fell 
from 7 cents in April to 6 cents in May, and crude fell 
one-tenth of a cent. John D. Archbold, in answering the 
figures given by the Pure Oil Company to the Industrial 
Commission, accused them of "carelessness," and gave the 
average monthly price of crude and refined to show that 
no such glaring discrepancy had taken place. Mr. Archbold 
gives the average price in March, for instance, as 7.98 and 
in April as 7.31 cents. However, his price is the average 
to "all the trade of Greater New York and its vicinity," 
whereas the prices of the Pure Oil Company are those they 
met in their limited competition. As Professor Jenks re- 
marked at the examination: "It might easily be, therefore, 
that your" (Standard) "average price would be what you 
had given, and that to a good many special customers with 
whom the Pure Oil Company was trying to deal it could 
be five and a half cents." That this was the fact seems to 
be proved by the quotations for water-white oil from tank- 
wagons, which were published from week to week in trade 
journals like the Oil, Paint and Drug Reporter. These prices 
show 9% cents for water-white on March 21, and an aver- 
age of 9.4 cents in April. Evidently only a part of the trade 
of "all Greater New York and vicinity" got the benefit 
of averages quoted to the Industrial Commission by Mr. 
Archbold. 

If competition persists the result usually has been perma- 
nently lower prices than in territory where competition has 
been run out or has never entered. For instance, why should 
oil be sold to a dealer at nearly four cents more on an aver- 
age in Kansas than in Kentucky, when the freight from 
Whiting to Kansas is only a cent more? For no reason except 
that in Kentucky there has been persistent competition for 
twenty-five years, and in Kansas none has ever secured a solid 

[224] 



THE PRICE OF OIL 

foothold. Why should Colorado pay an average of 16.90 
cents for oil per gallon and California 14.60 cents, when the 
freight from Whiting differs but one-tenth of one cent? For 
no reason except that a few years ago competition was driven 
from Colorado, and in California it still exists. 

Indeed, any consecutive study of the Standard Oil Com- 
pany's use of its power over the price of either export or 
domestic oil must lead to the conclusion that it has always 
been used to the fullest extent possible without jeopardising 
it; that we have always paid more for our refined oil than 
we would have done if there had been free competition. But 
why should we expect anything else? This is the chief object 
of combinations. Certainly the candid members of the Stand- 
ard Oil Company would be the last men to argue that they 
give the public any more of the profits they may get by com- 
bination than they can help. One of the ablest and frankest 
of them, H. H. Rogers, when before the Industrial Com- 
mission in 1899, was asked how it happened that in twenty 
years the Standard Oil Company had never cheapened the 
cost of gathering and transporting oil in pipe-lines by the 
least fraction of a cent; that it cost the oil producer just as 
much now as it did twenty years ago to get his oil taken 
away from the wells and to transport it to New York. And 
Mr. Rogers answered, with delightful candour: "We are 
not in business for our health, but are out for the dollars." 

John D. Archbold was asked at the same time if it were 
not true that, by virtue of its great power, the Standard Oil 
Company was enabled to secure prices that, on the whole, 
were above those under competition, and Mr. Archbold said: 
"Well, I hope so." * 

But these are frank answers, perhaps surprised out of the 
gentlemen. The able and wary president of the great con- 

* See Appendix, Number 58. John D. Archbold's statement on the prices the 
Standard receives for refined oil. 

[22 5 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

cern, John D. Rockefeller, is more cautious in his admis- 
sions. On the witness-stand in 1888 he was forced to admit, 
after some skilful evasion, that the control the Standard 
Oil Company had of prices was such that they could raise 
or lower them at will. "But," added Mr. Rockefeller, "we 
would not do it." The whole colloquy between the examiner 
and Mr. Rockefeller is interesting: 

Q. Isn't it a fact that the nine trustees controlling the large amount of capital which 
the Standard Oil Trust does could very easily advance or depress the market price 
of oil if they saw fit ? . . . 

A. I don't think they would. 

Q. I don't ask whether they would; could they do it ? 

A. I suppose it would be possible for these gentlemen; if they should buy enough 
oil, it would make the price go up. 

There was considerable sparring, Mr. Rockefeller trying 
to explain away his answer. 

Q. I can't get you down to my question . . . that is a very great power to wield. 

A. Certainly; an individual or a combination of men can advance the price or 
more or less depress the price of any commodity. 

Q. But if you desire to increase to put up the price of the refined oil, or to put 
down the price of the crude oil, is it within your power to do it, in the way I have 
indicated, by staying out of the market or going into the market to purchase, con- 
trolling 75 per cent, of the demand for the crude oil ? 

A. It would be a temporary effect, but that is all. . . . 

Q. By stopping the manufacture of refined oil your refineries representing so large 
a proportion would tend to raise the price ? 

A . That is something we never do; our business is to increase all the time, not to 
decrease. 

Q. Really your notion is that the Standard Oil Trust is a beneficial organisation 
to the public ? 

A. I beg with all respect to present the record which shows that it is.* 

For many of the world it is a matter of little moment, no 
doubt, whether oil sells for eight or twelve cents a gallon. 

* Report on Investigation Relative to Trusts, New York Senate, 1888, pages 434- 

435 and 396-398. 

[226] 



THE PRICE OF OIL 

It becomes a tragic matter sometimes, however, as in 1902- 
1903 when, in the coal famine, the poor, deprived of coal, 
depended on oil for heat. In January, 1903, oil was sold to 
dealers from tank-wagons in New York City at eleven cents 
a gallon. That oil cost the independent refiner, who paid full 
transportation charges and marketed at the cost of a cent a 
gallon, not over 6.4 cents. It cost the Standard Oil Company 
probably a cent less. That such a price could prevail under 
free competition is, of course, impossible. Throughout the 
hard winter of 1902-1903 the price of refined oil advanced. 
It was claimed that this was due to the advance in crude, 
but in every case it was considerably more than that of crude. 
Indeed, a careful comparative study of oil prices shows that 
the Standard almost always advances the refined market a 
good many more points than it does the crude market. The 
chart shows this. While this has been the rule, there are ex- 
ceptions, of course, as when a rate war is on. Thus, in the 
spring of 1904, the severe competition in England of the Shell 
Transportation Company and of Russian oil caused the Stand- 
ard to drop export refined considerably more than crude. But, 
as the chart shows, domestic oil has been kept up. 

As a result of the Standard's power over prices, not only 
does the consumer pay more for oil where competition has 
not reached or has been killed, but this power is used steadily 
and with consummate skill to make it hard for men to com- 
pete in any branch of the oil business. This history has been 
but a rehearsal of the operations practised by the Standard 
Oil Company to get rid of competition. It was to get rid 
of competition that the South Improvement Company was 
formed. It was to get rid of competition that the oil-carry- 
ing railroads were bullied or persuaded or bribed into un- 
just discriminations. It was to get rid of competition that the 
Empire Transportation Company, one of the finest transpor- 
tation companies ever built up in this country, was wrested 

[227] 



THE HISTORY OF THE STANDARD OIL COMPANY 

from the hands of the men who had developed it. It was to 
get rid of competition that war was made on the Tidewater 
Pipe Line, the Crescent Pipe Line, the United States Pipe 
Line, not to mention a number of similar smaller enterprises. 
It was to get rid of competition that the Standard's spy 
system was built up, its oil wars instituted, all its per- 
fect methods for making it hard for rivals to do business 
developed. 

The most curious feature perhaps of this question of the 
Standard Oil Company and the price of oil is that there are 
still people who believe that the Standard has made oil 
cheap! Men look at this chart and recall that back in the 
late sixties and seventies they paid fifty and sixty cents a gal- 
lon for oil, which now they pay twelve and fifteen cents for. 
This, then, they say, is the result of the combination. Mr. 
Rockefeller himself pointed out this great difference in 
prices. "In 1861," he told the New York Senate Committee, 
"oil sold for sixty-four cents a gallon, and now it is six and 
a quarter cents." The comparison is as misleading as it was 
meant to be. In 1861 there was not a railway into the Oil 
Regions. It cost from three to ten dollars to get a barrel of 
oil to a shipping point. None of the appliances of transpor- 
tation or storage had been devised. The process of refining 
was still crude, and there was great waste in the oil. Besides, 
the markets were undeveloped. Mr. Rockefeller should have 
noted that oil fell from 6iy 2 in 1861 to 25^ in the year he 
first took hold of it, and that by his first successful manipu- 
lation it went up to 30! He should point out what the suc- 
cessive declines in prices since that day are due to to the 
seaboard pipe-lines, to the development of by-products, to 
bulk instead of barrel transportation, to innumerable small 
economies. People who point to the differences in price, and 
call it combination, have never studied the price-line history 
in hand. They do not know the meaning of the variation of 

[228] 



THE PRICE OF OIL 

the line; that it was forced down from 1866 to 1876, when 
Mr. Rockefeller's first effective combination was secured by 
competition, and driven up in 1876 and 1877 by the stopping 
of competition; that it was driven down from 1877 to 1879 
by the union of all sorts of competitive forces producers, 
independent refiners, the developing of an independent sea- 
board pipe-line to a point lower than it had ever been be- 
fore. They forget that when these opposing forces were over- 
come, and the Standard Oil Company was at last supreme, 
for ten years oil never fell a point below the margin reached 
by competition in 1879, though frequently it rose above that 
margin. They forget that in 1889, when for the first time in 
ten years the margin between crude and refined oil began to 
fall, it was the competition coming from the rise of American 
independent interests and the development of foreign oil fields 
that did it. 

To believe that the Standard Oil Combination, or any 
other similar aggregation, would lower prices except under 
the pressure of the competition they were trying to kill, 
argues an amazing gullibility. Human experience long ago 
taught us that if we allowed a man or a group of men auto- 
cratic powers in government or church, they used that power 
to oppress and defraud the public. For centuries the struggle 
of the nations has been to obtain stable government, with fair 
play to the masses. To obtain this we have hedged our kings 
and emperors and presidents about with a thousand consti- 
tutional restrictions. It has not been possible for us to allow 
even the church, inspired by religious ideals, to have the 
full power it has demanded in society. And yet we have 
here in the United States allowed men practically autocratic 
powers in commerce. We have allowed them special privi- 
leges in transportation, bound in no great length of time to 
kill their competitors, though the spirit of our laws and of the 
charters of the transportation lines forbade these privileges. 

[229] 



THE HISTORY OF THE STANDARD OIL COMPANY 

We have allowed them to combine in great interstate aggre- 
gations, for which we have provided no form of charter or 
of publicity, although human experience long ago decided 
that men united in partnerships, companies, or corporations 
for business purposes must have their powers defined and be 
subject to a reasonable inspection and publicity. As a natural 
result of these extraordinary powers, we see, as in the case 
of the Standard Oil Company, the price of a necessity of life 
within the control of a group of nine men, as able, as ener- 
getic, and as ruthless in business operations as any nine men 
the world has ever seen combined. They have exercised their 
power over prices with almost preternatural skill. It has 
been their most cruel weapon in stifling competition, a sure 
means of reaping usurious dividends, and, at the same time, 
a most persuasive argument in hoodwinking the public. 



[230] 



CHAPTER SEVENTEEN 

THE LEGITIMATE GREATNESS OF THE STANDARD OIL 

COMPANY 

CENTRALISATION OF AUTHORITY ROCKEFELLER AND EIGHT OTHER TRUS- 
TEES MANAGING THINGS LIKE PARTNERS IN A BUSINESS NEWS-GATHER- 
ING ORGANIZATION FOR COLLECTING ALL INFORMATION OF VALUE TO 
THE TRUSTEES ROCKEFELLER GETS PICKED MEN FOR EVERY POST AND 
CONTRIVES TO MAKE THEM COMPETE WITH EACH OTHER PLANTS 
WISELY LOCATED THE SMALLEST DETAILS IN EXPENSE LOOKED OUT FOR 
QUICK ADAPTABILITY TO NEW CONDITIONS AS THEY ARISE ECONOMY 
INTRODUCED BY THE MANUFACTURE OF SUPPLIES A PROFIT PAID TO 
NOBODY PROFITABLE EXTENSION OF PRODUCTS AND BY-PRODUCTS A 
GENERAL CAPACITY FOR SEEING BIG THINGS AND ENOUGH DARING TO 
LAY HOLD OF THEM. 

WHILE there can be no doubt that the determining 
factor in the success of the Standard Oil Company 
in securing a practical monopoly of the oil indus- 
try has been the special privileges it has enjoyed 
since the beginning of its career, it is equally true that those 
privileges alone will not account for its success. Something 
besides illegal advantages has gone into the making of the 
Standard Oil Trust. Had it possessed only the qualities which 
the general public has always attributed to it, its overthrow 
would have come before this. But this huge bulk, blackened 
by commercial sin, has always been strong in all great busi- 
ness qualities in energy, in intelligence, in dauntlessness. It 
has always been rich in youth as well as greed, in brains as 
well as unscrupulousness. If it has played its great game with 
contemptuous indifference to fair play, and to nice legal points 
of view, it has played it with consummate ability, daring and 

[231] 



THE HISTORY OF THE STANDARD OIL COMPANY 

address. The silent, patient, all-seeing man who has led it in 
its transportation raids has led it no less successfully in what 
may be called its legitimate work. Nobody has appreciated 
more fully than he those qualities which alone make for per- 
manent stability and growth in commercial ventures. He has 
insisted on these qualities, and it is because of this insistence 
that the Standard Oil Trust has always been something be- 
,sides a fine piece of brigandage, with the fate of brigandage 
before it, that it has been a thing with life and future. 

If one attempts to analyse what may be called the legitimate 
greatness of Mr. Rockefeller's creation in distinction to its 
illegitimate greatness, he will find at the foundation the fact 
that it is as perfectly centralised as the Catholic church or 
the Napoleonic government. As was pointed out in a former 
chapter, the entire business was placed in 1882 in the hands of 
nine trustees, of whom Mr. Rockefeller was president. These 
trustees have always acted exactly as if they were nine partners 
in a business, and the only persons concerned in it. They met 
daily, giving their whole time to the management and devel- 
opment of the concern, as the partners in a dry-goods house 
would. Anything in the oil world might come under their 
ken, from a smoking wick in Oshkosh to the competition of 
Russian oil in China. Everything; but nothing came unless 
it was necessary; for below them, and sifting things for their 
eyes, were committees which dealt with the various depart- 
ments of the business. There was a Crude Committee which 
considered the subject of crude oil, the world over; a Manu- 
facturing Committee which studied the making of refined, 
the utilisation of waste, the development of new products; a 
Marketing Committee which considered the markets. Before 
each of these committees was laid daily all the information 
to be found on earth concerning its particular field; not only 
were there reports made to it of what was doing in its line 
in the Standard Oil Trust, but information came of everything 

[232] 




S. C. T. DODD 

Chief counsel of the Standard Oil Company. 
Framer of the Trust agreement of 1882. 




JABEZ A. BOSTWICK 

From 1872 to i8p2 the chief oil buyer of the 
Standard Oil Company. 




JOSEPH SEEP 

Head of the " Seep Agency," through which all oil 
transported by the Standard Oil Company goes. 




DANIEL O DAY IN IO72 



Vice-president of the National Transit Com- 
pany. I he pipe-line company owned by the Stand- 
ard Oil Company. 



THE LEGITIMATE GREATNESS OF THE COMPANY 

connected with such work everywhere by everybody. These 
committees not only knew all about their own business, they 
knew all about everybody else's. The Manufacturing Com- 
mittee knew just what each of the feeble independent refiners 
still existing was doing what its resources and advantages 
were; the Transportation Committee knew what rates it got; 
the Marketing Committee knew its market. Thus the fullest 
information about new developments of crude, new openings 
for refined, new processes of manufacture, was always at the 
command of the nine trustees of the trust. 

How did they get this information? As the press does by 
a wide-spreading system of reporters. In 1882 the Standard 
had correspondents in every town in the oil fields, and to-day 
it has them not only there but in every capital of the globe. 
It is a common enough thing, indeed, in European capitals 
to run across high-class newspaper correspondents, consuls, 
or business men who add to their incomes by private reporting 
to the Standard Oil Company. The people in their employ 
naturally report all they learn. There are also outsiders who 
report what they pick up "occasional contributions." There 
is more than one man in the Oil Regions who has made his 
livelihood for years by picking up information for the Stand- 
ard. "Spies," they are called there. They may deserve the 
name sometimes, but the service may be perfectly legitimate. 

These trustees then "know everything" about the oil busi- 
ness and they have used their information. Nobody ever used 
information more profitably. What was learned was applied, 
and affected the whole great structure, for by a marvellous 
genius in organisation Mr. Rockefeller had devised a machine 
with a head whose thinking was felt from the seat of power 
in New York City to the humblest pipe-line patrol on Oil 
Creek. This head controlled each one of the scattered plants 
with absolute precision. Take the refineries; they were indi- 
vidual plants, having a manager and a board of directors like 

[233] 



THE HISTORY OF THE STANDARD OIL COMPANY 

any outside plant, but these plants were not free agents. Ac- 
cording to J. J. Vandergrift's testimony in 1879, the Imperial 
Refinery, of which he was president, had no control of its oil 
after it was made. The Standard Oil Company of Cleveland 
took charge of it at Oil City, and arranged for transportation 
and for marketing. The managers of the Central Association, 
into which the allied refiners went in 1875 under Mr. Rocke- 
feller's presidency, had "irrevocable authority to make all 
purchases of crude oil and sales of refined oil," as well as to 
"negotiate for all railroad and pipe-line freights and trans- 
portation expenses" for each of the refineries. Each plant, of 
course, was limited as to the amount of oil it could make. 
Thus, in 1876, when the Cleveland firm of Scofield, Shurmer 
and Teagle went into a running arrangement with Mr. Rocke- 
feller on condition that he get for them the same rebates he 
enjoyed, it was agreed that the firm should manufacture only 
85,000 barrels a year, though they had a capacity of 180,000 
barrels. 

One of Mr. Rockefeller's greatest achievements has been 
to bring men who had built up their own factories and man- 
aged them to suit themselves to work harmoniously under 
such limitations. As this history has shown, the first attempt 
to harness the refiners failed because they would not obey the 
rules. No doubt the chief reason why they finally consented 
to them was that only by so doing could they get transporta- 
tion rates equally advantageous to those of the Standard Oil 
Company; but, having consented and finding it profitable, 
they were kept in line by an ingenious system of competition 
which must have done much to satisfy their need of indi- 
vidual effort and their pride in independent work. In the 
investigation of 1879, when the producers were trying to find 
out the real nature of the Standard alliance, they were much 
puzzled by the sworn testimony of certain Standard men that 
the factories they controlled were competing, and competing 

[234] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

hard, with the Standard Oil Company of Cleveland. How 
could this be? Being bitter in heart and reckless in tongue, the 
oil men denounced the statements as perjury, but they were 
the literal truth. Each refinery in the alliance was required 
to make to Mr. Rockefeller each month a detailed statement 
of its operations. These statements were compared and the 
results made known. If the Acme at Titusville had refined 
cheaper that month than any other member of the alliance, 
the fact was made known. If this cheapness continued to show, 
the others were sent to study the Acme methods. Whenever 
an improvement showed, that improvement received credit, 
and the others were sent to find the secret. The keenest rivalry 
resulted every factory was on its mettle. 

This supervision took account of the least detail. There is 
a story often told in the Oil Regions to illustrate the minute- 
ness of the supervision. In commenting as usual on the monthly 
"competitive statements," as they are called, Mr. Rockefeller 
called the attention of a certain refiner to a discrepancy in 
his reports. It referred to bungs articles worth about as much 
in a refinery as pins are in a household. "Last month," the 
comment ran, "you reported on hand 1,119 bungs. Ten thou- 
sand were sent you at the beginning of this month. You have 
used 9,527 this month. You report 1,012 on hand. What has 
become of the other five hundred and eighty?" The writer 
has it on high authority that the current version of this story 
is not true, but it reflects very well the impression the Oil Re- 
gions have of the thoroughness of Mr. Rockefeller's super- 
vision. The Oil Regions, which were notoriously extravagant 
in their business methods, resented this care and called it mean- 
ness, but the Oil Regions were wrong and Mr. Rockefeller 
was right. Take care of the bungs and the barrels will take 
care of themselves, is as good a policy in a refinery as the old 
saw it paraphrases is in financiering. 

There were other features of this revolutionary management 

[235] 



THE HISTORY OF THE STANDARD OIL COMPANY 

which caused deep resentment in the oil world. Chief among 
them was the dismantling or abandoning of plants which the 
Standard had "acquired," and which it claimed were so badly 
placed or so equipped that it did not pay to run them. There 
was reason enough in many cases for dissatisfaction with the 
process of acquisition, but having acquired the refineries, the 
Standard showed its wisdom in abandoning many of them. 
Take Pittsburg, for instance. When Mr. Lockhart began to 
absorb his neighbours, in 1874, there were some twenty-five 
plants in and around the town. They were of varying capacity, 
from little ten-barrel stills of antiquated design and out-of- 
the-way location, to complete plants like the Citizens', which 
Mr. Tack described in Chapter V. But how could Mr. 
Lockhart manage these as they stood to good advantage? It 
might pay the owner of the little refinery to run it, for he was 
his own stillman, his own pipe-fitter, his own foreman, and 
did not expect large returns ; but it would have been absurd 
for Mr. Lockhart to try to run it. He simply carted away any 
available machinery, sold what he could for junk, and left 
the debris. Now, one of the most melancholy sights on earth 
is an abandoned oil refinery; and it was the desolation of the 
picture, combined, as it always was in the Oil Regions, with 
the history of the former owners, that caused much of the out- 
cry. It was a thing that the oil men could not get over, largely 
because it was a sight always before their eyes. 

Bitter as this policy was for those who had suffered by the 
Standard's campaigns, it was, of course, the only thing for the 
trust to do indeed, that was what it had been waging war on 
the independents for: that it might shut them down and dis- 
mantle them, that there might be less oil made and higher 
prices for what it made. This wisdom in locating factories has 
continued to characterise the Standard operations. It works 
only plants which pay, and it places its plants where they can 
be operated to the best advantage. Many fine examples of the 

[236] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

relation of location in manufacturing to crude supply and to 
markets are to be seen in the Standard Oil Company plants 
to-day. For example, refined for foreign shipments is made 
at the seaboard, and the vessels which carry it are loaded at 
docks, as at the works at Bayonne, New Jersey. The cost of 
transportation from factory to ship, a large item in the old 
days, is eliminated entirely. The Middle West market is now 
supplied almost entirely from the Standard factories at Whit- 
ing, Indiana, a town built by the Standard Oil Company for 
refining Ohio oil. Here 25,000 barrels of oil are refined daily, 
and from this central point distributed to the Mississippi 
Valley. 

All of the industries which have been grafted on to the refin- 
eries have always been run with the same exact regard to 
minute economies. These industries were numerous because of 
Mr. Rockefeller's great principle, "pay a profit to nobody." 
From his earliest ventures in combination he had applied this 
principle. Mr. Blanchard's explanation to the Hepburn Com- 
mission in 1879 of why the Standard had controlled the Erie's 
yards at Weehawken since 1874, shows exactly Mr. Rocke- 
feller's point of view.* This policy of paying nobody a profit 
took Mr. Rockefeller into the barrel business. In 1872, when 
Mr. Rockefeller became master of the Cleveland oil business, 
the purchase of barrels was one of a refiner's heaviest expenses. 
In an estimate of the cost of producing a gallon of refined oil 
in 1873, made in the Oil City Derrick and accepted as correct 
by that paper, the cost of the barrel is put at four cents a 
gallon, which was more than the crude oil cost at that date. 
Even at four cents a gallon barrels were hard to get, so great 
was the demand. If a refiner could get his barrels back, of 
course there was a saving (a returned barrel was estimated to 
be worth 2^/4 cents), but the return could not be counted on; 
empty barrels coming from Europe particularly, and con- 

* See Chapter V. 
[ 2 37] 



THE HISTORY OF THE STANDARD OIL COMPANY 

signed to Western shippers, were frequently seized in New 
York by Eastern refiners. The need was held to justify the 
deed, like thieving in famine time. Fortunes were made in 
barrels, and dealers hearing of a big supply in Europe have 
been known to charter a vessel and go for them, and reap rich 
profits. In fact, a whole volume of commercial tragedy and 
comedy hangs around the oil barrel. Now it was to the barrel 
the "holy blue barrel" that Mr. Rockefeller gave early 
attention. He determined to make it himself. One of the earli- 
est outside ventures of the Standard Oil Company in Cleve- 
land was barrel works, and Mr. Rockefeller was soon getting 
for two and a half cents what his rivals paid four for, though 
he was by no means the only refiner who manufactured barrels 
in the early days each factory aimed to add barrel works as 
soon as able. The amount the Standard Oil Company saved 
on this one item is evident when the extent of its business 
is considered. The year before the trust was formed (1881) 
they manufactured 4,500,000 barrels, an average of about 
15,000 a day. Since that time the barrel has been gradually 
going out of the oil business, bulk transportation taking its 
place very largely. Nevertheless, in 1901 the Standard Oil 
Company manufactured about 3,000,000 new barrels. In the 
period since they began the manufacture of barrels their fac- 
tories have introduced some small savings which in the aggre- 
gate amount to large sums. For instance, they have improved 
the lap of the hoop a small thing, but one which amounted 
in 1901 to something like $15,000. Some $50,000 a year was 
saved by a slight increase in the size of the tankage. The 
Standard claims that these economies are so small in them- 
selves that it only pays to practise them where there is a 
large aggregate business. 

More important than the barrel to-day, however, is the tin 
can for it is in tin cans that all the enormous quantities of 
refined sent to tropical and Oriental countries must go to 

[238] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

prevent deterioration and nowhere does the policy of econ- 
omy which Mr. Rockefeller has worked out show better than 
in one of the Standard canning works. In 1902 the writer vis- 
ited the largest of the Standard can factories, the Devoe, on 
the East River, Long Island City. It has a capacity of 70,000 
five-gallon cans a day, and is probably the largest can factory in 
the world. At the entrance of the place a man was sweeping up 
carefully the dirt on the floor and wheeling it away not to 
be dumped in the river, however. The dirt was to be sifted 
for tin filings and solder dust. At every step something was 
saved. The Standard buys the tin for its cans in Wales, because 
it is cheaper. It would not be cheaper if it were not for a 
vagary in administering the tariff by which the duty on tin 
plate is refunded if the tin is made into receptacles to be ex- 
ported. This clause was probably made for the benefit of the 
Standard, it being the largest single consumer of tin plate in 
the United States. In 1901 the Standard Oil Company im- 
ported over 60,000 tons of tin with a value of over $1,000,000. 
This tin comes in sheets packed in flat boxes, which are opened 
by throwing it is quicker than opening by a hammer, and 
time is considered as valuable as tin filings. The empty boxes 
are sold by the hundred to the Long Island gardens for grow- 
ing plants in, and the broken covers are sold for kindling. 
The trimmings which result from shaping the tin sheets for 
a can are gathered into bundles and sold to chemical works 
or foundries. There is the same care taken with solder as 
with tin, the amount each workman uses being carefully 
gauged. The canning plants, like the refineries, compare 
their results monthly, and the laurels go to the manager who 
has saved the most ounces of solder, the most hours, the most 
footsteps. 

The five-gallon can turned out at the Devoe is a marvel 
of evolution. The present methods of manufacture are almost 
entirely the work of Herman Miller, known in Standard 

[ 239 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

circles as the "father of the five-gallon can"; and a fine 
type of the German inventor he is. The machinery for mak- 
ing the can has been so developed that while, in 1865, when 
Mr. Miller began his work under Charles Pratt, one man 
and a boy soldered 850 cans in a day, in 1880 three men made 
8,000, and since 1893 three men have made 24,000. It is an 
actual fact that a tin can is made by Miller in just about the 
time it takes to walk from the point in the factory where the 
sheets of tin are unloaded to the point where the finished 
article is filled with oil. 

And here is a nice point in combination. Not far away 
from the canning works, on Newtown Creek, is an oil re- 
finery. This oil runs to the canning works, and, as the new- 
made cans come down by a chute from the works above, 
where they have just been finished, they are filled, twelve at 
a time, with the oil made a few miles away. The filling 
apparatus is admirable. As the new-made cans come down 
the chute they are distributed, twelve in a row, along one 
side of a turn-table. The turn-table is revolved, and the cans 
come directly under twelve measures, each holding five gal- 
lons of oil a turn of a valve, and the cans are full. The 
table is turned a quarter, and while twelve more cans are filled 
and twelve fresh ones are distributed, four men with soldering 
coppers put the caps on the first set. Another quarter turn, 
and men stand ready to take the cans from the filler, and 
while they do this, twelve more are having caps put on, 
twelve are filling, and twelve are coming to their place from 
the chute. The cans are placed at once in wooden boxes 
standing ready, and, after a twenty-four-hour wait for dis- 
covering leaks, are nailed up and carted to a near-by door. 
This door opens on the river, and there at anchor by the 
side of the factory is a vessel chartered for South America 
or China or where not waiting to receive the cans which 
a little more than twenty-four hours before were tin sheets 

[240] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

lying in flat boxes. It is a marvellous example of economy 
not only in materials, but in time and in footsteps. 

With Mr. Rockefeller's genius for detail, there went a 
sense of the big and vital factors in the oil business, and a 
daring in laying hold of them which was very like military 
genius. He saw strategic points like a Napoleon, and he 
swooped on them with the suddenness of a Napoleon. This 
master ability has been fully illustrated already in this work. 
Mr. Rockefeller's capture of the Cleveland refineries in 
1872 was as dazzling an achievement as it was a hateful one. 
The campaign by which the Empire Transportation Com- 
pany was wrested from the Pennsylvania Railroad, viewed 
simply as a piece of brigandage, was admirable. The man 
saw what was necessary to his purpose, and he never hesi- 
tated before it. His courage was steady and his faith in his 
ideas unwavering. He simply knew that was the thing to do, 
and he went ahead with the serenity of the man who knows. 

After the formation of the trust the demand for these 
qualities was constant. For instance, the contract which the 
Standard signed with the producers in February, 1880, 
pledged them to take care of a production of 65,000 barrels 
a day. When they signed this agreement there was above 
ground nearly nine and one-half million barrels of oil. The 
production increased at a frightful rate for four years. At 
the end of 1880 there were stocks of over 17,000,000 above 
ground; in 1881, over 25,000,000; 1882, over 34,000,000; 
1883, over 35,000,000; and 1884, over 36,000,000, and the 
United Pipe Lines took care of this production with the 
aid of the producers, who built tanks neck and neck with 
them. In 1880 the Standard people averaged over one iron 
tank a day, the tanks holding from 25,000 to 35,000 barrels. 
There were not tank-builders enough in the United States 
to do the work, and crews were brought from Canada and 
England. This, of course, called for an enormous expendi- 



THE HISTORY OF THE STANDARD OIL COMPANY 

ture of money, for tanks cost from $7,000 to $10,000 apiece. 
Rich as the United Pipe Lines were they were forced to bor- 
row money in these years of excessive production, for they 
had to lay lines as well as build tanks. There were nearly 
4,000 miles of pipe-line laid in the Bradford region alone 
from 1878 to 1884, and these lines connected with upward 
of 20,000 wells. 

From the time it completed its pipe-line monopoly the 
Standard has followed oil wherever found. It has had to do 
it to keep its hold on the business, and its courage never yet 
has faltered, though it has demanded some extraordinary 
efforts. In 1891 a great deposit of oil was tapped in the Mc- 
Donald field of Southwestern Pennsylvania. The monthly 
production increased from 50,000 barrels in June to 1,600,000 
in December. It is an actual fact that in the McDonald field 
the United Pipe Lines increased the daily capacity of 3,500 
barrels, which they had at the beginning of July, to one of 
26,000 barrels by the first of September, and by the first of 
December they could handle 90,000 barrels a day. If one con- 
siders what this means one sees that it compares favourably 
with the great ordnance and mobilising feats of the Civil 
War. To accomplish it, rolling mills and boiler shops in vari- 
ous cities worked night and day to turn out the pipe, the 
pumps, the engines, the boilers which were needed. Trans- 
portation had to be arranged, crews of men obtained, a wild 
country prepared, sawmills to cut the quantities of timber 
needed built, and this vast amount of material placed and 
set to work. 

The same audacity and effectiveness are shown by the 
Standard in attacking situations created by new developments 
in handling business. The seaboard pipe-line is a notable ex- 
ample. When the Standard completed its pipe-line monopoly 
at the end of 1877, the pipe-line was still regarded as the 
feeder of the railroad. Naturally the railroads were seriously 

[242] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

opposed to its becoming anything more. In Pennsylvania 
particularly the laws had been so manipulated by the Penn- 
sylvania Railroad as to prevent the pipe-line carrying oil even 
for short distances in competition with them. Now, for many 
years it had been believed that the pipe-line could carry oil 
long distances many claimed to the seaboard and as soon 
as the independents found that the oil-bearing roads were 
acting solely in the interest of the Standard they began an 
agitation for a seaboard line which finally terminated in the 
Tidewater Line, one hundred and four miles long, carrying 
oil from the Bradford field to Williamsport on the Reading 
Railroad, and it was certain that the Tidewater eventually 
would get to the seaboard. That the day of the railroad as a 
carrier of crude oil was over when the Tidewater began to 
pump oil was obvious both to Mr. Rockefeller and to the 
railroad presidents, and without hesitation he seized the idea. 
By 1883 the Standard was pumping oil to New York, and the 
railroads that had served so effectively in building up the 
trust were practically out of the crude business. It was this 
audacious and splendid stroke, practically freeing him from 
the railroads which had made him, which made the passage 
of the Interstate Commerce Bill a matter of comparatively 
small importance to Mr. Rockefeller. To be sure, he still 
needed the railroads for refined, but he could so place his 
refineries that this service would be greatly minimised. The 
legislation which the Oil Regions of Pennsylvania demanded 
for fifteen years in hope of securing an equal chance in 
transportation came too late. By the time the bill was passed 
the pipe had replaced the rail as the great oil carrier, and 
the pipes were not merely under Mr. Rockefeller's control, 
as the rails had been; they belonged to him. It was little 
wonder, then, that the passage of the great bill did not ruffle 
his serenity. Little wonder that the Oil Regions, realising 
the situation, so tragic in its irony, as fully as Mr. Rocke- 

[243] 



THE HISTORY OF THE STANDARD OIL COMPANY 

feller did, felt an exasperation almost uncontrolled over it. 
Yet the seaboard pipe-line was no development of the Stand- 
ard Oil Company. The idea had been conceived and the 
practicability demonstrated by others, but it was seized by 
the Standard as soon as it proved possible. This quick sense 
of the real value of new developments, and this alertness in 
seizing them, have been among the strongest elements in the 
Standard's success. 

And every new line of action was developed to its utmost. 
Take the work the Standard began in 1879 on the foreign 
market. Before the Standard Oil Company was known, save 
as one of several prosperous Cleveland refineries, the foreign 
trade had been developed until petroleum was fourth in our 
list of exports, and it went literally to every civilised country 
on the globe. In 1874 Colonel Forney made a trip through 
the Orient, and he wrote in one of his letters that he found 
both Babylon and Nineveh to be lighted with American 
petroleum, and that while he was in Damascus a census was 
taken to ascertain how much petroleum was needed for each 
house in the place, and a proposition was made for its entire 
use. "At present," said the Derrick, in commenting on this 
letter, "petroleum is the chief commercial representative of 
the United States in the Levant and the Orient." 

The same dithyrambic paragraphs were written by oil men 
then, as by the Standard now, concerning foreign trade. For 
instance, compare the two paragraphs below the one found 
in 1874 in the Derrick, the second in a defence of the Oil Trust 
published in 1900: 

1874 "It lights the dwellings, the temples, and the mosques amid the ruins of 
ancient Babylon and Nineveh; it is the light of Bagdad, the city of the Thousand 
and One Nights; of Orfa, birthplace of Abraham; of Mardeen, the ancient Macius 
of the Romans, and of Damascus, gem of the Orient. It burns in the grotto of the 
Nativity at Bethlehem; in the Church of the Holy Sepulchre in Jerusalem; amidst 
the Pyramids of Egypt; on the Acropolis of Athens; on the plains of Troy; and in 
cottage and palace on the banks of the Bosporus and the Golden Horn." 

[244] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

1900 "Petroleum to-day is the light of the world. It is carried wherever a wheel 
can roll or a camel's hoof be planted. The caravans on the desert of Sahara go laden 
with Pratt's Astral, and elephants in India carry cases of 'Standard-white,' while 
ships are constantly loading at our wharves for Japan, Java and the most distant 
isles of the sea." 

Exports grew rapidly through the same machinery which 
had created the foreign market. In 1870 there were something 
over one hundred and forty million gallons of petroleum 
products going abroad, in 1873 nearly two and one-half hun- 
dred million, in 1878 three and one-half hundred million. In 
1870 the Standard began its work on the foreign trade by 
sending a representative abroad. Country after country seems 
to have been taken up, the idea being that the daily Standard 
Oil meeting should have the same full information before 
it concerning every place of foreign trade as it had of the 
American trade, and that gradually the company should con- 
trol the foreign trade as it did the American industry, doing 
away with middlemen, "paying nobody a profit." This work, 
begun in 1879, has been carried on steadily ever since. Through 
it the Standard soon became largely its own exporter. It 
established stations of its own in one port after another of 
Europe, Asia, South America, and has built up a large oil 
fleet. It carried on an aggressive campaign for developing 
markets ; it looked after hostile legislation; it studied the possi- 
ble competition of native oils; it met every difficulty preju- 
dice, ignorance, poverty. Little by little it has done in foreign 
countries what it has done in the United States. To-day it 
even carts oil from door to door in Germany and Portugal 
and other countries, as it does in America, thus realising Mr. 
Rockefeller's vision of controlling the petroleum of America 
from the time it leaves the ground until it is put into the lamp 
of the consumer. 

The same economy and alertness were applied to the matter 
of making oils. In laying hands on the refineries of the coun- 

[245] 



THE HISTORY OF THE STANDARD OIL COMPANY 

try, Rockefeller had acquired by 1882 about all the pro- 
cesses of manufacturing known, both patented and free. These 
processes, including all the essential ones of to-day, had been 
developed entirely outside of the Standard Oil Company. As 
early as 1865, the year Mr. Rockefeller went into the business, 
William Wright wrote an exhaustive book on the Oil Re- 
gions of Pennsylvania. Among other things, he reported 




PRODUCTS OBTAINED FROM THE DISTILLATION OF CRUDE OIL IN 

A REFINERY. 

quite fully what was being done in the refining of petroleum. 
He found that in several factories they were making naphtha, 
gasoline and benzine; that three grades of illuminating oils 
"prime white," "standard white" and "straw colour" 
were made everywhere; that paraffine, refined to a pure white 
article like that of to-day, was manufactured in quantities by 
the Downer works ; and that lubricating oils were beginning 
to be made. 

In 1872, the year that Mr. Rockefeller took things in hand, 
all of these original products had been greatly extended, as 

[246] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

we have seen. Joshua Merrill had succeeded in deodoris- 
ing lubricating oil, making it possible to put the petroleum 
lubricants on the foreign market, and in 1871 Mr. Merrill's 
factory sold 50,000 gallons in England alone. By 1872 paraf- 
fine wax was being made in many factories, and one maker 
of chewing gum in Maine used 70,000 pounds that year. The 
foreign trade in all the products of petroleum outside of 
illuminating oil was already considerable.* Many of the 
factories in making their oils gave them names; thus, Pratt's 




PRODUCTS OBTAINED FROM THE DISTILLATION OF CRUDE OIL IN 
LUBRICATING WORKS. 

Astral was a name for a water-white oil made by the Pratt 
works of Brooklyn. It was a high-grade oil, made exactly 
as the oil made by many other refineries, but it had a name 
a valuable one. 

* In 1872 there were exported as follows: 

Crude 16,363,975 gallons. 

Naphtha, benzine, gasoline, etc 8,688,257 

Lubricating, heavy paraffine, etc 438,425 

Residuum, pitch and tar 568,218 

Illuminating 1 18,259,832 " 

Derrick Handbook. 

[247] 



The tables (pages 246-247) analysing the products of crude 
oil obtained to-day at the Standard factories show the results 
tabulated. Now all of the products in these groups could be 
made in 1872, but certainly there were not forty-six distinct 
products under the naphthas as the table shows nor were 
there 174 refined distillates. In fact, these are not really prod- 
ucts; they are rather brands. Thus, though the table shows 
twenty-nine different kinds of odorised or deodorised naph- 
thas, the main difference between them is their name. The 174 
refined distillates are really the different grades of illuminat- 
ing oil which any factory can get, given the proper crude base, 
with a multitude of different names applied to catch the trade. 
Thus among these 174 "products" are thirty-three kinds of 
"Standard-white" * oil and forty-one kinds of "water-white" f 

* The "Standard-whites" are as follows: 



S. W. 100 (fl). 

S. W. 1 10. 

S. W. 112. 

S. W. 115. 

S. W. 120. 

S. W. 130 Dia. H. L. 

S. W. 130. 

S. W. 130 P. W. H. L. 

S. W. 73 Abel. 

S. W. 150. 

S. W. 1 60. 

S. W. Canadian Legal Test. 

S. W. Georgia P. W. H. L. 

S. W. Georgia Dia. H. L. 

S. W. Indiana P. W. H. L. 

S. W. Indiana S. T. 

S. W. Indiana Dia. H. L. 

fThe "water-whites" are as follows: 

W. W. 1 10. 

W. W. 112. 

W. W. 115. 

W. W. 120. 

W. W. 120 Eupion. 

W. W. 130 Sunlight. 

W. W. 130. 



S. W. Iowa S. T. 

S. W. Louisiana P. W. H. L. 

S. W. Louisiana Dia. H. L. 

S. W. Massachusetts S. T. 

S. W. Michigan S. T. 

S. W. Minnesota S. T. 

S. W. Montana S. T. 

S. W. Nebraska S. T. 

S. W. New York S. T. 

S. W. North Dakota S. T. 

S. W. Ohio S. T. 

S. W. South Dakota S. T. 

S. W. Tennessee Dia. H. L. 

S. W. Tennessee P. W. H. L. 

S. W. Tennessee S. T. 

S. W. Wisconsin S. T. 



W. W. 130 Eupion. 

W. W. 130 Fireproof. 

W. W. 150. 

W. W. 150 Headlight. 

W. W. 150 for extra Star. 

W. W. 150 forty-nine grav. 

W. W. 1 60. 



[2 4 8] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

the principal difference between them being the different 
fire tests at which they are put out. The real service of the 
Standard has been not this multiplication of so-called prod- 
ucts, but in rinding processes by which a poor oil like the 
famous Lima oil could be refined. In the case of the Lima oil 
the Standard claims it spent millions of dollars before it 
solved the problem of its usefulness. The amount of sulphur 
in the Lima or Ohio oil prevented its use as an illuminating 
oil, for the odour was intolerable, there was a disagreeable 
smoke, and the wick charred rapidly. The problem of deodor- 
ising it was attacked by many experimenters, and was finally 
practically solved by the Frasch process, which the Standard 
acquired after spending a large amount of money in testing 
its efficacy. Probably sixty per cent, of the illuminating oil 
used in the United States now is manufactured from an Ohio 
oil base. 

This multiplication of varieties is, of course, a perfectly 
legitimate merchandising device, but it is not a development 
of products, properly speaking. Nor indeed was it for dis- 
coveries and inventions that the Standard Oil Trust was great 
in 1882, or that it is now it is in the way it adapts and handles 
the discoveries and inventions it acquires. Take the matter of 
lubricating oils. After a long struggle it gathered to itself 

W. W. 165. W. W. Michigan S. T. 

W. W. Canadian Legal Test. W. W. Minnesota S. T. 

W. W. Electric. W. W. Nebraska S. T. 

W. W. Georgia Sunlight. W. W. Nebraska Perfection. 

W. W. Georgia S. T. W. W. New York S. T. 

W. W. Indiana Perfection. W. W. North Dakota S. T. 

W. W. Indiana S. T. W. W. Ohio Perfection. 

W. W. Iowa Perfection. W. W. Ohio S. T. 

W. W. Iowa S. T. W. W. South Dakota S. T. 

W. W. Kansas Perfection. W. W. South Dakota Perfection. 

W. W. Kansas S. T. W. W. Tennessee S. T. 

W. W. Louisiana S. T. W. W. Tennessee Sunlight. 

W. W. Louisiana Sunlight. W. W. Wisconsin S. T. 

W. W. Massachusetts S. T. 

[249] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the factories and the patents of lubricating oils, and it has 
developed the trade amazingly; for, while in 1872 less than 
a half million gallons of petroleum lubricants were going 
abroad, in 1897 over 50,000,000 gallons went. The extension 
of the lubricating trade was made possible largely by the dis- 
covery of Mr. Merrill referred to above. In 1869 Mr. Merrill 
discovered a process by which a deodorised lubricating oil 
could be made. He had both the apparatus for producing the 
oil and for the oil itself patented. The oil was so favourably 
received that the market sale was several hundred per cent, 
greater in a single year than the firm had ever sold before. 
Naturally, an attempt was made by other lubricating works 
to imitate Mr. Merrill's new product. The most successful 
imitation was made by Dr. S. D. Tweedle of Pittsburg. The 
oil he put upon the market was considered an infringement by 
Mr. Merrill, who commenced suit against the agents handling 
it. The case was before the courts for some six years, and Mr. 
Merrill spent over $100,000 in maintaining the patent. The 
case was finally decided in his favour by the Supreme 
Court in Washington. During this suit the Standard Oil 
Company stood behind Dr. Tweedle, furnishing the money 
to defend the suit. When finally they were defeated they 
took a license under the new patent which Mr. Merrill was 
obliged to get out, and paid him a royalty on the oil until 
within about a year and a half before the end of the life of 
the patent, when they bought it outright for a large sum, Mr. 
Merrill reserving the right to manufacture and sell the oil 
without a royalty. Most lubricating oils from petroleum are 
now made after Mr. Merrill's process. 

Having obtained control of the lubricating oils, the Stand- 
ard showed the greatest intelligence in studying the markets 
and in developing the products. It makes lubricants for every 
machine that works. It offers scores of cylinder oils, scores of 
spindle lubricants, of valve lubricants, of gas-engine lubri- 

[250] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

cants, special brands for sewing machines, for looms, for sole 
leather, for dynamos, for marine engines, for everything that 
runs and works by steam power, by air, by electricity, by 
gas, by man, or by beast power. Now any lubricating factory 
can produce the six or eight primary lubricants. Given these, 
the varieties to be produced by skilful compounding are in- 
finite. They can be made more or less viscous, flowing, heavy, 
light, according to the needs of the machines and the idiosyn- 
crasies of individuals who run them. The man who runs a 
machine soon knows what oil suits him, and if his trade is big 
enough an oil is put up especially for him with a name to 
tickle his vanity. It may be exactly like a dozen other oils 
on the market, but having its own name it is reckoned a new 
product. Skilful compounders insist that they can duplicate 
any of the 833 lubricating oils of the Standard if they can 
have samples. Of course this close study of the needs of a 
market, and this adaptation of one's goods to the requirements, 
are the highest sort of merchandising. 

Unquestionably the great strength of the Standard Trust 
in 1882, when it was founded as it is to-day, was the men who 
formed it. However sweeping Mr. Rockefeller's commercial 
vision, however steady his purpose, however remarkable his 
insight into what was essential to the realisation of his ambi- 
tion, he would have never gone far had he not drawn men into 
his concern who understood what he was after and knew how 
to work for it. His principle concerning men was laid down 
early. "We want only the big ones, those who have already 
proved they can do a big business. As for the others, unfor- 
tunately they will have to die." The scheme had no provision 
for mediocrity nor for those who could not stomach his 
methods. The men who in 1882 formed the Standard alliance 
were all from the foremost rank in the petroleum trade, men 
who without question would be among those at the top to-day 
if there had never been a Standard Oil Company. In Pitts- 



THE HISTORY OF THE STANDARD OIL COMPANY 

burg it was Charles Lockhart, a man interested in petroleum 
before the Drake well was struck, who had begun oil opera- 
tions on Oil Creek in March, 1860, who had carried samples 
of crude and refined to Europe as early as May, 1860, who 
had built one of the first refineries in Pittsburg, and who was 
easily the largest refiner there in 1874 when Mr. Rockefeller 
bought him up. In Philadelphia, the largest refiner in 1874 
was W. G. Warden of the Atlantic Refining Company, and 
it was he whom Mr. Rockefeller wanted. In New York it 
was the concern of Charles Pratt and Company, one of the 
three largest concerns around Manhattan the concern to 
which H. H. Rogers belonged. Charles Pratt had been in 
the oil and paint business since 1850, and he had become a 
refiner of petroleum at Greenpoint, Long Island, in 1867. 
Before Standard Oil was known outside of New York the 
fame of Pratt's Astral Oil had gone around the world. Mr. 
Pratt's concern was rated at the same daily capacity as Mr. 
Rockefeller's (1,500 barrels) in the spring of 1872, when the 
latter wiped up the Cleveland refineries and grew in a night 
to 10,000 barrels. Mr. Vandergrift, who united his inter- 
ests with Mr. Rockefeller's in 1874 and 1875, had been a 
far better known man in the oil business and controlled 
much greater and more varied interests up to South Improve- 
ment times. When he went into the Standard he controlled 
the largest refinery on Oil Creek, the Imperial, of about 1,400 
barrels. He was president of a large system of pipe-lines, and 
he was a member of one of the largest oil-producing con- 
cerns of the time the H. L. Taylor Company. 

There is no doubt but that Mr. Rockefeller had plenty of 
brains in his great trust. It was those who had done business 
with him who were the first to point this out when critics 
declared that the concern could not or must not live. "There 
is no question about it," W. H. Vanderbilt told the Hepburn 
Commission in 1879, "but these men are smarter than I am 

[252] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

a great deal. They are very enterprising and smart men. I 
never came in contact with any class of men as smart and 
able as they are in their business. They would never have got 
into the position they now are without a great deal of ability 
and one man would hardly have been able to do it; it is 
a combination of men." 

It was not only that first-rate ability was demanded at the 
top ; it was required throughout the organisation. The very 
day-labourers were picked men. It was the custom to offer 
a little better day wages for labourers than was current and 
then to choose from these the most promising specimens; those 
men were advanced as they showed ability. To-day the very 
errand boys at 26 Broadway are chosen for the promise of 
development they show, and if they do not develop they are 
discharged. No dead wood is taken into the concern unless 
it is through the supposed necessities of family or business 
relations, as probably occurs to a degree in every human 
organisation. 

The efficiency of the working force of the Standard was 
greatly increased when the trust was formed by the opportu- 
nity given to the employees of taking stock. They were urged 
to do it, and where they had no savings money was lent them 
on easy terms by the company. The result is that a great num- 
ber of the employees of the Standard Oil Company are owners 
of stock which they bought at eighty, and on which for several 
years they have received from thirty to forty-eight per cent, 
dividends. It is only natural that under such circumstances 
the company has always a remarkably loyal and interested 
working force. 

Mr. Rockefeller's great creation has really been strong, then,' 
in many admirable qualities. The force of the combination 
has been greater because of the business habits of the inde- 
pendent body which has opposed it. To the Standard's caution 
the Oil Regions opposed recklessness ; to its economy, extrava- 

[ 2 53] 



THE HISTORY OF THE STANDARD OIL COMPANY 

gancc; to its secretiveness, almost blatant frankness; to its 
far-sightedness, little thought of the morrow; to its close- 
fistedness, a spendthrift generosity; to its selfish unscrupulous- 
ness, an almost quixotic love of fair play. The Oil Regions 
had, besides, one fatal weakness its passion for speculation. 
Now, Mr. Rockefeller never speculates. He deals only in those 
things which other people have proved sure! 

It is when one examines the inside of the Standard Oil 
Trust that one sees how much reason there is for the opinion 
of those people who declare that Mr. Rockefeller can always 
sustain the monopoly of the oil business he has achieved. One 
begins to see what Mr. Vanderbilt meant in 1879 when he 
said: "I don't believe that by any legislative enactment or 
anything else, through any of the states or all of the states, 
you can keep such men down. You can't do it! They will be 
on top all the time, you see if they are not." * It is not sur- 
prising that those who realise the compactness and harmony 
of the Standard organisation, the ability of its members, the 
solidity of the qualities governing its operations, are willing 
to forget its history. Such is the blinding quality of success! 
"It has achieved this," they say; "no matter what helped to 
rear this structure, it is here, it is admirably managed. We 
might as well accept it. We must do business." They are weary 
of contention, too who so unwelcome as an agitator? and 
they began to accept the Standard's explanation that the critics 
are indeed "people with a private grievance," "moss-backs 
left behind in the march of progress." Again and again in 
the history of the oil business it has looked to the outsider 
as if henceforth Mr. Rockefeller would have to have things 
his own way, for who was there to interfere with him, to dis- 
pute his position? No one, save that back in Northwestern 
Pennsylvania, in scrubby little oil towns, around greasy der- 

* See Appendix, Number 59. W. H. Vanderbilt's characterisation of Standard Oil 
men. 

[254] 



THE LEGITIMATE GREATNESS OF THE COMPANY 

ricks, in dingy shanties, by rusty, deserted oil stills, men have 
always talked of the iniquity of the railroad rebate, the injus- 
tice of restraint of trade, the dangers of monopoly, the right to 
do an independent business; have always rehearsed with tire- 
some persistency the evidence by which it has been proved that 
the Standard Oil Company is a revival of the South Improve- 
ment Company. It has all seemed futile enough with the pub- 
lic listening in wonder and awe to the splendid rehearsal of 
figures, and the unctuous logic of the Mother of Trusts, and 
yet one can never tell. It was the squawking of geese that 
saved the Capitol. 

Certain it is that many and great as are his business quali- 
ties, John D. Rockefeller has never been allowed to enjoy 
the fruits of his victory in that atmosphere of leisure and 
adulation which the victor naturally craves. Certain it is that 
the incessant agitation of men with a "private grievance" has 
ruined some of his fairest schemes, has hauled him again and 
again before investigating committees, and has contributed 
greatly to securing a federal law authorising so fundamental 
and obvious a right as equal rates on common carriers. Certain 
it is that the incessant efforts of those who believed they had 
a right to do an independent business have resulted in the 
most important advances made in the oil business since the 
beginning of Mr. Rockefeller's combination, namely, the sea- 
board pipe-line, for transporting crude oil, due to the Tide- 
water Pipe Line, and later the use of the seaboard pipe-line 
for transporting refined oil, due to the United States Pipe 
Line. Certain it is, too, that all of competition which we have, 
with its consequent lowering of prices, is due to independent 
efforts. 



[255] 



CHAPTER EIGHTEEN 
CONCLUSION 

CONTEMPT PROCEEDINGS BEGUN AGAINST THE STANDARD IN OHIO IN 1897 
FOR NOT OBEYING THE COURT'S ORDER OF i8 9 z TO DISSOLVE THE TRUST 
SUITS BEGUN TO OUST FOUR OF THE STANDARD'S CONSTITUENT COM- 
PANIES FOR VIOLATION OF OHIO ANTI-TRUST LAWS ALL SUITS DROPPED 
BECAUSE OF EXPIRATION OF ATTORNEY-GENERAL MONNETT'S TERM- 
STANDARD PERSUADED THAT ITS ONLY CORPORATE REFUGE IS NEW 
JERSEY CAPITAL OF THE STANDARD OIL COMPANY OF NEW JERSEY IN- 
CREASED, AND ALL STANDARD OIL BUSINESS TAKEN INTO NEW ORGAN- 
ISATIONRESTRICTION OF NEW JERSEY LAW SMALL PROFITS ARE GREAT 
AND STANDARD'S CONTROL OF OIL BUSINESS IS ALMOST ABSOLUTE- 
STANDARD OIL COMPANY ESSENTIALLY A REALISATION OF THE SOUTH 
IMPROVEMENT COMPANY'S PLANS THE CRUCIAL QUESTION NOW, AS 
ALWAYS, IS A TRANSPORTATION QUESTION THE TRUST QUESTION WILL 
GO UNSOLVED SO LONG AS THE TRANSPORTATION QUESTION GOES UN- 
SOLVEDTHE ETHICAL QUESTIONS INVOLVED. 

FEW men in either the political or industrial life of 
this country can point to an achievement carried out 
in more exact accord with its first conception than 
John D. Rockefeller, for both in purpose and methods 
the Standard Oil Company is and always has been a form of 
the South Improvement Company, by which Mr. Rockefeller 
first attracted general attention in the oil industry. The origi- 
nal scheme has suffered many modifications. Its most offensive 
feature, the drawback on other people's shipments, has been 
cut off. Nevertheless, to-day, as at the start, the purpose of 
the Standard Oil Company is the purpose of the South Im- 
provement Company the regulation of the price of crude 
and refined oil by the control of the output; and the chief 

[256] 




JOHN D. ROCKEFELLER 
From a photograph by Allen Ayrault Green, taken about 1892. 



CONCLUSION 

means for sustaining this purpose is still that of the original 
scheme a control of oil transportation giving special privi- 
leges in rates. 

It is now thirty-two years since Mr. Rockefeller applied 
the fruitful idea of the South Improvement Company to the 
Standard Oil Company of Ohio, a prosperous oil refinery of 
Cleveland, with a capital of $1,000,000 and a daily capacity 
for handling 1,500 barrels of crude oil. And what have we as 
a result? What is the Standard Oil Company to-day? First, 
what is its organisation? It is no longer a trust. As we have 
seen, the trust was obliged to liquidate in 1892. It became a 
"trust in liquidation," and there it remained for some five years. 
It seemed to have come into a state of stationary liquidation, 
for at the end of 1892 477,881 shares were uncancelled; at the 
end of 1896 the same number were out. The situation of the 
great corporation was indeed curious. There began to be com- 
ments on it, for complications arose one over taxes. In 1893 
an auditor in Ohio tried to collect taxes on 225 shares of the 
Standard Oil Trust. The owner refused to pay and took the 
case into court. He won it. The Standard Oil Trust is an 
unlawful organisation, said the court. Its certificates have no 
validity. It would seem strange that a certificate which was 
void to all purpose would still be valid as to taxable pur- 
poses.* Here was an anomaly indeed. The certificates were 
drawing big quarterly dividends, had a big market value, but 
were illegal. Owners of small certificates naturally refused 
to exchange. In 1897 it took 194^ shares in the Standard Oil 
Trust to bring back one share in each of the twenty com- 
panies. Thus one share in the Standard Oil Company of Ohio 
was worth twenty-seven shares in the Standard Oil Trust. 
If a man owned twenty-five shares he got only fractional 
parts of a share in each company. On these fractional parts 
he received no dividends, it not being considered practical 

* Ohio Circuit Court Reports, Volume VII, 1893, page 508. 
[257] 



THE HISTORY OF THE STANDARD OIL COMPANY 
to consider such small sums. To raise his twenty-five shares 
to 194, and so secure dividends, took a good sum of money, 
since Standard Oil Trust shares were worth at least 340 then. 
But why should he trouble? He received his quarterly divi- 
dends promptly, and they were large! He paid no taxes, for his 
stock was illegal! The trustees were not pushing him to 
liquidate. Besides, it was doubtful if they could do anything. 
Joseph Choate said they could not. On May 3, 1894, before 
the attorney-general of New York, in an application for the 
forfeiture of the charter of the Standard Oil Company of 
New York, Mr. Choate said: 

"I happen to own 100 shares in the Standard Oil Trust, 
and I have never gone forward and claimed my aliquot share. 
Why not? Because I would get ten in one company, and ten 
in another company, and two and three-fifths in another 
company. 

"There is no power that this company can exercise to com- 
pel me and other indifferent certificate holders, if you please, 
to come forward and convert our trust certificates." 

If there was a way, the trustees were indifferent to it. They 
evidently were contented to let things alone. It is quite possi- 
ble that they would have been holding to-day 477,881 uncan- 
celled shares of Standard Oil Trust if it had not been for the 
irrepressible George Rice. Since October, 1892, Mr. Rice had 
held a Standard Oil Trust certificate for six shares. He had 
never cancelled it. He had received no invitation to do so. 
He received his dividends regularly on it. Later, he purchased 
one share, called "assignment of legal title" the new form 
given the trust certificate and on this he received dividends, 
exactly as on the original trust certificate. Finally Mr. Rice 
made up his mind, without knowing any of the facts of the 
liquidation outlined above, that there was no intention to carry 
out the dissolution, that some means of evasion had been de- 
vised, and he proposed to find out what it was. 

[258] 



CONCLUSION 

To do this he transferred his assignment of legal title to 
an agent with the order to liquidate it. A long correspondence 
followed between Mr. Kemper, Mr. Rice's agent, and Mr. 
Dodd, who objected to making the transfer on the ground that 
it cut the share into a "multitude of almost infinitesimal frac- 
tions of corporate shares." They were obviating this difficulty, 
Mr. Dodd said, by purchasing certificates calling for one or 
a few shares and uniting them until sufficient were had by 
one party to call for the issue of full corporate shares. Mr. 
Kemper insisted, however, and finally received scrip for his 
share. "Infinitesimal" it was, indeed, ^ of one share in one 
company, $ of one share in another, and so on through 
nineteen constituent companies.* 

Arguing from these experiences and what else he could 
gather, Mr. Rice decided that the trust was not dissolved and 
had no intention of doing so. Furthermore, he argued that 
the scheme was one to entice the small shareholders to sell 
their shares and thus enable the trustees to increase their 
holdings! And he sought legal counsel in Ohio as to the possi- 
bility of bringing suit against the Standard Oil Company of 
Ohio for failing to obey the court's orders in March, 1892. 
The attorneys, one of whom was Mr. Watson, advised Mr. 
Rice to lay his facts before the attorney-general of the state, 
Frank S. Monnett. Like Mr. Watson, when he brought his 
suit, Mr. Monnett was young and held firmly to the belief 
that the business of an attorney-general is to enforce the laws. 
The facts Mr. Rice and his counsel laid before him seemed to 
him to indicate that the Standard Oil Company of Ohio had 
taken advantage of the leniency of the court in allowing it 
time to disentangle itself from the trust, and had devised a 
skilful plan to evade the judgment pronounced against it five 
years before. He asked Mr. Rice and his attorneys to go with 
him and lay the case before the judges of the Supreme Court 

* See Appendix, Number 60. Facsimile of one of Mr. Kemper's shares. 

[ 2 59] 



THE HISTORY OF THE STANDARD OIL COMPANY 
in chambers, and ask if it did not justify proceedings against 
the company. The judges agreed with the attorney-general 
and ordered him to bring the company before the court for 
contempt. Information was filed in November, 1897. The suit 
which followed proved one of the most sensational ever insti- 
tuted against the Standard Oil Combination. 

The first substantial point gained by the attorney-general 
in the proceedings was securing answers to a long series of 
questions concerning the history of the operations of the Stand- 
ard Oil Company of Ohio, both within and without the trust. 
These answers were made by the president of that company, 
who was at the same time the president of the trust, John D. 
Rockefeller. They furnish a mass of facts of value and interest, 
and they include the minutes of the meeting at which the trust 
was dissolved on March 11, 1892,. as well as the minutes of 
all the quarterly meetings the liquidating trustees held from 
1892 to October, 1897. It was from the information obtained 
from this set of questions that Mr. Monnett secured proof 
that the liquidation scheme had been held up, as Mr. Rice 
claimed. The minutes showed, as related in Chapter XIV, that 
from November, 1892, to March, 1896, 477>88i shares were 
reported every three months to the trustees as uncancelled. 
In July, 1896, the number fell suddenly to 477,880. George 
Rice had succeeded in having his assignment of legal title 
liquidated! Mr. Monnett learned from the result of this 
inquiry another suggestive fact, that while only one share 
was cancelled in the five years before the contempt proceed- 
ings were brought, in the first three months after, 100,583 
shares were cancelled ! * 

It took Mr. Monnett some six months to secure the answers 
from Mr. Rockefeller, but his information was still incom- 
plete, and he asked the court to appoint a master commis- 

* History of Standard Oil Case in Supreme Court of Ohio, 1897-1898. Part II, 

page 39- 

[260] 



CONCLUSION 

sioner, with power to examine the officers, affairs and books 
of the Standard, to take testimony within or without the state, 
and to report. This was done, the commissioner holding his 
first court at the New Amsterdam Hotel, in New York, on 
October 1 1 and 12, 1898. Mr. Rockefeller was the only witness 
examined at the sessions, and his deliberation and self-control, 
his almost detached attitude as a witness, were the subject of 
remark by more than one observer. He answered no question 
promptly. He had the air of reflecting always before he spoke. 
He consulted frequently with his counsel. His counsel, his col- 
leagues who were present, the counsel of the prosecution, were 
sometimes irate, never Mr. Rockefeller. From beginning to 
end he was the soul of self-possession. His only sign of impa- 
tience if it was impatience was an incessant slight tapping 
of the arm of his chair with his white fingers. 

The outcome of this examination of Mr. Rockefeller was 
that Mr. Monnett and his colleagues called for those books 
of the trust which would show exactly how the original trust 
certificates had been liquidated. It was then that the copies 
of the transfers of Mr. Rockefeller's trust certificates and of 
his assignments of legal title printed in the Appendix, Num- 
ber 54, were obtained. Although Mr. Monnett had added 
to his knowledge of the Standard's operations between 1892 
and 1898, he was not yet convinced that the Standard Oil 
Company of Ohio was conducting its own business. He had 
found that, in spite of the order of the court in 1892, 13,593 
shares of that company's stock were still outstanding in trust 
certificates. He knew these certificates drew dividends. Was 
the company paying money directly or indirectly to the liqui- 
dating trustees? They said no, that they had been paying no 
dividends since 1892, that the money paid the holders of trust 
certificates came from the other nineteen companies, that all 
their earnings had been used in improving their plant, or were 
invested in government bonds. Besides, said they, we are not 

[261] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the thrifty concern we used to be. Mr. Monnett demanded 
proof from their books. The secretary of the company, on 
advice of his counsel, Virgil P. Kline, refused to produce 
the books asked for, on the ground that they would incriminate 
the company. The court supported Mr. Monnett, and ordered 
the company to produce those of their records showing the 
gross earnings since 1892, and what had been done with them. 
The order met with a second refusal. 

Such was the status of the proceedings when Mr. Monnett 
received an anonymous communication stating that, about the 
time the company was ordered by the court to produce its 
records, a great quantity of books had been taken from the 
Standard's office in Cleveland and burned. An investigation 
was at once made by the attorney-general, and a number of 
witnesses examined. The fact of the burning of sixteen boxes 
of books from the Standard offices in Cleveland was estab- 
lished, but these books, the officers of the company contended, 
were not the ones wanted by Mr. Monnett. "Then produce the 
ones we want," ordered the court. But, on the ground that 
such records might incriminate them, the officers still refused. 

The fact was, the Standard Oil Company of Ohio was in 
a very tight place, and it is difficult to see how an examination 
of their books could have failed to incriminate not only it, 
but three other of the constituent companies of the trust which 
held charters from the same state. These three companies were 
the Ohio Oil Company, which produced oil ; the Buckeye Pipe 
Line, which transported it; and the Solar Refining Company, 
which refined it. Mr. Monnett had learned enough about these 
organisations in the course of his investigations since Novem- 
ber, 1897, to convince him that these companies all of them 
enormously profitable were, for all practical purposes, one 
and the same combination, and that they were all working 
with the Standard Oil Company of Ohio, and that their oper- 
ations were in direct violation of a state anti-trust law recently 

[ 262 ] 



CONCLUSION 

passed. As soon as he had sufficient evidence he had filed peti- 
tions against all four of them. Now, these petitions were filed 
about the time he demanded the books showing the earnings 
of the Standard Oil Company of Ohio, for use in his contempt 
case. It was the old story of one suit being used as a shield in 
another. A witness cannot be made to incriminate himself. 

The reasons F. B. Squire, the secretary of the Standard Oil 
Company of Ohio, gave for refusing to produce the books 
as ordered by the court were as follows : 

1st. Because they are demanded in an action instituted against the Standard Oil 
Company for contempt of court, and for the purpose of proving said company guilty 
of contempt in order that the penalties for contempt may be inflicted upon it and its 
officers; and I am informed that, to enforce their production in such a case and for 
such a purpose, is an unreasonable search and seizure. 

2nd. Because the books disclose facts and circumstances which may be used against 
the Standard Oil Company, tending to prove it guilty of offences made criminal by 
an act of the Legislature of Ohio, passed April 19, 1898, entitled "An Act to define 
trusts and to provide for criminal penalties, civil damages, and the punishment of 
corporations," etc. 

3rd. Because they disclose facts and circumstances which may be used against 
myself personally as an officer of said company, tending to prove me guilty of offences 
made criminal by the act aforesaid.* 

All through the winter of 1898 and 1899, up to the end of 
March, when the commission declared the taking of testimony 
closed, the wrangle over the production of the books went 
on. Depositions had begun to be taken at the same time in the 
cases against the constituent companies for violation of the 
anti-trust laws, and by the time the contempt case was closed 
in March, 1899, the exasperation of both sides had reached 
fever pitch. Nor did the judgment of the court quiet it, for 
three judges voted for finding the company guilty of contempt, 
and three for clearing it. 

Unsatisfactory as this was, Mr. Monnett still had his anti- 

* History of Standard Oil Case in Supreme Court of Ohio, 1897-1898. Part II, 
page 248. 

[263] 



THE HISTORY OF THE STANDARD OIL COMPANY 

trust suits, through which he expected and through which he 
did secure much further evidence that the four Standard com- 
panies in Ohio were practically one concern so shrewdly and 
secretly handled that they were evading not only the laws of 
the state, but that policy of all states which decrees that it is 
unsafe to allow men to work together in industrial combina- 
tions without charters defining their privileges, and subjecting 
them to reasonable examinations and publicity. Mr. Monnett's 
work on these suits came to an end with the expiration of his 
term in January, 1900, and the suits were suppressed by his 
successor, John M. Sheets! Unfinished as they were, they 
were of the greatest value in dragging into the light infor- 
mation concerning the methods and operations of the Stand- 
ard Oil Combination to which the public has the right, and 
which it must digest if it is to succeed in working out a 
legal harness for combinations which, like the Standard, de- 
mand freedom to do what they like and do it secretly. 

The only refuge offered in the United States for the 
Standard Oil Trust in 1898, when the possibility arose by 
these suits of the state of Ohio taking away the charters of 
four of its important constituent companies for contempt of 
court and violation of the anti-trust laws of the state, lay in the 
corporation law of the state of New Jersey, which had just 
been amended, and here it settled. Among the twenty com- 
panies which formed the trust was the Standard Oil Company 
of New Jersey, a corporation for manufacturing and market- 
ing petroleum products. Its capital was $10,000,000. In June, 
1899, this capital of $10,000,000 was increased to one of $i 10,- 
000,000, and into this new organisation was dumped the entire 
Standard aggregation. The old trust certificates outstanding 
and the assignments of legal title which had succeeded them 
were called in, and for them were given common stock of the 
new Standard Oil Company. The amount of this stock which 
had been issued, in January, 1904, when the last report was 

[464] 



CONCLUSION 

made, was $97,448,800. Its market value at that date was 
$643,162,080. How it is divided is of course a matter of private 
concern. The number of stockholders in 1899 was about 3,500, 
according to Mr. Archbold's testimony to the Interstate Com- 
merce Commission, but over one-half of the stock was owned 
by the directors, and probably nearly one-third was owned by 
Mr. Rockefeller himself. 

The companies which this new Standard Oil Company has 
bought up with its stock are numerous and scattered. They 
consist of oil-producing companies like the South Penn Oil 
Company, the Ohio Oil Company, and the Forest Oil Com- 
pany; of transporting companies like the National Transit 
Company, the Buckeye Pipe Line Company, the Indiana Pipe 
Line Company, and the Eureka Pipe Line Company; of 
manufacturing and marketing companies like the Atlantic Re- 
fining Company of Pennsylvania, and the Standard Oil Com- 
panies of many states New York, Indiana, Kentucky, Ohio, 
Iowa; of foreign marketing concerns like the Anglo-American 
Company. In 1892 there were twenty of these constituent com- 
panies. There have been many added since, in whole or part, 
like gas companies; new producing concerns, made necessary 
by developments in California, Kansas and Texas ; new mar- 
keting concerns for handling oil directly in Germany, Italy, 
Scandinavia and Portugal. What the total value of the com- 
panies owned by the present Standard Oil Company is it is 
impossible to say. In 1892, when the trust was on trial in Ohio, 
it reported the aggregate capital of its twenty companies as 
$102,233,700, and the appraised value was given as $121,- 
631,312.63 ; that is, there was an excess of about $19,000,000. 

In 1898, when Attorney-General Monnett of Ohio had the 
Standard Oil Company of the state on trial for contempt of 
court, he tried to find out from Mr. Rockefeller what the 
surplus of each of the various companies in the trust was at 
that date. Mr. Rockefeller answered: "I have not in my pos- 



THE HISTORY OF THE STANDARD OIL COMPANY 

session or power data showing ... the amount of such sur- 
plus money in their hands after the payment of the last divi- 
dends." Then Mr. Rockefeller proceeded to repeat as the last 
he knew of the value of the holdings of the trust the list of 
values given six years before.* This list has continued to be 
cited ever since as authoritative. There is a later one, whether 
Mr. Rockefeller had it in his "possession or power," or not, 
in 1898. It is the last trustworthy valuation of which the writer 
knows, and is found in testimony taken in 1899, in a private 
suit to which Mr. Rockefeller was party. It is for the year 
1896. This shows the "total capital and surplus" of the twenty 
companies to have been, on December 31 of that year, some- 
thing over one hundred and forty-seven million dollars, nearly 
forty-nine millions of which was scheduled as "undivided 
profits." f Of course there has been a constant increase in 
value since 1896. 

The new Standard Oil Company is managed by a board 
of fourteen directors.:}: They probably collect the dividends 
of the constituent companies and divide them among stock- 
holders in exactly the same way the trustees of 1882 and the 
liquidating trustees of 1892 did. As for the charter under 
which they are operating, never since the days of the South 
Improvement Company has Mr. Rockefeller held privileges 
so in harmony with his ambition. By it he can do all kinds 
of mining, manufacturing, and trading business; transport 
goods and merchandise by land and water in any manner; 
buy, sell, lease, and improve lands; build houses, structures, 

* See Appendix, Number 53. 

f See Appendix, Number 61. General balance sheet, Standard Oil interests, 
December 31, 1896. 

| The present directors are John D. Rockefeller, William Rockefeller, Henry M. 
Flagler, John D. Archbold, Henry H. Rogers, W. H. Tilford, Frank Q. Barstow, 
Charles M. Pratt, E. T. Bedford, Walter Jennings, James A. Moffett, C. W. Hark- 
ness, John D. Rockefeller, Jr., Oliver H. Payne. 

[266] 



CONCLUSION 

vessels, cars, wharves, docks, and piers ; lay and operate pipe- 
lines; erect and operate telegraph and telephone lines, and 
lines for conducting electricity; enter into and carry out con- 
tracts of every kind pertaining to his business; acquire, use, 
sell, and grant licenses under patent rights ; purchase, or other- 
wise acquire, hold, sell, assign, and transfer shares of capital 
stock and bonds or other evidences of indebtedness of corpora- 
tions, and exercise all the privileges of ownership, including 
voting upon the stocks so held; carry on its business and have 
offices and agencies therefor in all parts of the world, and 
hold, purchase, mortgage, and convey real estate and personal 
property outside the state of New Jersey. These privileges 
are, of course, subject to the laws of the state or country in 
which the company operates. If it is contrary to the laws of a 
state for a foreign corporation to hold real estate in its boun- 
daries, a company must be chartered in the state. Its stock, 
of course, is sold to the New Jersey corporation, so that it 
amounts to the same thing as far as the ability to do business 
is concerned. It will be seen that this really amounts to a 
special charter allowing the holder not only to do all that is 
Specified, but to create whatever other power it desires, ex- 
cept banking.* A comparison of this summary of powers with 
those granted by the South Improvement Company shows 
that in sweep of charter, at least, the Standard Oil Company 
of to-day has as great power as its famous progenitor.! 

The profits of the present Standard Oil Company are enor- 
mous. For five years the dividends have been averaging about 
forty-five million dollars a year, or nearly fifty per cent, on 
its capitalisation, a sum which capitalised at five per cent, 
would give $900,000,000. Of course this is not all that the 
combination makes in a year. It allows an annual average of 

* See Appendix, Number 62. Amended certificate of incorporation of the Stand- 
ard Oil Company of New Jersey, 
t See Appendix, Number 9. 

[267] 



THE HISTORY OF THE STANDARD OIL COMPANY 

5.77 per cent, for deficit, and it carries always an ample 
reserve fund. When we remember that probably one-third 
of this immense annual revenue goes into the hands of John 
D. Rockefeller, that probably ninety per cent, of it goes to 
the few men who make up the "Standard Oil family," and 
that it must every year be invested, the Standard Oil Company 
becomes a much more serious public matter than it was in 
1872, when it stamped itself as willing to enter into a con- 
spiracy to raid the oil business as a much more serious con- 
cern than in the years when it openly made warfare of business, 
and drove from the oil industry by any means it could invent 
all who had the hardihood to enter it. For, consider what 
must be done with the greater part of this $45,000,000. It 
must be invested. The oil business does not demand it. There 
is plenty of reserve for all of its ventures. It must go into 
other industries. Naturally, the interests sought will be allied 
to oil. They will be gas, and we have the Standard Oil crowd 
steadily acquiring the gas interests of the country. They will 
be railroads, for on transportation all industries depend, and, 
besides, railroads are one of the great consumers of oil products 
and must be kept in line as buyers. And we have the directors 
of the Standard Oil Company acting as directors on nearly 
all of the great railways of the country, the New York Cen- 
tral, New York, New Haven and Hartford, Chicago, Mil- 
waukee and St. Paul, Union Pacific, Northern Pacific, Dela- 
ware, Lackawanna and Western, Missouri Pacific, Missouri, 
Kansas and Texas, Boston and Maine, and other lesser roads. 
They will go into copper, and we have the Amalgamated 
scheme. They will go into steel, and we have Mr. Rockefel- 
ler's enormous holdings in the Steel Trust. They will go into 
banking, and we have the National City Bank and its allied 
institutions in New York City and Boston, as well as a long 
chain running over the country. No one who has followed 
this history can expect these holdings will be acquired on a 

[268] 



CONCLUSION 

rising market. Buy cheap and sell high is a rule of business, 
and when you control enough money and enough banks you 
can always manage that a stock you want shall be temporarily 
cheap. No value is destroyed for you only for the original 
owner. This has been one of Mr. Rockefeller's most success- 
ful manoeuvres in doing business from the day he scared his 
twenty Cleveland competitors until they sold to him at half 
price. You can also sell high, if you have a reputation of a 
great financier, and control of money and banks. Amalga- 
mated Copper is an excellent example. The names of certain 
Standard Oil officials would float the most worthless property 
on earth a few years ago. It might be a little difficult for 
them to do so to-day with Amalgamated so fresh in mind. 
Indeed, Amalgamated seems to-day to be the worst "break," 
as it certainly was one of the most outrageous performances 
of the Standard Oil crowd. But that will soon be forgotten! 
The result is that the Standard Oil Company is probably 
in the strongest financial position of any aggregation in the 
world. And every year its position grows stronger, for every 
year there is pouring in another $45,000,000 to be used in 
wiping up the property most essential to preserving and 
broadening its power. 

And now what does the law of New Jersey require the con- 
cern which it has chartered, and which is so rapidly adding to 
its control of oil the control of iron, steel, copper, banks, and 
railroads, to make known of itself? It must each year report its 
name, the location of its registration office, with name of agent, 
the character of its business, the amount of capital stock issued, 
and the names and addresses of its officers and directors! 

So much for present organisation, and now as to how far 
through this organisation the Standard Oil Company is able 
to realise the purpose for which it was organised the control 
of the output, and, through that, the price, of refined oil. 
That is, what per cent, of the whole oil business does Mr. 

[269] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Rockefeller's concern control. First as to oil production. In 
1898 the Standard Oil Company reported to the Industrial 
Commission that it produced 35.58 per cent, of Eastern crude 
the production that year was about 52,000,000 barrels.* 
(It should be remembered that it is always to the Eastern oil 
fields Pennsylvania, Ohio, Indiana, West Virginia that this 
narrative refers. Texas, Kansas, Colorado and California are 
newer developments. These fields have not as yet been deter- 
mining factors in the business, though Texas particularly has 
been a distributing factor.) But while Mr. Rockefeller pro- 
duces only about a third of the entire production, he controls 
all but about ten per cent, of it; that is, all but about ten per 
cent, goes immediately into his custody on coming from the 
wells. It passes entirely out of the hands of the producers when 
the Standard pipe-line takes it. The oil is in Mr. Rockefeller's 
-hands, and he, not the producer, can decide who is to have it. 
The greater portion of it he takes himself, of course, for he 
is the chief refiner of the country. In 1898 there were about 
twenty-four million barrels of petroleum products made in 
this country.f Of this amount about twenty million were made 
by the Standard Oil Company; fully a third of the balance 
was produced by the Tidewater Company, of which the Stand- 
ard holds a large minority stock, and which for twenty years 
has had a running arrangement with the Standard. Reckon- 
ing out the Tidewater's probable output, and we have an inde- 
pendent output of about 2,500,000 in twenty-four million. It 
is obvious that this great percentage of the business gives the 
Standard the control of prices. This control can be kept in 
the domestic markets so long as the Standard can keep under 
competition as successfully as it has in the past. It can be kept 

* See Appendix, Number 63. Production of Pennsylvania and Lima crude oil by 
Standard Oil Company, 1890-1898. 

t See Appendix, Number 64. Business of Standard Oil Company and other re- 
finers, 1894-1898. 

[270] 



CONCLUSION 

in the foreign market as long as American oils can be made 
and sold in quantity cheaper than foreign oils. Until a decade 
ago the foreign market of American oils was not seriously 
threatened. Since 1895, however, Russia, whose annual out- 
put of petroleum had been for a number of years about equal 
in volume to the American output, learned to make a fairly 
decent product; more dangerous, she had learned to market. 
She first appeared in Europe in 1885. I* to k ten years to 
make her a formidable rival, but she is so to-day, and, in 
spite of temporary alliances and combinations, it is very doubt- 
ful whether the Standard will ever permanently control Rus- 
sian oil. 

In 1899 Mr. Archbold presented to the Industrial Commis- 
sion a most interesting list of foreign corporations and indi- 
viduals doing an oil business in various countries. According 
to this there were more than a score of large concerns in 
Russia, and many small ones. The aggregate capitalisation 
shown by Mr. Archbold's list was over forty-six and a half 
millions, and the capitalisation of a number of the concerns 
named was not given. In Galicia, four companies, with an 
aggregate capital of $3,775,100, and in Roumania six large 
companies, with an aggregate capital of $12,500,000, were 
reported. Borneo was shown to have nearly three millions in- 
vested in the oil fields; Sumatra and Java each over twelve 
millions. Since this report was made these companies have 
grown, particularly in marketing ability. In the East the oil 
market belonged practically to the Standard Oil Company 
until recently. Last year (1903), however, Sumatra imported 
more oil into China than America, and Russia imported nearly 
half as much.* About 91,500,000 gallons of kerosene went 

* America imported into China, 1893 31,060,527 gallons 

Borneo " " " " 574,6i5 " 

Russia " " ' " 13,503,685 " 

Sumatra " " " 39,859,508 " 

[271 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

into Calcutta last year, and of this only about six million 
gallons came from America. In Singapore representatives of 
Sumatra oil claim that they have two-thirds of the trade. 

Combinations for offensive and defensive trade campaigns 
have also gone on energetically among these various companies 
in the last few years. One of the largest and most powerful 
of these aggregations now at work is in connection with an 
English shipping concern, the Shell Transport and Trading 
Company, the head of which is Sir Marcus Samuel, formerly 
Lord Mayor of London. This company, which formerly traded 
almost entirely in Russian oil, undertook a few years ago to 
develop the oil fields in Borneo, and they built up a large 
Oriental trade. They soon came into hot competition with the 
Royal Dutch Company, handling Sumatra oil, and a war of 
prices ensued which lasted nearly two years. In 1903, how- 
ever, the two competitors, in connection with four other strong 
Sumatra and European companies, drew up an agreement 
in regard to markets which has put an end to their war. The 
"Shell" people have not only these allies, but they have a 
contract with the Guffey Petroleum Company, the largest 
Texas producing concern, to handle its output, and they have 
gone into a German oil company, the Petroleum Produkten 
Aktien Gesellschaft. Having thus provided themselves with 
a supply they have begun developing a European trade on 
the same lines as their Oriental trade, and they are making 
serious inroads on the Standard's market. 

The naphthas made from the Borneo oil have largely taken 
the place of American naphtha in many parts of Europe. One 
load of Borneo benzine even made its appearance in the 
American market in 1904. It is a sign of what well may 
happen in the future with an intelligent development of 
these Russian and Oriental oils the Standard's domestic 
market invaded. It will be interesting to see to what further 
extent the American government will protect the Standard 

[272] 



CONCLUSION 

Oil Company by tariff on foreign oils if such a time docs 
come. It has done very well already. The aggressive market- 
ing of the "Shell" and its allies in Europe has led to a recent 
Oil War of great magnitude. For several months in 1904 
American export oil was sold at a lower price in New York 
than the crude oil it takes to make it costs there. For instance, 
on August 13, 1904, the New York export price was 4.80 
cents per gallon for Standard-white in bulk. Crude sold at 
the well for $1.50 a barrel of forty-two gallons, and if costs 
sixty cents to get it to seaboard by pipe-line; that is, forty-two 
gallons of crude oil costs $2.10, or five cents a gallon in 
New York twenty points loss on a gallon of the raw material ! 
But this low price for export affects the local market little 
or none. The tank-wagon price keeps up to ten and eleven 
cents in New York. Of course crude is depressed as much as 
possible to help carry this competition. For many months 
now there has been the abnormal situation of a declining 
crude price in face of declining stocks. The truth is the Stand- 
ard Oil Company is trying to meet the competition of the low- 
grade Oriental and Russian oils with high-grade American 
oil the crude being kept as low as possible, and the domestic 
market being made to pay for the foreign cutting. It seems 
a lack of foresight surprising in the Standard to have allowed 
itself to be found in such a dilemma. Certainly, for over two 
years the company has been making every effort to escape 
by getting hold of a supply of low-grade oil which would ena- 
ble it to meet the competition of the foreigner. There have 
been more or less short-lived arrangements in Russia. An oil 
territory in Galicia was secured not long ago by them, and an 
expert refiner with a full refining plant was sent over. Various 
hindrances have been met in the undertaking, and the works 
are not yet in operation. Two years ago the Standard attempted 
to get hold of the rich Burma oil fields. The press of India 
fought them out of the country, and their weapon was the 

[273] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Standard Oil Company's own record for hard dealings! The 
Burma fields are in the hands of a monopoly of the closest 
sort which has never properly developed the territory, but the 
people and government prefer their own monopoly to one 
of the American type! 

Altogether the most important question concerning the 
Standard Oil Company to-day is how far it is sustaining its 
power by the employment of the peculiar methods of the 
South Improvement Company. It should never be forgotten 
that Mr. Rockefeller never depended on these methods alone 
for securing power in the oil trade. From the beginning the 
Standard Oil Company has studied thoroughly everything 
connected with the oil business. It has known, not guessed at 
conditions. It has had a keen authoritative sight. It has applied 
itself to its tasks with indefatigable zeal. It has been as cour- 
ageous as it has been cautious. Nothing has been too big to 
undertake, as nothing has been too small to neglect. These facts 
have been repeatedly pointed out in this narrative. But these 
are the American industrial qualities. They are common 
enough in all sorts of business. They have made our rail- 
roads, built up our great department stores, opened our 
mines. The Standard Oil Company has no monopoly in 
business ability. It is the thing for which American men are 
distinguished to-day in the world. 

These qualities alone would have made a great business, 
and unquestionably it would have been along the line of com- 
bination, for when Mr. Rockefeller undertook to work out 
the good of the oil business the tendency to combination was 
marked throughout the industry, but it would not have been 
the combination whose history we have traced. To the help 
of these qualities Mr. Rockefeller proposed to bring the pecu- 
liar aids of the South Improvement Company. He secured 
an alliance with the railroads to drive out rivals. For fifteen 
years he received rebates of varying amounts on at least the 

[274] 



CONCLUSION 

greater part of his shipments, and for at least a portion of that 
time he collected drawbacks of the oil other people shipped; 
at the same time he worked with the railroads to prevent 
other people getting oil to manufacture, or if they got it he 
worked with the railroads to prevent the shipment of the prod- 
uct. If it reached a dealer, he did his utmost to bully or wheedle 
him to countermand his order. If he failed in that, he under- 
sold until the dealer, losing on his purchase, was glad enough 
to buy thereafter of Mr. Rockefeller. How much of this sys- 
tem remains in force to-day? The spying on independent ship- 
ments, the effort to have orders countermanded, the predatory 
competition prevailing, are well enough known. Contempora- 
neous documents, showing how these practices have been 
worked into a very perfect and practically universal system, 
have already been printed in this work.* As for the rebates 
and drawbacks, if they do not exist in the forms practised up 
to 1887, as the Standard officials have repeatedly declared, it is 
not saying that the Standard enjoys no special transportation 
privileges. As has been pointed out, it controls the great pipe- 
line handling all but perhaps ten per cent, of the oil produced 
in the Eastern fields. This system is fully 35,000 miles long. 
It goes to the wells of every producer, gathers his oil into its 
storage tanks, and from there transports it to Philadelphia, 
Baltimore, New York, Chicago, Buffalo, Cleveland, or any 
other refining point where it is needed. This pipe-line is a 
common carrier by virtue of its use of the right of eminent 
domain, and, as a common carrier, is theoretically obliged 
to carry and deliver the oil of all comers, but in practice this 
does not always work. It has happened more than once in the 
history of the Standard pipes that they have refused to gather 
or deliver oil. Pipes have been taken up from wells belonging 
to individuals running or working with independent refiners. 
Oil has been refused delivery at points practical for inde- 

* See Chapter X 
[275] 



THE HISTORY OF THE STANDARD OIL COMPANY 

pendent refiners. For many years the supply of oil has been so 
great that the Standard could not refuse oil to the independent 
refiner on the ground of scarcity. However, a shortage in Penn- 
sylvania oil occurred in 1903. A very interesting situation arose 
as a result. There are in Ohio and Pennsylvania several inde- 
pendent refiners who, for a number of years, have depended on 
the Standard lines (the National Transit Company) for their 
supply of crude. In the fall of 1903 these refiners were in- 
formed that thereafter the Standard could furnish them with 
only fifty per cent, of their refining capacity. It was a serious 
matter to the independents, who had their own markets, and 
some of whom were increasing their plants. Supposing we 
buy oil directly from the producers, they asked one another, 
must not the Standard as a common carrier gather and deliver 
it? The experienced in the business said: "Yes. But what will 
happen? The producer rash enough to sell you oil may be 
cut off by the National Transit Company. Of course, if he 
wants to fight in the courts he may eventually force the Stand- 
ard to reconnect, but they could delay the suit until he was 
ruined. Also, if you go over Mr. Seep's head" Mr. Seep is 
the Standard Oil buyer, and all oil going into the National 
Transit system goes through his hands "you will antagonise 
him." Now, "antagonise" in Standard circles may mean a 
variety of things. The independent refiners decided to compro- 
mise, and an agreement terminable by either party at short 
notice was made between them and the Standard, by which 
the members of the former were each to have eighty per cent, 
of their capacity of crude oil, and were to give to the Standard 
all of their export oil to market. As a matter of fact, the Stand- 
ard's ability to cut off crude supplies from the outside refiners 
is much greater than in the days before the Interstate Com- 
merce Bill, when it depended on its alliance with the railroads 
to prevent its rival getting oil. It goes without saying that 
this is an absurd power to allow in the hands of any manufac- 

[276] 



CONCLUSION 

turer of a great necessity of life. It is exactly as if one corpora- 
tion aiming at manufacturing all the flour of the country 
owned all but ten per cent, of the entire railroad system 
collecting and transporting wheat. They could, of course, in 
time of shortage, prevent any would-be competitor from get- 
ting grain to grind, and they could and would make it diffi- 
cult and expensive at all times for him to get it. 

It is not only in the power of the Standard to cut off out- 
siders from it, it is able to keep up transportation prices. Mr. 
Rockefeller owns the pipe system a common carrier and 
the refineries of the Standard Oil Company pay in the final 
accounting cost for transporting their oil, while outsiders pay 
just what they paid twenty-five years ago. There are lawyers 
who believe that if this condition were tested in the courts, the 
National Transit Company would be obliged to give the same 
rates to others as the Standard refineries ultimately pay. It 
would be interesting to see the attempt made. 

Not only are outside refiners at just as great disadvantage 
in securing crude supply to-day as before the Interstate Com- 
merce Commission was formed; they still suffer severe dis- 
crimination on the railroads in marketing their product. 
There are many ways of doing things. What but discrim- 
ination is the situation which exists in the comparative rates 
for oil freight between Chicago and New Orleans, and 
Cleveland and New Orleans? All, or nearly all, of the 
refined oil sold by the Standard Oil Company through the 
Mississippi Valley and the West is manufactured at Whit- 
ing, Indiana, close to Chicago, and is shipped on Chicago 
rates. There are no important independent oil works at 
Chicago. Now at Cleveland, Ohio, there are independent 
refiners and jobbers contending for the market of the Mis- 
sissippi Valley. See how prettily it is managed. The rates 
between the two Northern cities and New Orleans in the 
case of nearly all commodities is about two cents per hun- 

[277] 



THE HISTORY OF THE STANDARD OIL COMPANY 

dred pounds in favour of Chicago. For example, the rate on 
flour from Chicago is 23 cents per 100 pounds; from Cleve- 
land, 25 cents per 100 pounds; on canned goods the rates are 
33 and 35 ; on lumber, 31 and 33 ; on meats, 51 and 54; on all 
sorts of iron and steel, 26 and 29; but on petroleum and its 
products they are 23 and 33! 

In the case of Atlanta, Georgia, a similar vagary of rates ex- 
ists. Thus Cleveland has, as a rule, about two cents advantage 
per 100 pounds over Chicago. Flour is shipped from Chicago 
to Atlanta at 34 cents, and from Cleveland at 32^ ; lumber at 
32 and 28^; but Cleveland refiners actually pay 48 cents to 
Atlanta, while the Standard only pays 45 from Whiting. 

There is a curious rule in the Boston and Maine Railroad 
in regard to petroleum shipments. On all commodities except 
petroleum, what is known as the Boston rate applies, but oil 
does not get this. For instance, the Boston rate applies to 
Salem, Massachusetts, on all traffic except petroleum, and that 
pays four cents more per 100 pounds to Salem than to Boston. 

The New York, New Haven and Hartford Railroad gives 
no through rates on petroleum from Western points, although 
it gives them on every other commodity. It does not refuse 
to take oil, but it charges the Boston rate plus the local rates. 
Thus, to use an illustration given by Mr. Prouty, of the In- 
terstate Commerce Commission, in a recent article, if a Cleve- 
land refiner sends into the New Haven territory, say to New 
Haven, a car-load of oil, he pays 24 cents per 100 pounds to 
Boston and the local rate of 12 cents from Boston to New 
Haven. On any other commodity he would pay the Boston 
rate. Besides, the rates on petroleum have been materially 
advanced over what they were when the Interstate Commerce 
Bill was passed in 1887, although on other commodities they 
have fallen. In 1887 grain was shipped from Cleveland to 
Boston for 22 cents, iron for 22, petroleum for 22. In 1889 
the rate on grain was 15 cents, on iron 20 cents, and on petro- 

[278] 



CONCLUSION 

leum 24. Of course it may be merely a coincidence that the 
New Haven territory can be supplied by the Standard Oil 
Company from its New York refineries by barge, and that 
William Rockefeller is a director of the New York, New 
Haven and Hartford Railroad. 

An independent refiner of Titusville, Pennsylvania, T. B. 
Westgate, told the Industrial Commission in 1898 that his 
concern was barred from shipping their products to nearly 
all New England and Canadian points by the refusal of the 
roads to give the same advantages in tariff which other freight 
was allowed. Mr. Westgate made the suggestive comment 
that very few railroads ever solicited oil trade. He pointed 
out that when the United States Pipe Line was building, agents 
of various roads were after the oil men soliciting shipments 
of the pipe, etc., to be used. "We could ship iron, but the oil 
we must not handle. That is probably the password that 
goes over." 

Examples of this manipulation might be multiplied. There 
is no independent refiner or jobber who tries to ship oil freight 
that does not meet incessant discouragement and discrimina- 
tion. Not only are rates made to favour the Standard refining 
points and to protect their markets, but switching charges and 
dock charges are multiplied. Loading and unloading facili- 
ties are refused, payment of freights on small quantities are 
demanded in advance, a score of different ways are found to 
make hard the way of the outsider. "If I get a barrel of oil 
out of Buffalo," an independent dealer told the writer not long 
ago, "I have to sneak it out. There are no public docks; the 
railroads control most of them, and they won't let me out if 
they can help it. If I want to ship a car-load they won't take 
it if they can help it. They are all afraid of offending the 
Standard Oil Company." 

This may be a rather sweeping statement, but there is 
too much truth in it. There is no doubt that to-day, as before 

[279] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the Interstate Commerce Commission, a community of interests 
exists between railroads and the Standard Oil Company suffi- 
ciently strong for the latter to get any help it wants in making 
it hard for rivals to do business. The Standard owns stock in 
most of the great systems. It is represented on the board of 
directors of nearly all the great systems, and it has an immense 
freight not only in oil products, but in timber, iron, acids, and 
all of the necessities of its factories. It is allied with many 
other industries, iron, steel, and copper, and can swing freight 
away from a road which does not oblige it. It has great influ- 
ence in the money market and can help or hinder a road in 
securing money. It has great influence in the stock market 
and can depress or inflate a stock if it sets about it. Little 
wonder that the railroads, being what they are, are afraid to 
"disturb their relations with the Standard Oil Company," or 
that they keep alive a system of discriminations the same in 
effect as those which existed before 1887. 

Of course such cases as those cited above are fit for the 
Interstate Commerce Commission, but the oil men as a body 
have no faith in the effectiveness of an appeal to the Commis- 
sion, and in this feeling they do not reflect on the Commission, 
but rather on the ignorance and timidity of the Congress 
which, after creating a body which the people demanded, 
made it helpless. The case on which the Oil Regions rests 
its reason for its opinion has already been referred to in the 
chapter on the co-operative independent movement which 
finally resulted in the Pure Oil Company. The case first came 
before the Commission in 1888. At that time there was a 
small group of independent refiners in Oil City and Titus- 
ville, who were the direct outgrowth of the compromise of 
1880 between the Producers' Protective Association and the 
Pennsylvania Railroad. The railroad, having promised open 
rates to all, urged the men to go into business. Soon after came 
the great fight between the railroads and the seaboard pipe- 

[280] 




A 25,000-BARREL TANK OF OIL IN FLAMES 



CONCLUSION 

line, with the consequent low rates. This warfare finally ended 
in 1884, after the Standard had brought the Tidewater into 
line, in a pooling arrangement between the Standard, now con- 
trolling all seaboard pipe-lines, and the Pennsylvania Rail- 
road, by which the latter was guaranteed twenty-six per cent, 
of all Eastern oil shipments on condition that they keep up 
the rate to the seaboard to fifty-two cents a barrel. 

Now, most of the independents shipped by barrels loaded 
on rack cars. The Standard shipped almost entirely by tank- 
cars. The custom had always been in the Oil Regions to charge 
the same for shipments whether by tank or barrel. Suddenly, 
in 1888, the rate of fifty- two cents on oil in barrels was raised 
to one of sixty-six cents. The independents believed that the 
raise was a manipulation of the Standard intended to kill 
their export trade, and they appealed to the Commission. They 
pointed out that the railroads and the pipe-lines had been 
keeping up rates for a long time by a pooling arrangement, and 
that now the roads made an unreasonable tariff on oil in bar- 
rels, at the same time refusing them tank cars. The hearing 
took place in Titusville in May, 1889. The railroads argued 
that they had advanced the rate on barrelled oil because of a 
decision of the Commission itself a case of very evident dis- 
crimination in favour of barrels. The Commission, however, 
argued that each case brought before it must stand on its own 
merits, so different were conditions and practices, and in 
December, 1892, it gave its decision. The pooling arrange- 
ment it did not touch, on the ground that the Commission had 
authority only over railroads in competition, not over rail- 
roads and pipe-lines in competition. The chief complaint, that 
the new rate of sixty-six cents on oil in barrels and not on oil in 
tanks was an injurious discrimination, the Commission found 
justified. It ordered that the railroads make the rates the same 
on oil in both tanks and barrels, and that they furnish shippers 
tanks whenever reasonable notice was given. As the amounts 

[281] 



THE HISTORY OF THE STANDARD OIL COMPANY 

wrongfully collected by the railroads from the refiners could 
not be ascertained from the evidence already taken, the Com- 
mission decided to hold another hearing and fix the amounts. 
This was not done until May, 1894, five years after the first 
hearing. Reparation was ordered to at least eleven different 
firms, some of the sums amounting to several thousand dollars ; 
the entire award ordered amounted to nearly $100,000. 

In case the railroads failed to adjust the claims the refiners 
were ordered to proceed to enforce them in the courts. The 
Commission found at this hearing that none of their orders 
of 1892 had been followed by the roads and they were all 
repeated. As was to be expected, the roads refused to recognise 
the claims allowed by the Commission, and the case was taken 
by the refiners into court. It has been heard three times. Twice 
they have won, but each time an appeal of the roads has 
forced them to appear again. The case was last heard at 
Philadelphia in February, 1904, in the United States Circuit 
Court of Appeals. No decision had been rendered at this 
writing. 

It would be impossible to offer direct and conclusive proof 
that the Standard Oil Company persuaded or forced the roads 
to the change of policy complained of in this case, but the 
presence of their leading officials and counsel at the hearings, 
the number of witnesses furnished from their employ, the 
statement of President Roberts of the Pennsylvania Railroad 
that the raise on barrelled oil was insisted on by the seaboard 
refiners (the Standard was then practically the only seaboard 
refiner) , as well as the perfectly well-known relations of the 
railroad and the Standard, left no doubt in the minds of those 
who knew the situation that the order originated with them, 
and that its sole purpose was harassing their competitors. The 
Commission seems to have had no doubt of this. But see the 
helplessness of the Commission. It takes full testimony in 1889, 
digests it carefully, gives its orders in 1892, and they are not 

[282] 



CONCLUSION 

obeyed. More hearings follow, and in 1895 the orders are 
repeated and reparation is allowed to the injured refiners. 
From that time to this the case passes from court to court, 
the railroad seeking to escape the Commission's orders. The 
Interstate Commerce Commission was instituted to facilitate 
justice in this matter of transportation, and yet here we have 
still unsettled a case on which they gave their judgment twelve 
years ago. The lawyer who took the first appeal to the Com- 
mission, that of Rice, Robinson and Winthrop, of Titusville, 
M. J. Heywang, of Titusville, has been continually engaged 
in the case for sixteen years ! 

In spite of the Interstate Commerce Commission, the cru- 
cial question is still a transportation question. Until the people 
of the United States have solved the question of free and equal 
transportation it is idle to suppose that they will not have a 
trust question. So long as it is possible for a company to own 
the exclusive carrier on which a great natural product de- 
pends for transportation, and to use this carrier to limit a 
competitor's supply or to cut off that supply entirely if the 
rival is offensive, and always to make him pay a higher rate 
than it costs the owner, it is ignorance and folly to talk about 
constitutional amendments limiting trusts. So long as the great 
manufacturing centres of a monopolistic trust can get better 
rates than the centres of independent effort, it is idle to talk 
about laws making it a crime to undersell for the purpose 
of driving a competitor from a market. You must get into 
markets before you can compete. So long as railroads can be 
persuaded to interfere with independent pipe-lines, to refuse 
oil freight, to refuse loading facilities, lest they disturb their 
relations with the Standard Oil Company, it is idle to talk 
about investigations or anti-trust legislation or application of 
the Sherman law. So long as the Standard Oil Company can 
control transportation as it does to-day, it will remain master 
of the oil industry, and the people of the United States will 

[283] 



THE HISTORY OF THE STANDARD OIL COMPANY 

pay for their indifference and folly in regard to transportation 
a good sound tax on oil, and they will yearly see an increasing 
concentration of natural resources and transportation systems 
in the Standard Oil crowd. 

If all the country had suffered from these raids on compe- 
tition, had been the limiting of the business opportunity of a 
few hundred men and a constant higher price for refined oil, 
the case would be serious enough, but there is a more serious 
side to it. The ethical cost of all this is the deep concern. We 
are a commercial people. We cannot boast of our arts, our 
crafts, our cultivation; our boast is in the wealth we produce. 
As a consequence business success is sanctified, and, practi- 
cally, any methods which achieve it are justified by a larger and 
larger class. All sorts of subterfuges and sophistries and slur- 
ring over of facts are employed to explain aggregations of 
capital whose determining factor has been like that of the 
Standard Oil Company, special privileges obtained by per- 
sistent secret effort in opposition to the spirit of the law, the 
efforts of legislators, and the most outspoken public opinion. 
How often does one hear it argued, the Standard Oil Com- 
pany is simply an inevitable result of economic conditions; 
that is, given the practices of the oil-bearing railroads in 1872 
and the elements of speculation and the over-refining in the 
oil business, there was nothing for Mr. Rockefeller to do but 
secure special privileges if he wished to save his business. 

Now in 1872 Mr. Rockefeller owned a successful refinery 
in Cleveland. He had the advantage of water transportation 
a part of the year, access to two great trunk lines the year 
around. Under such able management as he could give it his 
concern was bound to go on, given the demand for refined 
oil. It was bound to draw other firms to it. When he went 
into the South Improvement Company it was not to save 
his own business, but to destroy others. When he worked so 
persistently to secure rebates after the breaking up of the 

[284] 



South Improvement Company, it was in the face of an indus- 
try united against them. It was not to save his business that he 
compelled the Empire Transportation Company to go out 
of the oil business in 1877. Nothing but grave mismanage- 
ment could have destroyed his business at that moment; 
it was to get every refinery in the country but his own 
out of the way. It was not the necessity to save his business 
which compelled Mr. Rockefeller to make war on the Tide- 
water. He and the Tidewater could both have lived. It 
was to prevent prices of transportation and of refined oil 
going down under competition. What necessity was there 
for Mr. Rockefeller trying to prevent the United States Pipe 
Line doing business? only the greed of power and money. 
Every great campaign against rival interests which the Stand- 
ard Oil Company has carried on has been inaugurated, not 
to save its life, but to build up and sustain a monopoly in the 
oil industry. These are not mere affirmations of a hostile critic; 
they are facts proved by documents and figures. 

Certain defenders go further and say that if some such com- 
bination had not been formed the oil industry would have 
failed for lack of brains and capital. Such a statement is 
puerile. Here was an industry for whose output the whole 
world was crying. Petroleum came at the moment when the 
value and necessity of a new, cheap light was recognised 
everywhere. Before Mr. Rockefeller had ventured outside 
of Cleveland kerosene was going in quantities to every civil- 
ised country. Nothing could stop it, nothing check it, but the 
discovery of some cheaper light or the putting up of its price. 
The real "good of the oil business" in 1872 lay in making 
oil cheaper. It would flow all over the world on its own merit 
if cheap enough. 

The claim that only by some such aggregation as Mr. Rocke- 
feller formed could enough capital have been obtained to 
develop the business falls utterly in face of fact. Look at the 

[285] 



THE HISTORY OF THE STANDARD OIL COMPANY 

enormous amounts of capital, a large amount of it speculative, 
to be sure, which the oil men claim went into their business 
in the first ten years. It was estimated that Philadelphia alone 
put over $168,000,000 into the development of the Oil Re- 
gions, and New York $134,000,000, in their first decade of 
the business. How this estimate was reached the authority 
for it does not say.* It may have been the total capitalisation 
of the various oil companies launched in the two cities in 
that period. It shows very well, however, in what sort of 
figures the oil men were dealing. When the South Improve- 
ment Company trouble came in 1872, the producers launched 
a statement in regard to the condition of their business in 
which they claimed that they were using a capital of 
$200,000,000. Figures based on the number of oil wells in 
operation or drilling at that time of course represent only 
a portion of the capital in use. Wildcatting and speculation 
have always demanded a large amount of the money that the 
oil men handled. The almost conservative figures in regard 
to the capital invested in the Oil Regions in the early years 
were those of H. E. Wrigley, of the Geological Survey of 
Pennsylvania. Mr. Wrigley estimates that in the first twelve 
years of the business $235,000,000 was received from wells. 
This includes the cost of the land, of putting down and oper- 
ating the well, also the profit on the product. This estimate, 
however, makes no allowance for the sums used in specula- 
tion an estimate, indeed, which it was impossible for one to 
make with any accuracy. The figures, unsatisfactory as they 
are, are ample proof, however, that there was plenty of money 
in the early days to carry on the oil business. Indeed, there 
has always been plenty of money for oil investment. It did not 
require Mr. Rockefeller's capital to develop the Bradford oil 
fields, build the first seaboard pipe-line, open West Virginia, 
Texas, or Kansas. The oil business would no more have suf- 

* The Petroleum Age, Volume I, page 35. 
[286] 



CONCLUSION 

fered for lack of capital without the Standard combination 
than the iron or wheat or railroad or cotton business. The 
claim is idle, given the wealth and energy of the country in 
the forty-five years since the discovery of oil. 

Equally well does both the history and the present condi- 
tion of the oil business show that it has not needed any such 
aggregation to give us cheap oil. The margin between crude 
and refined was made low by competition. It has rarely been 
as low as it would have been had there been free competition. 
For five years even the small independent refineries outside 
of the Pure Oil Company have been able to make a profit 
on the prices set by the Standard, and this in spite of the higher 
transportation they have paid on both crude and refined, and 
the wall of seclusion the railroads build around domestic 
markets. 

Very often people who admit the facts, who are willing to 
see that Mr. Rockefeller has employed force and fraud to 
secure his ends, justify him by declaring, " It's business." That 
is, "it's business" has to come to be a legitimate excuse for 
hard dealing, sly tricks, special privileges. It is a common 
enough thing to hear men arguing that the ordinary laws of 
morality do not apply in business. Now, if the Standard Oil 
Company were the only concern in the country guilty of the 
practices which have given it monopolistic power, this story 
never would have been written. Were it alone in these 
methods, public scorn would long ago have made short work 
of the Standard Oil Company. But it is simply the most con- 
spicuous type of what can be done by these practices. The 
methods it employs with such acumen, persistency, and se- 
crecy are employed by all sorts of business men, from corner 
grocers up to bankers. If exposed, they are excused on the 
ground that this is business. If the point is pushed, frequently 
the defender of the practice falls back on the Christian doc- 
trine of charity, and points that we are erring mortals and 

[287] 



THE HISTORY OF THE STANDARD OIL COMPANY 

must allow for each other's weaknesses! an excuse which, 
if carried to its legitimate conclusion, would leave our busi- 
ness men weeping on one another's shoulders over human 
frailty, while they picked one another's pockets. 

One of the most depressing features of the ethical side of 
the matter is that instead of such methods arousing contempt 
they are more or less openly admired. And this is logical. 
Canonise "business success," and men who make a success like 
that of the Standard Oil Trust become national heroes! The 
history of its organisation is studied as a practical lesson in 
money-making. It is the most startling feature of the case 
to one who would like to feel that it is possible to be a com- 
mercial people and yet a race of gentlemen. Of course such 
practices exclude men by all the codes from the rank of gentle- 
men, just as such practices would exclude men from the sport- 
ing world or athletic field. There is no gaming table in the 
world where loaded dice are tolerated, no athletic field where 
men must not start fair. Yet Mr. Rockefeller has systemat- 
ically played with loaded dice, and it is doubtful if there has 
ever been a time since 1872 when he has run a race with a 
competitor and started fair. Business played in this way loses 
all its sportsmanlike qualities. It is fit only for tricksters. 

The effects on the very men who fight these methods on the 
ground that they are ethically wrong are deplorable. Brought 
into competition with the trust, badgered, foiled, spied upon, 
they come to feel as if anything is fair when the Standard is 
the opponent. The bitterness against the Standard Oil Com- 
pany in many parts of Pennsylvania and Ohio is such that 
a verdict from a jury on the merits of the evidence is almost 
impossible! A case in point occurred a few years ago in the 
Bradford field. An oil producer was discovered stealing oil 
from the National Transit Company. He had tapped the main 
line and for at least two years had run a small but steady stream 
of Standard oil into his private tank. Finally the thieving 

[288] 



CONCLUSION 

pipe was discovered, and the owner of it, after acknowledging 
his guilt, was brought to trial. The jury gave a verdict of Not 
guilty! They seemed to feel that though the guilt was acknowl- 
edged, there probably was a Standard trick concealed some- 
where. Anyway it was the Standard Oil Company and it de- 
served to be stolen from! The writer has frequently heard 
men, whose own business was conducted with scrupulous fair- 
ness, say in cases of similar stealing that they would never 
condemn a man who stole from the Standard! Of course such 
a state of feeling undermines the whole moral nature of a 
community. 

The blackmailing cases of which the Standard Oil Com- 
pany complain are a natural result of its own practices. Men 
going into an independent refining business have for years 
been accustomed to say : "Well, if they won't let us alone, we'll 
make them pay a good price." The Standard complains that 
such men build simply to sell out. There may be cases of this. 
Probably there are, though the writer has no absolute proof 
of any such. Certainly there is no satisfactory proof that 
the refinery in the famous Buffalo case was built to sell, 
though that it was offered for sale when the opposition of the 
Everests, the managers of the Standard concern, had become 
so serious as later to be stamped as criminal by judge and jury, 
there- is no doubt. Certainly nothing was shown to have been 
done or said by Mr. Matthews, the owner of the concern which 
the Standard was fighting, which might not have been ex- 
pected from a man who had met the kind of opposition he 
had from the time he went into business. 

The truth is, blackmail and every other business vice is the 
natural result of the peculiar business practices of the Stand- 
ard. If business is to be treated as warfare and not as a peace- 
ful pursuit, as they have persisted in treating it, they cannot 
expect the men they are fighting to lie down and die without 
a struggle. If they get special privileges they must expect their 

[289] 



THE HISTORY OF THE STANDARD OIL COMPANY 

competitors to struggle to get them. If they will find it more 
profitable to buy out a refinery than to let it live, they must 
expect the owner to get an extortionate price if he can. And 
when they complain of these practices and call them black- 
mail, they show thin sporting blood. They must not expect 
to monopolise hard dealings, if they do oil. 

These are considerations of the ethical effect of such busi- 
ness practices on those outside and in competition. As for 
those within the organisation there is one obvious effect worth 
noting. The Standard men as a body have nothing to do with 
public affairs, except as it is necessary to manipulate them 
for the "good of the oil business." The notion that the busi- 
ness man must not appear in politics and religion save as a 
"stand-patter" not even as a thinking, aggressive force is 
demoralising, intellectually and morally. Ever since 1872 the 
organisation has appeared in politics only to oppose legisla- 
tion obviously for the public good. At that time the oil indus- 
try was young, only twelve years old, and it was suffering from 
too rapid growth, from speculation, from rapacity of rail- 
roads, but it was struggling manfully with all these questions. 
The question of railroad discriminations and extortions was 
one of the "live questions" of the country. The oil men as a 
mass were allied against it. The theory that the railroad was 
a public servant bound by the spirit of its charter to treat all 
shippers alike, that fair play demanded open equal rates to all, 
was generally held in the oil country at the time Mr. Rockefel- 
ler and his friends sprung the South Improvement Company. 
One has only to read the oil journals at the time of the Oil 
War of 1872 to see how seriously all phases of the transporta- 
tion question were considered. The country was a unit against 
the rebate system. Agreements were signed with the railroads 
that all rates henceforth should be equal. The signatures were 
not on before Mr. Rockefeller had a rebate, and gradually 
others got them until the Standard had won the advantages 

[290] 



CONCLUSION 

it expected the South Improvement Company to give it. From 
that time to this Mr. Rockefeller has had to fight the best 
sentiment of the oil country and of the country at large as to 
what is for the public good. He and his colleagues kept a 
strong alliance in Washington fighting the Interstate Com- 
merce Bill from the time the first one was introduced in 1876 
until the final passage in 1887. Every measure looking to the 
freedom and equalisation of transportation has met his oppo- 
sition, as have bills for giving greater publicity to the opera- 
tions of corporations. In many of the great state Legislatures 
one of the first persons to be pointed out to a visitor is the 
Standard Oil lobbyist. Now, no one can dispute the right of 
the Standard Oil Company to express its opinions on pro- 
posed legislation. It has the same right to do this as all the 
rest of the world. It is only the character of its opposition 
which is open to criticism, the fact that it is always fight- 
ing measures which equalise privileges and which make it 
more necessary for men to start fair and play fair in doing 
business. 

Of course the effect of directly practising many of their 
methods is obvious. For example, take the whole system of 
keeping track of independent business. There are practices 
required which corrupt every man who has a hand in them. 
One of the most deplorable things about it is that most of 
the work is done by youngsters. The freight clerk who reports 
the independent oil shipments for a fee of five or ten dollars 
a month is probably a young man, learning his first lessons in 
corporate morality. If he happens to sit in Mr. Rockefeller's 
church on Sundays, through what sort of a haze will he re- 
ceive the teachings? There is something alarming to those 
who believe that commerce should be a peaceful pursuit, and 
who believe that the 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 uncon- 

[291 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

sciously growing up with the idea that business is war and that 
morals have nothing to do with its practice. 

And what are we going to do about it? for it is our busi- 
ness. We, the people of the United States, and nobody else, 
must cure whatever is wrong in the industrial situation, typi- 
fied by this narrative of the growth of the Standard Oil Com- 
pany. That our first task is to secure free and equal transporta- 
tion privileges by rail, pipe and waterway is evident. It is 
not an easy matter. It is one which may require operations 
which will seem severe ; but the whole system of discrimination 
has been nothing but violence, and those who have profited 
by it cannot complain if the curing of the evils they have 
wrought bring hardship in turn on them. At all events, until 
the transportation matter is settled, and settled right, the 
monopolistic trust will be with us, a leech on our pockets, a 
barrier to our free efforts. 

As for the ethical side, there is no cure but in an increasing 
scorn of unfair play an increasing sense that a thing won by 
breaking the rules of the game is not worth the winning. When 
the business man who fights to secure special privileges, to 
crowd his competitor off the track by other than fair competi- 
tive methods, receives the same summary disdainful ostracism 
by his fellows that the doctor or lawyer who is "unprofes- 
sional," the athlete who abuses the rules, receives, we shall 
have gone a long way toward making commerce a fit pursuit 
for our young men. 

THE END 



[292] 



APPENDIX 



ARTICLES OF INCORPORATION OF THE TIDEWATER PIPE LINE 

Incorporation Tidewater Pipe Company, Limited, of Titusville, Pennsylvania. 
Recorded November 22, 1878. William F. Dickson, Recorder. 

The undersigned persons, to wit: Byron David Benson, Robert Emmet Hopkins, 
Andrew Worton Perrin, Alanson Ashford Sumner, David Boyd Stewart, David 
McKelvy, Samuel Queen Brown, Adam Clark Hawkins, Willis Booth Benedict, Marcus 
Brownson, William Henry Nicholson, Calvin Nathaniel Payne, John Hahn Dilks, 
Hascal Ledger Taylor, William Henry Conley, Thomas Benton Riter, Clark Isaac 
Hayes, Gershom Hyde, James Henry Caldwell, George Lawrence Benton, George 
Hill Graham, Elisha Gilbert Patterson, Benjamin Bakewell Campbell, Delos Olcott 
Wickham, Joseph Henry Simmonds, Lewis Henry Smith, desire to form a partner- 
ship association, pursuant to the provisions of an act of the General Assembly of the 
Commonwealth of Pennsylvania, entitled, "An Act, authorising the formation of part- 
nership association in which the capital subscribed shall alone be responsible for the 
debts of the association except under certain circumstances," approved the second 
day of June, A.D. 1874, and the several supplements thereto for the purpose of con- 
ducting a legal business or occupation, within the United States or elsewhere, whose 
principal office or place of business shall be established and maintained within the 
state of Pennsylvania, by subscribing and contributing capital thereto, which capital 
shall alone be liable for the debts of such association, and to that end sign and acknowl- 
edge the following statement: 

Full names of the persons desiring to form such association are : Byron David Benson, 
Robert Emmet Hopkins, Andrew Worton Perrin, Alanson Ashford Sumner, David 
Boyd Stewart, David McKelvy, Samuel Queen Brown, Adam Clark Hawkins, Willis 
Booth Benedict, Marcus Brownson, William Henry Nicholson, Calvin Nathaniel 
Payne, John Hahn Dilks, Hascal Ledger Taylor, William Henry Conley, Thomas 
Benton Riter, Clark Isaac Hayes, Gershom Clark Hyde, James Henry Caldwell, 
George Lawrence Benton, George Hill Graham, Elisha Gilbert Patterson, Benjamin 
Bakewell Campbell, Delos Olcott Wickham, Joseph Henry Simmonds, Lewis Henry 
Smith. 

The amount of capital of said association subscribed for by each is as follows, to 
wit: 

[295 1 



Said Byron David Benson has subscribed for $100,300 of the capital of said asso- 
ciation; the said Robert Emmet Hopkins has subscribed for $72,400 of the capital of 
said association; said Andrew Worton Perrin has subscribed for $24,700 of the capital 
of said association; said David Boyd Stewart has subscribed for $16,800 of the capital 
of said association; said David McKelvy has subscribed for $72,500 of the capital of 
said association; said Samuel Queen Brown has subscribed for $25,000 of the capital 
of said association; said Adam Clark Hawkins has subscribed for $6,000 of the 
capital of said association; said Willis Booth Benedict has subscribed for $5,000 of 
the capital of said association; said Marcus Brownson has subscribed for $10,000 
of the capital of said association; said William Henry Nicholson has subscribed 
for $5,000 of the capital of said association; said Calvin Nathaniel Payne has sub- 
scribed for $5,000 of the capital of said association; said John Hahn Dilks has sub- 
scribed $82,300 of the capital of said association; said Hascal Ledger Taylor has 
subscribed for $50,000 of the capital of said association; said William Henry Conley 
has subscribed for $2,500 of the capital of said association; said Thomas Benton Riter 
has subscribed for $2,500 of the capital of said association; said Clark Isaac Hayes 
has subscribed for $10,000 of the capital of said association; said Gershom Clark 
Hyde has subscribed for $1,000 of the capital of said association; said James Henry 
Caldwell has subscribed for $2,500 of the capital of said association; said George 
Lawrence Benton has subscribed for $1,000 of the capital of said association; said 
George Hill Graham has subscribed for $1,000 of the capital of said association; said 
Elisha Gilbert Patterson has subscribed for $5,000 of the capital of said association; 
said Benjamin Bakewell Campbell has subscribed for $10,000 of the capital of said 
association; said Delos Olcott Wickham has subscribed for $2,500 of the capital of 
said association; said Joseph Henry Simmonds has subscribed for $1,000 of the capital 
of said association; said Lewis Henry Smith has subscribed for $1,000 of the capital 
of said association. 

Second. The total amount of the capital of the said association is $625,000, and 
said capital shall be paid at the times and in the manner following, to wit : Twenty- 
five per cent, thereof on the second day of December, A.D. 1878; twenty-five per cent, 
thereof on the second day of January, A.D. 1879; twenty-five per cent, thereof on the 
first day of February, A.D. 1879, and the balance of twenty-five per cent, thereof the 
third day of March, A.D. 1879. The whole of said capital shall be paid in lawful money 
to the treasurer of said association at the principal office or place of business of said 
association at Titusville, Pennsylvania. 

Third. The character of the business to be conducted by said association is the 
production, shipping, refining, storing, insuring, buying and selling of petroleum and 
its products, and the acquisitions, manufacture and management of such property, 
real, personal and mixed, as may be deemed necessary or advisable to use in such 
business or in connection therewith. The location of the business to be conducted 

[2 9 6] 



APPENDIX, NUMBER XXXVII 

by said association is at the city of Titusville, in the county of Crawford, and state 
of Pennsylvania, where the principal office or place of business of said association 
is established and shall be maintained. 

Fourth. The name of the said association is the Tidewater Pipe Company 
(Limited). 

Fifth. The contemplated duration of said association is twenty years from the 
date of this statement. 

Sixth. The names of the officers of said association selected in conformity with the 
provisions of said act are as follows : 

The managers of said association so elected are: Byron David Benson, Hascal 
Ledger Taylor, Alanson Ashford Sumner, Robert Emmet Hopkins, and John Hahn 
Dilks, of whom said Byron David Benson is so selected chairman of said association; 
said Robert Emmet Hopkins is so selected treasurer of said association; and said 
Alanson Ashford Sumner is so selected secretary of said association. 

In Witness Whereof, the persons named in this statement have hereunto severally 
signed their names, this thirteenth day of November, Anno Domini one thousand 
eight hundred and seventy-eight: 

ELISHA GILBERT PATTERSON, BYRON DAVID BENSON, MARCUS BROWNSON, 
HASCAL LEDGER TAYLOR, GEORGE LAWRENCE BENTON, ALANSON ASHFORD SUMNER, 
DELOS OLCOTT WICKHAM, DAVID McKELVY, ADAM CLARK HAWKINS, DAVID BOYD 
STEWART, JOHN HAHN DILKS, GEORGE HILL GRAHAM, WILLIAM HENRY NICHOLSON, 
JOSEPH HENRY SIMMONDS, GERSHOM CLARK HYDE, LEWIS HENRY SMITH, WILLIS 
BOOTH BENEDICT, BENJAMIN BAKEWELL CAMPBELL, WILLIAM HENRY CONLEY, 
CALVIN NATHANIEL PAYNE, THOMAS BENTON RITER, JAMES HENRY CALDWELL, 
CLARK ISAAC HAYES, ANDREW NORTON PERRIN, SAMUEL QUEEN BROWN, ROBERT 
EMMET HOPKINS. 



[297] 



NUMBER 38 (Sec page 15) 

TESTIMONY OF HENRY M. FLAGLER IN REGARD TO THE 
TIDEWATER CONTEST 

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 
3,112, page 783.] 

Q. Now you can make your statement. 

A. I want to say this: The Tidewater Pipe Line was the first line built to the sea- 
board, and it had a connection with the Reading Railroad, by which the railroad and 
the line jointly undertook to do business. We had several discussions of pipe-lines of 
the future with the representatives of the Tidewater Pipe Line, and would have had 
no difficulty whatever in making satisfactory arrangements with them, which would 
have removed all unnecessary competition, but the New York Central, the Erie road, 
and the Pennsylvania Central said to us: "Gentlemen, we don't want you to make 
any alliance of any formal nature with the Tidewater Pipe Line." They added: "We 
will protect you in the matter of rates as against any competition furnished by the 
Reading and Tidewater Pipe Line." I replied to that: "I have never seen a contest 
begun of this kind but what there was an end to it. Now, we can make a satisfactory 
arrangement with the Tidewater Pipe Line and avoid all this contest. It is not neces- 
sary for you to throw away any money. We are not seekers after low rates. We have 
done our business by you, and are willing to continue, but only upon one single, solitary 
condition: we would prefer not to have this contest; it is better that the Tidewater 
and Reading Railroad should be recognised." The reply was :" We never will recognise 
them as carriers of oil." 

Q. That was the reply of these three trunk lines ? 

A . Yes, sir. I said : "Gentlemen, the other thing is of a great deal more importance 
than the rates. The rates are short-lived affairs." Now, I will make this explanation 
in justice to ourselves, in reply to the remark you made of our contest with the 
Tidewater Line. We had no contest. It was simply a contest of the transportation 
lines, and we, like fools, allowed ourselves, instead of making arrangements with the 
Tidewater Line, to say to the trunk lines: "Very well, then, we will stick to you 
and leave you to fight out this battle." They fought it for a year or two, and you 
know how it ended. 



APPENDIX, NUMBER XXXVIII 

Q. Three or four years, was it not ? 

A. I thought it was two years. 

Q. Then I understand you to say that all that struggle, and the low rate that the 
trunk line charged at the time the competition with the Tidewater and Reading 
came into existence, was brought about by the trunk lines themselves ? 

A . It was a struggle on the part of the trunk lines to hold the entire oil business, 
and they avowed it to me not once, but many times, that it was their firm intention 
never to recognise the Tidewater to the seaboard. 

Q. And during that struggle they actually carried it at fifteen cents a barrel ? 

A. I should have said twenty or twenty-five cents. I knew it was a ridiculously 
low rate. 



[299] 



NUMBER 39 A (See page 24) 

AGREEMENT BETWEEN STANDARD AND TIDEWATER 
REFINERIES 

[From manuscript presented to the Industrial Commission by Lewis Emery, Jr.] 

This agreement, made and entered into the ninth day of October, A.D. 1883, by 
and between the Standard Oil Company, a corporation of Ohio, the Standard Oil 
Company of New York, a corporation of New York, and the Standard Oil Company 
of New Jersey, a corporation of New Jersey, who collectively constitute the party 
of the first part, and the Ocean Oil Company, a corporation of New Jersey, the Chester 
Oil Company, a corporation of Pennsylvania, and Ayres, Lombard and Company, 
a corporation of New York, who collectively constitute the party of the second part. 

Witnessetb: That in consideration of the mutual covenants and agreements hereby 
made and entered into, the said parties do hereby covenant and agree to and with each 
other as follows: 

First. That for the purpose of this contract the business of refining petroleum 
is defined to mean the distillation of crude petroleum within the United States, without 
regard to where the crude is obtained; the quantity of crude petroleum received at 
each refinery, except for export in its crude state, shall be regarded as the quantity 
refined by it. 

Second. That in said business the refineries named in schedule "A" and schedule 
" B" (which schedules are hereto attached and made a part of this agreement) shall 
respectively be entitled to have and do the following percentage or proportionate part 
of the aggregate business of all refineries named in both schedules, viz.: The refineries 
named in Schedule "A," eighty-eight and one-half (88) per cent, thereof, and the 
refineries named in Schedule "B," eleven and one-half (nj) per cent, thereof. 

Third. The refineries named in Schedule "A" and the refineries named in Schedule 
" B" shall respectively do as nearly as practicable their said proportion or percentage 
of said business; and is agreed that, 

A . If in any calendar month the refineries named in Schedule "A" shall receive 
more than their said percentage of the said aggregate of crude petroleum received 
except for export in its crude state, the party of the first part hereto will pay to the 
party of the second part hereto, twenty (20) cents per barrel on the quantity so re- 
ceived in excess of their said percentage. 

B. If in any calendar month the refineries named in Schedule "B" shall receive 

[300] 



APPENDIX, NUMBER XXXIX a 

more than their said percentage of the said aggregate of crude petroleum received 
except for export in its crude state, the party of the second part hereto will pay to 
the party of the first part hereto twenty (20) cents per barrel on the quantity so received 
in excess of this said percentage. 

C. If in any year the refineries named in Schedule "A" shall neglect or refuse to 
do eighty (80) per cent, of their said percentage of said business, then the party of 
the first part shall return and repay the party of the second part the sums received 
under the provisions of this paragraph in excess of the sums paid under the same 
provisions during the same year. 

D. If in any year the refineries named in Schedule "B" shall neglect or refuse 
to do eighty (80) per cent, of their said percentage of said business, then the party 
of the second part shall return and repay to the party of the first part the sums received 
under the provisions of this paragraph in excess of the sums paid under the same 
provisions during the same year. 

Fourth. Each party hereto shall make to the other daily reports showing all crude 
petroleum received at the refineries named in said schedule, and when, where and from 
whom received, and all crude petroleum exported therefrom, and when, where and 
to whom delivered. The reports of the party of the first part shall show the crude 
received at and exported from refineries named in Schedule "A," and the reports of 
the party of the second part shall show the crude received at and exported from 
refineries named in Schedule " B." The correctness of such reports shall, if required 
of either party, be verified by the party making them. 

Fifth. A settlement shall be made, on or before the fifteenth day of each month, 
of all business done under this agreement during the preceding month, and payments 
shall then be made of all such sums as under the terms hereof shall be found payable 
by either party to the other. 

Sixth. All refineries now owned or controlled by those owning or controlling a 
majority of the refineries embraced in Schedule "A" are or shall be included in Schedule 
"A," and all refineries which may hereafter be acquired or controlled in the same 
interest shall, as acquired or controlled, be added to said Schedule "A," and by such 
addition be included in the terms of this agreement. All refineries now owned or 
controlled by those owning or controlling a majority of the refineries embraced in 
Schedule " B," and all refineries which may hereafter be acquired or controlled in 
the same interest shall, as acquired or controlled, be added to said Schedule "B," 
and by such addition be included in the terms of the agreement. 

Seventh. It is understood that forty-two gallons constitute a barrel. 

Eighth. A year, whenever used in this contract, is understood to mean a calendar 
year. 

Ninth. This agreement shall take effect on the first day of October, 1883, and 
remain in force for fifteen (15) years from said date. 

[301 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Provided, however, and it is agreed that it shall not remain in force longer than a 
certain other agreement of even date herewith between the National Transit Company 
and the United Pipe Lines of the first part, and the Tidewater Pipe Company, Limited, 
of the second part, shall remain in force, and that a termination of said other agreements 
shall at the same time terminate this one. 

In Witness Whereof, the said parties have caused their common and corporate 
seals to be hereto attached and to be attested by the signature of their proper officers 
the day and year first aforesaid. 

Standard Oil Company, by 

O. H. PAYNE, Vice-President. 
[S. O. C., Cleveland] Attest: W. P. THOMPSON, Secretary. 

Standard Oil Company of New York, by 

WILLIAM ROCKEFELLER, President. 
fS. O. C., New York] Attest: GEORGE H. VILAS, Secretary. 

Standard Oil Company of New Jersey, by 

J. A. McGEE, President. 
[S. O. C., New Jersey] Attest: GEO. H. VILAS, Secretary. 



[302] 



NUMBER 396 (See page 24) 

AGREEMENT BETWEEN STANDARD AND TIDEWATER PIPE LINES 
[From manuscript presented to the Industrial Commission by Lewis Emery, Jr.] 

This agreement, entered into the ninth day of October, A.D. 1883, by and between 
the National Transit Company and the United Pipe Lines, each being a corporation 
of the state of Pennsylvania, parties of the first part, and the Tidewater Pipe Com" 
pany, Limited, a limited partnership association formed under the laws of the state 
of Pennsylvania, party of the second part. 

Witnessetb: That in consideration of the mutual covenants and agreements hereby 
made and entered into, the said parties do hereby covenant and agree to and with each 
other as follows: 

First. That for the purposes of this contract the business hereinafter referred 
to is divided into departments, one known as the "Gathering Department," one known 
as the "Transporting Department," one known as the "Interior Export Department," 
and one known as the "Seaboard Export Department." 

All crude petroleum received directly or indirectly from wells located in the state 
of New York or state of Pennsylvania, and into the system of pipes and tanks now 
owned or controlled, or which may hereafter be owned or controlled by any party 
hereto, either directly or indirectly, shall constitute gathering, and the business of 
so receiving crude petroleum is the business of said gathering department. AH deliveries 
from local lines of pipe of crude petroleum gathered as aforesaid, to or for any of the 
refineries then embraced in Schedule "A" or Schedule "B" (which schedules are 
hereto attached and made part of this agreement), and also all deliveries of crude 
petroleum from any of the trunk lines of pipe now owned or controlled, or which may 
hereafter be owned or controlled, by any party hereto, either directly or indirectly, 
and the getting of such crude petroleum to the point of delivery shall constitute trans- 
porting, and the business of so getting and delivering crude petroleum is the business 
of said transporting department, except, and it is agreed, that whatever petroleum 
gathered as aforesaid shall be delivered to or for any party hereto, or to or for any 
refinery or refining company then embraced in either of said schedules, for export in 
its crude state, whether the same shall be delivered from a local line of pipe or a trunk 

[303] 



THE HISTORY OF THE STANDARD OIL COMPANY 
line of pipe, shall not be included in transporting, nor in the business of said transport- 
ing department. 

AH petroleum gathered as aforesaid and delivered from local lines of pipe for export 
in its crude state (other than deliveries to trunk lines of pipe of such petroleum for 
export in its crude state) by or for any party hereto or by or for any refinery or refining 
company then embraced in either of said schedules, shall constitute interior exporting 
and the business of receiving and exporting such petroleum in its crude state shall 
be the business of said interior export department. 

All petroleum gathered as aforesaid and delivered from trunk lines of pipe for export 
in its crude state by or for any party hereto or by or for any refinery or refining com- 
pany then embraced in either of said schedules shall constitute seaboard exporting, 
and the business of receiving and exporting such petroleum in its crude state shall 
be the business of said seaboard export department. 

All pipes used for gathering and delivering at points in the oil-producing regions 
are herein called local lines. 

AH lines of pipe used for transporting beyond the oil-producing regions are herein 
called trunk lines. 

Second. That in each said department of the business the respective parties hereto 
shall be entitled to do the following percentage or proportionate part of the aggregate 
business done by all parties hereto then in said department, viz.: The said parties 
of the first part eighty-eight and one-half (88^) per centum thereof, and the said party 
of the second part eleven and one-half (ni) per centum thereof. 

Third, Each party hereto shall do as nearly as practicable its said proportion 
or percentage of said business. And it is agreed that: 

A. If in any calendar month either party shall gather more than its said percentage 
of said aggregate of crude petroleum gathered, as gathering is herein defined, it shall 
pay to the other party on the quantity gathered in excess of its said percentage an 
amount per barrel equal to three-fourths of the then current full rate per barrel charged 
for collecting and delivering crude petroleum in the oil-producing regions commonly 
called local pipage; 

Provided, however, and it is hereby agreed that this clause shall not be applicable 
to crude petroleum gathered as aforesaid prior to September I, 1884. 

And provided, further, That the excess over its said percentage gathered prior to 
September 1, 1884, by either party shall on demand of the other be delivered to the other 
party at some point or points in the oil-producing regions convenient to both the party 
receiving and the party delivering (the means and places to be mutually agreed upon) 
when and as often as the said excess amounts to ten thousand (10,000) barrels, upon 
legal orders or certificates with storage and assessments thereon paid to date of delivery 
being presented therefor, or upon the payment of the then market price of United 
Pipe Line certificates for a like quantity. The party receiving shall pay the party 

[304] 



APPENDIX, NUMBER XXXIX b 

delivering the same a gathering charge often (10) cents per barrel upon all petroleum 
so delivered. 

B. If in any calendar month either the parties of the first part or the party of the 
second part shall transport and deliver more than their or its said percentage of the 
said aggregate of crude petroleum transported, as transporting is herein defined, 
they or it shall pay to the other party twenty-five (25) cents per barrel upon the quantity 
transported and delivered in excess of their or its said percentage. 

Provided, That the amount payable under this clause shall not exceed the amount 
it would cost to bring said excess from the mouth of a local pipe in the oil-producing 
regions to either the port of New York or the port of Philadelphia at the then current 
rate of transportation by any route or method not owned or controlled directly or 
indirectly by any party hereto. 

C. If in any calendar month either party shall do more than its said percentage 
of business in either the exterior export department or the seaboard export department, 
it shall pay to the other party twenty-five (25) cents per barrel upon the quantity 
so exported in excess of its said percentage. 

Provided, however, That the amount per barrel payable under this clause shall 
not exceed the amount per barrel which would be payable under Clause B and 
its proviso at the same time for excess in the transporting department. 

D. If in any year either party shall neglect or refuse to do eighty (80) per centum 
of its said proportion or percentage in any department of said business, then the party 
so doing less than eighty (80) per centum of its said proportion shall return or repay 
to the other party the sums received in that department under the provisions of this 
paragraph in excess of the sums paid in the same department under the same provisions 
during the same year. 

Fourth. Each party shall make to the other daily reports showing: 

1st. All crude petroleum gathered, as gathering is herein defined. 

2nd. All crude petroleum delivered from local lines other than deliveries to trunk 
lines, stating when, where and to whom delivered. 

3rd. All crude petroleum delivered from local lines to trunk lines, stating when, 
where and to which line delivered. 

4th. All crude petroleum delivered from trunk lines, stating when, where and to 
whom delivered. 

5th. All crude petroleum exported in the crude state, stating when, where and from 
whom received, so as to distinguish between receipts from local lines and receipts 
from trunk lines, and when, where and to whom delivered for export. The correct- 
ness of such reports shall, if required by either party, be verified by the party making 
them. 

Fifth. On all deliveries of crude petroleum from local lines made by said parties 
of the first part or either of them, other than such deliveries as constitute transporting, 

[305] 



THE HISTORY OF THE STANDARD OIL COMPANY 

as transporting is hereinbefore defined, the parties of the first part will account fr 
and pay to the party of the second part eleven and one-half (11$) per centum of the 
then current full rate of local pipage, first deducting from such full rate ten (10) cents 
per barrel for the work of gathering and delivering such petroleum. 

On all deliveries of crude petroleum from local lines made by said party of the second 
part other than such deliveries as constitute transporting as hereinbefore defined, 
the party of the second part will account for and pay to the parties of the first part 
eighty-eight and one-half (88 J) per centum of the then current full rate of local 
pipage, first deducting from such full rate ten (10) cents per barrel for the work of gath- 
ering and delivering such petroleum. 

Sixth. It is agreed that in case of excess of deliveries over the quantity gathered, as 
gathering is herein before defined, by all the parties hereto, the stocks in custody of the 
respective parties shall to the extent of such excess be diminished in the ratio of eighty- 
eight and one-half (88J) per centum thereof from the stocks in custody of said parties 
of the first part, and eleven and one-half (n$) per centum thereof from the stocks in 
custody of said party of the second part; and to this end it is agreed that whenever 
and as often as under the working of this agreement the depletion of the stocks in the 
custody of either of the respective parties shall amount to ten thousand (10,000) barrels 
in excess of such party's percentage of depletion, then the other party shall and will on 
demand deliver, and the party whose stocks are so depleted will when tendered receive, 
said ten thousand (10,000) barrels at some point or points in the oil-producing regions 
convenient to both the party receiving and the party delivering (the means and place 
to be mutually agreed upon), upon legal orders or certificates with storage and assess- 
ments thereon paid to date of delivery being presented therefor, or upon the payment 
of the then market price of United Pipe Line certificates for a like quantity. The 
party receiving shall pay to the party delivering a gathering charge of ten (10) cents 
per barrel upon all petroleum gathered. 

Seventh. A settlement shall be made on or before the fifteenth day of each month 
of all business done under this agreement during the preceding month, and pay- 
ment shall then be made of all such sums as under the terms hereof shall be found 
payable by either party to the other. 

Eighth. If in any year the profits of the party of the second part added to the profits 
of the several refineries then embraced in Schedule "B" shall in the aggregate amount 
to less than five hundred thousand (500,000) dollars (excluding from the calculations all 
profits realised and losses sustained from speculation and the value of property destroyed 
by fire), then the said party of the second part shall have the right within three months 
from the time the profits of such year shall have been ascertained to cancel this agree- 
ment. 

Provided, however, That the said right shall not exist or shall not be exercised under 
the following circumstances, to wit: 

[306] 



APPENDIX, NUMBER XXXIX b 

1st. If the average of such profits during the said year and all previous years from 
the beginning of this agreement shall equal five hundred thousand (500,000) dollars 
per year. 

2nd. If the said parties of the first part or either of them shall contribute to the said 
party of the second part such sums of money as together with the said profits for the 
said year will make the average profit five hundred thousand (500,000) dollars per year. 

And provided, further, That in exercising the right of cancellation the said party 
of the second part must give to one or both of said parties of the first part three (3) 
months' written notice of said cancellation, which notice must be accompanied by a 
statement of the said profits of the party of the second part, and of said refineries 
then embraced in Schedule " B," and any contributions made as aforesaid must be 
made within the said three (3) months. 

The party receiving said notice shall have the right to verify the statement by an 
examination of the books of said party of the second part, and books of said refineries. 

Ninth. All refineries now owned or controlled by those owning or controlling 
a majority of the refineries embraced in Schedule "A" are or shall be included in 
Schedule "A"; and all refineries which may hereafter be acquired or controlled in the 
same interest shall, as acquired or controlled, be added to said Schedule "A," and 
by such addition be included in the terms of this agreement. 

All refineries now owned or controlled by those owning or controlling a majority 
of the refineries embraced in Schedule "B" are or shall be included in Schedule "B"; 
and all refineries which may hereafter be acquired or controlled in the same interest 
shall, as acquired or controlled, be added to said Schedule "B," and by such addition 
be included in the terms of this agreement. 

Tenth. It is agreed that any business done in either the interior export department 
or the seaboard export department by any of the refineries or refining companies then 
embraced in Schedule "A" shall be treated for the purpose of this agreement as if 
done by the parties of the first part; and that any business done in either of said export 
departments by any of the refineries or refining companies then embraced in Schedule 
"B" shall be treated for the purposes of this agreement as if done by the party of the 
second part. 

Eleventh. It is understood that forty-two (42) gallons constitute a barrel. 

Twelfth. A year, whenever used in this contract, is understood to mean a calendar 
year. 

Thirteenth. This agreement shall take effect as of the first day of October, 1883, 
and unless sooner cancelled, as provided in the eighth paragraph, shall remain in force 
for fifteen (15) years from said first day of October, 1883. 

In Witness Whereof, the said parties of the first part have caused their common 
and corporate seals to be hereto attached and to be attested by the signatures of 
their proper officers; and the said party of the second part has caused the same to be 

[307] 



THE HISTORY OF THE STANDARD OIL COMPANY 
signed in its name and on its behalf by two of its managers, the day and year first 

aforesaid. 

NATIONAL TRANSIT COMPANY, 



[Nat. Tran. Co. Seal.] 



[U. P. L. Seal.] 



(Signed by) BENJAMIN BREWSTER, Vice-President. 
Attest: JOHN BUSHNELL, Secretary. 
UNITED PIPE LINES, 

(Signed by) J. J. VANDERGRIFT, President. 
Attest: H. D. HANCOCK, Secretary. 



SCHEDULE OF REFINERIES REFERRED TO IN THE ATTACHED AGREEMENT 
SCHEDULE "A" 

Atlas Refining Co Works at Buffalo, N. Y. 

Acme Oil Co. of Pennsylvania ' Titusville, Pa. 

Acme Oil Co. of New York " Olean, N. Y. 

Atlantic Refining Co " Philadelphia, Pa. 

American Lubricating Oil Co " Cleveland, Ohio. 

Baltimore United Oil Co " Canton, Md. 

Bush Denslow Mfg. Co " " South Brooklyn, N. Y. 

Camden Consolidated Oil Co " Parkersburg, W. Va. 

" " " " " " Canton, Md. 

Central Refining Co., Limited on Newtown Creek, L. I. 

Empire Refining Co., Limited 

Eclipse Lubricating Co., Limited at Franklin, Pa. 

" " " Olean, N. Y. 

Eagle Oil Co " Communipaw, N. J. 

Galena Oil Works, Limited " Franklin, Pa. 

Imperial Refining Co " Oil City, Pa. 

Pratt Mfg. Co " " Bushwick Creek, L. I. 

Jenny & Son, S " " Wallabout Land. 

Donald & Co., James " Newtown Creek, L. I. 

Portland Kerosene Co " " Portland, Me. 

Paine, Ablett & Co., Limited " " Smith's Ferry. 

" " n IT J r> 

f reedom, Pa. 

Sone Fleming Mfg. Co., Limited " " Newtown Creek, L. I. 

Standard Oil Co. of New York " 

" Hunter's Point, L. I. 

New Jersey " Bayonne, N. J. 

Pennsylvania " " Pittsburg, Pa. 

Ohio " " Cleveland, Ohio. 

Union Refining Co., Limited " "Oil City, Pa. 

Vacuum Oil Co " " Rochester, N. Y. 

SCHEDULE "fi" 

Chester Oil Co Works at Chester, Pa. 

Ocean Oil Co " Bayonne, N. T. 

Seaboard Oil Co " " " 

Solar Oil Co Buffalo, N. Y. 

[308] 



NUMBER 40 (See page 28) 

TWO AGREEMENTS OF EVEN DATE, AUGUST 22, 1884, BETWEEN 

THE PENNSYLVANIA RAILROAD COMPANY AND THE 

NATIONAL TRANSIT COMPANY 

[Report of the Industrial Commission, 1900. Volume I, pages 663-666.] 

Memorandum of a traffic agreement, made this twenty-second day of August, 
1884, between the Pennsylvania Railroad Company, hereinafter designated the rail- 
road company, and the National Transit Company, hereinafter designated the transit 
company, ffitnesseth : 

That for consideration mutually interchanged, the parties hereto agree, each with 
the other, as follows : 

First. The transit company owns an extended system of local pipes in the Oil 
Regions of Pennsylvania and New York, which are grouped into a separate division, 
known as the United Pipe Lines Division of the National Transit Company. This 
division will be hereinafter designated as the Transit Company's Local Division. 

The business of this division is to collect oil from producer, store it in tanks, and 
deliver it, as may be desired, to any through carrier of petroleum, which will transport 
the same to where it is to be refined or otherwise disposed of. 

The transit company also own certain through or trunk line pipes, extending 
from several points of connection with the aforesaid local pipe division to various 
refining and terminal points. 

With these latter pipes, which will be hereinafter entitled the Transit Company's 
Trunk Line Division, it competes in the through carriage of petroleum with all other 
through carriers, whether pipe or rail. 

The business of its local division is therefore entirely distinct from the business 
of its through trunk line division. 

It undertakes and agrees that its local division will deliver into cars furnished by 
the railroad company at any of its regular delivery points and under its regular delivery 
rules whatever petroleum the owners thereof may desire to have so delivered, and as 
the railroad may furnish cars to transport, and will make no discrimination in its 
local charges for carriage, storage, and other services, or in the use of any of its local 
facilities, against such oil, but will at all times treat it in the said respects as favour- 

[309] 



THE HISTORY OF THE STANDARD OIL COMPANY 

ably as it at the same time treats any other petroleum which may be delivered to its 
own trunk line division or to any other through carriers. 

Second. The transit company agrees that all petroleum brought to the Atlantic 
seaboard by all existing carriers, whether rail or pipe, now engaged in transporting 
such property, or which may hereafter engage in such transportation in conjunction 
with the transit company's pipe-lines, shall be ascertained monthly, and so much of 
it as shall have been shipped in the refined state shall be reduced to its equivalent 
in crude oil by considering that one and three-tenths (ly 3 ^) gallons of crude are re- 
quired to make one (i) gallon of refined oil. It further undertakes and agrees that 
if of the total so transported the railroad company shall not have moved in its cars 
twenty-six (26) per centum thereof, the transit company shall cause to be delivered 
to cars furnished by the railroad company at Milton, Pa., such quantity of crude 
petroleum as shall, when added to the amount which has been actually trans- 
ported by the railroad company to the seaboard in said month, make the total 
transported by the railroad company in said month equal to said twenty-six (26) 
per centum. 

The railroad company agrees to furnish the needful cars and facilities, and promptly 
transport the oil which the transit company agrees in this contract to deliver to it at 
Milton : 

Provided, That if during any month the railroad company is not able to assign 
from its oil equipments a sufficient number of cars to the traffic of the transit company 
to move the proportion of oil herein provided to be delivered at Milton, then during 
that month the transit company shall only be required to so deliver to the railroad 
company such quantity of oil as the railroad company shall be able to transport, 
and shall not be required to make up any deficiency that may occur during said 
month. 

Efforts shall be made by the transit company to deliver so much during each month 
as will probably be necessary to make the total carried by the railroad company equal 
to said percentage. 

Shortages, if not due to short supply of cars, and such excesses as may be found 
to have occurred in any month, shall be adjusted in the following month, or as soon 
afterwards as shall be possible. 

Third. It is agreed that the proportion of petroleum which the transit company 
is to deliver under the second section of this agreement shall be considered as petroleum 
transported from Coalgrove, Pa., via Milton, Pa., to the Atlantic seaboard, and that 
the railroad company shall be entitled to one-half of the current through rates thereon. 

It is agreed that whenever the through rates shall be so low that the railroad com- 
pany shall suspend the movement of oil by its cars, at other points than Milton, the 
transit company shall during such suspension not be bound to deliver to the railroad 
company any oil at Milton. 



APPENDIX, NUMBER XL 

/arti. All joint rates for the joint transportation of oil from any delivery point 
of the local pipe division aforesaid to any refining or terminal point shall be fixed 
by the railroad company, subject to the advice and concurrence of the transit 
company. 

It is agreed that said joint through rates shall be uniform to all parties. The railroad 
company stipulates that it will make no discrimination whatever, either in rates or 
facilities, against the transit company or against the oil which the said transit company 
herein covenants to deliver to it. 

It is agreed that the joint through rates to Philadelphia shall always be five cents 
less per barrel on crude oil, or its refined equivalent, than shall be currently charged 
to New York harbour. 

It is agreed that the joint through rates, which shall be so fixed from time to time, 
shall be as low as shall be currently made between same and similar points by rival 
carriers of petroleum, and shall not be higher than an approximate mileage proportion 
of rates current on petroleum produced south of Oil City, nor than rates from Olean 
and similar points. 

It is also agreed that rates on refined oil and other products of crude oil shall be 
fixed by the railroad company upon the following basis, viz. : 

From railroad stations in the Oil Regions to which oil is delivered by local pipes the 
rate to any point east thereof on a barrel of refined oil or other products shall be one 
and three-tenths (1-^5-) times the current rate on a barrel of crude oil to the same 
point. 

From Pittsburg the rate to any point east thereof on a barrel of refined oil or other 
products shall be one and three-tenths (i^) the rate currently charged on crude 
oil to any such eastern point from rail points south of Oil City : 

Provided, That one and three-tenths times the charges for moving a barrel of crude 
oil by rail or through pipe from the local pipe to Pittsburg shall first be deducted 
therefrom. 

From Cleveland and Buffalo the net rate on a barrel of refined oil or other products 
to any point east thereof shall be not less than is currently charged to the same point 
from Pittsburg. 

Fifth. Whenever the term barrel is used herein, unless otherwise specified, it 
means forty-five gallons of crude petroleum; and whenever the term oil is used herein, 
unless otherwise specified, it means crude petroleum. 

Sixth. The transit company hereby agrees that it will not make any more favour- 
able terms with any other rail line connecting with any of its pipes than the terms which 
under this agreement are given to the railroad company; or if for any reason it should 
desire to do so, it hereby agrees to modify this contract so as to give the said "more 
favourable terms" to the railroad company. 

Seventh. All existing contracts between the parties hereto shall be deemed to have 



THE HISTORY OF THE STANDARD OIL COMPANY 
been accomplished, and shall become void and of no effect upon the day this contract 
goes into operation. 

Eighth. This contract shall take effect as of the first day of August, 1884, and shall 
continue until terminated under the provisions hereof. It may be terminated after 
August i, 1889, by either party hereto giving ninety days' written notice to the other 
of a desire that it shall end, at the expiration of which notice it shall cease and deter- 
mine. 

In Witness Whereof, the parties hereto have executed this agreement under their 
corporate seals the day and date above written. 

THE PENNSYLVANIA RAILROAD COMPANY, 

[L.S.] By FRANK THOMSON, Second Vice-President. 

Attest: JOHN C. SIMS, JR., Secretary. 

THE NATIONAL TRANSIT COMPANY, 

[L.S.] By C. A. GRISCOM, President. 

Attest: JOHN BUSHNELL, Secretary. 



Memorandum of agreement, made this twenty-second day of August, 1884, between 
the Pennsylvania Railroad Company, hereinafter designated the railroad company, 
and the National Transit Company, hereinafter designated the transit company. 

Witnessetb: That for considerations mutually interchanged the parties hereto here- 
by agree with each other as follows : 

Whereas, The parties hereto have made an agreement of even date herewith, in 
which, among other things, it is stipulated that under certain circumstances the transit 
company shall deliver certain crude petroleum into cars furnished by the railroad 
company at Milton, Pa.; and 

Whereas, It has been proposed that the railroad company shall contract with the 
transit company to the effect that the transit company shall transport through its 
pipe-lines the aforesaid crude oil, which, under the other contract aforesaid, it has 
undertaken to deliver into the cars of the railroad company at Milton. 

Now, therefore, this agreement witnesseth: 

First. The railroad company agrees that instead of delivering said crude oil to 
said cars at Milton, the transit company shall transport the same through its pipes 
to destination, and the transit company undertakes and agrees to do such transporta- 
tion. It is mutually agreed that the compensation to the transit company for doing said 
work shall be as follows: 

Whenever the through rate for transporting a barrel of crude petroleum from Olean 



APPENDIX, NUMBER XL 

to Philadelphia shall be forty cents, the transit company shall receive eight cents per 
barrel as such compensation for so much of said oil as under the provisions hereof 
shall be considered as Philadelphia oil. 

For each five cents of increase or diminution in said rates from Olean to Philadelphia 
the said compensation on Philadelphia oil shall be increased or diminished one cent 
per barrel. 

Provided, however, That the transit company shall not be obliged to accept less 
than six cents per barrel, and shall not receive more than ten cents per barrel on such 
Philadelphia oil. 

It is agreed that the said compensation on the oil, which under the provisions hereof 
is to be deemed New York oil, shall be one cent per barrel greater than it currently 
shall be on Philadelphia oil. 

Whenever, and from time to time, as the said joint through rates shall be so low 
that the said minimum compensation to the transit company of six cents per barrel 
shall be as much or more than the railroad company's share of said joint through rates, 
this contract may, at the option of either party hereto, be suspended during all or any 
part of the time such low rates shall prevail. During such suspension the aforesaid 
other contract shall alone remain in force; but whenever, and from time to time, as 
said joint through rates shall again be high enough to make the said minimum com- 
pensation, under said sliding scale, less than the said share of said joint through rates, 
this contract shall again resume its force and effect. 

Second. The transit company agrees to account for, and pay to the railroad com- 
pany, on or before the twentieth of each month, the latter's share of the joint rates 
on joint business via Milton (as provided in said other contract) during the next pre- 
ceding month, first retaining, however, the proportion of such share which it is herein- 
before agreed the transit company is to have for its services in pumping said oil to 
the seaboard. 

It is agreed that all such joint business shall be considered as having transported 
from Coalgrove via Milton, Pa., to the Atlantic seaboard, and that it shall be considered 
as having gone either to Baltimore, Philadelphia, or New York, or partly to each. 
The proportion thereof which has constructively gone to New York shall be determined 
upon the following basis: 

The total amount of oil transported in any month by the railroad company to New 
York shall be compared with fifty (50) per centum of the total oil which the railroad 
company is entitled to carry in said month under the aforesaid other agreement. If 
the amount which has been in such month carried by cars to New York shall be less 
than fifty (50) per centum, then the difference shall be considered as having been 
moved by the pipe to New York, at New York rates, and shall be accounted for 
accordingly. The remainder of the oil via Milton shall be accounted for at Philadel- 
phia rates. 

[313] 



THE HISTORY OF THE STANDARD OIL COMPANY 

This contract shall commence and terminate simultaneously with said *thr con- 
tract. 

Witness the corporate seals of said parties duly attested the day and date above 
written. 

THE PENNSYLVANIA RAILROAD COMPANY, 

[L.S.I By FRANK THOMSON, President. 

Attest: JOHN C. SIMS, Secretary. 



[L.S.] 



THE NATIONAL TRANSIT COMPANY, 

By C. A. GRISCOM, President. 
Attest: JOHN BUSHNELL, Secretary. 



[314] 



NUMBER 41 (See page 60) 



TABLE SHOWING PRICES OF OIL AT COMPETITIVE AND 
NON-COMPETITIVE POINTS IN 1892 

[Trust Investigation of Ohio Senate, 1898. Appendix, pages 43-44.] 



TERRITORIES 

AND 

STATES. 


PRIME WHITE OIL. 


WATER-WHITE OIL. 


PER GALLON 


Non-competi- 
tive prices per 
gallon. 


Competitive 
prices per 
gallon. 


Non-competi- 
tive prices per 
gallon. 


Competitive 
prices per 
gallon. 


Barrels. 


U 


i 


Barrels. 


i 

u 


m 


1 


i 

u 


| 


Barrels. 


j 


"3 


t> 

bo 

X 


Lowest. 


Difference. 


Difference per 
tank car 6,000 
gallons. 


Arizona. 


























31 








Arkansas 






x ix 


8 

8& 




i/ 


16 












17 

26J 

31 

!7 

30 

12 
12 

16 

I3 I 
I? 

33 


7 

12 

5^2 

Ig 



sK 


15 
24 
6% 

7x1 
8 

sK 

9 
8 

20 


$57 
630 
900 
1,440 
39 
630 
780 
57 
45<> 
300 
480 
33 
54 
300 
480 

435 
690 
1,200 
1,170 


Alabama 








ftV 








IO 3/ 






California. 








la Q 




2 gi/ 




13 


17* 


"M 


Colorado 




26 

16 


21 


10 


15 


7 








Florida 


IX 














Georgia 






9K 


9M 




fi i/ 














Idaho 


22% 


29 






22^ 












Illinois 






8 


$' 




i/ 








7Vf 




55^ 


Indiana 
















& 




Iowa 


I/ 




8 


"* 
















8 

3 2 /S 
Sxl 


Kansas 


*9$ 

12 




10 
9 


! 
$ 




5 

13 


12 

16 
X 5j 

21 


33 


14 

7 
ii 

25 


8 




Louisiana 
Michigan 
Minnesota 


Mississippi 
Missoun 
Montana 


13* 
12 




Nebraska 


i8 






i/ 




Nevada 




TX 




7/2 


















New Mexico 




3i 

21 


26 

14 
IS 












28 








32 
18 
24 

12 

28 

25% 
35 


26 

8 
6 
8 
13 
15 
6 
8 


6 

6& 

4 
ii 

25% 

i5 : 
27 


360 
405 
660 
45 
33 
240 
660 

1,530 
900 
630 
555 
1,620 


North Dakota 
Oregon 
Oklahoma 


: s * 


'% 


19 


13 


18 


24 


4 


!?!f 


23 


"^ 


South Carolina. . . . 


J2 i/ 








j IX 






o 






South Dakota 


uO 










8 












8 


Tennessee 
Texas 


25 


28 




8 * 




6 








gi/ 




'4 


9 


3 


33K 


24 


12 


i6K 


8 


Utah 


Washington 
Wisconsin 
Wyoming 


n 

9 

20 


20^ 
25 


15 










ix 










1/2 




6 


21 


35 


29 


I* 


ID" 


6 

15 



PRIME WHITE OIL 

The table shows that this grade of oil ranges in price as follows : 

In barrels 6 to 25 cents per gallon 

In cases 14 to 37$ 

In bulk 3i to 25 

[315] 



THE HISTORY OF THE STANDARD OIL COMPANY 

WATER-WHITE OIL 

This table also shows that this grade of oil ranges in price as follows: 

In barrels 6$ to 30 cents per gallon 

In cases 16 to 35 

In bulk 3* to 29 

A comparison of these two grades of oil shows: 

A difference of 24 cents per gallon on barrelled oil 

" 21 " " " case oil 

" 255 " " " bulk oil 



[316] 



NUMBER 42 (See page 69) 

STANDARD OIL COMPANY'S PETITION FOR RELIEF AND 

INJUNCTION 

[In the case of the Standard Oil Company vs. William C. Scofield et a/., in the 
Court of Common Pleas, Cuyahoga County, Ohio, 1880.] 

The said plaintiff, the Standard Oil Company, now comes and says that on the 
twentieth day of July, A.D. 1876, it was and still is a corporation organised and existing 
under and by virtue of the laws of the state of Ohio, and that at the same time the 
said defendants, William C. Scofield, Charles W. Scofield, Daniel Shurmer and John 
Teagle, were and still are partners doing business in the firm name of Scofield, Shurmer 
and Teagle, and the said plaintiff complains of the said defendants, and says: That 
on the said twentieth day of July, A.D. 1876, the said plaintiff and the said defendants 
as such partners were each separately engaged in the business of refining and dealing 
in crude petroleum and its products, said plaintiff having a number of refining estab- 
lishments at Cleveland, Ohio, and the said defendants owning and operating one 
refinery only, also located at Cleveland, Ohio, on the line of the Atlantic and Great 
Western Railroad, and while so engaged and on the said twentieth day of July, A.D. 
1876, the said plaintiff and the said defendants as such partners entered into a joint 
arrangement in writing in and by which it was, amongst other things, agreed between 
the said plaintiff and the said defendants individually and as such partners that the 
said defendants would continue their then business in the firm name of Scofield, 
Shurmer and Teagle of buying, refining and selling crude petroleum and its products 
as theretofore carried on by them, for a period of ten years from July 20, A.D. 1876, 
and furnish for the conducting of said business their refinery aforesaid with all tanks, 
fixtures, buildings, erections, tools, and all mechanical appliances then or theretofore 
used by them in their said business, together with the land on which the same are 
situated, and also within five days from the date of said agreement furnish for the use 
of said joint business adventure the sum of ten thousand dollars in cash to be used 
continuously in said business until July 20, A.D. 1 886. That the said William C. Scofield, 
Charles W. Scofield, Daniel Shurmer and John Teagle, in and by said agreement for 
conducting said joint adventure, further covenanted and agreed with the plaintiff to 
devote all their time and personal attention necessary to conduct the said business 
for the period aforesaid, and that during the existence of said adventure they would 

[317] 



THE HISTORY OF THE STANDARD OIL COMPANY 

not nor would either of them as a firm or as individuals directly or indirectly engage 
r be concerned in any busineii connected with petroleum or any of its products in 
Cuyahoga County or elsewhere, except in connection with the parties of the first part 
under this agreement, nor would they or either of them enter into any new business 
which would interfere with the time necessary to be devoted to the full and faithful 
conduct of the business of said adventure. 

That the said William C. Scofield, Charles W. Scofield, Daniel Shurmer and John 
Teagle, in and by said agreement for conducting said joint adventure, further covenanted 
and agreed with said plaintiff that the amount of crude petroleum to be distilled by 
them in the business of said adventure should not exceed annually eighty-five thousand 
barrels of forty-two gallons each in any year, but the same should be distributed as 
nearly as practicable in equal quantities of 42,500 barrels of forty-two gallons each, 
each and every six months from the twentieth day of July, A.D. 1876, but the said 
42,500 barrels might be run in a less period than six months. 

That in and by said agreement for conducting the business of said joint adventure 
it was stipulated and agreed by both parties, amongst other things, that from the net 
profits of the business of said joint adventure the said defendants should first be 
entitled to retain and be paid the sum of $35,000 per annum while the said agreement 
was in force and operation, and in the case the net profits should not amount to $35,000 
for any year that said agreement for conducting said joint adventure was in force and 
operation, then at the expiration of any such year the plaintiff should on demand 
pay to the said defendants a sum of money sufficient to make that amount, viz., $35,000 
for any year that said agreement should be in force and operation. That all net profits 
over the amount of $35,000 so stipulated to belong to said defendants annually should 
belong and be paid to said plaintiff until the plaintiff should receive therefrom as 
much as said defendants had received from the net profits under the provisions of said 
agreement, and all net profits in excess of $70,000 annually should be divided equally 
between the parties thereto. 

That in consideration thereof and in and by said agreement for conducting said 
joint adventure, the said plaintiff stipulated and agreed with the said defendants, 
amongst other things, that on or before the twenty-fifth day of July, A.D. 1876, it 
would furnish to the said defendants for them to use in the business of said joint ad- 
venture the sum of $10,000 in cash, which sum was so paid in as agreed and still 
remains in the business. 

That the said plaintiff would receive, dock, and sell in the city of New York all 
oil and the products of petroleum consigned to it for sale at New York by said firm 
of Scofield, Shurmer and Teagle at actual cost of brokerage and handling without 
commissions. 

That the said plaintiff would and did in said agreement guarantee to the said defend- 
ants that their share of the net profits arising from the business of said joint adventure 

[318] 



APPENDIX, NUMBER XLII 

should for ten years from July ao, A.D. 1876, to July ao, A.D. 1886, amount to the su 
of 535,000 annually, during the operation of this contract, as hereinbefore stated. 
The plaintiff further says that between July 20, 1876, and the present time, the said 
defendants have repeatedly violated their said agreement in this, to wit: that every 
year since the making of said agreement the said defendants have distilled over 85,000 
barrels of crude petroleum ; that during the year from July 20, 1876, to July 20, 1877, they 
distilled 89,983.34-42 barrels; that during the year from July 20, 1877, to July 20, 1878, 
they distilled 87,754.4-42 barrels; that during the year from July 20, 1878, to July 
20, 1879, they distilled 100,246.25-42 barrels, and from July 20, 1879, to July 20, 1880, 
they distilled 90,082.34-42 barrels. 

That up to the present time the defendants have distilled more than by the terms of 
their said agreement they have a right to distil up to January 20, 1881, and have 
purchased large quantities of crude petroleum and are distilling portions thereof, and 
threaten to distil the balance without regarding their said contract. That the crude 
petroleum so as aforesaid distilled by the defendants has not by them been distributed 
as nearly as practicable in equal quantities of 42,500 barrels of forty-two gallons each, 
each and every six months as they agreed to do, but in violation of their said agree- 
ment they distilled from July 20, 1876, to January, I, 1877, 43,509.36-42 barrels; 
from January I, 1877, to July 20, 1877, 46,473.40-42 barrels; from July 20, 1877, to 
January I, 1878, 50,416.12-42 barrels; from January i, 1878, to July 20, 1878, 
37,337.34-42 barrels; from July 20, 1878, to January I, 1879, 56,974.15-42 barrels; 
from January I, 1879, to July 20, 1879, 43,272.10-42 barrels; from July 20, 1879, 
to January i, 1880, 57,499.35-42 barrels; that on or about the twentieth day of July, 
1879, the plaintiff having discovered that the said defendants had in violation of said 
agreement distilled about 22,984 barrels of oil more than they were entitled to by 
the terms of said agreement, the plaintiff objected and complained to the defendants 
in regard thereto, and thereupon the defendants admitted the violation of the contract 
in that respect, and it was agreed between the parties that the defendants would and 
should during the then coming year diminish their manufacture sufficiently to bring 
the entire amount of manufacture under said contract within the terms of said 
agreement. 

That during the then coming year from July 20, 1879, to July 20, 1880, the said 
defendants did not diminish their distillation below the 85,000 barrels as they had 
agreed to do, but from July 20, 1879, to January I, 1880, they distilled 57,499.35-42 
barrels, and from January 1, 1880, to July 20, 1880, they distilled 32,582.41-42 barrels, 
making a total of 90,082.34-42 barrels for the year, thus increasing their distillation 
over the 85,000 barrels 5,082 barrels, instead of diminishing it as they had agreed to do. 

That the defendants threaten to and have informed the plaintiff that they will 
hereafter wholly disregard said contract and continue to distil crude petroleum 
without regard to quantity. 

[319] 



THE HISTORY OF THE STANDARD OIL COMPANY 

The plaintiff further says that since the making of said agreement and within the 
past year the said Daniel Shurmer and John Teagle have in violation of their said 
contract engaged and been connected in constructing a refinery at Buffalo, New 
York, for the purpose of distilling crude petroleum with others than the plaintiff 
under said agreement and are now so engaged. 

That within the past year the said Daniel Shurmer and John Teagle and each of 
them have invested money to the amount of $10,000, and are now engaged and con- 
nected in constructing refineries for the purpose of distilling crude petroleum and 
its products with others in no way connected with the plaintiff or under said agreement, 
but intending thereby to establish and prosecute with others the same business as 
that contemplated and conducted under said agreement, and thereby establishing 
and conducting a rival business to the business of said adventure and tending to involve 
the plaintiff in loss by reason of its guarantee that the profits of said adventure should 
amount to the sum of $35,000 annually to defendants, and have during the past year 
been at said Buffalo and other places giving the said business their time and personal 
attention, and have done so at times when their time and personal attention was needed 
and was requisite to properly conduct the business of said adventure under said agree- 
ment at Cleveland. 

The plaintiff further says that because of the said failures and refusals of the de- 
fendants to carry out their said agreement it has already sustained great damage and 
will sustain further damage if the said defendants are permitted to continue their 
said violation of said agreement. That the said plaintiff has no adequate remedy 
therefor at law for the reason that the damages arising therefrom are so remote and 
difficult of ascertainment, and constantly recurring would necessitate a multiplicity 
of suits and would involve the plaintiff in the increased hazards of losses arising 
from such increased manufacture and deprive it of all the benefits of said 
contract. 

The plaintiff therefore prays that the said William C. Scofield, Charles W. Scofield, 
Daniel Shurmer and John Teagle may by proper process be made defendants herein 
and compelled to answer this petition; that a preliminary injunction and restraining 
order be granted restraining the said William C. Scofield, Charles W. Scofield, Daniel 
Shurmer and John Teagle, and each of them individually and as partners in the name 
of Scofield, Shurmer and Teagle, until the further order of the court, from distilling at 
their said works at Cleveland, Ohio, more than 85,000 barrels of crude petroleum 
of forty-two gallons each in every year, and also from distilling more than 42,500 
barrels of crude petroleum of forty-two gallons each, each and every six months, and 
also from distilling any more crude petroleum until the expiration of six months from 
and after July 20, 1880, and also from directly or indirectly engaging in or being con- 
cerned in any business connected with petroleum or any of its products, except in 
connection with the plaintiff under their said agreement, and that on the final hearing 

[320] 



APPENDIX, NUMBER XLII 

of this case the said defendants may in like manner be restrained and enjoined from 
doing any of said acts until the expiration of said agreement, and for such other and 
further relief in the premises as equity can give. 

M. R. KEITH, 
: R. P. RANNEY, 

Attorneys for Plaintiff. 



NUMBER 43 (See page 70) 

ANSWER OF WILLIAM C. SCOFIELD ET AL. 

[In the case of the Standard Oil Company vs. William C. Scofield et aL, in the Court 
of Common Pleas, Cuyahoga County, Ohio, 1880.] 

That the so-called agreement is and at all times has been utterly void and of no 
effect, as being by its terms in restraint of trade and against public policy. 

These defendants further say that they deny that through any action of theirs said 
plaintiff has sustained or will sustain any damage whatever, but these defendants 
say that their business of distilling oil has been carried on at a large profit, and that 
the same is now attended with large profits, and the price of refined oil is now so high, 
and there is such a large margin between the price of crude oil and refined, that the 
manufacture and sale of refined oil is attended with large profit; that it is impossible 
to supply the demand of the public for oil if the business and refineries of both plaintiff 
and defendant are carried on and run to their full capacity, and if the business of 
defendants were stopped as prayed for by plaintiff it would result in a still higher 
price for refined oil and the establishment of more perfect monopoly in the manufacture 
and sale of the same by plaintiff. 

These defendants further say that said plaintiff has constantly and persistently 
violated the terms of said so-called written agreement in that it has intentionally 
failed to give and has withheld from the defendants the benefits of the advantages 
therein agreed to be given, and that it has not given to defendants the benefits of its 
contracts relating to freight on crude and refined oil, but these defendants have been 
constantly required to pay more and larger freights than said plaintiff, and that said 
plaintiff has not allowed to defendants the same rebate that it has received with different 
carriers; and, further, that said plaintiff has recently constructed a pipe-line to the 
Oil Regions of Pennsylvania through which its oil has been pumped to Cleveland 
at an expense of about twelve cents a barrel, but has charged defendants for pumping 
their oil through the same pipe twenty cents per barrel. 

The defendants further say that at the time when said writing was signed said 
plaintiff was endeavouring by contracts with divers persons to establish a monopoly 
in the manufacture of refined oil in the state of Ohio and in the United States, and 
that, for the purpose of monopolising the trade in refined oil and enhancing the price 

[322] 



APPENDIX, NUMBER XLIII 

thereof, and maintaining an unnaturally high price, said plaintiff entered into said 
so-called agreement under the form of a joint arrangement or adventure, and for no 
other purpose, and contributed to the capital of said so-called adventure the sum of 
$10,000, whereas those defendants contributed thereto the sum of $73,000 and their 
time and attention, and their refinery had the capacity for refining 180,000 barrels 
of crude oil per year, as plaintiff well knew, and said plaintiff thereby, and by said other 
contracts made with the same design, succeeded in creating a substantial monopoly 
and averting competition and maintaining an unnaturally high price for refined oil, 
and that said so-called agreement is therefore in restraint of trade and against public 
policy, and void. 

These defendants further say that defendants have from time to time paid to plaintiff 
their full share of the profits of said so-called adventure, and at no time has plaintiff 
been required to pay any sum whatever to defendants, but has realised large profits 
from said business, and on the fourth day of March, 1880, with full knowledge of how 
much oil in excess of 85,000 barrels per year had been manufactured by defendants, 
demanded of said defendants that they should pay to plaintiff the entire profits upon 
said excess, and claimed that its monopoly was so perfect that it would have sold said 
excess if defendants had not, and defendants did pay to plaintiff the one-half of the 
profits on said excess. 



[323] 



NUMBER 44 (See page 71) 

AFFIDAVIT OF JOHN D. ROCKEFELLER 

[In the case of the Standard Oil Company vs. William C. Scofield et al., in the Court 
of Common Pleas, Cuyahoga County, Ohio, 1880.] 

John D. Rockefeller being duly sworn, says that for about eighteen years past he 
has been engaged in the business of refining crude petroleum; that from about the 
year 1863 to 1870 he was engaged as a member of firms in such refining, and from 
January, 1870, he has been and still is engaged in such refining business as president 
of said plaintiff, the Standard Oil Company; that during said time he has given the 
business personal attention and has thereby become familiar with the general business 
of refining crude petroleum, with the amount of crude petroleum produced, with the 
amount of crude petroleum refined, so far as the same can be ascertained, and especially 
with the business of the Standard Oil Company. 

Affiant says the said Standard Oil Company owns and operates its refineries at 
Cleveland, Ohio, and its refinery at Bayonne, New Jersey; that it has no other refineries 
nor any interest in any other refineries, nor does the Standard Oil Company operate 
or control in the United States any other refineries of crude petroleum; that there 
are in Ohio, West Virginia, Pennsylvania, New York, and New Jersey a large number 
of refineries of crude petroleum that are not owned or controlled by said Standard 
Oil Company, and in which the said Standard Oil Company has no interest whatever, 
directly or indirectly, which are now and for years past have been refining crude petro- 
leum and selling it in the open market; that the amount of crude petroleum refined 
by the said Standard Oil Company does not exceed thirty-three per cent, of the total 
amount refined in the United States. 

Affiant further says that the capacity of all the refineries in the United States is 
more than sufficient to supply the markets of the world, and in the judgment of affiant 
if all the refineries were run to their full capacity they would refine at least twice as 
much oil as the markets of the world require; that this difference between the capacity 
of refineries and the demands of the market has existed for at least seven years past, 
and during that period the refineries of the Standard Oil Company have not been run 
to their full capacity, and in the judgment of affiant not to exceed one-half of their 
capacity. 

Affiant further says that during all the period of time that he has been engaged 

[324] 



APPENDIX, NUMBER XLIV 

in the business of refining oil he has been familiar with the price of crude oil and with 
the price of refined oil and with the profits to be derived therefrom, and from such 
experience he states that the average price of refined oil and the average profits to 
the manufacturer per gallon on same since 1876 have been much less than the average 
profit for several years previous to 1876; that said Standard Oil Company has no 
means now and never has had any of influencing the price of refined oil, save by the 
sale of its product in the open market. 

Affiant further says that the Standard Oil Company has not nor did it ever have 
any interest in any oil property or any control over the production of crude petroleum; 
that it does not own any oil wells or land producing oil, and never did; nor has it 
any control over the price of crude petroleum, but relies upon obtaining its supplies, 
as all others do, by purchase in the open market and at the prices paid by others at 
the same time; that the said Standard Oil Company is not now nor has it ever been 
a stockholder in any railroad, pipe-line, or other common carrier for the transportation 
of oil, but within the year past it has for its own convenience constructed, and owns 
and is now operating, a pipe-line from Cleveland to the western line of the state of 
Pennsylvania for the purpose of bringing oil to its refineries at Cleveland; that said 
pipe-line is now insufficient to supply the demands of the Standard Oil Company for 
crude oil for its own refineries, and for that reason it has been and is now compelled 
to bring crude oil to Cleveland in cars to supply its wants. 

That from the deponent's experience in business he knows it to be true that a large 
manufacturer always has an advantage in cheapness of manufacture over a small 
manufacturer; that all the advantages derived by the Standard Oil Company are 
legitimate business advantages, due to the very large volume of supplies which it 
purchases, its long continuance in the business, the experience it has thereby acquired, 
the knowledge of all the avenues of trade, the skill of experienced employees, the 
possession and use of all the latest and most valuable mechanical improvements, 
appliances and processes for the distillation of crude oil, and in the manufacture of 
its own barrels, glue, etc., etc., by reason of which it is enabled to put the oil on the 
market at a cost of manufacture much less than by others not having equal advantages. 
These advantages, by reason of which the Standard Oil Company is enabled to refine 
oil cheaper than smaller manufacturers, are not exclusive to the Standard Oil Company, 
but are open to every person doing business under similar circumstances. That this 
state of facts has been detrimental to smaller refineries and has prevented them from 
making as much profit as they desired, and in some cases compelled them to suspend 
refining, and this constitutes the only foundation for the oft-repeated expressions 
"crushed out," "squeezed out," and "bulldozing." 

Affiant says he has examined the answer of the defendants, Shurmer and Teagle, and 
his attention has been called to various statements contained in it. In regard to the 
statement made therein that "if the business of the defendants were stopped as prayed 

[325] 



THE HISTORY OF THE STANDARD OIL COMPANY 

for by plaintiff, it would result in a still higher price for refined oil and the establish- 
ment of a more perfect monopoly in the manufacture and sale of the same by plaintiff." 
The same is untrue, as there is not, never has been, and never can be a monopoly in 
the manufacture of refined oil, nor has the limitation in said agreement as to quantity 
to be manufactured affected, nor will the stoppage by the defendants of their manu- 
facture, as prayed for in plaintiff's petition, in the least affect the price of refined oil, 
for the reason that leaving out the entire capacity of the refinery of defendants there 
would still remain a large excess of capacity for supplying all the demands of the public, 
and hence there would be no opportunity for advancing the price, nor would it tend 
to create a monopoly of the business by the plaintiff. 

Affiant further says that it is not true that the said plaintiff has at any time or in 
any manner violated the terms of said agreement as alleged in said answer or in any 
other manner. That it is not true that plaintiff has intentionally or otherwise withheld 
from the defendants the benefit of the advantages agreed upon in said contract to 
be given them, nor is it true that the plaintiff has not given to defendants the benefit 
of its contracts relating to freight on crude and refined oil, but the plaintiff has given 
to the defendants privileges not required by the agreement. That it is not true that 
the defendants have ever been required to pay larger rates of freight than were paid 
by the plaintiff when the defendants made any shipments of oil in accordance with 
the terms of the contract; nor is it true that the plaintiff has not allowed to defendants 
the same rebates that it has received from different carriers upon any shipments of 
oil made in accordance with the terms of the contract. 

That it is true that the plaintiff has recently constructed a pipe-line from Cleveland 
to the western line of the state of Pennsylvania, through which its oil has been pumped 
to Cleveland since the spring of 1880, but it is not true that it is the owner of the said 
pipe-line from the western line of the state of Pennsylvania to the Oil Regions. That 
it is true that to promote the interest of the defendants, the plaintiff has furnished to 
defendants crude oil through said pipe-line and charged them twenty cents per barre' 
for the transportation of same; but it is not true that said pipe-line was constructed 
for the purpose of transporting oil for others than the plaintiff, nor is it true that under 
the terms of said agreement the defendants are entitled to the transportation of oil 
through said pipe-line, nor is it true that the charge of twenty cents per barrel is an 
unreasonable price for transporting oil through said pipe-line from the Oil Regions to 
Cleveland; but affiant avers it to be true that during the time it so furnished the oil 
through the pipe-line at twenty cents per barrel, of forty-two gallons each, the railroads 
were charging freight at the rate of from thirty-five to fifty cents per barrel, of forty- 
five gallons each. 

Plaintiff continued to deliver defendants through the pipe-line, and at twenty cents 
per barrel, until they had received all they were entitled to manufacture under the 
contract dated July 20, 1876. 

[326] 



APPENDIX, NUMBER XLIV 

Affiant says that it is not true that "at the time when said agreement was signed, 
said plaintiff was endeavouring by contracts with divers persons to establish a monopoly 
in the manufacture of refined oil in the state of Ohio and in the United States." Affiant 
avers that it has made but one other contract with other persons like the one made 
with defendants, and that was a contract made at the same date, viz., July 20, 1876, 
with the Pioneer Oil Company of the City of Cleveland, of which the defendants had 
full knowledge. Affiant further says that he was present and participated in the negotia- 
tions which resulted in the formation of the contract with these defendants, and that 
it is not true that said contract was entered into for the purpose of monopolising the 
trade in refined oil or for the purpose of enhancing the price thereof and maintaining 
an unnaturally high price for the same; and affiant says that it is not true that plaintiff 
by said contract, and by the said other contract made with the same design, succeeded 
in creating a substantial monopoly and averting competition, and maintaining an un- 
naturally high price for refined oil; but said contract was made, as is therein stated, 
for the purpose of equalising the business of manufacturing oil and giving to each of 
said contracting parties their due proportion thereof, and that the amount of 85,000 
barrels per annum to which the distillation of defendants is by said contract limited 
is, as agreed, a relative proportion to their full capacity, as is the amount distilled by 
plaintiff per annum since said contract was entered into to its total capacity for re- 
fining oil; and it is not true that said agreement is in restraint of trade and against 
public policy, as alleged in the said answer of defendants, Shurmer and Teagle. Af- 
fiant says that on or about the first day of October, 1879, it came to his knowledge that 
the defendants had, in violation of said agreement, distilled about 22,984 barrels of 
oil more than they were entitled to by the terms of said agreement, and thereupon 
he had an interview with defendants, W. C. Scofield and John Teagle, who admitted 
the defendants had distilled in excess of the quantity stipulated in the contract, and 
agreed to reduce the quantity distilled during the year following, July 20, 1879, by 
the amount they had already distilled in excess up to that date, but requested they 
might be allowed to distribute said reduction equally over each six months of the 
year instead of wholly in either the first or last six months of the year following July 
20, 1879, to which request affiant assented. 

Affiant says that it is not true that "the plaintiff, on the fourth day of March, 1880, 
with full knowledge of how much oil in excess of 85,000 barrels per year had been 
manufactured by defendants and plaintiff, demanded of said defendants that they 
should pay to plaintiff the entire profits upon said excess," other than as is hereinafter 
stated ; and it is not true that plaintiff, at the time it demanded said profits, claimed 
that it had any monopoly, or that its monopoly was so perfect that it would have sold 
said excess if defendants had not, or that it was entitled to said profits in consequence 
of any monopoly; but affiant says that it did claim the profits upon the oil sold in 
excess of said 85,000 barrels, because defendants had broken their agreement with said 

[327] 



THE HISTORY OF THE STANDARD OIL COMPANY 

plaintiff, and the profits on such excess the plaintiff at that time was willing to accept 
as compensation for such breach of said contract. 

Affiant says that he does not know what contracts for the sale of oil defendants may 
have made, or what contracts for the manufacture or for the construction of barrels 
they may have entered into, or what obligations they may be under to their customers; 
but he says that for a long time past the defendants have had notice that plaintiff 
would insist upon the performance by them of their obligations under their said con- 
tract, and that if they have entered into contracts for the sale of oil as alleged by them 
and entered into other obligations, they have done so with the full knowledge that they 
were thereby violating and continuing the violation of said agreement of July 20, 1876. 

I have read the affidavit of H. L. Taylor, filed in this case October 18, 1880, in which 
he says "that he has been for some six or eight years last past acquainted with Mr. 
Rockefeller, Mr. Flagler, Mr. Payne, and others; that he has had conversations with 
some of these parties with regard to the control by the Standard Oil Company of the 
distilling and refining business in the state of Ohio and in the United States, and that 
he has heard them say in substance that the Standard Oil Company intended to wipe 
out all the refineries in the country except theirs, and to control the entire refining 
business in the United States." Affiant says that he has been acquainted with H. L. 
Taylor for several years past, that all the foregoing statements so far as they relate 
to him are false, and that he never made to said Taylor or to any person in his hearing 
any such statement, nor statements in substance to that effect. Affiant further says 
that he never in company with said Taylor visited any of the cities or places mentioned 
in his affidavit for the purpose of inspecting or examining refineries, though he may 
have met said Taylor incidentally at various places, but that he never showed him re- 
fineries that were formerly under the control of others and running independently 
and stated that the same had passed under the control of the Standard Oil Company, 
nor did anybody else make such statements to Taylor in his hearing. 

Affiant says that it has not come to pass, as sworn to by said Taylor, that said Stand- 
ard Oil Company has "wiped out" the refining business of the United States or that it 
to-day controls it, but affiant believes that at the time said Taylor made his affidavit 
he knew there were very many refineries running independently of and in no way 
connected with the Standard Oil Company, and that said Taylor was himself then 
interested in the profits of a large refining business represented by a number of refine 
who were large competitors of the Standard Oil Company. 

With respect to the assertion of said Taylor that "in many instances to his knowledg 
the Standard Oil Company has bought refineries and taken them down," affiant saj 
that several years ago when the business was very much scattered, in several instance 
and for greater economy in manufacturing, the Standard Oil Company dismantlec 
refineries unfavourably located and utilised the construction, machinery, and appli- 
ances of the same to increase its manufactory at Cleveland. 

[328] 



APPENDIX, NUMBER XLIV 

It is true that in many cases persons who had been unsuccessfully engaged in re- 
fining, but had experience, were to some extent employed by the Standard Oil Company 
in its business of refining, but that with respect to the averment in said Taylor's affidavit 
that "in other cases said company employed men who had refineries, at large salaries 
and at the same time gave them no absolute employment," the same is untrue. But 
it is true that it has restricted its employees from entering the business of refining and 
distilling oil except under said company's direction. 

But none of these things were done by the plaintiff for the purpose of creating and 
maintaining a monopoly of the business of refining, but were done for the purpose 
of conducting its business more efficiently. 

And affiant says that it is not true, as sworn to by said Taylor, that the Standard 
Oil Company during a large portion of the time that he refers to, to wit, six or eight 
years past, or for any length of time, has substantially controlled the transportation 
of oil; that it is not true that said Standard Oil Company ever had, or that it now has, 
any contract with any lines of transportation in which it was stipulated that it should 
have a lower rate of freight than other shippers undertaking the same obligations 
and furnishing equal terminal facilities; that in all the contracts ever had with the 
railroads, the railroad companies have reserved the right to charge others the same 
rate of freight as that paid by the Standard Oil Company; and affiant further says 
that even those contracts with the railroad companies which gave the Standard Oil 
Company a commission for facilities furnished have long been abrogated and aban- 
doned. 

Affiant says that with respect to the statement in said Taylor's affidavit that "other 
language has been used to him said Taylor by the officers of said Standard Oil 
Company to the effect that the said company intended to have all the refineries and 
aimed at having entire control of the oil market," the same, so far as it related to him, 
is wholly untrue. 

Affiant says that it is not true that the plaintiff got control of the refineries of the 
firm of Logan Brothers of Philadelphia, Octave Oil Company, Easterly and Davis, and 
Bennett, Warner and Company of Titusville, Pennsylvania; R. S. Waring and Citizens- 
Oil Works of Pittsburg, or of either of them. The statement of H. L. Taylor that " the 
principal way by which these independent refineries came under the control of the Stand- 
ard Oil Company was from the fact that said company had such rates of transportation 
that the small companies could not compete with it, and when said company had such in 
its power it would make such arrangements with parties engaged in these refineries 
as would prevent them from thereafter competing with the Standard Oil Company," 
is false in its facts and its inferences. Affiant has already correctly stated the facts 
as to the purchase of refineries by the Standard Oil Company of Cleveland, what led 
to such purchases, and that persons engaged in such refineries were in some cases 
employed by said company; and any statement or inference to the effect that by illegal 

[329] 



THE HISTORY OF THE STANDARD OIL COMPANY 

means or unfair influences the plaintiff "squeezed out" or "crushed out" small refiners 
and prevented them from again entering into the business of refining, is untrue. 

Affiant further responding to the affidavit of said Taylor, says that with reference to 
the statement therein contained that "the effect of the control of the refining business 
by the Standard Oil Company upon the oil market is to largely increase the price to 
consumers beyond what they ought to pay," the same is untrue, and he avers again 
that since the date of the contract with defendants the average price to consumers of 
refined oil has been lower than for years previous. 

As to the allegation of said Taylor that "if the business was distributed among the 
independent refineries it would furnish employment to a much larger number of persons 
than at present, and the interests of the country would be decidedly promoted by having 
the refining business in the hands of competent parties," in so far as the same implies 
that there are not independent competing refineries outside of the works of said plain- 
tiff, the same is untrue, and that it is a fact that a larger number of persons are now 
employed in connection with the business of refining oil than ever before. 

Affiant says that with reference to the language used by the said Heisel in his affidavit 
that he, Heisel, was not afraid, to which Mr. Rockefeller replied, "You may not be 
afraid to have your head cut off, but your body will suffer," "and that this was said 
by affiant prior to the time that he sold his interest in the refining business to Bishop 
and was said for the purpose of inducing affiant to sell out to the Standard Oil Com- 
pany," that affiant has no recollection of ever using any such language to said Heisel, 
and so far as said statement implies threats or inducements held out to said Heisel 
to procure the control of the works of Bishop and Heisel by the Standard Oil Company, 
the same is wholly false in spirit and effect. 

Affiant says respecting the statement in said Heisel's affidavit, that "the effect 
resulting from the control by this one company the Standard Oil Company of the 
entire refining business in Cleveland has been to largely increase the price of refined 
oil to consumers, to lessen its production, to reduce the number of hands employed 
in the refining business, and to reduce the price paid labourers for their work, and 
thereby to largely injure the public," the same, so far as it alleges that there is a control 
by the Standard Oil Company of the entire refining business, is false; and that so far 
as it undertakes to state consequences of said alleged control by the Standard Oil 
Company, it is also false. 

I have read the affidavit of Mrs. B. filed in this case on October 18, 1880. Said affi- 
davit is incorrect, erroneous and in many respects false. 

The first interview that I ever had with Mrs. B. was at her house, when she sent 
for Mr. Flagler and myself to consult with her in reference to selling out her establish- 
ment to one of her employees. This occurred during the year 1876. She stated to us 
the terms of an offer that she had received from the said employee, and expressed 
an earnest desire to dispose of the business and to be free from its perplexities and 

[330] 



APPENDIX, NUMBER XLIV 

annoyances, and evinced a disposition to accept the offer, and we advised her to accept 
providing the payments were made secure. I did not see her again until the fall of 
1878, more than two years later. Then at her urgent request I met her at her house, 
at which time she made reference to the conversation she had had with Mr. Jennings, 
and desired me to pursue negotiations with her with reference to the sale of her property, 
which I positively declined, stating to her that I knew nothing about her business 
or the mechanical appliances used in the same, and that I could not pursue any negotia- 
tions with her with reference to the same, but that if, after reflection, she yet desired 
to do so, some of our people familiar with the lubricating oil business would take up 
the question with her. She was very desirous to begin negotiations, but I declined to 
negotiate and advised her not to take any hasty action, as from her own statements 
there was no such change in the condition of the business as to discourage the expecta- 
tion that she could do as well in the future as she had in the past. When she responded 
expressing her fears about the future of the business, stating that she could not get 
cars to transport sufficient oil, and other similar remarks, I stated to her that though 
we were using our cars and required them in our own business, yet we would loan her 
any number she required or do anything else in reason to assist her, and I saw no 
reason why she could not prosecute her business just as successfully in the future as 
in the past. This is the last interview I had with her. 

Affiant thinks it is true that Mrs. B. stated in the course of the conversation in 
substance that "the B. Oil Company was entirely in the power of the Standard Oil 
Company, and that all she could do would be to appeal to affiant's honour as a gentle- 
man and to his sympathy to do with her the best that he could do." To the statement 
that she was in the power of the Standard Oil Company, affiant made a positive denial, 
and stated to her there was no foundation for the fears she expressed, and in this con- 
nection made the offer to her to furnish her with cars. He cannot remember what was 
said by Mrs. B. at this interview in relation to an agreement upon the part of the 
Standard Oil Company not to touch the lubricating branch of the trade. It is true that 
the Standard Oil Company had a contract with the B. Oil Company, made early in 
1873, terminable on sixty days' notice by either party, in reference to carbon oil only 
which contract had been voluntarily assumed by the B. Oil Company and it was 
entirely op ional with the said B. Oil Company to discontinue said contract upon a 
notice of sixty days and thereby relieve itself from its obligations if it so desired; but 
said contract was continued in full force and effect up to the time of the sale by Mrs. 
B. of her interest in said B. Oil Company; but the Standard Oil Company had no 
contract with B. Oil Company by which it "agreed not to touch the lubricating branch 
of the trade," nor did it have any contract with the said B. Oil Company having reference 
in any particular to the lubricating oil business, nor did affiant have any such contract. 
While affiant declined to enter into a negotiation with the said Mrs. B., it may be 
true that daring the interview alluded to he said to her that in case a sale were made 

[331 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

she could retain whatever stock in the B. Oil Company she desired. As a result of 
the negotiations, in which affiant took no part, the construction and good-will of the 
B. Oil Company was purchased for sixty thousand dollars, which was at least twenty 
thousand dollars in excess of its value, and largely in excess of the value placed upon 
it by Mrs. B. in the interview above referred to between Mr. Flagler and affiant with 
her in 1876. In addition to the construction and good-will which was purchased for 
the sum of sixty thousand dollars, there was purchased of the B. Oil Company its 
entire stock of oils on hand at the full market value, and the sum paid for same amounted 
to $19,144.49, making an aggregate of $79,144.49, and did not include any other 
assets of the company, such as cash, accounts receivable and accrued dividends. 

With respect to the allegation in said affidavit that " Mrs. B., seeing that the property 
had to go, asked that she might, according to the understanding with the president 
of the company, retain fifteen thousand dollars of her stock," so far as said statement 
implies that she was parting with her property under any duress, restraint, or undue 
influence, or was forced thereto by any acts of the Standard Oil Company, the same 
is absolutely false; and it is also false that she ever had any understanding with the 
president of the Standard Oil Company that she should retain fifteen thousand dollars 
of the stock of the B. Oil Company, nor was there any reference to that subject save 
as is hereinbefore stated; and if the said Mrs. B. refers to this affiant in that connection 
wherein she says that "to this request the reply was, 'No outsider can have any 
interest in this concern' and 'that said Standard Oil Company had dallied as long 
as it would over this matter, that it must be settled up that day or go, and insisted 
upon her signing the bond above referred to,'" the same is also false; nor has he any 
knowledge that during said negotiation any such language was ever used, or that the 
negotiations were ever carried on or closed in any such spirit. 

Affiant says that it is not true that he made any promises that he did not keep in 
the letter and spirit; and it is not true that he was instrumental to any degree in her being 
obliged to sell the property much below its true value; and he avers that she was not 
obliged to sell out, and that such sale was a voluntary one upon her part and for a sum 
far in excess of its value, and that the construction which was purchased of her could 
be replaced for a sum not exceeding twenty thousand dollars. 

On Saturday, the ninth day of November, 1878, the negotiations were closed and 
payments made to Mrs. B. Affiant had no knowledge of dissatisfaction upon her part 
until the receipt of a letter dated Monday, November u, which reached him on the 
1 2th, and on November 13 the reply thereto was made, copy of which is as follows: 

November 13, 1878. 

Dear Madam: I have held your note of nth inst., received yesterday, until to-day, 
as I wished to thoroughly review every point connected with the negotiation for the 
purchase of the stock of the B. Oil Company, to satisfy myself as to whether I had 

[332] 



APPENDIX, NUMBER XLIV 

unwittingly done anything whereby you would have any right to feel injured. It is 
true that in the interview I had with you I suggested that if you desired to do so you 
could retain an interest in the business of the B. Oil Company by keeping some number 
of its shares, and I then understood you to say that if you sold out you wished to go 
entirely out of the business. That being my understanding, our arrangements were 
made in case you concluded to make the sale, that precluded any other interests being 
represented, and therefore when you did make the inquiry as to your taking some 
of the stock our answer was given in accordance with the facts noted above, but not 
at all in the spirit in which you refer to the refusal in your note. In regard to the refer- 
ence that you make as to my permitting the business of the B. Oil Company to be taken 
from you, I say that in this, as in all else that you have written in your letter of nth 
inst., you do me most grievous wrong. It was of but little moment to the interests 
represented by me whether the business of the B. Oil Company was purchased or not. 
I believe that it was for your interest to make the sale, and am entirely candid in this 
statement, and beg to call your attention to the time, some two years ago, when you 
consulted Mr. Flagler and myself as to selling out your interests to Mr. Rose, at which 
time you were desirous of selling at considerably less price, and upon time, than you 
have now received in cash, and which sale you would have been glad to have closed 
if you could have obtained satisfactory security for the deferred payments. As to the 
price paid for the property, it is certainly three times greater than the cost at which 
we could now construct equal or better facilities; but wishing to take a liberal view 
of it, I urged the proposal of paying the sixty thousand dollars, which was thought 
much too high by some of our parties. I believe that if you would reconsider what 
you have written in your letter, to which this is a reply, you must admit having done me 
great injustice, and I am satisfied to await upon your innate sense of right for such ad- 
mission. However, in view of what seems your present feelings, I now offer to restore 
to you the purchase made by us, you simply returning the amount of money which 
we have invested and leaving us as though no purchase had been made. Should you 
not desire to accept this proposal, I offer to you one hundred, two hundred, or three 
hundred shares of the stock at the same price that we paid for the same with, this ad- 
dition that if we keep the property we are under engagement to pay into the treasury 
of the B. Oil Company an amount which, added to the amount already paid, would 
make a total of $100,000, and thereby make the shares one hundred dollars each. 

That you may not be compelled to hastily come to conclusion, I will leave open for 
three days these propositions for your acceptance or declination, and in the meantime, 
believe me, Yours very truly, 

JOHN D. ROCKEFELLER. 

To which letter no reply was ever received, and since which time affiant has had no 
communication with Mrs, B. upon any subject. 

[333] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Affiant says that he has had his attention called to the affidavit of Daniel Shurmer, 
filed in this case October 18, 1880, and to the language as follows: "That the Standard 
Oil Company had already squeezed out one refining concern with which he was con- 
nected, whereby he had lost over twenty thousand dollars." Affiant says that the same 
is false, as nothing of the kind ever occurred. 

Affiant says that he conducted most of the negotiations which led to the making 
of the contract with defendants, and that at no time previous or during the same were 
any threats made by him or any officer of the Standard Oil Company or agent to his 
knowledge to the effect that the firm of Scofield, Shurmer and Teagle would be ruined 
if they did not make such a contract, and no promises were made by him nor anybody 
else in behalf of said Standard Oil Company to said Shurmer or any of the defendants, 
that if said contract was signed the Standard Oil Company and defendants would con- 
trol and monopolise the whole refining business in Cleveland; nor is it true, as alleged 
by said Shurmer, that he was reluctant to enter into said agreement, but, so far as affiant 
knows, the said Shurmer was anxious to make the arrangement, believing it to be a 
profitable one for the defendants. That some time in the year 1872, when the refining 
business of the City of Cleveland was in the hands of a number of small refineries and 
was unproductive of profit, it was deemed advisable by many of the persons engaged 
therein, for the sake of economy, to concentrate the business and associate their joint 
capital therein. The state of the business was such at that rime that it could not be 
retained profitably at the City of Cleveland by reason of the fact that points nearer 
the Oil Regions were enjoying privileges not shared by refiners at Cleveland, and could 
produce refined oil at a much less rate than could be made at this point. That it was 
a well-understood fact at that time among refiners that some arrangement would have 
to be made to economise and concentrate the business or ruinous losses would not 
only occur to the refiners themselves, but ultimately Cleveland as a point of refining 
oil would have to be abandoned. At that rime those most prominently engaged in the 
business here consulted together, and as a result thereof several of the refiners conveyed 
to the plaintiff" their refineries and had the option in pay therefor to take stock in the 
Standard Oil Company at par or to take cash. That at this time the Standard Oil 
Company, by reason of its facilities and large cash capital, was agreed upon as the one 
best adapted to concentrate the business, and for no other reason whatsoever. That 
said Standard Oil Company had no agency in creating this state of things which made 
that change in the refining business necessary at that time, but the same was the natural 
result of the trade; nor did it in the negotiations which followed use any undue or unfair 
means, but in all cases, to the general satisfaction of those whose refineries were acquired, 
the full value thereof either in stock or cash was paid, as the parties preferred. 

Since that time the Standard Oil Company, by diligent and faithful attention to its 
business, by the exercise of the most rigid economy, by promptly taking advantage 
of all legitimate business opportunities, has acquired large and valuable property 

[334] 



APPENDIX, NUMBER XLIV 

at Cleveland with a capacity to refine oil largely in excess of any local refinery, but 
he denies that from 1872 to the present time, by any conclusion, conspiracy, or undue 
means from first to last, the present standing and capacity of the Standard Oil Com- 
pany has been acquired, or that it seeks to maintain its hold upon business through 
any purpose to create or maintain a monopoly. 

JOHN D. ROCKEFELLER. 



[335 ] 



NUMBER 45 (See page 72) 



FINDINGS OF FACT 

[Transcript of record, Supreme Court of the United States, October term, 1886. 
Number 1,290. The Lake Shore and Michigan Southern Railway Company, plaintiff 
in error, vs. Scofield, Shurmer and Teagle, in error to the Supreme Court of the state 
of Ohio, pages 14-21.] 

This cause came on to be heard upon the pleadings, exhibits, and testimony, and 
was argued by counsel; in consideration whereof the plaintiffs, having moved for a 
reservation to the Supreme Court, the judges are unanimously of opinion that important 
and difficult questions exist in the case, making it proper that the same should be 
reserved to the Supreme Court for decision, which questions embrace the following 
propositions: 

1st. Is this a case upon the face of the petition and under the laws of the state in 
which the court ought to interfere by injunction ? 

2nd. Whether such remedy by injunction will apply as well to the case of shipments 
over the defendants' road alone, as to cases of through shipments over such road and 
connecting roads ? 

3rd. What are the duties and obligations of common carriers at common law as 
distinguished from the statutory provisions of this and other states and countries ? 

4th. Are the defendants at common law obliged to carry freight at the same price 
for all parties or members of the public, without regard to quantity or circumstances 
connected with the transportation ? 

5th. May the defendant, as a common carrier and a corporation organised for that 
purpose, contract with a party controlling -ffo or more of all the freight of a particular 
class, at a given city or point, to carry the same for less than general tariff rates, 
in consideration that it shall receive all the freight thus controlled by such party ? 

6th. May the defendant, as a common carrier, in consideration of receiving all the 
freight of such party, that the quantity shall not be diminished, and that terminal 
facilities as to loading, unloading, and delivering the freight shall be furnished different 
from regular or usual freight and with less expense and risk to the carrier, contract 
to carry such freight, with such convenience and benefits, for less than general tariff 
rates to the public ? 

7th. May the defendant, as common carrier, transport over its road large quantities 

[336] 



APPENDIX, NUMBER XLV 

of oil, amounting to many full car-loads per day, for a less price per car-load than it 
charges the public generally per barrel or for single car-loads or less, provided all 
persons are charged like prices for like quantities ? 

8th. May defendant, as common carrier, make any distinction in prices for carrying 
like freight on the ground of quantity and covenants to continue the same if thereby 
it can make a greater profit than to charge the same prices for quantities small and 
great ? Is defendant, under all circumstances, obliged to charge the same prices per 
ton or other quantity, for the same distance, to all persons tendering freight of the same 
class, or may it, in good faith and without intention to injure other producers or patrons, 
contract to carry for one party at a less price than general rates if thereby it can secure 
a large and profitable business which would otherwise be diverted from it, in whole 
or part ? 

8$. Should decree be rendered for plaintiffs; and, if so, to what extent should it be 
enforced only within the bounds of the state or to all parts of the country within or 
without the state, to all points reached by defendant and connecting lines ? 

9th. Was section 3373 of the Revised Statutes intended to apply to cases like the 
present, and under it is there any authority for the injunction relief prayed for in this 
action ? 

loth. Whether upon such shipments so made by the defendant's cars by the barrel, 
either in car-load lots or in less amounts, the plaintiffs are, either by common law or 
by the Ohio statutes on the subjects, entitled to have their said products carried at 
the same rate of charge between like points of shipment as are allowed to said Standard 
Oil Company or other shippers, either to points on its line or branches of said road 
beyond ? 

nth. Whether the defendant, as a common carrier, may exact from the plaintiffs 
upon such shipments in barrels any amount greater than the amount charged to said 
Standard Oil Company upon shipment of like amounts by such tank-cars so long as 
the plaintiffs offer to ship by their own tank-cars on substantially like terms ? 

I2th. Whether, if such defendant can be required to give to said plaintiffs equal 

I rates of freight upon its shipments with those allowed said Standard Oil Company 

to points upon its line and branches, it can be required to give as low a rate to terminal 

points as the rate it receives for its proportion of the service to such points, on ship- 

j ments to points beyond, and on its connecting lines on a through rate fixed by it, and 

such connecting line or lines for the through shipment ? 

I3th. Whether the fact of the existence of such arrangement, and the fact of the said 
j Standard Oil Company being a shipper in amounts larger than the plaintiffs, is any 
justification for the making of such charges to the plaintiffs in excess of such charges 
made to said Standard Oil Company ? And in order that the same may be legally 
presented to said Supreme Court, the District Court do find the facts as follows: 

1st. The court find the plaintiffs are, and since 1875 have been, partners, carrying on, 

[337] 



THE HISTORY OF THE STANDARD OIL COMPANY 
in a large way, at Cleveland, Ohio, where this refinery is situated, the business of 
refining petroleum and selling the refined product mainly throughout the territory 
west and northwest of Cleveland, and extending throughout the Western and North- 
western states, this business being one in which they have invested a large amount 
of capital, and in which they have established a large and profitable trade throughout 
such territory, which constitutes the natural market for the sale of such products 
manufactured at Cleveland, the cost of plaintiffs' refining being about 70,000, with 
a refining capacity of about 150,000 barrels per year. 

2nd. That the defendant is a consolidated railroad company, owning and operating 
a railroad extending from Buffalo, in the state of New York, to Chicago, in the state 
of Illinois, and passing through parts of the states of New York, Pennsylvania, Ohio, 
Indiana, Michigan, and Illinois, and also owning and operating branches from Toledo, 
in the state of Ohio, to Detroit, in the state of Michigan, and also from White Pigeon, 
in the state of Michigan, to Grand Rapids, in the state of Michigan. 

3rd. That said railroad, so far as the same is constructed and operated in the state 
of Ohio, extends from the Easterly line of Ashtabula County to the Westerly line of 
Williams County; that it is a corporation engaged as common carrier in the business 
of transporting persons and property for hire and reward over its said line of road and 

branches. 

4th. That it crosses and connects with other lines of railroads at Toledo, Coldwater, 
and Chicago, over which it can and does forward passengers and freight to their desti- 
nation and consignment points as requested and directed; that it holds itself out as 
ready to make and does make the rates to points reached by connecting roads; that 
defendant, as such common carrier, has been accustomed to receive for transportation 
property over its line and branches to points beyond the termini of the same by deliver- 
ing the same at such termini to connecting roads for carriage to the points of consign- 



ment. 



5 th. That the rates for such through freights are fixed by agreement between the 
different companies owning the lines over which such freights are carried, and not by 
the defendant alone, and are charged by like agreement, from time to time. 

6th. That what are termed local rates, being for property received and delivered 
at points on the line of defendant's road, are fixed exclusively by the defendant. 

7 th. That some of the towns and cities on the main line and branches of the defem 
ant's road can only be reached by shippers from Cleveland over its said road and 
branches; and all of them, as well as the towns on most of its connecting branches, 
can be most directly reached by means of its line from Cleveland. 

8th. That the defendant is sufficiently supplied with cars and engines and appliance! 
for transportation necessary to enable it, in the ordinary course of its business, to receivi 
and carry for the plaintiffs such products from Cleveland to such markets. 

9th. That for a period of time extending back beyond the time when plaintiffs cora- 

[338] 



APPENDIX, NUMBER XLV 

menced the manufacture of oil in the City of Cleveland, the defendant has published 
for the benefit of the public, tariff rates for local and through freights, which have 
been frequently changed, and including rates for the carriage of oil in barrels. 

loth. The plaintiffs commenced and established their present business in Cleveland 
in the spring or summer of 1875, and subsequently, in July, 1876, became engaged 
in the same by arrangement with the Standard Oil Company to the partial extent of their 
own manufacturing establishment. 

loj. That during the time in the petition named the Standard Oil Company, the 
plaintiffs' principal competitor in business, has also been and still is engaged in a like 
business with them, it having at Cleveland a large refinery from which it sells like 
products in the same markets; that the refineries of both are situate on the line of 
railroads other than that of the defendant, but having like connection with it; that 
each has switch tracks extending to their refineries from the main lines of its roads 
on which they are situate, by means of which shipments from them are made, the 
course of business in making shipments by defendant's road by the car-load (which 
is the manner in which nearly all the business is done) being for the defendant, on 
request of either, to furnish its cars, which are switched from its connecting track by 
the road on which the refineries are situate to the refineries, then loaded by the shippers, 
and by said road drawn out and placed on the defendant's tracks for shipment by its 
road. By some traffic arrangement between the roads a switching charge per car for 
such service is charged by the local road against the defendant, which is by it at its 
discretion charged against the shippers with its general freight charge. Upon ship- 
ments in less than car-load lots delivery is made to the defendant's freight depot. 

nth. That the Standard Oil Company was then, and ever since has been, engaged 
in the same business at Cleveland and elsewhere, and did then and ever since has 
manufactured and shipped more than ninety one-hundredths of all the illuminating 
oil and products cf petroleum manufactured and shipped at and from the City of Cleve- 
land. 

I2th. The court further find that prior to 1875 it was a question whether the Standard 
Oil Company would remain in Cleveland or remove its works to the oil-producing 
country, and such question depended mainly upon rates of transportation from 
Cleveland to market; that prior thereto said Standard Company did ship large quan- 
tities of its products by water to Chicago and other lake points, and from thence 
distnbuted the same by rail to inland markets; that it then represented to defendant 
the probability of such removal; that water transportation was very low during the 
season of navigation; that unless some arrangement was made for rates at which it 
could ship the year round as an inducement, it would ship by water and store for winter 
distribution; that it owned its tank-cars and had tank-stations and switches or would 
have at Chicago, Toledo, Detroit, and Grand Rapids, on and into which the cars and 
oil in bulk could be delivered and unloaded without expense and annoyance to defend- 

[339 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

ant; that it had switches at Cleveland leading to its works at which to load cars, and 
would load and unload all cars; that the quantity of oil to be shipped by the company 
was very large, and amounted to 90 per cent, or more of all the oil manufactured or 
shipped from Cleveland, and that if satisfactory rates could be agreed upon it would 
ship over defendant's road all its oil products for territory and markets west and north- 
west of Cleveland, and agree that the quantity for each year should be equal to the 
amount shipped the preceding year; that upon the faith of these representations the 
defendant did enter into the contract and arrangement substantially as set forth in 
defendant's answer; that the rates were not fixed rates, but depended upon the general 
card tariff rates as charged from time to time, but substantially to be carried from 
time to time for about ten cents per barrel less than tariff rates, and, in consideration 
of such reduced rates as to bulk oil, the Standard Company agreed to furnish its own 
cars and tanks, load them on switches at distributing points, and unload them into 
distributing tanks, and was also to load and unload oil shipped in barrels, and without 
expense to defendant, and with, by reason thereof, less risk to defendant, which entered 
into the consideration, and was also to ship all its freight to points west and northwest 
of Cleveland, except small quantities, to lake ports not reached by rail, and to so 
manage the shipments, as to cars and times, as would be most favourable to defendant; 
that defendant then agreed to said terms; that said agreement so made in 1875 has 
remained in force ever since. 

I3th. That at a cost exceeding $100,000 said Standard Company had and con- 
structed the terminal facilities promised and herein found; that, in fact, the risk of 
danger from fire to defendant, the expense of handling, in loading and unloading, 
and in the use of the standard tank-cars is less (but how much the testimony does not 
show) than upon oil shipped without the use of such or similar terminal facilities; 
that said Standard Company commenced by shipping about 450,000 barrels a year 
over defendant's road, which increased from year to year until, "in 1882, the year 
before the filing the petition in this action, the quantity so shipped on defendant's 
road amounted to 742,000 barrels, equal to 2,000 barrels or one full train-load 
per day. 

1 4th. That said arrangement was not exclusive, but was at all times open to others 
shipping a like quantity and furnishing like service and facilities; that it was not made 
or continued with any intention on the part of the defendant to injure the plaintiffs 
in any manner; that plaintiffs knew of an arrangement between defendant and Standard 
Oil Company years before January I, 1880, and on or about July 20, 1876, contracted 
with the Standard Company to give it the control of the shipments of plaintiffs' oil and 
the plaintiffs the benefit, if any, of any arrangements then existing or that might 
thereafter exist with the Standard Oil Company upon shipment of oil, and which 
plaintiffs received until about January i, 1880, when they ceased operating with the 
Standard Oil Company, and thereafter were charged and paid the regular tariff rates 

[ 340 ] 



APPENDIX, NUMBER XLV 

published by defendant and by it charged and collected from all the public except the 
Standard Oil Company under the arrangement aforesaid. 

I 5 th. That the testimony on behalf of the plaintiffs fails to show the quantity manu- 
factured or sh, P ped by them, and how much they could or would ship by defendant's road 
the Standard Company were charged tariff rates, does not appear in the testimony 
although the testimony does show that plaintiffs shipped many car-loads, but the court 
find that the Standard Company have shipped and do ship over defendant's road more 
than T Vo of all the oil manufactured at and shipped from Cleveland. 

i6th. The court further find that at the time of filing the petition, and at all times 
after November 29, 1882, the prices charged the Standard Company from Cleveland 
to Chicago was fifty cents per barrel on oil in barrels, and forty dollars for each tank- 
car; that at the time of filing the petition, and from and after May 19, 1883, the tariff 
rate between the points aforesaid was sixty cents per barrel, while from November 
20, 1882, to May 19, 1883, the tariff was seventy cents per barrel; that prior to the dates 
aforesaid the tariff rates and rates to the Standard frequently changed, and the difference 
was frequently greater than after said dates; that sixty-one barrels constitute a car- 
load and eighty barrels are estimated to the tank, but that some tanks hold one hundred 
and some one hundred and twenty barrels, and that at no time were tariff rates made 
or published for tank-cars carried by defendant with refined oil except when furnished 
by said Standard Company. 

i;th. That after said May I 9 th, 1883, about the same difference often cents per barrel 
existed between tariff rates and the prices charged to the Standard Oil Company to 
the different points along the line and consignment points beyond the termini of 
defendant's road; that five barrels of oil make a ton, and that the prices charged the 
Standard after November, 1882, from Cleveland to Chicago, amounted to ^ of 
one cent per ton, per mile, and tariff rates to T <W of one cent per ton per mile; that the 
contract of arrangement made with defendant has been largely profitable to defendant; 
that during the season of water navigation the Standard Company could have shipped 
to said distributing points on vessels by the lakes and river barreled oil for a less sum 
than the rates charged to it by defendant to plaintiffs and the public were reasonable 
rates in themselves. 

1 8th. That the defendant from time to time published and still does publish and 
hold forth to the public a certain printed tariff of rates of charge for the shipment and 
delivery of all classes of freight, including the products of the plaintiffs' refinery, be- 
tween Cleveland aforesaid and the various towns and cities upon its said line, branches, 
and connecting lines, and has refused and still does refuse to ship such products for 
the plaintiffs to any of such points named in its tariff or schedule except for the prices 
therein named; and that such schedule fixes the prices for oil shipment at so much 
per barrel to the public, irrespective of their being shipped in barrels by ordinary freight 
cars or in bulk by means of tank-cars. 

[341] 



THE HISTORY OF THE STANDARD OIL COMPANY 
igth. That the plaintiffs have since December, 1879, frequently applied to the de- 
fendant both for reduced rates upon such tariff rates and for like rates with those 
made to such Standard Oil Company, both upon their general shipments by the ordinary 
freight cars of the defendant and also upon shipments to be by them made in bulk 
by means of tank-cars owned by them, they proposing to load and unload the same 
at terminal points, and to assume all risks by fire or leakage; but that the defendant 
has and still does refuse to allow them by either course of shipment rates less than 
such tariff rates, the tariff charged and demanded upon such shipments in bulk being 
on the basis of eighty barrels allowed to be shipped by each tank-car. 

20th. The defendant has received ever since the first day of December, 1879, and 
still does receive from said Standard Oil Company at Cleveland and ship for him, 
like products to those of the plaintiffs at rates much less than such schedule rates, 
and receives and ships for said Standard Oil Company oil for shipment in bulk to 
such points by means of tank-cars of said Standard Company at rates much less than 
said schedule rates and much less than the rates allowed to said company for the 
shipment of oil by barrels in ordinary freight cars, and that such reduced rates to said 
Standard Oil Company by means of such tank-cars are allowed both by the making 
to it a lower rate upon its shipments by the defendant's cars in barrels, and also by 
means of its being allowed to ship by means of its said tank-cars to their full capacity, 
running from 80 to 120 barrels each, and averaging over 100 barrels each, and the 
reduced rate being charged on a basis of 80 barrels per car. The defendant charged 
the plaintiffs the switching charge, and omitted to charge the same to the Standard 
Oil Company; that it was a further part of such understanding, that should the de- 
fendant give to other shippers like rates, said Standard Oil Company would as far as 
possible withdraw from it its shipments; and that for the purpose of effectually securing 
at least the greater part of said trade, the defendant, on the completion of the New York, 
Cleveland and St. Louis Railway, a competing line from Cleveland to the West, in the 
year 1883 entered into a traffic arrangement with it, giving to it a portion of the ship- 
ments of said Standard Oil Company west, on a condition of its uniting with it in the 
carrying out of such understanding as to reduced rates to said Standard Company, 
which arrangements still exist. 

2ist. That upon the shipment made by the defendant for said Standard Oil Company 
of such products the rates paid for shipment to points of delivery upon the defendant's 
connecting lines and beyond its line have been and are less for the ratable amount of 
carriage charged for the distance transported over its own line, than said schedule 
rates or than the lower rates charged to said Standard Oil Company for shipments to 
the terminal points at which said shipments went from said road to its connecting 
line; how much less the defendant has refused to state. 

22nd. That the reduced rates charged to said Standard Oil Company upon its 
shipments are arrived at by charging upon such shipments full tariff rates, and after- 

[342] 



APPENDIX, NUMBER XLV 

ward, in accordance with some prearranged method agreed on with said Standard 
0.1 Company, refunding to it a portion of the freight so charged and collected, the 
amount refunded bang known as a "drawback" or "rebate." 

2yd. That the evidence does not establish the fact whether or not all the various 
advantages cla.med as secured to defendant by its contract with the Standard Oil 
Company are the equivalent for the discrimination made to it in freights. 



[343] 



NUMBER 46 (See page 80) 

LETTER OF EDWARD S. RAPALLO TO GENERAL PHINEAS PEASE, 
RECEIVER CLEVELAND AND MARIETTA RAILROAD COMPANY 

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 
3,112, pages 576-577.] 

32 NASSAU STREET, NEW YORK, March 2, 1885. 
GENERAL PHINEAS PEASE, 

Receiver Cleveland and Marietta Railroad Company. 

Dear Sir: My opinion is asked as to the legality of your making such an arrange- 
ment with the Standard Oil Company as set forth below. 

The facts, as I understand them, are as follows: 

The Standard Oil Company proposes to ship or control the shipping of a large 
amount of oil over your road, say a quantity sufficient to yield to you $3,000 freight per 
month. That company also owns the pipes through which oil is conveyed from the wells 
owned by individuals to your railroad, except those pipes leading from the wells of 
George Rice, which pipes are his own. The company has, or can acquire, facilities 
for storing all its oil until such time as it can lay pipes to Marietta, and thus deprive 
your company of the carriage of all its oil. 

The amount of oil shipped by Mr. Rice is comparatively small, say a quantity suffi- 
cient to yield $300 per month for freight. 

The Standard Oil Company threatens to store, and afterward pipe all oil under 
its control unless you make the following arrangements, viz. : You shall make a uniform 
rate of thirty-five cents per barrel for all persons excepting the Standard Oil Company; 
you shall charge them ten cents per barrel for oil and also pay them twenty-five cents 
per barrel out of the thirty-five cents collected from other shippers. 

It may render the subject less difficult of consideration to determine, first, those acts 
which you cannot with propriety do as receiver. 

You are by the decree vested with all the powers of receiver, according to the rules 
and practice of the court; are directed to continue the operations of the railroad and 
can safely make disbursements from such moneys as come into your hands for such 
purposes only as the decree directs, viz. : wages, interest, taxes, rents, freights, mileage 
on rolling stock, traffic balances and certain debts for supplies. 

In my opinion this would not protect you in collecting freight from one shipper and 
paying it over to another. 

All moneys received, therefore, from any person for freight over your road, must 
pass into your hands and there remain to be disbursed by proper authority. After an 
examination of your statute, however, I find no prohibition against your allowing 

[344] 



APPENDIX, NUMBER XLVI 

a discount, or charging a rate less than a schedule rate to a shipper on account of 
the large amount shipped by him. 

As you are acting, therefore, in the interest of the company, and endeavouring to 
increase its legitimate earnings as much as possible, I find nothing in the statutes to 
prevent your making a discrimination, especially where the circumstances are such 
that a large shipper declines to give your road his freight unless you allow him to ship 
at less than the schedule rates. Therefore, there is no legal objection to the making of 
an arrangement which in practical effect may be the same as that proposed, provided 
the objections pointed out above are obviated. 

You may with propriety allow the Standard Oil Company to charge twenty-five 
cents per barrel for all oil transported through their pipes to your road, and I understand 
from Mr. Terry that it is practicable to so arrange the details that the company can, 
in effect, collect this direct, without its passing through your hands. You may agree 
to carry all such oil of the Standard Oil Company or of others delivered to your road 
through their pipes, at ten cents per barrel. You may also charge all other shippers 
thirty-five cents per barrel freight, even though they delivered oil to your road through 
their own pipes, and this I gather from your letter and from Mr. Terry would include 
Mr. Rice. 

You are at liberty, also, to arrange for the payment of a freight by the Standard Oil 
Company calculated upon the following basis, viz. : 

Such company to be charged an amount equal to ten cents per barrel, less an 
amount equivalent to twenty-five cents per barrel upon all oil shipped by Rice, the 
agreement between you and the company thus being that the charge to be paid by 
them is a certain sum ascertained by such a calculation. If it is impracticable so 
to arrange the business that the Standard Oil Company shall, in effect, collect the 
twenty-five cents per barrel from those persons using the company's pipes from the wells 
to the railroad without its passing into your hands, you may properly also deduct 
from the price to be paid by this company an amount equal to twenty-five cents per 
barrel upon the oil shipped by such persons provided your accounts, bills, vouchers, 
etc., are consistent with the real arrangement actually made, you will incur no per- 
sonal responsibility by carrying out such an arrangement as I suggest. It is possible 
that by a proper application to the court, some person may prevent you in the future 
from permitting any discrimination. Even if Mr. Rice should compel you, subsequently, 
to refund to him the excess charged over the Standard Oil Company, the result would 
not be a loss to your road, taking into consideration the receipts from the Standard 
Oil Company, if I understand correctly the figures. There is no theory, however, 
in my opinion under the decisions of the courts, relating to this subject, upon which, 
for the purpose, an action could be successfully maintained in this instance. 

Yours truly, 

EDWARD S. RAPALLO. 

[345] 



NUMBER 47 (See page 84) 

TESTIMONY OF F. G. CARREL, FREIGHT AGENT OF THE 
CLEVELAND AND MARIETTA RAILROAD COMPANY 

[In the case of Parker Handy and John Paton, Trustees, vs. The Cleveland and 
Marietta Railroad Company et al. t Circuit Court of the United States, Southern 
District of Ohio, Eastern Division.] 

Q. The auditor reports it (the $340) remitted on October 29, 1885. Please state 
by whom it was held from the first of May to that time. 

A. We might as well go back of that, and I will make a clean sweep, so far as I 
am concerned. This overcharge of twenty-five cents was held by the Macksburg Pipe 
Line Company. Whether this was my fault or the fault of the general agent I am 
not able to say. I know no difference between Mr. Rice's oil and the Pipe Une Com- 
pany's. 

Q. The books of the company show from the 26th of March, 1885, until April 28, 
1885, Mr. Rice shipped from Macksburg to Marietta 1,360 barrels; that upon these 
shipments $340, or twenty-five cents per barrel, were reported to the auditor of the 
Cleveland and Marietta Railway upon the 2Qth of October. Who sent the money 
$340 to the railroad company, and who reported the amount of money to the 
auditor ? 

A. If I understand correctly, if it is the amount I think it is, that is the amount for 
overcharge. It came through my office. 

Q. In whose hands had the $340 been from the time paid by Mr. Rice until it was 
sent by you to the bank at Cambridge ? 

A . I received check from Pipe Lino. 

Q. How soon did you send money to Cambridge after receiving check ? 

A. I think the next day. 

Q. How did you come to get that check ? 

A. I don't understand. 

Q. Did you go after it ? 

A. No, sir; it was sent to me by mail. 

Q. Where was it mailed ? 

A. Oil City, I think. 

[346] 



APPENDIX, NUMBER XLVII 

Q. By whom was the check signed ? 

A. By the treasurer, J. R. Campbell, I think. 

Q. If I understand the arrangement during the month of April, 1885, you collected 
thirty-five cents per barrel for all oil shipped by George Rice, and paid ten cents to the 
receiver of the railroad company and twenty-five cents to the Macksburg Pipe Line ? 

A. Yes, sir; as long as Mr. Rice shipped. 

Q. Afterwards the Macksburg Pipe Line Company sent the money thus paid to 
it to you, and you paid the money into the depository of the railroad company on 
the 29* of October, 1885 ? 

A. Yes, sir. 



[347] 



NUMBER 48 (See page 84) 

REPORT OF THE SPECIAL MASTER COMMISSIONER GEORGE K. 
NASH TO THE CIRCUIT COURT 

[In the case of Parker Handy and John Paton, Trustees, vs. The Cleveland and 
Marietta Railroad Company et al., Circuit Court of the United States, Southern 
District of Ohio, Eastern Division.] 

To THE HONOURED THE CIRCUIT COURT OF THE UNITED STATES, 
Southern District of Ohio, Eastern Division. 

By an order of your court made on the i8th day of December, 1885, in the 
case of Parker Handy and John Paton, Trustees, vs. The Cleveland and Marietta 
Railroad Company et al., I was appointed a special master commissioner to investi- 
gate and report to the court for its action what discriminations have been made in 
freights by Receiver Pease, or during his administration by those under him, and 
to this end I was authorised to summon and examine witnesses and to cause their testi- 
mony to be reduced to writing so far as in my discretion it might be necessary. I 
was also required to inquire fully and particularly into the facts and report to the court 
what discriminations had been made, under what arrangements and to what extent, 
and to report fully all the facts and show to what extent and under what circumstances 
discriminations have been made against shippers as well as in favour of shippers, 
and by whom such discriminations were authorised and by whom made. In compliance 
with this order I proceeded to examine the matters therein referred to, and in the course 
of such examination called the following-named persons as witnesses : 

T. D. Dale, C. C. Pickering (auditor of the Cleveland and Marietta Railroad Com- 
pany under Receiver Pease), F. G. Carrel, J. E. Terry, Daniel O'Day, George Rice, 
H. L. Wilgus, W. H. Slack, W. J. Cramm, George Best, Jr., and J. C. McCarty, 
whose evidence I caused to be reduced to writing by A. C. Armstrong, a stenographer, 
and is herewith submitted. 

I find from the evidence that soon after General Pease was appointed receiver of the 
Cleveland and Marietta Railroad, an arrangement was entered into with Daniel 
O'Day and W. T. Scheide, by which it was agreed that the rate to be charged by 
Receiver Pease and his subordinates upon all crude oil shipped from Macksburg 
and vicinity upon the line of the Cleveland and Marietta Railroad Company to Marietta 

[348] 



APPENDIX, NUMBER XLVIII 

should be thirty-five cents per barrel; that the agent of the receiver at Marietta should 
also pay the agent of the parties represented by O'Day and Scheide; that his com- 
pensation was to be $85 per month, $60 of which was to be paid by Receiver Pease and 
$25 by the parties represented by O'Day and Scheide; that it was the duty of this joint 
agent (one F. G. Carrel) to collect from all shippers the sum of thirty-five cents per 
barrel, and to account to Receiver Pease for ten cents of this sum, and to the parties 
represented by O'Day and Scheide for the balance. This arrangement went into force 
on the 2Oth day of March, 1885, and continued in force until September, 1885, at 
which time one George Rice made complaint to your court that discriminations 
were being made by the receiver against oil shippers. 

Negotiations for this arrangement were opened in the City of Toledo on the 8th 
day of February, 1885, at a meeting which was attended by Daniel O'Day, W. T. 
Scheide, A. G. Blair (acting general freight and passenger agent of the receiver of 
the Wheeling and Lake Erie Railroad Company), and J. E. Terry (general freight 
and passenger agent of Pease, the receiver of the Cleveland and Marietta Railroad 
Company). The agreement above referred to was substantially reached at this meeting. 
Mr. Terry reported the same to General Pease, receiver of the Cleveland and Marietta 
Railroad Company, who thereupon wrote a letter to his general counsel in New York, 
asking advice in regard thereto, which letter was transmitted to said counsel by 
J. E. Terry in person. E. S. Rapallo, an attorney in New York City, replied to 
the letter of General Pease, and a copy of his letter is now on file in your court and 
;s a part of a report filed by General Pease in November, 1885. This arrangement seems 
to have been entered into with full knowledge of General Pease, the receiver, and 
after consultation with his counsel, and with the full knowledge of his general freight 
and passenger agent, J. E. Terry. 

George Rice was the owner of certain oil wells in the Macksburg Oil Region and 
he also purchased some oil from the owners of certain other wells in the same district. 
The oil which he produced and also the oil which he purchased he was in the habit of 
transporting to his refinery at Marietta, Ohio, by means of the Cleveland and Marietta 
Railroad. Before the arrangements to which I have referred went into effect he had 
been charged upon the shipment made by him the sum of seventeen and one-half 
cents per barrel. After the aoth of March, 1885, he was charged thirty-five cents per 
barrel upon all oil shipped by him. Between the 2Oth of March and the 3<Dth of 
April following, Mr. Rice shipped from Macksburg to Marietta over the Cleveland 
and Marietta Railroad, 1,360 barrels of oil. Upon this oil he was charged thirty-five 
cents per barrel, or the sum of $476. This money was collected by F. G. Carrel, 
the agent of the receiver and also the agent of the parties represented at Toledo by 
O'Day and Scheide. This money was divided according to the agreement, and $136 
was sent by Carrel to the bank of the receiver at Cambridge, Ohio, and the remaining 
$340, or twenty-five cents for each barrel of oil shipped by Rice, was sent by Carrel to 

[349] 



THE HISTORY OF THE STANDARD OIL COMPANY 

the oil parties who had their headquarters at Oil City, Pennsylvania. On or about the 
2Qth of October, 1885, this $340 was returned to Mr. Carrel at Marietta, by a check 
from Oil City, which check was signed by one J. R. Campbell, treasurer. This 
money was sent by Carrel to the bank in Cambridge in which the receiver made his de- 
posits. It will be observed that this money was returned from Oil City some ten or twelve 
days after Judge Baxter made his order directing the receiver to make a report showing 
what discriminations, if any, had been made by him in the shipments of oil, which 
order had been obtained upon the complaint of George Rice. It was also returned 
after a consultation had by J. E. Terry with Daniel O'Day in the City of Cleveland. 
Mr. Terry states that the receiver was made acquainted with the steps taken by 
him in connection with this transaction. The receiver did not submit himself to an ex- 
amination in regard to this matter, but filed an affidavit with me which I attach to this 
report, in which he states in substance that he did not know at the time he filed his 
reports with your court that that part of the agreement between himself and the oil 
parties which required that twenty-five cents per barrel of the moneys collected by him 
should be paid to the oil parties had been carried out, or that the money thus paid 
by Rice, and by Carrel paid over to the oil parties, had been returned. The reason 
given by Receiver Pease and by Mr. Terry for entering into this agreement was 
that the parties represented by O'Day and Scheide were threatening to put down 
a pipe-line from Macksburg to Parkersburg, through which to transport the oil pro- 
duced by them in this region to the latter city, and that if this threat was carried out, 
the Railroad Company would be prevented from carrying oil produced by them to 
Marietta. They further stated that in consideration of the arrangement to which I 
have referred, the parties represented by O'Day and Scheide agreed not to put down a 
pipe-line, but to ship their oil over the Cleveland and Marietta Railroad. 

As soon as George Rice found that the rates on oil had been raised from seven- 
teen and one-half to thirty-five cents per barrel, and that he could not get any better 
terms for his shipment from the railroad, he commenced to lay a pipe-line from his wells 
in the Macksburg field to Lowell, on the Muskingum River. This line was completed 
about the first of May, 1885, and from that time he transported all his oil through this 
pipe to Lowell, and thence shipped it to Marietta by boat on the Muskingum River. 
As soon as the parties represented by O'Day and Scheide ascertained that Rice was 
putting down a pipe-line, they proceeded also to lay a pipe-line from the Macksburg oil 
field to Parkersburg, in West Virginia. Since the completion of their pipe-line all the oil 
sent to Parkersburg and Marietta has been sent through this pipe-line. For several 
months they continued to ship some of their oil North over the Cleveland and Marietta 
Railroad to Cleveland, but during the last two months these shipments have ceased, 
and all the oils now produced by the parties represented by O'Day and Scheide are 
sent by them through their pipe-line to Parkersburg. 

Mr. Rice, since the completion of his pipe-line, has shipped through it to Marietta 

[350] 



APPENDIX, NUMBER XLVIII 

more than forty-five thousand barrels of oil. The shipments by Mr. Rice might have 
been retained for the benefit of the railroad had the rate of seventeen and one-half 
cents per barrel been continued. It is probable that had not the arrangement which 
we have been considering been entered into, a line would have been put down by the 
parties represented by O'Day and Scheide, but without the arrangement the patronage 
of Mr. Rice could have been retained. The result of the arrangement seems to be 
that the railroad has lost the patronage not only of the parties represented by O'Day 
and Scheide, but also of Mr. Rice, and it is not to-day carrying a barrel of oil. 

The Argand Oil Works and the Argand Refining Company, two corporations located 
at Marietta, Ohio, have made complaint that from the eighteenth day of February 
until the fourteenth day of October, 1885, they were shippers of oil from the Macksburg 
Oil Region, over the Cleveland and Marietta Railroad, and that they were discriminated 
against by the receiver and his agents. I conceived that the order of your court referring 
this subject to me was broad enough to cover the complaint made by these corporations 
and I accordingly called W. H. Slack, W. J. Cramm, C. C. Pickering, and F. G. 
Carrel as witnesses in regard to this complaint, and their testimony is herewith sub- 
mitted, together with the account presented by these two corporations and the receipted 
bills taken by them in paym e nt of freight. From the evidence of these witnesses it ap- 
pears that these corporations, during the time covered by the complaint, were engaged 
in refining oil at Marietta, Ohio. They purchased their crude oil of the parties rep- 
resented by O'Day and Scheide at Macksburg. Their purchases were made by order- 
ing their oil when needed by telegraph from a man by the name of Seep, located at 
Oil City, Pennsylvania, and they were charged therefor the market price of oil at Oil 
City on the day when the telegraphic order was given. The oil was then shipped to 
them over the Cleveland and Marietta Railroad and a bill for freight presented to 
them in the form following: "The Argand Oil Works, Marietta, Ohio, To the 
Cleveland and Marietta Railroad Company, Dr." 

In these bills they were charged for all oil shipped at the rate of thirty-five cents per 
barrel. This amount was paid by them to Carrel, the agent of the receiver, at Marietta, 
Ohio. Of this amount Carrel paid to the receiver ten cents, and to the parties repre- 
sented by O'Day and Scheide, twenty-five cents. I am of the opinion that these parties 
were in the same position as George Rice, with the exception that Mr. Rice produced 
his oil from the ground and shipped it over the Cleveland and Marietta Railroad, 
and these parties bought their oil instead of producing it from the ground. I cannot 
see as this difference modifies in any way the discrimination made against them. They 
claim that from February 18, 1885, until October 14, 1885, they shipped 3,679^3- 
barrels of oil, for which they were charged $1,232.06 as freight, and that the discrimi- 
nations against them amounted to $888.70. From their bill certain reduction should 
be made. All shipments made prior to March 20, 1885, should be excluded for the 
reason that the discriminating arrangement entered into between the receiver and the 

[350 



THE HISTORY OF THE STANDARD OIL COMPANY 

parties represented by O'Day and Scheide did not go into effect until the 2oth of 
March, 1885. Two shipments, one made on the 7th of August, and the other made 
on the 2 1st of September, from Dexter City, should also be excluded for the reason 
that all oils shipped from Dexter City were charged for at the same rates as these com- 
plainants were taxed. After making these deductions, I find that under the contract 
complained of, the Argand Oil Works and the Argand Refining Company shipped from 
the 2Oth of March until the I4th of October, 2,695 barrels of oil; that they were re- 
quired to pay upon these shipments the sum of $894.59, and that of this sum Carrel, 
the agent of the receiver at Marietta, paid to the receiver the sum of $245.44, and to 
the parties in Pennsylvania represented by O'Day and Scheide the sum of $649 . 15. 

A complaint of a similar character is made by the Marietta Oil Works, a partner- 
ship engaged in the business of refining oils at Marietta, Ohio. Upon their complaint, 
I examined George C. Best, Jr., J. C. McCariy, W. H. Slack, C. C. Pickering, 
and F. G. Carrel as witnesses, and their evidence is submitted herewith in full, together 
with the account presented by this partnership and the receipted bills presented by 
the Cleveland and Marietta Railroad and paid by them. Their case in all respects 
seems to be precisely like that of the Argand Oil Works and the Argand Refining 
Company. They claim that from the 1st day of April until the 3151 day of August, 
1885, inclusive, they shipped 2,717 barrels of oil, for which they were charged as freight 
$950.95, and that they were discriminated against to the extent of $679.25. From 
their bill I think that there should be excluded two shipments from Dexter City, one 
made on the 1 2th day of June, and the other on the i8th day of June, for the reason 
that no discriminations were made in freights, by the receiver, of oils shipped from 
Dexter City. After taking into account these two shipments, I find that the Marietta 
Oil Works shipped from Macksburg and Elba on their account 2,547 barrels of oil; 
that the freights paid by them upon these shipments amounted to the sum of $891 .45, 
and that out of this sum Carrel, the agent at Marietta, paid to the receiver the sum 
of $251.70, and to the parties represented by O'Day and Scheide the sum of $639.75. 

I find that during the receivership of General Pease, no oils were shipped from 
Macksburg North over the Cleveland and Marietta Railroad except such as were 
shipped by the parties represented by Messrs. O'Day and Scheide. 

I have purposely referred to the parties who entered into this arrangement with 
Receiver Pease and his freight agent, J. E. Terry, as "the parties represented 
by O'Day and Scheide," for the reason that I have not been able to ascertain who or 
what the parties are. It appears from the evidence that during the time that M. D. 
Woodford had control as manager of the Cleveland and Marietta Railroad, one W. 
J. Brundred and T. D. Dale conceived the idea of running pipes to all the wells in 
the Macksburg Oil Regions, and then by concentrating them together convey all the oils 
thus gathered through the main line to the Cleveland and Marietta Railroad and de- 
posit it in tanks, and with this end in view entered into a contract in writing with said 

[352] 



APPENDIX, NUMBER XLVIII 

Woodford, a copy of which contract is attached to the report of Receiver Pease, filed 
in your court in November, 1885. After this contract was entered into, they organised 
a corporation known as the Ohio Transit Company, with T. D. Dale as president and 
W. J. Brundred as vice-president, to which corporation this contract was assigned. 
This company continued in the business until January, 1885. Mr. Dale, the president, 
states that "We said we could not compete with the Standard Oil Company, and 
for that reason we sold out at a fair price." When asked to whom his company sold 
their property, Mr. Dale answered, "I don't know what company, but my recollection 
is that it might have been the National Transit Company." "It was done in their 
office. I don't know whether the bill of sale was made to Mr. O'Day or to Mr. Scheide." 
Mr. Dale further states that "Mr. O'Day was vice-president of the National Transit 
Company, and that Mr. Scheide was its general manager; it, however, is conjecture 
on my part." In another place Mr. Dale states that the gentleman managing the 
National Transit Company bought the property of the Ohio Transit Company, and 
gives as their names Daniel O'Day, W. T. Scheide, and J. R. Campbell. The corpora- 
tion or partnership, or whatever it is which now manages the pipe-line system in 
Macksburg oil fields, and extending from there to Parkersburg, is known as the Macks- 
burg Pipe Line. One Daniel O'Day, now having his headquarters at Macksburg, is the 
manager of this pipe-line. When O'Day was asked, "To whom does the Macksburg 
Pipe Line belong ?" he answered, "I do not believe I can answer that; I do not know." 
When asked, "Who has general control of it?" he answered, "Mr. Scheide, Mr. 
O'Day, and J. R. Campbell." He stated that "Mr. Scheide lives in Titusville, 
Mr. Campbell at Oil City, and Mr. O'Day at Buffalo." He also stated that these 
gentlemen were officers of the National Transit Company and the United Pipe 
Line, a division of the National Transit Company; that Mr. O'Day is general manager 
of the National Transit Company, and when asked whether the Macksburg Pipe 
Line is also a branch of the same system, he answered, " Really, I am not well enough 
posted to know, but I presume it is." Daniel O'Day also stated that the National 
Transit Company is a corporation organised under the laws of New York, and that 
its principal office is located in New York City. He also stated that "its property is 
located throughout the state of New York and the state of Pennsylvania, and some 
in Ohio." The line located in Ohio he described as running from Parker's Landing, 
in Pennsylvania, to Cleveland. He also stated that the United Pipe Line is a division 
of the National Transit Company which runs from wells to railroad points or pumping 
stations, and that the wells to which he referred are located in Alleghany County, 
New York, and throughout a large portion of Pennsylvania. He also stated that the 
Macksburg Pipe Line controls, by lease and deed, sixty or seventy acres of land in 
this state of the line of the Cleveland and Marietta Railroad Company, and that the 
lease and deeds for this land are in the name of one Benjamin Brewster, of New York 
City, and that said Brewster is the vice-president of the National Transit Company. 

[353] 



THE HISTORY OF THE STANDARD OIL COMPANY 

When Mr. O'Day was asked, "What relation does the National Transit Company 
and the United Pipe Line Company sustain to the Standard Oil Company ? " he 
answered, "I believe that people having stock in the National Transit Company or 
the United Pipe Line can hold stock, and do hold stock, in the Standard Oil Com- 
pany, but I do not know what further relations they have." 

I have attempted to summarise in a very brief manner the evidence which has been 
taken by me under the order of your court, but in order to obtain a full understanding 
of the situation, it will perhaps be necessary to read all the evidence which is herewith 
submitted in full, in connection with the reports and exhibits filed by General Pease, 
in November, 1885. 

Respectfully submitted, 

(Signed) GEORGE K. NASH, 

Special Master Commissioner. 



[354] 



NUMBER 49 (See page 1 20) 

A STATEMENT FROM AN OIL-PRODUCER'S STAND-POINT 

FOR 1886 

[Circular used in the campaign against the Billingsley Bill.] 

Total production for the year, 25,145,088 barrels. 

Average price per barrel, .714. 

The gross income from the entire Oil Regions, based on these figures, $i 7,978,237. 

The cost of producing the above amount of oil was as follows: 

Wells drilled, 3,525 at an average cost of $3,000 each $10,575,000 

Cost of pumping and raising the oil to the surface and keeping 
rigs and wells in repair, estimated at .25 per barrel of 
production 6,286,272 

Add estimated cost of royalty, one-eighth 2,247,342 

Total expenditures $19,108,614 

Deduct total income of the entire Oil Regions I 7>97^,737 



Net loss to oil producers during the year $1,129,877 

If the estimated value of the one-eighth royalty be not added, then the value of five 
acres of land should be added to the cost of each well and the result would be practically 
the same. 

The daily production January I, 1886, was 59,603 barrels, valued at $750 

per barrel $44,702,250 

The daily production January I, 1887, was 66,383 barrels, valued at $500 

per barrel 33,191,500 

Showing a shrinkage in value of the producing territory for the 

year 1886 to be $11,510,750 

NOTE. To make it more clear to the uninitiated, the foregoing means that producing 
territory was bought and sold in 1885 on the basis of $750 to each barrel of produc- 
tion, and in 1886 on the basis of $500. It is on this basis that the value of oil-producing 
territory is estimated. A well producing one barrel a day at the present time is valued 
at $500; one year ago it was worth $750. 

[355] 



THE HISTORY OF THE STANDARD OIL COMPANY 

The valuation of the stock of the Standard Oil Company at the present time is 
$150,000,000, or nearly five times as great as the entire Oil Region country valuation. 
The profits of the Standard Oil Company for the year 1886 were over $26,000 ,000. 

Strangers may ask, Why is there no competition in pipage and storage of oil 
if the profits are so great ? We answer, that with rebates, drawbacks, discrimination, 
and conspiracies the Standard Oil Company has been able to freeze out and suppress 
nearly every attempt at competition. 

Does not the foregoing array of figures, showing as it does the terrible shrinkage 
which the property of the oil producers has sustained, amounting to nearly twenty-five 
per cent, in one year, demand such relief in pipage, storage, and shrinkage, as is 
contemplated by the Billingsley Bill, now before the Senate of Pennsylvania ? 



NUMBER 50 (See page 121) 



THE BILLINGSLEY BILL 

[Legislature of Pennsylvania. File of the House of Representatives. Number 104, 
session of 1887.] 

An act to punish corporations, companies, firms, associations and persons and each 
of them engaged in business of transporting by pipe-lines or lines or storing petroleum 
in tank or tanks, under certain restrictions and penalties from charging in excess 
of certain fixed rates for receiving, transporting, storing, and delivering petroleum, 
and to regulate deductions for losses caused to petroleum in pipe-lines and storage 
tanks by lightning, fire, storm, or other unavoidable causes. 

SEC. I. Be it enacted by the Senate and House of Representatives of the Com- 
monwealth of Pennsylvania in general assembly met, and it is hereby enacted by 
authority of the same: That no corporation, company, firm, association, person or 
persons who are now, or shall hereafter engage in the business of transporting or 
storing crude or refined petroleum by means of pipe-line or pipe-lines, or storage by 
tank or tanks, shall demand or receive any rate of charge in excess of ten cents per 
barrel, reckoning forty-two gallons for each barrel, for all services performed within 
this commonwealth in receiving petroleum from tank or tanks or other receptacle on 
the lease or farm at the place of its production and transporting and delivering the 
same, or petroleum of like kind and quantity in every essential particular in the division 
of such pipe-line within which the same shall have been received at any shipping point 
in said division which may be designated by the holder, owner, or purchaser of said 
petroleum, whether said petroleum is held by certificate, voucher, receipt, credit 
balance, accepted order or otherwise. And such corporation, company, firm, association, 
person or persons, and each of them are hereby required immediately upon this act 
becoming a law to erect and establish, if not already established, and maintain there- 
after at least one shipping point within each pipe-line division within this common- 
wealth of sufficient dimensions, capacity and equipment to accommodate the entire 
trade within each such pipe-line division. 

SEC. 2. No such corporation, company, firm, association, person or persons shall 
demand or receive from any person or persons, firms, association, company or corpora- 
tion owning or holding a credit balance for petroleum in line or tank within this com- 
monwealth, any rate of charge whatever for the tankage or storage of petroleum owned 

[357] 



THE HISTORY OF THE STANDARD OIL COMPANY 

or so held by credit balance for the first thirty days from the date of said credit balance. 
And no corporation, company, firm, association, person or persons who are now 
engaged or shall hereafter engage in the business of transporting or storing crude 
or refined petroleum by means of pipe-line or pipe-lines, or storage tank or tanks, 
shall demand or receive, from any source whatever, for the tankage of crude or refined 
petroleum within this commonwealth any rate of charge in excess of one-sixtieth of 
one cent per barrel of forty-two gallons a day or fractional part thereof so long as 
said petroleum shall thereafter be held and stored in tank. 

SEC. 3. Such corporation, company, firm, association, person or persons are hereby 
obliged and required, and it is hereby made the duty of such corporation, company, 
firm, association, person or persons, and each of them, to hold and store in tank any 
and all petroleum offered for storage or transportation, or any and all petroleum 
received and transported by them or either of them for the owner thereof; or for the 
person or persons holding certificate, voucher, receipt, credit balance or accepted 
order thereof, for a period of one year or for any shorter period than one year from 
the time when said petroleum was first received by such corporation, company, firm, 
association, person or persons for storage, if requested so to do by the owner thereof, 
or by the person or persons holding certificate, voucher, receipt, credit balance or 
accepted order therefor, at and for the rate of charge of one-sixtieth of one cent per 
barrel of forty-two gallons for each day, or fractional part thereof thereafter. Except 
that when said petroleum is held by credit balance, no rate of charge whatever shall 
be made or charged on said credit balance for the first thirty days from the date of said 
credit balance. 

SEC. 4. Such corporation, company, firm, association, person or persons shall be 
allowed to make a deduction from the crude petroleum received, transported or stored, 
not to exceed one-half of one per cent, of said petroleum so received, transported or 
stored, on account of water, sediment, evaporation, waste, and the like. The deduction 
mentioned in this section shall be made when the petroleum is first run or transported 
by such corporation, company, firm, association, person or persons, from the tank 
or receptacle on the lease or farm where produced, and it is hereby declared to be 
unlawful for such corporation, company, firm, association, person or persons to 
make the reduction in this section provided for at any other time or place than as 
above provided. 

SEC. 5. Any corporation, company, firm, association, officer or officers, agent or 
agents, person or persons, engaged in the business of transporting or storing crude or 
refined petroleum within this commonwealth by means of pipe-line or pipe-lines or 
storage tank or tanks shall, upon application of the owner of any well or wells, lay 
pipe or pipes to any well or wells on any lease or leases in any locality where there is 
any oil on any farm or farms in this commonwealth, and receive the oil therefrom 
and transport the same through their pipe-line or pipe-lines and store the same in 

[358] 



APPENDIX, NUMBER L 

their storage tank or tanks, in any division or in any place in any division designated 
by the owner or purchaser of said petroleum, and hold the same subject to the owner 
or purchaser at the rate or charge prescribed in the preceding sections. 

SEC. 6. Such corporation, company, firm, association, person or persons shall be 
liable for all loss caused by lightning, fire, storm, or other unavoidable cause to the 
petroleum received, transported or stored by them, and in the event of any such loss 
the same shall be charged by said corporation, company, firm, association, person or 
persons, pro rata, upon and deducted from all petroleum in the custody of such cor- 
poration, company, firm, association, person or persons, at the date of such loss. 

SEC. 7. Any corporation, company, firm, association, officer or officers, agent or 
agents thereof, person or persons engaged in the business of transporting or storing 
crude or refined petroleum within this commonwealth by means of pipe-line or pipe- 
lines or storage tank or tanks, who shall demand or receive any rate of charge in excess 
of ten cents per barrel, reckoning forty-two gallons for each barrel, for all services 
performed within this commonwealth for receiving petroleum from tank or tanks 
or other receptacle on the lease or farm at the place of its production and transporting 
and delivering the same or petroleum of like kind and quality in every essential par- 
ticular in the division of the pipe-line within which the same shall have been received 
at the shipping points designated by the holder, owner or purchaser of said petroleum, 
or who shall fail or neglect to erect and establish immediately upon this act becoming 
a law if not already established and maintain thereafter at least one shipping point 
within each pipe-line division within this commonwealth of sufficient dimensions and 
capacity and properly equip the same to accommodate the entire trade within each 
such district, or who shall demand or receive for the storage of petroleum within this 
commonwealth any rate of charge in excess of one-sixtieth of one cent a barrel of 
forty-two gallons a day or a fractional part thereof so long as said petroleum shall 
thereafter be held and stored in tank, or who shall demand or receive from any person 
or persons, firm, association, company, or corporation owning or holding a credit balance 
for petroleum in line or tank within this commonwealth, any rate of charge whatsoever 
for the tankage or storage of petroleum so owned or held by credit balance for the 
first thirty days commencing from the date of said credit balance, or who shall refuse 
to hold and store in tank any and all petroleum received and transported by them or 
either of them for the owner thereof, or for the person or persons holding certificate, 
voucher, receipt, credit balance or accepted order therefor for the period of one year, 
or for any shorter period than one year from the time when said petroleum was first 
received, by such corporation, company, firm, association, person or persons for storage 
if requested so to do by the owner thereof, or by the person or persons holding certificate, 
voucher, receipt, credit balance or accepted order therefor, at and for the rate of charge 
of one-sixtieth of one cent per barrel of forty-two gallons for each day or fractional 
part thereof thereafter but no rate of charge whatever shall be had or made for the 

[359] 



THE HISTORY OF THE STANDARD OIL COMPANY 

first thirty days from date of credit balance when oil is held by credit balance or who 
shall make any deduction on account of water, sediment, evaporation, waste, or the 
like, in excess of one-half of one per cent, of the petroleum received, transported, and 
stored, or who shall violate any or either of the provisions or requirements of any or 
either of the first sections of this act, shall be deemed guilty of a misdemeanour, and 
on conviction thereof shall be sentenced to pay a fine of not less than one thousand 
dollars nor more than two thousand dollars for the first offense, and for the second 
and any subsequent offenses to pay a fine of not less than two thousand dollars nor 
more than five thousand dollars, and to undergo an imprisonment of not less than 
sixty days and not exceeding one year, one-half of any such fine or fines to be paid 
to the prosecutor and the other one-half to be for the use of the county in which such 
offence or offences shall have been committed, and in addition to the penalties herein- 
before provided shall be liable in any action of debt to any person or persons, firm, com- 
pany, association, or corporation thereby aggrieved for double the amount of the 
damage sustained by reason of the violation of any of the provisions of this act. 

SEC. 8. No contract heretofore made or now existing for receiving, transporting, 
or storing petroleum within this commonwealth shall be in any manner impaired or 
affected by the provisions of this act. 

SEC. 9. All acts and parts of acts inconsistent herewith are hereby repealed. 

SEC. 10. This act shall take effect immediately upon its becoming a law. 



[360] 






NUMBER 51 (See page 130) 

EXTRACTS FROM TESTIMONY OF H. H. ROGERS 

[Report of Special Committee on Railroads, New York Assembly, 1879. Volume 
III, pages 2613-2618.] 

Q. Was your firm's business sold out to the Standard Oil Company ? 

A. I would like to have the question explained. 

Q. Was there a sale or transfer made of your business to the Standard Oil Com- 
pany, by which practically the Standard Oil Company really controlled your busi- 
ness ? 

A . I will answer this much of the question, by saying that the Standard Oil Company 
does not practically control our business. 

Q. Do they control the rates at which your business gets the transportation of oil ? 

A. That I don't know anything about; I don't know anything about the rates of 
transportation. 

By the Chairman. 

Q. Was not your firm taken in with the Standard Oil Company upon some agreed 
basis or arrangement, whether you regard it as a purchase or transfer or not ? 

A. We worked in harmony with the Standard Oil Company for a number of years. 

Q. Upon an agreed basis of general business ? 

A. Our interest was in common, to a certain extent. 

Q. Has your firm any contract with the Standard Oil Company ? 

A. That I cannot answer. 

Q. What member of your firm would be able to answer that ? 

A. I think Mr. Pratt would, if he were here. 

Q. When was it that your firm began to work in harmony with the Standard Oil 
Company ? 

A . I cannot say exactly how long ago; seven or eight years ago we got up a refining 
association here; that was the first, and then we got up another, and we got up another, 
and we have always been trying to get into some relations with all the refiners, so 
that we might make some money out of the business. 

Q. Had you difficulty before you entered into relations with the Standard Oil Com- 
pany to make money out of the business ? 



THE HISTORY OF THE STANDARD OIL COMPANY 

A. The competition was always very sharp, and there was always some one that 
was willing to sell goods for less than they cost, and that made the market price for 
everything; we got up an association, and took in all the refiners until some of them 
went back on us, and that would break up the association; we tried that two or three 
times. 

Q. Then finally you entered the Standard Oil arrangement ? 

A. Then we made an alliance or association with some of the refiners about here, 
and it was more successful. 

Q. What are the refiners about here with whom that alliance was made, and are 
they or are they not all of them covered by the Standard Oil arrangement ? 

A. They would come in and then they would go out; there is no refiner that I know 
of, with one exception, about New York but what has been in the association. 

Q. What are the refiners that are now in association of the Standard Oil ? 

A. The people that are working in harmony with us comprise about, I should think, 
90 or 95 per cent, of the refiners. 

Q. Now tell us their names, the leading ones. 

A. Some of the leading ones ? The Standard Oil Company; Charles Pratt and Com- 
pany; the Sone and Fleming Manufacturing Company; Warden, Frew and Company of 
Philadelphia; the Standard Oil Company of Pittsburg; the Acme Oil Refining Company 
of Titusville; the Imperial Refining Company of Oil City; the Baltimore United Oil 
Company of Baltimore. 

Q. You said that substantially 95 per cent, of the refiners were in the Standard 
arrangement ? 

A. I said 90 to 95 per cent. I thought were in harmony. 

Q. When you speak of their being in harmony with the Standard, what do you mean 
by that ? 

A. I mean just what harmony implies. 

Q. Do you mean that they have an arrangement with the Standard ? 

A . If I am in harmony with my wife, I presume I am at peace with her, and am 
working with her. 

Q. You are married to her, and you have a contract with her ? 

A. Yes, sir. 

Q. Is that what you mean ? 

A. Well, some people live in harmony without being married. 

Q. Without having a contract ? 

A. Yes; I have heard so. 

Q. Now, which do you mean ? Do you mean the people who are in the Standard 
arrangement, and are in harmony with it, are married to the Standard or in a state of 
freedom celibacy ? 

[362] 



APPENDIX, NUMBER LI 

A . Not necessarily, so long as they are happy. 

Q. Is it the harmony that arises from a marriage contract ? 

A. Not necessarily, so long as they are happy. 

Q. When you speak of their harmony, is it a relation of contract ? 

A. I mean by harmony that if you and I agree to go on Wall Street and buy a hun- 
dred shares of Erie at 33, and we agree to sell it out together at 40, that is harmony. 
I mean just the same that way if I go into the Standard Oil office and conclude to buy 
some oil of them and agree on a fair price to sell it out at, that is harmony. 

Q, Is that the harmony that you mean that you gentlemen have agreed between 
each other the rate at which you will buy and the rate at which you will sell ? 

A. Well, not going too far into detail, I would say that the relations are very pleasant. 

Q. But we want the detail ; we want precisely what that harmony is, what it consists 
of, and what produces it. 

A. Well, is it a railroad abuse, or is it an abuse to be in harmony with people ? 

Q. No; it is not abuse to be in harmony; there are some kinds of harmony that the 
law considers conspiracy. 

A. Well, I have heard so. 

By the Chairman. 

Q. What we want to know is this: This Standard Oil Company in itself is, as we 
understand it, a large organisation, not very extensive, but is made so by contracts 
with various other organisations, that are not a part of it, by their written contract 
or verbal contract or understanding, or whatever you term it; we want to know whether 
that is not the fact, and if that is not what you refer to when you speak about working 
in harmony. 

A . Mr. Chairman, I want to give you all the information that is necessary in this 
matter for your purposes, but it is a question in my mind whether it is a proper thing 
for me, even if there is no harm done by it, to divulge my business secrets. 

Q. We do not ask you for your secrets; we simply ask you the general nature of 
this organisation. 

A. I have explained it, I think, to you quite as fully as I can. 



[363] 



NUMBER 52 (See page 136) 



THE TRUST AGREEMENT OF 1882 

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 
3,112, pages 307-313.] 

This agreement, made and entered upon this second day of January, A.D. 1882, 
by and between all the persons who shall now or may hereafter execute the same 
as parties thereto: 

Witnessed : I. It is intended that the parties to this agreement shall embrace three 
classes, to wit: 

1st. All the stockholders and members of the following corporations and limited 
partnerships, to wit: 

Acme Oil Company, New York; Acme Oil Company, Pennsylvania; Atlantic 
Refining Company of Philadelphia; Bush and Company (limited); Camden Consoli- 
dated Oil Company; Elizabethport Acid Works; Imperial Refining Company (limited); 
Charles Pratt and Company; Paine, Abbett and Company; Standard Oil Company, 
Ohio; Standard Oil Company, Pittsburg; Smith's Ferry Oil Transportation Com- 
pany; Solar Oil Company (limited); Sone and Fleming Manufacturing Company 
(limited). 

Also, all the stockholders and members of such other corporations and limited 
partnerships as may hereafter join in this agreement, at the request of the trustees 
herein provided for. 

2d. The following individuals, to wit: 

W. C. Andrews, John D. Archbold, Lide K. Arter, J. A. Bostwick, Benjamin Brew 
ster, D. Bushnell, Thomas C. Bushnell, J. N. Camden, Henry L. Davis, H. M. Flagler, 
Mrs. H. M. Flagler, John Huntington, H. A. Hutchins, Charles F. G. Heye, A. B. 
Jennings, Charles Lockhart, A. M. McGregor, William H. Macy, William H. Macy, 
Jr., estate of Josiah Macy, William H. Macy, Jr., executor, O. H. Payne, A. J. Pouch, 
John D. Rockefeller, William Rockefeller, Henry H. Rogers, W. P. Thompson, J. 
J. Vandergrift, William T. Wardwell, W. G. Warden, Joseph L. Warden, Warden, 
Frew and Company, Louise C. Wheaton, H. M. Hanna and George W. Chapin, D. 
M. Harkness, D. M. Harkness, trustee, S. V. Harkness, O. H. Payne, trustee; Charles 

[364] 



APPENDIX, NUMBER LII 

Pratt, Horace A. Pratt, C. M. Pratt, Julia H. York, George H. Vilas, M. R. Keith, 
trustees, George F. Chester. 

Also, all such individuals as may hereafter join in the agreement at the request of 
the trustees herein provided for. 

3d. A portion of the stockholders and members of the following corporations and 
limited partnerships, to wit: 

American Lubricating Oil Company; Baltimore United Oil Company; Beacon 
Oil Company; Bush and Denslow Manufacturing Company; Central Refining Com- 
pany of Pittsburg; Cheesborough Manufacturing Company; Chess, Carley Company; 
Consolidated Tank Line Company; Inland Oil Company; Keystone Refining Com- 
pany; Maverick Oil Company; National Transit Company; Portland Kerosene 
Oil Company; Producers' Consolidated Land and Petroleum Company; Signal Oil 
Works (limited); Thompson and Bedford Company (limited); Devoe Manufacturing 
Company; Eclipse Lubricating Oil Company (limited); Empire Refining Company 
(limited); Franklin Pipe Company (limited); Galena Oil Works (limited); Galena 
Farm Oil Company (limited); Germania Mining Company; Vacuum Oil Company; 
H. C. Van Tine and Company (limited); Waters- Pierce Oil Company. 

Also, stockholders and members (not being all thereof) of other corporations and 
limited partnerships who may hereafter join in this agreement at the request of the 
trustees herein provided for. 

II. The parties hereto do covenant and agree to and with each other, each in con- 
sideration of the mutual covenants and agreements of the others, as follows: 

1st. As soon as practicable a corporation shall be formed in each of the following 
states, under the laws thereof, to wit, Ohio, New York, Pennsylvania, New Jersey; 
provided, however, that instead of organising a new corporation any existing charter 
and organisation may be used for the purpose when it can advantageously be done. 

2d. The purposes and powers of said corporations shall be to mine for, produce, 
manufacture, refine, and deal in petroleum and all its products, and all the materials 
used in such businesses, and transact other business collateral thereto. But other pur- 
poses and powers shall be embraced in the several charters such as shall seem expedient 
to the parties procuring the charter, or, if necessary to comply with the law, the powers 
aforesaid may be restricted and reduced. 

3d. At any time hereafter, when it may seem advisable to the trustees herein pro- 
vided for, similar corporations may be formed in other states and territories. 

4th. Each of said corporations shall be known as the Standard Oil Company of 
(and here shall follow the name of the state or territory by virtue of the laws of which 
said corporation is organised). 

5th. The capital stock of each of said corporations shall be fixed at such an amount 
as may seem necessary and advisable to the parties organising the same, in view of 
the purpose to be accomplished. 

[365] 



THE HISTORY OF THE STANDARD OIL COMPANY 

6th. The shares of stock of each of said corporations shall be issued only for money, 
property, or assets equal at a fair valuation to the par value of the stock delivered 
therefor. 

7th. All of the property, real and personal, assets and business of each and all of 
the corporations and limited partnerships mentioned or embraced in class first, shall 
be transferred to and vested in the said several Standard Oil companies. All of the 
property, assets, and business in or of each particular state shall be transferred to 
and vested in the Standard Oil Company of that particular state, and in order to 
accomplish such purpose the directors and managers of each and all of the several 
corporations and limited partnerships mentioned in class first are hereby authorised 
and directed by the stockholders and members thereof (all of them being parties to 
this agreement) to sell, assign, transfer, convey, and make over, for the consideration 
hereinafter mentioned, to the Standard Oil Company or companies of the proper 
state or states, as soon as said corporations are organised and ready to receive the 
same, all the property, real and personal, assets and business of said corporations 
and limited partnerships. Correct schedules of such property, assets, and business 
shall accompany each transfer. 

8th. The individuals embraced in class second of this agreement do, each for him- 
self, agree for the consideration hereinafter mentioned to sell, assign, transfer, convey, 
and set over all the property, real and personal, assets and business mentioned and 
embraced in schedules accompanying such sale, and transfer to the Standard Oil 
Company or companies of the proper state or states, as soon as the said corporations 
are organised and ready to receive the same. 

9th. The parties embraced in class third of this agreement do covenant and agree 
to assign and transfer all of the stock held by them in the corporations or limited partner- 
ships herein named, to the trustees herein provided for, for the consideration and upon 
the terms hereinafter set forth. It is understood and agreed that the said trustees 
and their successors may hereafter take the assignment of stocks in the same or similar 
companies upon the terms herein provided, and that whenever and as often as all 
the stocks of any corporations or limited partnerships are vested in said trustees, the 
proper steps may then be taken to have all the moneys, property, real and personal, 
of such corporation or partnership assigned or conveyed to the Standard Oil Company, 
of the proper state, on the terms and in the mode herein set forth, in which event the 
trustees shall receive stocks of the Standard Oil companies, equal to the value of the 
money, property, and business assigned, to be held in place of the stocks of the com- 
pany or companies assigning such property. 

loth. The consideration for the transfer and conveyance of the money, property, 
and business aforesaid to each or any of the Standard Oil companies shall be stock 
of the respective Standard Oil Company to which said transfer or conveyance is made, 

[366] 



APPENDIX, NUMBER LII 

equal at par value to the appraised value of the money, property, and business so 
transferred. Said stock shall be delivered to the trustees hereinafter provided for, 
and their successors, and no stock of any of said companies shall ever be issued except 
for money, property, or business, equal, at least, to the par value of the stock so issued, 
nor shall any stock be issued by any of said companies for any purpose, except to the 
trustees herein provided for, to be held subject to the trusts hereinafter specified. It 
is understood, however, that this provision is not intended to restrict the purchase, 
sale, and exchange of property by said Standard Oil companies as fully as they may 
be authorised to do by their respective charters; provided only that no stock be issued 
therefor except to said trustees. 

nth. The consideration for any stocks delivered to said trustees, as above provided 
for, as well as for stocks delivered to said trustees by persons mentioned or included 
in class third of this agreement, shall be the delivery by said trustees, to the persons 
entitled thereto, of trust certificates hereinafter provided for, equal at par value to the 
par value of the stocks of the said several Standard Oil companies so received by 
said trustees and equal to the appraised value of the stocks of other companies or 
partnerships delivered to said trustees. 

The said appraised value shall be determined in a manner agreed upon by the 
parties in interest and said trustees. 

It is understood and agreed, however, that the said trustees may, with any trust 
funds in their hands, in addition to the mode above provided, purchase the bonds 
and stocks of other companies engaged in business similar or collateral to the business 
of said Standard Oil companies on such terms and in such mode as they may deem 
advisable, and shall hold the same for the benefit of the owners of said trust certificates, 
and may sell, assign, transfer, and pledge such bonds and stocks whenever they may 
deem it advantageous to said trust so to do. 

III. The trusts upon which said stock shall be held, and the number, powers, and 
duties of said trustees shall be as follows : 

1st. The number of trustees shall be nine. 

2d. J. D. Rockefeller, O. H. Payne and William Rockefeller are hereby appointed 
trustees, to hold their office until'the first Wednesday of April, A.D. 1885. 

3d. J. A. Bostwick, H. M. Flagler and W. G. Warden are hereby appointed 
trustees, to hold their office until the first Wednesday of April, A.D. 1884. 

4th. Charles Pratt, Benjamin Brewster and John Archbold are hereby appointed 
trustees, to hold their office until the first Wednesday of April, A.D. 1883. 

5th. Elections for trustees to succeed those herein appointed shall be held annually, 
at which election a sufficient number of trustees shall be elected to fill all vacancies 
occurring either from expiration of the term of the office of trustee or from any other 
cause. All trustees shall be elected to hold their office for three years, except those 

[367] 



THE HISTORY OF THE STANDARD OIL COMPANY 

elected to fill a vacancy arising from any cause except expiration of term, who shall 
be elected for the balance of the term of the trustee whose place they are elected to fill. 
Every trustee shall hold his office until his successor is elected. 

6th. Trustees shall be elected by ballot by the owners of trust certificates or their 
proxies. At all meetings the owners of trust certificates, who may be registered as 
such on the books of the trustees, may vote in person or by proxy, and shall have one 
vote for each and every share of trust certificates standing in their names, but no such 
owner shall be entitled to vote upon any share which has not stood in his name thirty 
days prior to the day appointed for the election. The transfer books may be closed 
for thirty days immediately preceding the annual election. A majority of the shares 
represented at such election shall elect. 

7th. The annual meeting of the owners of said trust certificates for the election of 
trustees, and for other business, shall be held at the office of the trustees in the City 
of New York, on the first Wednesday of April of each year, unless the place of meeting 
be changed by the trustees, and said meeting may be adjourned from day to day until 
its business is completed. Special meetings of the owners of said trust certificates 
may be called by a majority of the trustees, at such times and places as they may appoint. 
It shall also be the duty of the trustees to call a special meeting of holders of trust 
certificates whenever requested to do so by a petition signed by the holders of ten per 
cent, in value of such certificates. The business of such special meetings shall be 
confined to the object specified in the notice given thererfbr. Notice of the time and 
place of all meetings of the owners of trust certificates shall be given by personal notice 
so far as possible, and by public notice in one of the principal newspapers of each 
state in which a Standard Oil Company exists, at least ten days before such meeting. 
At any meeting, a majority in value of the holders of trust certificates represented 
consenting thereto, by-laws may be made, amended, and repealed relative to the mode 
of the election of trustees, and other business of the holders of trust certificates; pro- 
vided, however, that said by-laws shall be in conformity with this agreement. By-laws 
may also be made, amended, and repealed at any meeting, by and with the consent 
of a majority in value of the holders of trust certificates, which alter this agreement 
relative to the number, powers, and duties of the trustees, and to other matters tending 
to the more efficient accomplishment of the objects fof which the trust is created; 
provided only, that the essential intents and purposes of this agreement be not thereby 
changed. 

8th. Whenever a vacancy occurs in the board of trustees, more than sixty days prior 
to the annual meeting for the election of trustees, it shall be the duty of the remaining 
trustees to call a meeting of the owners of Standard Oil Trust certificates for the 
purpose of electing a trustee or trustees to fill the vacancy or vacancies. If any vacancy 
occurs in the board of trustees, from any cause, within sixty days of the date of the 
annual meeting for the election of trustees, the vacancy may be filled by a majority 

[368] 



APPENDIX, NUMBER LII 

of the remaining trustees, or, at their option, may remain vacant until the annual 
election. 

9th. If for any reason at any time a trustee or trustees shall be appointed by any 
court to fill any vacancy or vacancies in said board of trustees, the trustee or trustees 
so appointed shall hold his or their respective office or offices only until a successor or 
successors shall be elected in the manner above provided for. 

loth. Whenever any change shall occur in the board of trustees, the legal title to 
the stock and other property held in trust shall pass to and vest in the successors of 
said trustees without any formal transfer thereof. But if at any such time formal 
transfer shall be deemed necessary or advisable, it shall be the duty of the board of 
trustees to obtain the same, and it shall be the duty of any retiring trustee, or the 
administrator or executor of any deceased trustee, to make said transfer. 

nth. The trustees shall prepare certificates which shall show the interest of each 
beneficiary in said trust and deliver them to the persons properly entitled thereto. 
They shall be divided into shares of the par value of $100 each, and shall be known 
as the Standard Oil Trust certificates, and shall be issued subject to all the terms 
and conditions of this agreement. The trustees shall have power to agree upon and 
direct the form and contents of said certificates and the mode in which they shall be 
signed, attested, and transferred. The certificates shall contain an express stipula- 
tion that the holders thereof shall be bound by the terms of this agreement and by 
the by-laws herein provided for. 

1 2th. No certificates shall be issued except for stocks and bonds held in trust as 
herein provided for, and the par value of certificates issued by said trustees shall be 
equal to the par value of the stocks of said Standard Oil Company and the appraised 
value of other bonds and stocks held in trust. The various bonds, stocks, and moneys 
held under said trust shall be held for all parties in interest jointly, and the trust cer- 
tificates so issued shall be the evidence of the interest held by the several parties in 
this trust. No duplicate certificates shall be issued by the trustees, except upon sur- 
render of the original certificate or certificates for cancellation, or upon satisfactory 
proof of the loss thereof, and in the latter case they shall require a sufficient bond of 
indemnity. 

1 3th. The stocks of the various Standard Oil companies, held in trust by said 
trustees, shall not be sold, assigned, or transferred by said trustees, or by the bene- 
ficiaries, or by both combined, so long as this trust endures. The stocks and bonds 
of other corporations held by said trustees may be by them exchanged or sold and the 
proceeds thereof distributed pro rata to the holders of trust certificates, or said proceeds 
may be held and reinvested by said trustees for the purposes and uses of the trust; 
provided, however, that said trustees may, from time to time, assign such shares of stock 
of said Standard Oil Company as may be necessary to qualify any person or persons 
chosen or to be chosen as directors and officers of any of said Standard Oil companies. 

[369] 



THE HISTORY OF THE STANDARD OIL COMPANY 

1 4th. It shall be the duty of said trustees to receive and safely to keep all interest 
and dividends declared and paid upon any of the said bonds, stocks, and moneys 
held by them in trust, and to distribute all moneys received from such sources or from 
sales of trust property or otherwise by declaring and paying dividends upon the Standard 
Trust certificates as funds accumulate which in their judgment are not needed for 
the use and expenses of said trust. The trustees shall, however, keep separate accounts 
of receipts from interest and dividends, and of receipts from sales or transfers of trust 
property, and in making any distribution of trust funds, in which moneys derived 
from sales or transfers shall be included, shall render the holders of trust certificates 
a statement showing what amount of the fund distributed has been derived from such 
sales or transfers. The said trustees may be also authorised and empowered by a 
vote of a majority in value of holders of trust certificates, whenever stocks or bonds 
have accumulated in their hands from moneys purchases thereof, or the stocks or bonds 
held by them have increased in value, or stock dividends shall have been declared 
by any of the companies whose stocks are held by said trustees, or whenever, from 
any such cause, it is deemed advisable so to do, to increase the amount of trust cer- 
tificates to the extent of such increase or accumulation of values and to divide the 
same among the persons then owning trust certificates pro rata. 

1 5th. It shall be the duty of said trustees to exercise general supervision over the 
affairs of said several Standard Oil companies, and, as far as practicable, over the 
other companies or partnerships, any portion of whose stock is held in said trust. 
It shall be their duty, as stockholders of said companies, to elect as directors and 
officers thereof faithful and competent men. They may elect themselves to such 
positions when they see fit so to do, and shall endeavour to have the affairs of all of 
said companies managed and directed in the manner they may deem most conducive 
to the best interests of the holders of said trust certificates. 

i6th. All the powers of the trustees may be exercised by a majority of their number. 
They may appoint from their own number an executive and other committees. A 
majority of each committee shall exercise all the powers which the trustees may confer 
upon such committee. 

i yth. The trustees may employ and pay all such agents and attorneys as they deem 
necessary in the management of said trust. 

1 8th. Each trustee shall be entitled to a salary for his services not exceeding $25,000 
per annum, except the president of the board, who may be voted a salary not exceeding 
$30,000 per annum, which salaries shall be fixed by said board of trustees. All salaric 
and expenses connected with or growing out of the trust shall be paid by the trustees 
from the trust fund. 

1 9th. The board of trustees shall have its principal office in the City of New Yori 
unless changed by a vote of the trustees, at which office, or in some place of safe deposit 
in said city, the bonds and stocks shall be kept. The trustees shall have power 

[370] 



APPENDIX, NUMBER LII 

adopt rules and regulations pertaining to the meetings of the board, the election of 
officers, and the management of the trust. 

2Oth. The trustees shall render at each annual meeting a statement of the affairs 
of the trust. If a termination of the trust be agreed upon, as hereinafter provided, or 
within a reasonable time prior to its termination by a lapse of time, the trustees shall 
furnish to the holders of trust certificates a true and perfect inventory and appraise- 
ment of all stocks and other property held in trust, and a statement of the financial 
affairs of the various companies whose stocks are held in trust. 

2ist. This trust shall continue during the lives of the survivors and survivor of 
the trustees in this agreement named, and for twenty-one years thereafter: provided, 
however, that if, at anytime after the expiration often years, two-thirds of all the holders 
in value, or if, after the expiration of one year, ninety per cent, of all the holders in 
value of trust certificates, shall, at a meeting of holders of trust certificates called for 
that purpose, vote to terminate this trust at some time to be by them then and there 
fixed, the said trust shall terminate at the date so fixed. If the holders of trust certificates 
shall vote to terminate the trust as aforesaid, they may, at the same meeting, or at a 
subsequent meeting called for that purpose, decide by a vote of two-thirds in value 
of their number the mode in which the affairs of the trust shall be wound up, and 
whether the trust property shall be distributed, or whether it shall be sold and the 
values thereof distributed; or whether part, and, if so, what part, shall be divided and 
what part shall be sold, and whether such sales shall be public or private. 

The trustees, who shall continue to hold their offices for that purpose, shall make 
the distribution in the mode directed; or, if no mode be agreed upon by two-thirds 
in value, as aforesaid, the trustees shall make distribution of the trust property accord- 
ing to law. But said distribution, however made, and whether it be of property or 
values, or of both, shall be just and equitable, and such as to insure to each owner of 
a trust certificate his due proportion of the trust property, or the value thereof. 

22d. If the trust shall be terminated by expiration of the time for which it is created, 
the distribution of the trust property shall be directed and made in the mode above 
provided. 

23d. This agreement, together with the registry of certificates, books of accounts, 
and other books and papers connected with the business of said trust, shall be safely 
kept at the principal office of said trustees. 

BENJ. BREWSTER; JNO. D. ARCHBOLD; J. A. BOSTWICK; CHAS. PRATT; HENRY 
H. ROGERS; H. A. PRATT; C. M. PRATT; D. M. HARKNESS, Trustee, by H. 
M. FLAGLER, Attorney; THOMAS C. BUSHNELL; W. C. ANDREWS, CHAS. F. 
G. HEYE; WILLIAM T. WARDWELL; WM. H. MACY; Estate of JOSIAH MACY, 
JR., WM. H. MACY, JR., Executor; WM. H. MACY, JR.; A. M. MCGREGOR; J. 
N. CAMDEN, by H. M. FLAGLER, Attorney; O. H. PAYNE, by H. M. FLAGLER, 

[371 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Attorney; GEO. F. CHESTER, Trustee; GEO. H. VILAS, Trustee; W. G. WARDEN; 
H. M. FLAGLER; JOHN D. ROCKEFELLER; WM. ROCKEFELLER; J. J. VANDER- 
GRIFT; Mrs. H. M. FLAGLER, by H. M. FLAGLER; A. J. POUCH; O. B. JEN- 
NINGS; D. M. HARKNESS, by H. M. FLAGLER, Attorney; W. P. THOMPSON, by 
H. M. FLAGLER, Attorney; S. V. HARKNESS, by H. M. FLAGLER, Attorney; 
JOHN HUNTINGTON, by H. M. FLAGLER, Attorney; LIDE K. ARTER, by H. M. 
FLAGLER, Attorney; H. M. HANNA and GEO. W. CHAPIN, by H. M. FLAGLER, 
Attorney; LOUISE C. WHEATON, by H. M. FLAGLER, Attorney; O. H. PAYNE, 
Trustee, by H. M. FLAGLER, Attorney; CHAS. LOCKHART; Jos. L. WARDEN, by 
HENRY L. DAVIS, Attorney; JULIA H. YORK, by H. M. FLAGLER, Attorney; H. 
A. HUTCHINS, by H. M. FLAGLER, Attorney; M. R. KEITH, Trustee; D. 
BUSHNELL; WARDEN, FREW and COMPANY; HENRY L. DAVIS. 

Whereas, in and by an agreement dated January 2, 1882, and known as the Standard 
Trust agreement, the parties thereto did mutually covenant and agree inter alia as 
follows, to wit: That corporations to be known as Standard Oil companies of vari- 
ous states should be formed, and that all of the property, real and personal, assets, 
and business of each and all of the corporations and limited partnerships mentioned 
or embraced in class first of said agreement should be transferred to and vested in 
the said several Standard Oil companies; that all of the property, assets, and business 
in or of each particular state should be transferred to and vested in the Standard Oil 
company of that particular state, and the directors and managers of each and all of 
the several corporations and associations mentioned in class first were authorised 
and directed to sell, assign, transfer, and convey, and make over to the Standard Oil 
Company or companies of the proper state or states, as soon as said corporations 
were organised and ready to receive the same, all the property, real and personal, 
assets, and business of said corporations or associations; and 

Whereas, it is not deemed expedient that all of the companies and associations 
mentioned should transfer their property to the said Standard Oil companies at the 
present time, and in case of some companies and associations it may never be deemed 
expedient that the said transfers should be made and said companies and associations 
go out of existence; and 

Whereas, it is deemed advisable that a discretionary power should be vested in 
the trustees as to when such transfer or transfers should take place, if at all. Now, 
it is hereby mutually agreed between the parties to the said trust agreement, and as 
supplementary thereto, that the trustees named in the said agreement and their suc- 
cessors shall have the power and authority to decide what companies shall convey their 
said property as in said agreement contemplated, and when the said sales and transfers 
shall take place, if at all; and until said trustees shall so decide, each of said companies 
shall remain in existence and retain its property and business, and the trustees shall 

[372] 



APPENDIX, NUMBER LII 

hold the stocks thereof in trust as in said agreement provided. In the exercise of said 
discretion, the trustees shall act by a majority of their number as provided in said 
trust agreement. All portions of said trust agreement relating to this subject shall 
be considered so changed as to be in harmony with this supplemental agreement. 

In Witness Whereof, the said parties have subscribed this agreement, this fourth 
day of January, 1882. 

BENJAMIN BREWSTER; JOHN D. ARCHBOLD; J. A. BOSTWICK; CHARLES PRATT; 
HENRY H. ROGERS; H. A. PRATT; C. M. PRATT; D. M. HARKNESS, Trustee; 
D. M. HARKNESS; T. C. BUSHNELL; W. C. ANDREWS; CHARLES F. G. HEYE; 
WILLIAM T. WARDWELL; WILLIAM H. MACY; Estate of JOSIAH MACY, JR., 
WILLIAM H. MACY, JR., Executor; WILLIAM H. MACY, JR.; A. M. MCGREGOR; 
J. N. CAMDEN; JULIA H. YORK, by B. H. Y.; O. H. PAYNE; GEORGE F. 
CHESTER, Trustee; M. R. KEITH, Trustee; H. M. FLAGLER; JOHN D. ROCKE- 
FELLER; WILLIAM ROCKEFELLER; J. J. VANDERGRIFT; Mrs. H. M. FLAGLER; 
by H. M. FLAGLER; A. J. POUCH; O. B. JENNINGS; W. O. THOMPSON; S. V. 
HARKNESS; JOHN HUNTINGTON; LIDE K. ARTER; H. M. HANNA; GEORGE W. 
CHAPIN, H. M. HANNA, Attorney in Fact; LOUISE C. WHEATON, by H. M. FLAGLER; 
O. H. PAYNE, Trustee; CHARLES LOCKHART; JOSEPH L. WARDEN; HENRY L. 
DAVIS; W. G. WARDEN; WARDEN, FREW and COMPANY; D. BUSHNELL; H. A. 
HUTCHINS; GEORGE H. VILAS, Trustee. 



[373] 



NUMBER 53 (See page 153) 

LIST OF CONSTITUENT COMPANIES OF THE STANDARD OIL 
TRUST, WITH ASSETS AND CAPITALISATION IN 1892 

[From History of Standard Oil Case in the Supreme Court of Ohio, 1897-1898. 
Part I, page 112.] 



Anglo-American Oil Co., Limited 


ASSETS 
#6,913,639.49 


CAPITALISATION 
#5,OOO,OOO 


Atlantic Refining Co 


8,631,376.67 


5,OOO,OOO 


Buckeye Pipe Line Co 


7,941,038.15 


IO,OOO,OOO 


Eureka Pipe Line Co 


i,547>55-i6 


5,OOO,OOO 


Forest Oil Co 


3,528,813.11 


5,500,000 


Indiana Pipe Line Co 


2,014,053.91 


I,OOO,OOO 


National Transit Co 


25,796,712.97 


25,455.200 


New York Transit Co 


4,999,300.00 


5,OOO,OOO 


Northern Pipe Line Co 


707,067.00 


1,000,000 


Northwestern Ohio Natural Gas Co 


1,396,760.00 


3,278,500 


Ohio Oil Co 


8,260,378.04 


2,OOO,OOO 


Solar Refining Co 


7ii>793-87 


5OO,OOO 


Southern Pipe Line Co 


3,279,018.28 


5,OOO,OOO 


South Penn. Oil Co 


3,021,654.87 


2,500,OOO 


Standard Oil Co., Indiana 


1,038,518.61 


I,OOO,OOO 


Standard Oil Co., Kentucky 


3,604,800.78 


1,000,000 


Standard Oil Co., New Jersey 


i4,9 8 3943 -3 


IO,OOO,OOO 


Standard Oil Co., New York 


16,772,186.29 


7,OOO,000 


Standard Oil Co., Ohio 


3,426,014.72 


3,500,000 


Union Tank Line Co 


3,057,187.41 


3,500,000 



#121,631,312.63 

Capitalisation twenty corporations 102,233,700.00 

Excess of assets over capitalisation #19,397,612.63 



[374] 



NUMBER 54 (See page 154) 

FORMS OF MR. ROCKEFELLER'S CERTIFICATE OF HOLDINGS 

IN THE STANDARD OIL TRUST, WITH ASSIGNMENT OF 

LEGAL TITLE WHICH TOOK ITS PLACE IN 1892 

[From History of Standard Oil Case in the Supreme Court of Ohio, 1897-1898. 
Part II, pages 53-56.] 

KNOW ALL MEN BY THESE PRESENTS 

That we, John D. Rockefeller, Henry M. Flagler, William Rockefeller, John D. 
Archbold, Benjamin Brewster, Henry H. Rogers, Wesley H. Tilford, and O. B. Jen- 
nings, Trustees, for winding up the Standard Oil Trust, by W. H. Tilford, our Attorney 

in Fact, and John D. Rockefeller, of , do hereby constitute and 

appoint John Bensinger, of New York City, our true and lawful attorney for the 
purposes following, to wit: 

Whereas, John D. Rockefeller has placed in the hands of said attorney assign- 
ment Number A 365 for 25 2 ' ^ of the amount of corporate shares held by said trustees 
on the first day of July, 1892, in each of the companies whose stocks were so held. 

Now the said attorney is hereby authorised to secure from each of said companies 
transfer upon their corporate books of said stock and stock certificates for whole shares, 
and scrip for fractional shares thereof, and when the said certificates and scrip are 
received from all the companies referred to, the said attorney shall deliver the same to 
John D. Rockefeller, and the said assignment Number A 365 shall at the same time 
be delivered to the said trustees. 

And the said attorney hereby agrees to obtain the said certificates and scrip and 
to deliver the same and the said assignment as above specified. 
(Signed in print) JOHN D. ROCKEFELLER, 
HENRY M. FLAGLER, 
WILLIAM ROCKEFELLER, 
JOHN D. ARCHBOLD, 
BENJAMIN BREWSTER, 
HENRY H. ROGERS, 
O. B. JENNINGS, 
WESLEY H. TILFORD. 
(Signed in ink) W. H. TILFORD, Attorney in Fact, 

JOHN D. ROCKEFELLER, per GEO. D. ROGERS, 
JOHN BENSINGER. 

[375 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 

Received from John Bensinger, Attorney aforesaid, stock certificates and scrip as 
follows, being in full satisfaction of Assignment Certificate No. A 365 aforesaid: 



NAMES OF COMPANIES 



Anglo-American Oil Co., Limited 6867 465-9725 

The Atlantic Refining Co 13205 ^375~97 2 5 

The Buckeye Pipe Line Co 52823 4325-9725 

The Eureka Pipe Line Co 13205 8375-9725 

Forest Oil Co 14526 435~9725 

Indiana Pipe Line Co 5282 335~9725 

National Transit Co 134463 131316-9725 

New York Transit Co 13205 8375-9725 

Northern Pipe Line Co 2641 1675-9725 

Northwestern Ohio Natural Gas Co 8659 80890-9725 

The Ohio Oil Co 21 129 3675-9725 

The Solar Refining Co 1320 57-9725 

Southern Pipe Line Co 13205 8375-9725 

South Penn. Oil Co 6602 9056-9725 

Standard Oil Co., Indiana 2641 1675-9725 

Standard Oil Co., Kentucky 2641 1675-9725 

Standard Oil Co., New Jersey 2641 1 7025-9725 

Standard Oil Co., New York 18488 2000-9725 

Standard Oil Co., Ohio 9244 1000-9725 

Union Tank Line Co 9244 1000-9725 

(Signed in ink) JOHN D. ROCKEFELLER, 
Per GEO. D. ROGERS. 

Received of John Bensinger, Attorney, Assignment Certificate, Number 

(Signed in ink) JOHN D. ROCKEFELLER, 
WILLIAM ROCKEFELLER, 
BENJAMIN BREWSTER, 
WESLEY H. TILFORD, 
HENRY M. FLAGLER, 
JOHN D. ARCH BOLD, 
HENRY H. ROGERS, 
O. B. JENNINGS. 

By , Attorney in Fact. 

11-3-92. 

Number A 365. JOHN D. ROCKEFELLER. 

Received from trustees to liquidate the Standard Oil Trust assignment of legal 

title to 2S ' 54 of the amount of corporate stocks held by them in each of the cor- 

972,500 * 

porations whose stocks were so held on July i, 1892, and I do hereby authorise and 
direct the said trustees, or the survivor or survivors of them, to receive from the re- 
spective companies and to pay over to me or my assigns the dividends upon the stocks 

[376] 



APPENDIX, NUMBER LIV 

so assigned, and actual transfer thereof is recorded upon the books of the respective 
corporations. 

(Signed) JOHN D. ROCKEFELLER, 

Per GEO. D. ROGERS. 

There is pasted to this stub the original assignment of legal title for the transfer of 
Mr. Rockefeller's trust certificates into corporate stock of the respective companies. 
This has been returned and marked "cancelled" and attached to the original stub, 
and is as follows: 

Number A 365. 

STANDARD OIL TRUST COMPANY 

Assignment of Legal Title to Stocks Heretofore Represented by 256,854 shares. 

Whereas, John D. Rockefeller is the owner of the equitable title to ? 56 ' 854 of 

* 972,500 

the amount of corporate stocks held by the trustees of the Standard Oil Trust in each 
of the several corporations whose stocks were held by said trust on the first day of 
July, A.D. 1892, which equitable ownership was represented by 256,854 shares of 
Standard Oil Trust surrendered for cancellation. Now, we, the trustees in whose 
names the legal title to said stock stands, do hereby assign and transfer to John D. 
Rockefeller and his assigns the legal title to the aforesaid amount of the said stocks 
and authorise the proper officers of the several corporations to transfer upon their 
books and to issue corporate certificates for the required amount of their respective 
capital stocks upon presentation and cancellation of this assignment. The several 
corporations will issue stock certificates for whole shares and scrip for fractions of 
shares and upon presentation of fractional share scrip sufficient for the purpose, certifi- 
cates for whole shares will be issued. When transfer of stock upon the corporate 
books is desired by virtue of this assignment, it must be placed in the hands of an 
attorney in fact, both for the assignee and the undersigned trustees, and said attorney 
shall first obtain the proper certificates and scrip from all the several companies, and 
thereupon shall deliver the certificates to the trustees and the stock certificates and 
scrip to the party or parties entitled thereto. 

(Signed in print) JOHN D. ROCKEFELLER, 
WILLIAM ROCKEFELLER, 
HENRY M. FLAGLER, 
JOHN D. ARCHBOLD, 
BENJAMIN BREWSTER, 
HENRY H. ROGERS, 
WESLEY H. TILFORD, 
O. B. JENNINGS, Trustees. 
(Signed in writing) H. M. FLAGLER, Secretary. 

W. H. TILFORD, Attorney in Fact- 

[ 377 ] 



THE HISTORY OF THE STANDARD OIL COMPANY 
On the left-hand corner of this same certificate this indorsement appears : 
Cancelled November 7, 1892. Transfer Number 4833. Certificate issued. 

There appears on the back of this assignment of legal title the following: 

For value received, I hereby assign the corporate stocks mentioned or referred 

to in the within assignment, and authorise their transfer upon the respective corporate 

books to myself or my heirs. 

(Signed in writing) JOHN D. ROCKEFELLER. 



[378] 



NUMBER 55 (See page 160) 

AGREEMENT OF 1887 BETWEEN THE STANDARD OIL COMPANY 

AND PRODUCERS 

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 
3,112, pages 69-70.] 

Memorandum of agreement, made this first day of November, 1887, between the 
Standard Oil Company of New York and the following-named persons, partnerships, 
and corporations, producers of crude petroleum, Thomas W. Phillips and others, 
whose names will be found in the schedule hereto attached and made part of this 
agreement, as follows: 

Whereas, there has accumulated in past years an excessive stock of crude petroleum, 
which is deteriorating in quality, and a portion of which each year becomes sediment, 
valueless for any purpose, and the carrying of which excessive stock requires the 
expenditure of vast sums annually; and 

Whereas, in consequence of the existence of said stock the price of crude petroleum 
has for the past year been largely below the cost at which the same was produced; now, 
in order as far as possible to preserve the said stock from further waste, and to con- 
serve the public interest and our own, this agreement witnesseth: 

That the Standard Oil Company of New York will set apart at sixty-two cents per 
barrel, and hold for the use of the above-named producers and those who shall here- 
after become parties to this agreement, as hereinafter provided, 5,000,000 barrels of 
merchantable crude petroleum, of forty-two gallons each, to be sold and disposed of 
in the manner hereinafter provided. The said 5,000,000 barrels of petroleum to be 
subject, until sold by the said producers, to the usual assessments, storage charges, 
and interest upon the same, as also interest on the price of said petroleum, at sixty- 
two cents per barrel; said assessments, charges, and interest to be added to the price 
aforesaid. 

In consideration of which the above-named producers agree to limit their production 
of petroleum, that for the year next ensuing from this date, they or any number of 
them shall, for said year, collectively produce at least 17,500 barrels of crude petroleum 
less per day than they or any number of them collectively produced per day for the 
months of July and August, 1887, and that they will use every reasonable endeavour 
to control their production so that the same shall be in the aggregate 30,000 barrels 
less per day than it was during the said period of July and August, 1887. 

[379] 



THE HISTORY OF THE STANDARD OIL COMPANY 

If at the end of three months from the date hereof the said reduction of 17,500 
barrels per day shall be attained, to be measured by taking the average production 
of the above-named producers for the months of December and January next, and 
comparing the same with their average production for the months of July and August, 
1887, a statement of the same being hereto attached and made part of this agreement, 
then the said 5,000,000 barrels of petroleum shall be delivered as fast as the same 
shall be sold by, upon the order, and for the account of said producers through their 
executive committee appointed by agreement between themselves, and hereinafter 
named, to be paid for with interest and storage as delivered; that the profits aforesaid 
upon said 5,000,000 barrels of petroleum as sold, in accordance with the provisions 
of this agreement, shall, by said Standard Oil Company and said producers' executive 
committee, be deposited with the United States Trust Company in New York City, 
until the expiration of one year from the date hereof, in trust, in accordance 
with and subject to the provisions of this agreement; and in case the above-named 
producers or any number of them shall not have lessened their production 
17,500 barrels per day for said year as aforesaid, then all of said profits upon 
said 5,000,000 barrels of petroleum shall belong and be paid to the Standard Oil 
Company of New York; and in case the said above-named producers or any number 
of them collectively shall have lessened their production 17,500 barrels per day for 
the said year as aforesaid, then the entire profits aforesaid upon the 5,000,000 barrels 
of petroleum shall be paid to said producers' executive committee, to be by it distributed 
in accordance with agreements between themselves to such of said producers as have 
fulfilled the terms of this agreement, and all agreements between themselves relating 
to such distributions. 

The said producers are guaranteed by said Standard Oil Company of New York 
against loss within said year upon said 5,000,000 barrels of petroleum. The lessening 
of 17,500 barrels per day above provided shall embrace and include any reduction 
or lessening of production by producers who shall sign contracts not to use means 
to increase their production by drilling or otherwise. 

Producers may become parties to this agreement within the year the contract is to 
operate by signing the agreement between producers authorising the executive 
committee to sign this contract on their behalf, and having their names added hereto 
as parties by said executive committee. 

The following-named persons constitute the executive committee above referred 
to, to wit: 

(Names omitted by consent of the chairman.) 



NUMBER 56 (See page 187) 

JOHN D. ARCHBOLD'S STATEMENT TO THE INDUSTRIAL COM- 
MISSION CONCERNING THE STANDARD'S OPPOSITION TO 
THE BUILDING OF THE UNITED STATES PIPE LINE 

[Report of the Industrial Commission, 1900. Volume I, page 529.] 

Mr. Lee makes a statement regarding the difficulty of his pipe-line, the United 
States Pipe Line, in crossing railroads and securing right of way to the seaboard, 
and makes a general statement implying that we have instituted and carried out great 
obstruction to their progress. I want to make general denial of this statement. We 
have not at any time had any different relations with reference to any obstruction 
or effort at obstruction of their line than would attach to any competitor in a line of 
business engaging against another. With reference to the special features referred 
to by Mr. Lee, and which he attempts, by implication at any rate, to connect us with, 
in the crossing of the Delaware and Lackawanna Railroad in New Jersey, I want to 
say that the contention in that respect was entirely at the hands of the railroad, and 
not at our hands in any possible respect. They went there surreptitiously and en- 
deavoured to force their way, on a Sunday, over a line where they had no right, either 
by private purchase or by public franchise. Having accomplished the crossing of the 
road in that surreptitious way, they stationed there an armed force to prevent the 
railroad company from asserting its rights and taking out their lines, and kept that 
force there for a long period. The railroad went about it in a peaceful way, in the 
courts, and the final result is that the decision is against the line, after the case has 
been carried up finally to the supreme court of the state, and they must, of course, 
remove their line. But any statement on Mr. Lee's part, or any other witness, that 
we had anything to do with that matter, or with reference to any of the difficulties 
interposed in their progress to the seaboard, is absolutely false. 

By Mr. Phillips. 

Q. Did your company own in fee simple the tract of ground, and was a roadway 
reserved by the landholder ? Was that purchased by them ? 

A . It was not my case, and I am not conversant with the details regarding it. The 
fact that, after having been fought in the newspapers and in the courts for a term of 
years, seeking the sympathy of the judges as well as the public, the supreme court of 
the state has ruled against them, is the best evidence, I think, that the right was against 

[381] 



THE HISTORY OF THE STANDARD OIL COMPANY 

them. I want to say with reference to our pipe lines, that we never endeavoured to 
cross any man's right of way without first seeing him about it. 

Q. Still, did they not go through the railroad on their own ground, and was not this 
the final decision, that they had not the right to lay a pipe line where a man had re- 
served a right of way under the ground ? 

A. It was not only decided that they had no right there, but they were ordered to 
remove. 



[382] 



NUMBER 57 (See page 194) 

TABLES OF YEARLY AVERAGE PRICES OF CRUDE AND REFINED 

[All quotations up to 1899 are from the Oil City Derrick; all quotations for 1900- 
1903 are from the New York Commercial.] 

TABLE OF YEARLY AVERAGE PRICE OF CRUDE 

In the following table is presented the highest and lowest price of oil, the months 
in which these quotations occurred, and the general average for each year. The 
"average" as estimated is usually the mean price between the highest and lowest 
quotation of a given time. It is sufficiently accurate for general purposes of compari- 
son. It would be an almost impossible task to determine a "true average" from the 
reports of the daily sales that are now on record. Previous to 1875 the quotations are 
given for points along Oil Creek, and they hardly represent what the producer actually 
realised for oil at the wells. From 1875 onward the trading in oil was placed on a more 
satisfactory basis by the general adoption of pipe-line certificates, and the exchange 
quotations show very closely the value of the oil at the wells. When the certificate 
was finally purchased by the refiner, it was subject to a uniform charge for pipage 
of the oil from the wells to the nearest shipping point. 



YEAR 


Highest 
Month 


Price 


Lowest 
Month 


Price 


Average 


YEAR 


Highest 
Month 


Price 


Lowest 
Month 


Price 


Average 


1859 


Sept. 


$2O.OO 


Dec. 


&20.00 


820 . oo 


1882 


Nov. 


'37 


July 


$0.49! 


$0.784 


1860 


Jan. 


2O.OO 


Dec. 


2.OO 


9.60 


I88 3 


June 


1.24! 


Jan. 


.831 


1-05* 


1861 


Jan. 


i-75 


Dec. 


.10 


52 


1884 


Jan. 


1.15! 


June 


.511 


.3l 


1862 


Dec. 


2.50 


Jan. 


.10 


1.05 


1885 


Oct. 


I.I2| 


Jan. 


.68 


.88| 


1863 


Dec. 


4.00 


Jan. 


2.00 


3-15 


1886 


Jan. 


.92! 


Aug. 


59* 


7H 


1864 


July 


14.00 


Feb. 


3-75 


8.15 j 


1887 


Dec. 


.90 


July 


54 


.66| 


1865 


Jan. 


IO.OO 


Aug. 


4.00 


6-59 


1888 


Mar. 


I .OO 


June 


.71! 


.87 


1866 


Jan. 


5-5 


Dec. 


i-35 


3-75 


l889 


Nov. 


I.I24 


April 


79* 


94* 


1867 


Oct. 


4.00 


June 


1.50 


2.40 


l890 


Jan. 


I.07I 


Dec. 


.6oJ 


86| 


1868 


July 


5-75 


Jan. 


1.70 


3-24 ; 


l89I 


Feb. 


.8if 


Aug. 


5 


.66t 


1869 


Jan. 


7.00 


Dec. 


4-25 


5.60 


1892 


Jan. 


.64* 


Oct. 


.50 


55* 


1870 


Jan. 


4-9 


Aug. 


2.75 


3-9 


1893 


Dec. 


.80 


Jan. 


52* 


.64 


1871 


June 


5-25 


Jan. 


3-25 


4.40 


1894 


Dec. 


951 


Jan. 


.78* 


83! 


1872 


Oct. 


4-55 


Dec. 


2.674 


3-75 


I8 95 


April 


2.60 


Jan. 


951 


i-35l 


1873 


Jan. 


2.75 


Nov. 


.824 


i. 80 


1896 


Jan. 


1.50 


Dec. 


.90 


1.19 


1874 


Feb. 


2.25 


Nov. 


.624 


1.15 


l8 97 


Mar. 


.96 


Oct. 


65 


.78! 


1875 


Feb. 


I.82i 


Jan. 


75 


1.24! 


1898 


Dec. 


1.19 


Jan. 


.65 


.91* 


1876 


Dec. 


4-23! 


Jan. 


i-47i 


2-571 


1899 


Dec. 


1.66 


Feb. 


'3 


1.29! 


1877 


Jan. 


3-69! 


June 


i-53i 


2-391 


1900 


Mar. 


1.68 


Nov. 


.07 


i-35l 


1878 


Feb. 


1.87* 


Sept. 


.78! 


1.17* 


1901 


Nov. 


1.30 


June 


05 


I.2lfr 


1879 


Dec. 


1.28! 


June 


.63* 


-8 5 f 


I9O2 


Dec. 


1.444 


Mar. 


1 5 


1.23 


1880 


June 


1.24$ 


April 


.71! 


94* 


1903 


Dec. 


1.88 


Mar. 


5 


1.58* 


1881 


Sept. 


I. Oil 


July 


.72* 


.85! 















[383] 



THE HISTORY OF THE STANDARD OIL COMPANY 



TABLE OF YEARLY AND MONTHLY AVERAGE PRICE OF REFINED 

In the following table is given the average monthly and yearly prices of refined oil 
per gallon, in barrels, in New York, from January, 1863, to December, 1903. During 
the years when a tax was levied on this article of domestic production the quotations 
do not include the tax: 





1863 


1864 


1865 


1866 


1867 


1868 


1869 


1870 


1871 


1872 


Jan . . 
a " 


.4.0 


.46! 


.70 


C7l 


.31 


.24* 


.74! 


.7I| 


24f 


22{ 


Feb 


.38! 


47i 


.67! 


48? 


.281 


.2? 


36| 


.29t 


.2<i 


.21} 


March 


.74} 


.4.0* 


.<$} 


.4l| 


.27* 


.2?J 


.72* 


.27 


.24J 


.221 


April 


.7.7,1 


.C4l 


.C 2 1 


40 1 


.27 


.261 


.321 


.26* 


.231 


21* 


May 


.30$ 


. SQ4 


.cii 


.4.3 


.26J 


.20$ 


.71* 


.27* 


,24| 


23| 


June 


.444 


.72 


.cii 


.41! 


.24? 


.7l| 


.31 


.27 


.2<J 


.23 


July . . 


4.0 


86t 


i 


TO* 


3Ol 


74! 


32l 


26 


. 2 <Cj 


221 


J U 'J 
Aug. . 


.C74 


.84! 


. ?2 


4-4.4 


20l 


.33 


.72* 


.2< 


.24f 


.221 


Sept 


Cg 


.7^ 


c8l 


4-4.4 


3lf 


31 


32! 


26t 


.24* 


,24-i 


Oct 


.cz4 


.63} 


.61} 


4O$ 


O 1 * 

.74* 


.30 


.32! 


.24| 


.23j 


?6 


Nov 


4.1 1 


70 


62! 


3<tf 


274 


. 3Oi 


34. 


.23 


.221 


.27 


Dec 


.46* 


.72} 


.6<1 


.7,11 


.24* 


.321 


3ii 


.23 


.23 


?fi 
























Yearly average. . . 


44f 


.64* 


581 


.42* 


.28f 


29* 


32i 


.261 


241 


23ft 





1873 


1874 


1875 


1876 


1877 


1878 


1879 


1880 


1881 


1882 


Jan . . 
* 


22i 


13* 


I2l 


I4i 


24. 


I2t 




71 


Ql 


7 


Feb 


.io| 


. 1^ 


14 


I4l 


.18! 


I2l 


of 


7i 


9l 


7f 


March 


. 10 


14! 


ir 


U* 


16 


.lift 


ql 


7} 


8i 


7f 


April 


.20 


.icf 


17,1 




.icf 


.Ilf 


qi 


7f 


7l 


7i 


May 


.iol 


I3i 


12} 


.14! 


14*. 


.III 


8* 


7f 


8 


7i 


June 


IO 


I2l 


T2 


U J 


13} 


III 


7i 


of 


84 


74 


July . . 


.i8i 


I2t 


ii* 


.16! 


I3t 


.I0f 


6| 


nl 


7! 


61 


Aue. . 


16* 


IlJ 


ni 


.IQi 


I3l 


iol 


6* 




7l 


61 


Sept 


i6i 


I2i 


12} 


26 


14-i 


iol 


61 


10* 


8 


74 


Oct 


.16! 


.III 


I4t 


.26 


14* 


Qi 


7i 


12 


7f 


8 


Nov 


I4i 


IOJ 


13 


261 


I3l 


Qi 


8 


zoi 


7! 


81 


Dec . . . 


134 


III 


*O 

12} 


2Q* 


^o* 
I3t 


8| 


81 


ql 




7* 




^o* 






*y 


l J5 






V 






Yearly average. . . 


.18! 


13 


13 


I9t 


IS* 


.IOJ 


Bi 


9* 


8 


7i 



[384] 



APPENDIX, NUMBER LVII 





1883 


1884 


1885 


1886 


1887 


1888 


1889 


1890 


1891 


1892 


Jan 


7i 


Of 


7f 


7l 


6} 


74 




- 1 




6. _ 


Feb 


7l 


9i 


71 


/* 

74 


65 


7* 
7} 


7 

Tl 


74 

Tl 


7-42 

7.0 


45 


March 


8 


84 


8 


7l 


62 


7* 

74 


7s 


74 
i 


40 


6.42 


April 


81 


8f 


7i 


7$ 


6? 


7* 

7i 


fix 


71 

Tl 


7-3 1 

7 18 


6.32 


May 


7* 


8* 


7l 


7l 


61 


/s 

7l 


s 
fix 


7i 
~i 


7-I8 


ft nft 


June 


8 


8 A 


8 


7l 


62 


7' 
7* 


S 

fix 


71 

-i 


7-20 




July . . 


7i 


7l 


81 


7 


61 


7 

7 1 


5 

Tl 


7* 

7! 


7-13 




Aup. . 


7i 


8 


8f 


6| 


64 


/* 

7ft 


7* 

74 


7t 

-i 




ft nX 


5 lu & 
Sept . . 


8* 


7t 


8f 


61 


6} 


/S 

7} 


7* 

7i 


7t 

T3 


fi J- 




Oct 


81 


71 


84 


6* 


6i 


/* 

7$ 


/ 

7l 


7s 

-,1 


fi if 




Nov .... 


8f 


71 


84 


61 


7 


/ 
7! 


7t 

7* 


7' 

-.1 


0-45 


c 80 


Dec 


94 


7f 


8 


fji 


/ 
7i 


/* 
7l 


7 

7 i 


7' 

74 


ft A 
















/* 


/' 


7* 


0-44 


45 


Yearly average ... 


8J 


81 


8i 


71 


61 


7* 


7 


71 


6-93 


6.07 





1893 


1894 


1895 


1896 


1897 


1898 


1899 


1900 


1901 


1902 


1903 


Tan.. 


C.27 


C.IC 


C.87 


7 8c 


6 17 


C AO 


7 4.7 


9 no 


7 C8 




8 IT 


Feb 


C.7O 


C.IC 


6.00 


7.7C 


6 26 


J 1- <J 
C 48 


/ -Tj 

7 4.O 


V" 

9 no 


7-5 

7 8l 


.20 
7 in 


2 7 

8 in 


March 
April 
May 


5-34 
5-52 

1.2O 


5 i5 
5-i5 

C 1C 


6.75 

9.12 

8.20 


7.40 

7.00 
6 7C 


6.36 
6.13 

6 21 


5.82 
5.67 

6 oo 


/ *W 

7-33 
7-05 

7 OI 


.yu 

9.90 
9.51 

8 98 


/ - 01 
8.00 
7.68 
7m 


{J 
7-20 

7-30 
7 An 


8.21 

8-35 
e A7 


June 
July . . 


5-21 
C.ic 


5-15 

C 1C 


7.83 

7.6c 


6.85 
6 cc 


6. 14 

c 8? 


6.16 

6 27 


/ - ul 
7-20 
7 6l 


7.88 

7 OO 


6.90 
7 1C 


4 U 
7.40 
7 AO 


0.47 

8-55 
8 cc 


Aug. . 


c.i8 


5 Jf 

C.IC 


7.10 


6.6c 


C.7C 


6 44. 


7 82 


/ -y 

8 05 


/ X J 
7 CO 


/ -4 U 
7 21 


-55 
8 cc 


Sept . . 


c. i^ 


C 1C 


7. IO 


6 8c 


C 74. 


6 60 


8 63 


7 08 


/ O" 

7 CO 


/ * 1 

7 20 


O3 

8 cc 


Oct 


s. i< 


C I C 


7 IO 


6 90 


C CC 


7 21 


9 oo 


7 4.8 


/ j" 

^ 6c 


/ 4U 
7 26 


- j> 

O OI 


Nov 


C.IC 


C 1C 


7.88 


7. 1C 


C 4.O 


7 3C 


4.O 


7 7.3 


/ - u j 

7 6c 


/ *" 

7 71 


976 


Dec 


5-15 


5.61 


7-77 


6.35 


5-40 


7.40 


9.85 


7.28 


7-43 


8.12 


y* 

9-45 


Yearly 
average.. 


5-24 


5.19 


7-36 


6.98 


5-91 


6.32 


7.98 


8.50 


7-49 


7.38 


8.62 



NOTE. In the above tables the quotations down to 1890, inclusive, are noted 
in cents and fractional parts of a cent; from 1891 to 1903 the prices are given in cent 8 
and decimal parts of a cent, i.e., 7.42 signifies seven and forty-two hundredths cents, 
and 9! means nine and three eighths cents per gallon. The above are New York quota- 
tions in barrels; bulk oil is generally 2-5OC. below these prices. Philadelphia and 
Baltimore quotations are five points below New York; for instance, if New York 
price was 5-75c., the Philadelphia and Baltimore price would be 5.70 c. 

[385] 



JOHN D. ARCHBOLD'S STATEMENT ON THE PRICES THE 
STANDARD RECEIVES FOR REFINED OIL 

[Report of the Industrial Commission, 1900. Volume I, pages 569-570.] 

Q. Now, the general result then is this: By virtue of your greater power you are 
enabled to secure prices that on the whole could be considered steadily somewhat 
above competitive rates ? 

A. Well, I hope so. I think we have better merchandising facilities, better marketing 
facilities, better distributing facilities, and better talent than a competitor can have. 

Q. I am not asking with reference to your power of making profits, but it is with 
reference to getting the prices from the consumer. 

A. Prices are what make the profit. If we had a better average price, we could 
get a better profit. 

Q. You think, generally speaking, that you get prices for oil slightly above com- 
petitive prices ? 

A. Well, I should think so; I could not answer that is a very general question, and 
very difficult to answer. I could not answer that specifically. I hope that we do. 

Q. Of course, in this investigation, we are seeing if we can get some general prin- 
ciples on which legislation might be based, and these questions are to bring out, if 
we can, the power that so great an organisation has in fixing prices. Would you say, 
then, that in the case of an organisation that controls perhaps eighty per cent, of the 
markets of the country, there is a monopolistic element that enters in which enables 
them to hold prices above the regular rate ? Is there a monopolistic power that comes 
merely from the power of capital itself? 

A. Undoubtedly, there is an ability, and when that ability, as I have said, is unwisely 
used, it is sure to bring its own defeat. 

Q. If that ability goes to get an exorbitant price, of course it will invite competition, 
but when that ability is kept within modest limits, would you still say that it was in 
the power of such an organisation to get the benefit of the monopolistic power that 
comes merely from the power of capital itself ? 

A. Well, I should say that that would be a very restricted power, a very restricted 
limit. The competitors in this country are very active. 

[386] 



APPENDIX, NUMBER LVIII 

Q. What ? 

A. The competitors are very active; they are alert at all points with their small 
offerings in the hope to find just such a condition as you describe. 

Q. Certainly. 

A . But as I say, as business is and as it has been for many years, we could not have 
that ability to any considerable extent as merchants. 

Q. If the ability were operative only to a slight extent, would it still be enough, do 
you think, to make a difference between what we may call a moderate dividend, say 
6 or 7 per cent., and a pretty high dividend of between 15 and 20 per cent. ? 

A. Well, that involves so nice a question that I could hardly undertake to answer 
it; but generally as to the effect on the community, I should say 

Q. Generally on the prices in the United States ? 

A. I should say that the lessened cost incident to doing business in a large volume 
would more than compensate the consumer for any ability in getting higher prices. 

Q. Then that leads to this point, whether the large capital does itself give an organisa- 
tion the power to get a somewhat higher price than it could in the market provided the 
competitors were substantially equal in power ? 

A. Oh, it may be so, but that is a difficult question to answer. 



[387] 



W. H. VANDERBILT'S CHARACTERISATION OF STANDARD OIL 

MEN 

[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume 
II, pages 1668-1669.] 

Q. Can you attribute, or do you attribute, in your own mind, the fact of there 
being one refiner instead of fifty, now, to any other cause except the larger capital of 
the Standard Oil Company ? 

A. There are a great many causes; it is not from their capital alone that they have 
built up this business; there is no question about it but that these men and if you 
come in contact with them I guess you will come to the same conclusion I have long 
ago I think they are smarter fellows than I am, a good deal; they are very enterprising 
and smart men; never came in contact with any class of men as smart and able as 
they are in their business, and I think a great deal is to be attributed to that. 

Q. Would that alone monopolise a business of that sort ? 

A. It would go a great way toward building it up; they never could have got in 
the position they are in now without a great deal of ability, and one man would hardly 
have been able to do it; it is a combination of men. 

Q. Wasn't it a combination that embraced the smart men in the railways, as well 
as the smart men in the Standard Company ? 

A. I think these gentlemen from their shrewdness have been able to take advantage 
of the competition that existed between the railroads for their business, as it grew, and 
that they have availed themselves of that there is not a question of doubt. 

Q. Don't you think they have also been able to make their affiliations with railroad 
companies and railroad officers ? 

A. I have not heard it charged that any railway official has any interest in any of 
their companies, only what I used to see in the papers some years ago, that I had an 
interest in it. 

Q. Your interest in your railway is so large a one that nobody would conceive, as 
a matter of personal interest, that you would have an interest antagonistic to your road ? 

A. When they came to do business with us in any magnitude; that is the reason I 
disposed of my interest. 

Q. And that is the only way you can account for the enormous monopoly that has 
thus grown up? 

A. Yes; they are very shrewd men; I don't believe that by any legislative enactment 
or anything else through any of the states or all of the states, you can keep such men 
as them down; you can't do it; they will be on top all the time; you see if they are not. 

Q. You think they get on top of the railways ? 

A. Yes; and on top of everybody that comes in contact with them; too smart for me. 

[388] 



NUMBER 60 (See page 259) 

FACSIMILE OF ONE OF MR. KEMPER'S SHARES 

[From History of Standard Oil Case in Supreme Court of Ohio, 1897-1898. 
Part II, page 271.] 
No. S. II 

H;H^ Incorporated under the laws of the Whole Shares 

of one share. State of Pennsylvania. $50 each. 

NATIONAL TRANSIT COMPANY 

This certifies that J. L. Kemper is the owner of Five Hundred Nine Thousand 
One Hundred and Four 972,500^5 of one share of stock in the National Transit 
Company. The holder or assignee of this Scrip will be entitled to a Certificate of 
Stock, and to have his name entered on the corporate books as a stockholder, on 
presentation of sufficient fractional Scrip to entitle him to one full share. 

Witness the corporate seal of said Company, attested by the signatures of its 
President and Treasurer at Philadelphia, Pa., this 2Oth day of February, 1896. 

H. H. ROGERS, 

President. 

GEO. W. COLTON, 

'Treasurer. 

[Seal] 

[On the reverse side.] 

For value received hereby sell, assign, and transfer unto 

972,5OOths of one share of the Capital Stock represented by the within Certificate 

of Scrip, and do hereby irrevocably constitute and appoint Attorney to 

transfer the said Scrip on the books of the within named company, with full power 
of substitution in the premises. 

Dated, 

J. L. KEMPER. 

In the presence of HARWOOD R. POOL. 

NOTICE. The signatures to this assignment must correspond with the name as writ- 
ten upon the face of the certificate in every particular, without alteration or enlarge- 
ment or any change whatever. 

[389] 



NUMBER 6 1 

GENERAL BALANCE SHEET, STANDARD 
[In the case of James Corrigan vs. John D. Rockefeller in 





Plant 


Other Assets 


Total 


Anglo-American Oil Co., Lim 
Atlantic Refining Co . . . 


$6,111,436.75 

A 870 676 08 


10,877,942. 53 

6 677 7 CO 7O 


16,989,379.28 
II CI7 786 4.7 


Buckeye Pipe Line Co 


4.CCQ.2I7.27 


8.CQ7.4-I7.44. 


17, 1 C2.626. 71 


Eureka Pipe Line Co 


1. 4.80. C 7 7.77 


C.OCO.6lC 7O 


6.C4.O.I4.8.67 


Forest Oil Company 


4. 2^6 77O IO 


800.4.82 co 


C.O76.8C2 60 


Indiana Pipe Line Co 


002.4.26.01 


2.222.78l .00 


7.2I4..8O7.QI 


National Transit Co 


6,800,056 66 


4.2.C2Q.7C7 7Q 


4.Q.720.4-IO OC 


New York Transit Co 


I 860 774. CC 


C 171 207 80 


7.O7I.678 7C 


Northern Pipe Line Co 


670.001 6c 


c8 7.766 4.6 


1,222,768 II 


N. W. Ohio Nat. Gas. Co 


118.670.71 


2O4-.4.8O.77 


727,l6o.O4 


Ohio Oil Co., The 


4..872.7O7 10 


7IO.7OC 4.2 


C.I4.7.OI2.6l 


Solar Refining Co., The 


C77.7Q7 . C4. 


1. 727.774.. 02 


1,861,172.46 


Southern Pipe Line Co 


I.C27.I7C 80 


2.O74..774. OC 


7.6oi.C4-Q.8c 


South Penn Oil Co 


1 1. 700.607. 72 


I.77C.Q7Q. C4 


I7,O76,c87.26 


Standard Oil Co., Indiana 


7.IOC.OOI .0? 


4-.Ql8.O2C. l8 


8.O27.O27. 17 


Kentucky 
" New Jersey. . . 
New York.... 
Ohio 


474,352- 8 3 
5,469,277-44 
4,957.545-26 
I. l66.OI7 QO 


4,236,638.24 

I3, 8 64,446.39 
56,822,284.95 
2.7C2.274.OI 


4,710,991.07 

I9,333,723-83 
61,779,830.21 
7,918,287.91 


Union Tank Line Co 


2.6lC.C04. 64. 


74.O.C67 7C 


2.QC6.IC8. 70 










Total Planf 


$67.672. 7C8.4.2 






Other Assets 




4i7i.oco.ic6. c8 




Total Assets 






i278.722.CIC.OO 


Less Actual Liabilities 








Total Net Value 








Capital Stock .... 
















Total Capital and Surplus . . 








Other Assets S. O. Trust . . 

















[390] 



(See page 266) 

OIL INTERESTS, DECEMBER 31, 1896 

the Court of Common Pleas, Cuyahoga County, Ohio, 1897.] 



NOMINAL LIABILITIES 



Liabilities 


Net Value 


Capital Stock 


Surplus or 
Impairment. 


Net Value 


$8,997,759.61 


$7,991,619.67 


$2,530,666 . 66 


$5,460,953.01 




357,691.56 


11,159,694.91 


5,000,000.00 


6,159,694.91 




302,998.58 


12,849,628.13 


10,000,000.00 


2,849,628.13 




352,320.90 


6,187,827.77 


5,000,000.00 


1,187,827.77 




198,645.38 


4,838,207.31 


5,500,000.00 


661,792.69 




7,821.80 


3,206,986 . 1 1 


1,000,000.00 


2,206,986.11 




23,296,866 . 66 


26,032,543.39 


25,455,200.00 


577,343-39 




202,139.33 


6,829,499 - 02 


5,000,000.00 


1,829,499.02 




44,161.69 


1,178,606.42 


1,000,000.00 


178,606.42 




11,384.76 


311,775.28 


1,967,100.00 


1,655,324.72 




326,923.43 


4,816,089.18 


2,000,000.00 


2,816,089.18 




298,137.91 


i, 5 6 3,o34 -55 


500,000.00 


1,063,034.55 




66,929.31 


3,534,620.54 


5,000,000.00 


M65,379-46 




1,278,580.96 


11,758,002.30 


2,500,000 . oo 


9,258,002.30 




3,372,518.91 


4,650,508.22 


1,000,000.00 


3,650,508.22 




49, 8 35-90 


4,661,155.17 


1,000,000.00 


3,661,155.17 




2,396,607.81 


16,937,116.02 


10,000,000.00 


6,937,116.02 




48,919,899.34 


12,859,930.87 


7,000,000.00 


5,859,930.87 




1,013,373.13 


2,904,914.78 


3,500,000.00 


595,085.22 




",653.38 


2,944,505 - OI 


3,500,000.00 


555,494-99 




$91,506,250.35 












$147,216,264.65 












$98,452,966.66 










~J '1J >/ 


$48,763,297.99 












$147,216,264.65 










4,I35-25 










$147,220,399.90 



[39 1 ] 




AMENDED CERTIFICATE OF INCORPORATION OF THE STANDARD 
OIL COMPANY OF NEW JERSEY 

Resolved, That it is advisable to alter the charter of this company to read as below 
stated, and that a meeting of the stockholders be called to meet at the principal office 
of the company in Bayonne, N. J., on the fourteenth day of June, 1899, at n A.M., 
to take action hereon, notice of such meeting to be signed by the president and secretary 
and given to each stockholder in person or mailed to his proper post-office address 
at least ten days previous to the time of meeting as provided by the by-law. 

First The name of the corporation is STANDARD OIL COMPANY. 

Second. The location of the principal office in the State of New Jersey is at the 
company's refinery, in the City of Bayonne, County of Hudson. The name of the 
agent therein and in charge thereof, and upon whom process against this company 
may be served, is J. H. Alexander. 

Third. The objects for which this company is formed are: To do all kinds of 
mining, manufacturing, and trading business; transporting goods and merchandise 
by land or water in any manner; to buy, sell, lease, and improve lands; build houses, 
structures, vessels, cars, wharves, docks, and piers; to lay and operate pipe-lines; to 
erect and operate telegraph and telephone lines and lines for conducting electricity; 
to enter into and carry out contracts of every kind pertaining to its business; to acquire, 
use, sell, and grant licenses under patent rights; to purchase or otherwise acquire, 
hold, sell, assign and transfer shares of capital stock and bonds or other evidences of 
indebtedness of corporations, and to exercise all the privileges of ownership including 
voting upon the stocks so held; to carry on its business and have offices and agencies 
therefor in all parts of the world, and to hold, purchase, mortgage, and convey real 
estate and personal property outside the State of New Jersey. 

Fourth. The total authorised stock of the corporation is One Hundred and Ten 
Million Dollars, divided into One Million and One Hundred Thousand shares of 
the par value of One Hundred Dollars each. Of said stock the One Hundred Thou- 
sand shares now issued and existing shall be preferred stock, and the increase of 
One Million shares shall be common stock. Said preferred stock shall entitle the 
holder thereof to receive out of the net earnings a dividend of and not exceeding one 
and one-half per cent, quarterly before any dividend shall be paid on the common 

[392] 



APPENDIX, NUMBER LXII 

stock. Common stock may at the discretion of the company be issued in exchange 
for preferred stock, and all preferred stock so received by the company shall be can- 
celled. Common stock may also be issued in payment for such property as the 
company has authority to purchase. Holders of preferred and of common stocks 
shall have like voting power. 

Fifth. The names and post-office addresses of the ^corporators and the number 
of shares subscribed for by each shall remain as set forth in the original certificate 
of incorporation. 

Sixth. The duration of the corporation shall be unlimited. 

Seventh. The corporation may use and apply its surplus earnings, or accumulated 
profits authorised by law to be reserved, to the purchase or acquisition of property, 
and to the purchase or acquisition of its own capital stock from time to time, to such 
extent and in such manner and upon such terms as its Board of Directors shall deter- 
mine; and neither the property nor the capital stock so purchased or acquired, nor any 
of its capital stock taken in payment or satisfaction of any debt due to the corpo- 
ration, shall be regarded as profits for the purpose of declaration or payment of div- 
idends, unless otherwise determined by a majority of the Board of Directors, or a 
majority of the stockholders. 

The corporation, in its by-laws, may prescribe the number necessary to constitute 
a quorum of the Board of Directors which may be less than a majority of the whole 
number. 

The number of directors at any time may be increased or diminished by vote of 
the Board of Directors, and in case of any such increase the Board of Directors shall 
have power to elect such additional directors, to hold office until the next meeting 
of stockholders, or until their successors shall be elected. 

The Board of Directors shall have power to make, alter, amend, and rescind the 
by-laws of the corporation, to fix the amount to be reserved as working capital, to 
authorise and to cause to be executed mortgages and liens upon the real and personal 
property of the corporation, and from time to time to sell, assign, transfer or otherwise 
dispose of any or all of the property of the corporation; but no such sale of all of the 
property shall be made except pursuant to the votes of at least two-thirds of the Board 
of Directors. 

The Board of Directors, by resolution passed by a majority of the whole Board, may 
designate three or more directors to constitute an executive committee, which com- 
mittee, to the extent provided in said resolution or in the by-laws of the corporation, 
shall have, and may exercise, the power of the Board of Directors in the management 
of the business and affairs of the corporation, and shall have power to authorise the 
seal of the corporation to be affixed to all papers which may require it. 

The Board of Directors from time to time shall determine whether and to what extent, 
and at what times and places, and under what conditions and regulations, the accounts 

[393 1 



THE HISTORY OF THE STANDARD OIL COMPANY 

and books of the corporation, or any of them, shall be open to the inspection of the 
stockholders; and no stockholder shall have any right of inspecting any account or 
book or document of the corporation, except as conferred by statute or authorised 
by the Board of Directors, or by a resolution of the stockholders. 

The Board of Directors shall have power to hold its meetings, to have one or more 
offices, and to keep the books of the corporation (except the stock and transfer books) 
outside of the state, at such places as may be from time to time designated by them. 

I CERTIFY that the above resolution was adopted by the Board of Directors of the 
STANDARD OIL COMPANY, at a meeting held on the twenty-sixth day of May, 
A.D. 1899, a majority of directors being present and voting in favour thereof. Witness 

the seal of said corporation. 

L. D. CLARKE, 

Secretary. 



[394] 



H 
o 

so 


oooooooooooooooooo 

sOsOsOsOsOsOsOsOsO 
GO^I OsOn 4v OO 10 1-1 O 


H 












to 
sO 
to. 


OJOOOOOOOOOOOOOOOO 
i-il^iOO O O >-< OO <~n O 


H 

o 




~~J 
O 

oo 


Os I-H SO OO Os tO OO ^J O 
4* ^ O SO sO <~n OO 4- Os 
On O OO"-c Os Os to to On 


T3 

3 




-<l 

to 
O 


HI oo O OO^J to OO 1-1 OO 
Lri Os4>- ON 1-1 OO O to O 
M -^1 i-c OO OsOo Os^J --4 


B 
O 

a. 

o 


fl 
n 


Os 
Un 


M sO ^O vO ^J ON*- *" to 


9$ 


4 


OJ 
K> 
OO 


1o-<IOO 1-1 tO^OoO O 
-fOOOOi-Hi-iO l ^ | - | i-' 

oo~^j o VQ o on oooo oo 


"H 3 

2.8 1 


1-1 
< 
> 


to 

N> 
On 


4-- OO Os\O OO ~tO OO-^J O^ 
-f-UiOn to-^~^J to^joj 
U> OO -P O 1 -^ ONtOU^^l 


C G. 
|g 


> 

o 
r 


K> 
10 


OOtOtOIOtOtOMi-l 
Ol~-4^l>OOO MOOOO OO 


O w 

" S 
^ s - 




to 


On oo CM-fi -f>. -f>. o ^l ^J 
onoo Ohovoon ts)4>. 1-1 


S3 3 ~l 

Z-. Zt 0- 

O 
"> EU' 








H 




On 


O to Un 1-1 OO~^I O~^I On 


p 




4- 

00 

M 


to ^J to ~~J ^r\ OO OsOO O 
C7\\O to -> -~~1 to OO OO 1-1 
OsOO to vO 1^1 OO Oi 1-1 4*. 


T3 
O 




on 
s^l 

00 


OoOO^tOOstOi-i'OOO 
tOOOvO'-'n O^^lxO tO OO 

oooo 1-1 O oo on oo Oo to 


C 

o' 

3 




os 


^4 ^J OO O\ O*^4 ^J vO OO 


?% 


r 


"o 
^J 


To 4>- o oo o^To oooo 4>- 
to so oo o so o\-f^ >-! o 

O^J M OOO OOosO O 


T3 3 
gL| 


i 

> 

o 


On 
K> 
10 


O\OJ ^4 OOsO OOOO 1-1 On 
O-KsO^JOnsO toon ON 
ONSO OO ON w so -f>- OS OO 


C B- 
|P. 


r 


OO 
sO 

OO 
O 


Oooooooooo4>--^OnOn 
On to 1-1 <-t o\ o lOoOn 

O\ OO OOOO O ^J O OssO 
OosO-t>-On to-t^ 1-1 wiwn 


If 

o " a. 
3 ^ 

^- rr d. 

'^9. 




& 

OO 


U\OnOnvyi4"-4-OnOn-. 

w^JsO lOsOsO OOOLn 


t- 1 'TJ 

I'i 




IN 

SO 
O 


sOsOi-iONtOOOiO 
1-1 OsOO w ~^> -^J i-< to OO 
wOO O ** tOsO I 4*- O 


g'i 

11 




it) 

00 

4" 


4*4v H >-<ooOn4^ O^ 
^J OOO 1-" HHOosOOn4. 
so O to OOsO OOsO O so 


r^ P 

5' J 
3 g. 


O 


1-1 




^3 r/) 


> 


4- 


00-^1 ^r on oo oo to -f^ M 


p ? 


D 


OO 
sO 
Os 


4>- to-f-sOsOsO >-i to o 
ON OO to O OS OOOO I-H 
vO4* to OOi-' OstO tOsO 


-t P- 
O 

g-3. 


O 


^1 
4- 
~J 


O-^J4>--~~J to I-H i-isb'to 
4^ O4>-sOsO-^-l4-Oj O 
sO to ^J Os Oss^i Os "-" On 


B. o 

o t^- 

3 


> 

r 


to 

OO 


oototoooiototoioio 

On sO so O OO OO4 Os-f' 


If 

C & 




-^1 
o 


On OO4>- 10 to 4^ OO ~vl -t>- 
OO to Oi OO 1-1 Os OssO -t" 


33. 

O 
"> f^-' 





ndustri 



O = 5 

g 3 g 

3 cr > 

3 



SO 

8 



3 "B 



LW 

V 



00 
sO 
OO 



[395] 



NUMBER 64 (See page 270) 



BUSINESS OF STANDARD OIL COMPANY AND OTHER REFINERS 

1894-1898 

(Barrels of fifty gallons. All products, domestic trade.) 
[Report of Industrial Commission, 1900. Volume I, page 560.] 





STANDARD OIL COMPANY 


OTHKBS 


TOTAL 


YXAK 




Per cent, of 




Per cent, of 






Barrels 




Barrels 




Barreb 






total 




total 




1894.... 


18,118,933 


81.4 


4,145,232 


18.6 


22,264,165 


I8 95 .... 


18,348,051 


8l.8 


4,084,720 


18.2 


22,432,771 


1896.... 


16,341,161 


82.1 


3.569.719 


17.9 


19,910,880 


1897.... 


18,141,479 


82.4 


3,876,706 


I 7 .6 


22,0l8,l85 


1898.... 


I9999939 


83-7 


3,914,999 


I6. 3 


239H,938 


Total... 


90,949,563 


82.3 


19.591.376 


17.7 


110,540,939 



[396] 



INDEX 



INDEX 



A B 

Acme Oil Company, I, 159; II, 100-101. Baltimore and Ohio R. R., I, 195-196. 

Aiken, J. R., II, 164. Barrel Industry, II, 237-238. 

Alexander, Scofield and Company, I, Barstow, Frank Q., I, 159; II, 2 66. 

46, 49 65. Bedford, E. T., II, 266. ' 

Allegheny River as a means of transpor- Benson, B. D., I, 172, 214; II, 3, 5, 21- 

tation, I, 15-16. 22. 

Allen, M. N., I, 108, 141-143- Billingsley Bill, The, II, 121-124. 

Amalgamated Copper, II, 269. Bissell, George H., I, 7. 

American Oil Company, II, 50. Blackmail, II, 289-290. 

American Transfer Company, I, 223-224. Blanchard, G. R., I, 132, 136-137, 139, 
Andrews, Samuel, partner of John D. 162, 228. 

Rockefeller, I, 42-43, 44; II, 201. Bogus Oil Companies, II, 50-51. 

Archbold, John D., opposes South Im- Borneo Oil, II, 271-273. 

provement Company, I, 73-74; gained Boston and Maine R. R., II, 268, 278. 

over by Rockefeller, 107; practises re- Bostwick, Jabez A., in South Improve- 

bate system, 132; affiliate; with the 

Standard Oil Company, 159; before 

the Pennsylvania courts, 227, 228, 229; 

in the fight for the Tidewater Pipe Line, 

II, 21-22; testimony on underselling, 

50; testimony in Buffalo Conspiracy 



case, 89; indicted in Buffalo conspir- 
acy case, 100-104; negotiates control 
of Producers' Oil Company, 179; de- 
nies illegal methods of competition, 
187; before Industrial Commission, 
190; on Standard Oil prices, 224-225; 



ment Company, I, 58; joins Standard 
Oil Company, 179-181; in negotia- 
tions for sale of Empire Transporta- 
tion Company, 194; Standard Oil buy- 
er in oil fields, 217; introduces "im- 
mediate shipment" order, 217-220; 
before the Hepburn Commission, 228; 
indicted for conspiracy in Pennsylvania, 
239; a typical Standard Oil witness, 
243; extradition from New York de- 
manded by oil producers, 247; charged 
with oppression, II, 8. 



director Standard Oil, 266; on foreign Boyle, Patrick, I, 187-188; II, 171-172. 



competition, 271. 
Atherton, Judge, II, 74-75, 76. 



Bradford Oil Fields, I, 215-219. 
Brands, II, 216-217. 



Atlantic and Great Western R. R., I, 16, Brewster, Benjamin, I, 63; II, 206. 



46, 89, 91. 



Bribery, II, 56-59, 114-119, 
[399] 



INDEX 



Brown, S. Q., II, 15. 

Buffalo Lubricating Company, II, 92, 

95. 9 6 97 9 8 > I0 - 
Burwald, H. P., II, 174, 176. 
Butts, Mrs. G. C, II, 39-41. 
By-products, utilization of, II, 246-251. 



Camden, J. N., I, 169, 171, 197; II, 112. 

Campbell, B. B., ally of Empire Trans- 
portation Company^ I, 189-190; in 
the struggle against railway discrim- 
ination, 221; causes indictment of 
Standard Oil officials, 238; fights for 
extradition of Standard Oil officials, 
247-248; effects compromise with 
Standard Oil, 251-255. 

Carter, John J., II, 178-181. 

Cassatt, A. J., denies railway discrimina- 
tion, I, 144; defends discrimination, 
153; before Congressional Committee 
on Commerce, 169; supports Empire 
Transportation Company in contest 
with Standard Oil, 186-188 ; yields 
to Standard Oil, 190-191 ; ally of 
Standard Oil in rebate system, 200; 
startling testimony in Pennsylvania 
courts, 227; submits to Standard Oil 
drawback system, 233; aids in the war 
on the independents, II, 8-10. 

Central Association, I, 148-149. 

Chess, Carley and Company, II, 33, 44- 
46, 48, 149, 222. 

Chicago, Milwaukee and St. Paul R. R., 
II, 268. 

Choate, Joseph H., Standard Oil counsel 
before New York Senate investigating 
committee, II, 132, 135-136; in Ohio 
dissolution proceedings, 145; in New 
York liquidation proceedings, 258. 



Church, Judge Pierson, II, 19-22. 

Cincinnati and Marietta R. R., II, 78, 81. 

Clark, Horace F., I, 59, 61, 92, 93. 

Clark, M. B., I, 41-42. 

Cleveland, as a refining centre, I, 38-39, 
51-52. 

Collins, C. P., II, 165. 

Columbia Oil Company, 165. 

Committee System, in Standard Oil Com- 
pany, II, 232-233. 

Common Carriers, II, 82-83; see also 
DRAWBACK, REBATE. 

Competition, see PREDATORY COMPETI- 
TION; UNDERSELLING; PRICES; STAND- 
ARD OIL COMPANY. 

Congressional Investigating Committee, 
I, 169-171; II, 137-141- 

Constituent Companies, in Standard Oil 
Company, II, 265. 

Corlett, Thomas, II, 106-107. 

Crescent Pipe Line, II, 213. 

Cunneen, John, II, 186. 

D 

Delamater, Wallace, II, 122. 

Delaware, Lackawanna and Western 
R. R., II, 182-183, 268. 

Denslow and Bush, I, 199-201. 

Devereux, J. H., I, 47-48, 67, 133, 170. 

Directorate of the Standard Oil Com- 
pany, II, 266. 

Discrimination; see REBATE; DRAW- 
BACK; OPPRESSION. 

Dividends, magnificent, II, 200-201, 208, 
267-268. 

Doane, W. H., I, 46, 47, 64, 65, 70-71. 

Dodd, S. C. T., counsel for Standard Oil 
Company before New York Senate ir 
vestigating committee, II, 132; in Ohio 
dissolution proceedings, 145; carrie 



[400] 



INDEX 



out liquidation of Standard Oil Trust, 

152-154; defends liquidation methods, 

259. 
Downer, Samuel, pioneer oil-refiner, I, 

19-20. 

Drake, Edwin L., strikes oil, I, 9-10. 
Drawback, I, 61, 196-197, 232-233, 253- 

254; II, 77-84; see also REBATE. 
"Dry-Hole," I, 22. 
Dudley, J. P., II, 102. 



Emery, Lewis, founds Equitable Petro- 
leum Company, I, 214; testifies to spy 
system of Standard Oil Company, II, 
39; employees corrupted by Standard 
Oil Company, 57-58; supports Bil- 
lingsley Bill, 123; charges Standard 
Oil Company with legislative bribery, 
124; in Producers' Protective Associa- 
tion, 164; leads fight for independent 
pipe-line, 167-169 ; establishes inde- 
pendent foreign markets, 175, 177; in 
the struggle for independent seaboard 
pipe-line, 182-187; retires from contest, 
1 88; see also UNITED STATES PIPELINE. 

Empire Transportation Company, origin, 
I, 23-24; in railway pool, 136; organ- 
ization, 178-179; invades refining field, 
183-185; contest with Standard Oil 
Company, 185-191; sells out to Stand- 
ard Oil Company, 192-193; formally 
dissolved, 194; an important factor in 
competition, II, 202; see also POTTS, 
JOSEPH D. 

Equitable Petroleum Company, I, 214, 
222-223. 

Erie R. R., I, 33-34, 59, 6l , 62 > 9 r 93, 
132-133, 134-140, 151-152, 185, 186, 
187, 195-196; II, 6-7, 168, 169. 



Espionage system, II, 38-41, 52-55, 57- 

58. 
Ethics of Standard Oil methods, II, 56- 

57, 288-291. 
Everest, H. B. and C. M., II, 89, 91-110. 



Fertig, John, II, 174, 176. 

Flagler, Henry M., partner in Standard 
Oil Company of Cleveland, I, 44; de- 
nies existence of rebate system, 49; 
character, 50-51; in South Improve- 
ment Company, 55; in the Oil Regions, 
105, 107; takes part in organization of 
Central Association, 146-147; nego- 
tiates with Empire Transportation 
Company, 191, 194; before Ohio in- 
vestigating committee, 228; indicted 
for conspiracy in Pennsylvania, 239; 
extradition demanded by oil producers, 
247 ; testimony on Tidewater Pipe 
Line contest, II, 15; testimony in the 
Scofield contest, 71; before Congres- 
sional investigating committee, 138- 
140; director Standard Oil, 266. 

Foreign competition, II, 210-211, 213- 
214, 271-274; see also RUSSIAN OIL, 
SUMATRA OIL, JAVA OIL, BORNEO OIL. 

Foreign markets, I, 21; II, 244-245. 

Frew, William, I, 57, 160, 161, 227. 

Frye, Senator, II, 115-116. 



Gas versus Oil, II, 201. 
Girty, G. W., I, 239, 247- 
Goldsborough, J. R., II, 165. 
Gould, Jay, I, 27, 33, 59, 61, 89, 179-180. 
Gowen, F. B., II, 14-15, 16-17, 20. 
Guffey Petroleum Company, II, 272. 



[ 4 0l] 



INDEX 



H 



Haight, Judge, II, 103-104, no. 

Handy, Truman P., I, 63. 

Hanna, Marcus A., II, 146-148. 

Hanna, Robert, II, 66-67. 

Harkness, C. W., II, 266. 

Harkness, Stephen V., I, 44. 

Harkness, William W., I, 157, 202. 

Harley, Henry, I, 27-28, 138-139, 177- 
178; II, 6-7; see also PENNSYLVANIA 
TRANSPORTATION COMPANY. 

Hartranft, John F., I, 225. 

Hasson, William, I, iio-in, 116-117, 
123. 

Hatch, C. P., I, 25-26. 

Hatch, Edward W., II, 106-109. 

Haupt, Herman, I, 174-176, 214; II, 3. 

Hepburn Commission, I, 228. 

Hoar, George F., II, 115, 117-119. 

Hopkins, R. E., I, 172-173, 214; II, 3. 

Hostetter, David, I, 72, 194-195. 

Hoyt, Henry M., I, 244-249. 

Humboldt Refining Works, I, 20. 

Hunt, Mrs. Sylvia C., I, 198-199. 



Immediate shipment, I, 215-219, 251 ; 
see also OPPRESSION. 

Independents, I, 156-161, 171-173, 174- 
178, 214; II, 23, 190; see also PREDA- 
TORY COMPETITION and STANDARD OIL 
COMPANY. 

Industrial Commission, II, 50, 86, 183, 
187, 190, 218, 220, 224, 225, 271. 

Interstate Commerce Bill, I, 168, 171, 
218; II, 125, 291. 

Interstate Commerce Commission, II, 
1 66, 280-283. 

Intimidation and force, II, 41, 202-207; 



see also PREDATORY COMPETITION and 
ESPIONAGE. 

Investigation, I, 77-83, 169-171, 225, 
228-229; II, 131-134; see also CON- 
GRESSIONAL INVESTIGATING COMMIT- 
TEE and HEPBURN COMMISSION. 

J 

Java Oil, II, 271-273. 
Jenks, Professor, II, 50. 
Jennings, O. B., I, 63, 141. 
Jennings, Walter, II, 266. 

K 

Keene, James R., II, 20-21. 

Kier, Samuel M., I, 5-6. 

King, Hugh, II, 183. 

Kirk, David, II, 164, 176. 

Kline, Virgil P., II, 145, 150-151, 262. 



Lake Shore R. R., I, 16, 47, 48, 52; II, 
71-74, 75-76; see also NEW YORK 
CENTRAL R. R. 

Lee, J. W., in Producers' Protective As- 
sociation, II, 164; organizes Producers' 
Oil Company, 165; a leader in the 
struggle against the Standard Oil Com- 
pany, 174-175; contest with J. J. Car- 
ter, 1 80; in the fight for a free pipe- 
line bill, 183. 

Legislative Corruption, I, 215; see also 
LOBBYING and BRIBERY. 

Lobbying, II, 183-184. 

Lockhart, Charles, in South Improvement 
Company, I, 57; absorbs Pittsburg 
refineries, 68; in the Central Associa- 
tion, 146-147; takes part in the nego- 
tiations with the Empire Transporta- 
tion Company, 194; before the Penn- 



[402] 



INDEX 

sylvania courts, 227; indicted for con- New York Central R. R., I, 33-34, 52, 
spiracy, 239; leading position in Stand- 53, 59, 61, 62, 93, 130, 134-140, 165, 
ard Oil Company, II, 252. 



Logan, John P., I, 57. 

Logan, W. P., I, 57. 

Lombard, Ayres and Company, II, 6-1 1, 

14- 
Lombard, Josiah, I, 71; II, 196-197. 

M 

McCandless, William, I, 225-226. 



185-187, 195-196; II, 7, 268; see also 

LAKE SHORE R. R. 
New York, New Haven and Hartford 

R. R., II, 268, 278-279. 
New York, Ontario and Western R. R., 

II, 168. 
Northern Pacific R. R., II, 268. 

O 



McClellan, George B., General, I, 59, O'Day, Daniel, enters service of Erie R. 



61, 89, 92. 

McDonald Oil Field, II, 242. 
McDowell, J. C, II, 181. 
McGregor, Ambrose, II, 89, 100-104. 
McKelvy, David, I, 172, 214; II, 3, 21- 

22. 

Malicious Litigation, II, 183-187. 
Matthews, C. B., n, 90-109. 
Merrill, Joshua, I, 21-22; II, 250. 
Miller, Albert, II, 91-93, 94-96, 99-100, 

102. 
Miller, Herman, II, 240. 



R., I, 179-180; passes to Standard Oil 
Company, 181; in negotiations with 
Empire Transportation Company, 194; 
enforces drawback system on Pennsyl- 
vania R. R., 196; indicted for conspir- 
acy, 239; extradition demanded by oil 
producers, 247; enforces drawback 
system on Cleveland and Marietta R. 
R., II, 79; compelled to return draw- 
backs collected, 81 ; at the Buffalo con- 
spiracy trial, 102. 
Ohlen, H. C., I, 233-234. 



Missouri, Kansas and Texas R. R., II, Oil, found on Oil Creek, I, 10-12; at 



268. 

Moffett, James A., II, 266. 
Monnett, Frank S., II, 259-264. 
Morehouse and Freeman, I, 163-164. 



Pithole, 24-25; at Bradford, 215. 
Oil City Derrick, I, 74, 8l, 122; II, 107, 

109, 122, 171, 244. 
Oil Creek, I, 10. 



Murphy, Michael, II, 164, 177, 181, 187. Oil Exchange, I, 28. 

Oil Regions, rush to, I, 12; plentiful cap- 
ital, 32; social conditions, 34-37; rise 
against South Improvement Company* 
72-75; wasteful methods, 112-113; 
lose advantage of geographical posi- 
tion, 137-138; hostility towards Cen- 
tral Association, 150-151 ; yield to Cen- 
tral Association, 158 159; resentment 
against Standard Oil Company, 220- 
227; lack of effective opposition, 258- 



N 

Nash, George K., II, 83-84. 

National City Bank, II, 268. 

National Transit Company, II, 12-13, 

26-27, 120, 276-277; see also UNITED 

PIPE LINES. 
National Refiners' Association, I, 109, 

126. 
New Jersey Central R. R., II, 169. 



[403] 



INDEX 



259; support the Billingsley Bill, II, 
119-121, 123, renewed hostility to- 
wards Standard Oil Company, 124- 
125, 156-158. 

Oil wars; see PREDATORY COMPETITION. 

Oppression, by overcharges, I, 220; by 
refusing shipping facilities, 220-222; 
by discrimination in freight charges, 
227-229; see also IMMEDIATE SHIP- 
MENT, DRAWBACK and REBATE. 



Page, Howard, II, 36-37. 

Patterson, E. G., I, 169, 189-190, 256; 
II, 17-19. 

Payne, H. B., II, 112-113, 114-119. 

Payne, Oliver H., I, 56, 58, 70-71; II, 
113, 266. 

Pease, Phineas, II, 78-79, 80-84. 

Pennsylvania R. R., I, 33-34, 48, 52, 59- 
62, 93, 134-140, 144, 183-188, 190- 
191, 195-197, 199-201, 223, 225, 227, 
233, 239, 244, 254; II, 8, 27-29, 1 66. 

Pennsylvania Transit Company, I, 27- 
28, 138, 174, 176. 

Petroleum, I, 4-6. 

Petroleum Congress, I, 213. 

Philadelphia and Erie R. R., I, 16. 

Phillips, Thomas W., II, 159-160. 

Pipe Lines, see EMPIRE TRANSPORTATION 
COMPANY, PENNSYLVANIA TRANSPOR- 
TATION COMPANY; UNITED PIPE LINES 
NATIONAL TRANSIT COMPANY; UNI- 
TED STATES PIPE LINE; TIDEWATER 
PIPE LINE. 

Pithole, oil struck at, I, 24-25. 

Politics, Standard Oil Company in, II, 
111-128. 

Poth, Herr, 173, 175, 177. 



Potts, Joseph D., organizes EmpireTrans- 
portation Company, I, 24; begins pur- 
chase of pipe lines, 25; opposes South 
Improvement Company, 60; organizes 
railway pool, 136; opposes rebates to 
Central Association, 152-153; opposes 
Standard acquisition of pipe lines, 181- 
183; invades refining field, 183, 187; 
allies himself with independent pro- 
ducers, 189; abandoned by the Penn- 
sylvania R. R., 191; sells to the Stand- 
ard Oil Company, 192-193; see also 
EMPIRE TRANSPORTATION COMPANY. 

Pratt, Charles, enters Standard Oil Com- 
pany, 148; stockholder in Acme Oil 
Company, 159; in negotiations with 
Empire Transportation Company, 194; 
extradition demanded by Pennsylvania 
oil men, 247; leading power in Stand- 
ard Oil Company, 252. 

Predatory competition, I, 156-159, 163- 
166, 188-189, 199-202; II, 41-43, 88- 
lio, 172-174. 

Prices, fluctuation, I, 31-32; exorbitant, 
190, 210-212; II, 59; high prices aim 
of Standard Oil Company, 192-193; 
decline after 1866, 194-197; prices dic- 
tated by Standard Oil Company, 197- 
198; Standard coup of 1876, 200-201; 
high prices reduce exports, 201; in- 
crease of refining, 201-202; competi- 
tion enters, 202-203; arbitrary prices, 
204-206; enormous Standard profits, 
208-209; underselling, 211-213; ma- 
nipulating price quotations, 215-216; 
fancy brands and high prices, 216-217; 
great variations in local prices, 217- 
22i; reasonable prices due to compe- 
tition, 221-228. 

Producers' Agency, I, 117-118. 



[404] 



INDEX 



Producers' and Refiners' Company, II, Rebates, I, 33-34, 47-49, 52, 84-85, 93, 



167. 

Producers' Oil Company, II, 165-167, 
178. 

Producers' Protective Association, II, 
159-160, 161-165. 

Producers' Union (Association), organ- 
ized, I, 72; refuses terms to South Im- 
provement Company, 76-77; arouses 
popular sympathy, 83-84; destroys 
alliance between South Improvement 
Company and railways, 90-94; renews 
contest, no; restricts production, 113- 
116; alliance with Refiners' Associa- 
tion, 123-124; alliance dissolved, 125; 
union dissolved, 126; reorganized, 213; 
plans independent pipe line, 214; brings 
suits against Pennsylvania R. R., 225; 
forces indictment of Standard officials, 
239; presses suits in court, 242-245; 
rejects overtures of the Standard Oil 
Company, 249-251; effects compro- 
mise, 255-258, 260. 

Production of oil, I, 10-12, 21, 29-30, 
36, 113-115, 121, 154, 209-210; II, 
157-158, 194-195- 

Profits, from Standard Oil, II, 200-201, 
208, 267-268; see also PRICES. 

Pure Oil Company, II, 176-177, 189-190. 

Q 

Quick, M. W., II, 164- 
Quinby, George, T, II, 102, 109. 
Quo Warranto Proceedings, I, 225; II, 
143-149. 

R 

Ramage, S. W., II, 174-176- 
Rapallo, Edward S., II, 79-80. 
Reading R. R., II, 4, i8. 



100, 129-130, 131-133, 136-138, 151- 
153, 232-233, 253-254; II, 66-87. 

Refined Oil Pipe Line, II, 170. 

Refiners' Association, I, 109, 126. 

Rice, George, assails Standard system of 
underselling, II, 44-49; attacks rebate 
system, 77-84; seeks liquidation of 
Standard Oil Trust, 258-259. 

Rogers, H. H., opposes South Improve- 
ment Company, I, 89; defends Stand- 
ard Oil combination, 149-150; before 
Hepburn Commission, 228-229; pur- 
chases Vacuum Oil Works at Roches- 
ter, II, 89, 96, 97; indicted for con- 
spiracy, 100-104; 1 3> negotiates for 
control of Producers' Oil Company, 
179; on the aims of the Standard Oil 
Company, 193; before Industrial Com- 
mission, 225, 252; director Standard 
Oil, 266. 

Rockefeller, Frank, I, 64, 169-170. 

Rockefeller, John D., childhood and 
youth, I, 41; enters produce business, 
42; enters oil business, 43; organizes 
Standard Oil Company, 44; plans com- 
bination of Cleveland refiners, 51; in 
the South Improvement Company, 55- 
56; bears chief obloquy of scheme, 92, 
97; makes secret terms for rebate with 
railways, 100; persists in attempts at 
oil combination, 104; in the Oil Re- 
gions, 104-109; president National Re- 
finers' Association, 109; effects combi- 
nation with producers, 119-124; breaks 
alliance, 125; life threatened, 128; be- 
gins campaign for refining monopoly, 
144-147; organizes Central Associa- 
tion of Refiners, 148-149; war against 
outside refiners, 154-161; attacks Em- 

[405] 



INDEX 



pire Transportation Company, 183- 
186; initiates system of drawbacks, 
196-197; methods of absorption, 202- 
207; denies existence of Standard com- 
bination, 230-231; indicted for con- 
spiracy, 239-240; extradition demand- 
ed by Pennsylvania producers, 247; 
makes overtures to producers, 249- 
251, 253-254; conspiracy suit with- 
drawn, 254; campaign for the seaboard 
pipe-line, II, 12-29; campaign for the 
world's markets, 35-62; fear of his 
secret methods, 63-66; his contest with 
Scofield, Shurmer and Teagle, 68-71; 
his system of drawbacks, 77-84; denies 
existence of such system, 85-86; at the 
Buffalo conspiracy trial, 102; his 
methods perfected, 125-126; enemy of 
publicity, 127-131; before the New 
York Senate committee, 132-135; be- 
fore Congressional committee, 138; 
his connection with Marcus A. Hanna, 
146-147; makes peace with Producers' 
Protective Association, 160-161; his 
theory of high prices, 192-193; his con- 
trol of the refining industry, 197; on 
Standard Oil policy, 226; his attention 
to details, 235; his genius for essen- 
tials, 241; his skill on the witness- 
stand, 260-261 ; 266, his profits, 
268. 

Rockefeller, John D., Jr., II, 266. 

Rockefeller, William A., in the Standard 
Oil Company, I, 44; attractive person- 
ality, 50; in South Improvement Com- 
pany, 58; in Acme Oil Company, 159; 
in negotiations with the Empire Trans- 
portation Company, 194; indicted for 
conspiracy, 239; extradition demanded 
247; at Buffalo conspiracy trial, II, 



102; director Standard Oil, 266; rail- 
way director, 279. 
Russian oil, II, 210-211, 213, 214, 271- 

273- 
Rutter circular, the, I, 141-144. 



Satterfield, John, II, 19-20, 162. 

Scheide, W. T., testimony on rebate sys- 
tem, I, 131-133; testimony on under- 
selling, 161-163; before the Hepburn 
Commission, 228; supports Billingsley 
Bill, II, 122. 

Scofield, Shurmer and Teagle, II, 67-76. 

Scott, Rufus, II, 164. 

Scott, Thomas A., makes secret contracts 
with South Improvement Company, I, 
59-61; abandons South Improvement 
Company, 90, 92; denies rebate agree- 
ment with Standard Oil Company, 170; 
supports Standard Oil against inde- 
pendents, 200-20 1. 

Seaboard Pipe Line, projected, I, 174- 
176; opposed by Standard Oil Com- 
pany, 223; completed, II, 3-6; cap- 
tured by Standard Oil Company, n- 

24- 

Secret bureau of information; see ES- 
PIONAGE SYSTEM. 

Secret contracts with railroads, I, 59- 
62, 79-80; see also REBATE. 

Seep, Joseph, I, 150. 

Seneca oil, I, 5. 

Shell Transport and Trading Company, 
II, 272-273. 

Sherman, John, II, 145, 147. 

Sherman, Roger, counsel for Producers' 
Union, I, 251, 252; in Producers' Pro- 
tective Association, II, 164; charges 



[406] 



INDEX 



Standard Oil with conspiracy, 186; 
death, 188. 

Shull, Peter, II, 42-43. 

Silliman, Professor, I, 7. 

South Improvement Company, organized 
monopoly, I, 55-59; secret contracts 
with railroads, 61-62; absorption by 
intimidation, 64-68; boycotted by pro- 
ducers, 72-76; a generous charter, 78- 
79; investigated by Congressional 
Committee, 79-83; charter repealed, 
94; boycott lifted, 95-97. 

Speculation, I, 31-33. 

Spring-pole, method of drilling wells by, 
I, 10. 

Squire, F. B., II, 263. 

Standard Oil Company, organized, I, 
44; absorbs independent refineries, 
63-68; held responsible for South Im- 
provement scheme, 97-98; enormous 
profits, 127-128; favoured shipper on 
N. Y. Central R. R., 129-130; favoured 
shipper on Erie R. R., 134-135; absorbs 
Philadelphia, Pittsburg and New York 
refineries, 147-148; obtains rebates 
from railroads, 151-153; absorbs Oil 
Regions refineries, 158-160; invades 
oil-shipping business, 161-163; enters 
pipe-line field, 179, 181; monopolizes 
pipe-line traffic, 194-195; absorbs Bal- 
timore refineries, 197; enters Bradford 
oil fields, 216; investigated in various 
states, 227-229; secret methods, 229- 
231; monopolistic character, 231-232; 
rebate and drawback system, 232-235; 
increases prices, 235-238; indicted for 
conspiracy in Pennsylvania, 239-240; 
charges evaded, 242-243; seeks com- 
promise with producers, 249-251 ; com- 
promise effected, 253-254; conspiracy 

[407 



charge withdrawn, 254; hinders Tide- 
water pipe-line, II, 4-5; builds rival 
lines, 12; absorbs independent refin- 
eries, 13-14; seeks to ruin Tidewater's 
credit, 16-17; seeks to dissolve it by 
legal process, 17-19; attempts to seize 
control, 19-21; forms alliance with 
Tidewater, 23-24; extensive pipe-line 
development, 25-27; alliance with 
Pennsylvania R. R., 28-29; monopoly 
of oil transportation, 29; contest for 
world's markets, 31-32; efficient sell- 
ing organization, 32-34; secret bureau 
of information, 35-41; intimidation 
and underselling, 41-51; summary of 
competitive methods, 60-62; rebate 
system, 63-87; sued for conspiracy 
in Buffalo, 100-110; its political role, 
111-124; investigated by N. Y. Senate 
committee, 131-135; its operating con- 
stitution revealed, 136-137; charter 
assailed in Ohio, 142-150; Standard 
Trust formally dissolved, 152-154; 
alliance with Producers' Association, 
160-161; enters producing field, 162- 
163; hinders independent oil move- 
ment, 168-169; attacks credit of 
United States Pipe Line Company, 
170-172; undersells it, 173-174; buys 
up rival's stock, 177-181; fights inde- 
pendent seaboard pipe-line, 181-187; 
its control of prices, 192-227; destruc- 
tion of competition its object, 227-229; 
merits of the Standard system, 231- 
232; centralized authority, 232; com- 
mittee system, 233; internal emulation, 
234-235; minute supervision, 235; 
dismantling of unprofitable plants, 236; 
wise location of industries, 236-237; 
side-industries, 237-240; economy of 



INDEX 



time, 240-241 ; initiative, 241-251 ; high- 
grade personnel, 251-253; the Stand- 
ard Trust after formal dissolution in 
1892, 257-258; contempt proceedings 
in Ohio, 259-264; reorganized as 
Standard Oil Company of New Jersey, 
264-265; its constituent companies, 
265; capital and surplus, 265-266; its 
directorate, 266; its charter, 266-267; 
profits, 267-268; invasion of other in- 
dustrial fields, 268-269; its foreign 
competitors, 271-274; present prac- 
tices, 274-283; transportation the 
basis of its supremacy, 283-284; de- 
fence of Standard methods, 284-288; 
political and ethical influence, 288-292. 

Stewart, D. B., II, 19. 

Stokes, Edward, II, 6-7. 

Stone, Amasa, I, 47, 48, 63. 

Straight, R. J., II, 164. 

Subsidiary industries, II, 237-240. 

Sumatra oil, II, 271-273. 

Sumner, A. A., II, 4. 



Tack, A. H., I, 154-155; H, 197. 

Tankage charges; see OPPRESSION. 

Tank building begun, I, 13. 

Tariff, the, and the Standard Oil Com- 
pany, II, 272-273. 

Taylor, H. L., II, 18-20, 161-162. 

Teagle, John, II, 38, 42. 

Teaming industry, I, 13-15, 17-18. 

Tidewater Pipe Company, organized, II, 
4; line built under difficulties, 4-5; 
completed, 6; supported by independ- 
ent producers, n; builds independent 
refineries, 14; prospers, 15; credit as- 
sailed by Standard Oil Company, 1 6- 
17; legal dissolution attempted, 17-19; 



control seized by Standard Oil Com- 
pany, 19-21; forms alliance with 
Standard Oil, 23-24. 

Tilford, W. H., II, 141-266. 

Tinning industry, II, 238-240. 

Truesdale, George, II, 93-95, 100. 

Trust investigations, II, 131. 

Tweedle, S. D., II, 250. 

U 

Underselling, I, 156; II, 41-51, 211-213, 
221-224; see also PREDATORY COMPE- 
TITION. 

Union Oil Company, II, 161-163. 

Union Pacific R. R., 268. 

United Pipe Lines, I, 139, 181, 216-217, 
218, 224-225, 227; II, 25. 

United States Pipe Line, II, 169, 170, 
174, 182-187. 



Vacuum Oil Works of Rochester, II, 88- 
89, 91, 96-97, 98, 100. 

Vanderbilt, W. H., I, 59, 61, 92-93, 228. 

Vandergrift, J. J., organizes bulk trans- 
portation in oil, I, 16; builds pipe-lines 
30; affiliates with Rockefeller, 107; 
vice-president National Refiners' As- 
sociation, 109; president United Pipe 
Lines, 181; in negotiations with Em- 
pire Transportation Company, 194; 
before Pennsylvania courts, 227; lead- 
ing man in Standard councils, 229; 
indicted for conspiracy, 239; seeks 
compromise with producers, 249; tes- 
timony on prices, II, 193; testimony 
on trust methods, 234. 

Van Syckel, Samuel, pioneer pipe-line 
builder, I, 17-18. 



[ 4 08] 



INDEX 



W 



vours combination of refiners, 55; in 
South Improvement Company, 56-68; 
in the raid on independent refiners, 66- 
67; leading spirit of South Improve- 
ment scheme, 75-76; before Congres- 
sional committee, 77-78, 80, 82; dis- 
regarded by producers, 92; president 
Erie R. R., 133-134- 



Warden, W. G., I, 56-57, 68, 77, 80, 82, 

146-147, 159, 194, 239; II, 252. 
Waring, O. F., I, 58. 
Waring, R. S., I, 57, 105. 
Warrington, John W., II, 145, 148. 
War tactics, II, 182-183. 
Waste assessments, I, 26-27; see also Welch, John C., II, 204, 205. 

OPPRESSION. Well-drilling, I, 22. 

Waters-Pierce Oil Company, II, 33, 37, Westgate, Theodore B., II, 39, 279. 

41, 46-48, 221. "Wild-catting," I, 22. 

Watson, David K., II, 142-150, 259. Wilson, J. Scott, II, 90, 96-97. 

Watson, Jonathan, I, II. Witt, Stillman, I, 63. 

Watson, Peter H., aids Rockefeller in Wood, A. D., II, 164, 188. 

establishing rebate system, I, 53; fa- Wright, William, I, 20. 



[409] 




TAREELL, IDA MINERVA 

History of the Standard 
oil company. 



liD . 
7269 
.04 
T2 
vol.2