THE GREAT OIL OCTOPUS
THE
GREAT OIL OCTOPUS
BY
“TRUTH’S” INVESTIGATOR
T. FISHER UNWIN
LONDON: ADELPHI TERRACE
LEIPSIC: INSELSTRASSE 20
1911
(_All rights reserved._)
PREFACE
The appearance in _Truth_ of the articles which form the greater
portion of this volume has been followed by a wish expressed in many
quarters that they might be republished in a more permanent and
convenient form. The suggestion has been adopted. The articles have
been carefully revised, some additional matter has been inserted, and
it is hoped that they will form a useful contribution to contemporary
social and commercial history. The late Mr. Henry D. Lloyd and Miss
Ida M. Tarbell have each published exhaustive investigations of the
Standard Oil Trust’s proceedings in the United States, and further
information is available in the records of the Missouri litigation,
and--in regard to the flash-point scandal--in British Blue-books.
Hitherto, however, there has been lacking a complete conspectus of all
the many branches of this worldwide subject. One or other tentacle
of the Octopus has been described in detail, but in this volume an
attempt is made for the first time briefly to describe them all. It
has been necessary to exclude any reference to many other commercial
enterprises--such as “Amalgamated Coppers”--in which the heads of the
Oil Trust individually figure in order to concentrate attention on
that combination in the oil trade which first brought them together,
which set the example to so many imitators in America and Europe,
and exhibits most clearly their business methods and morals in two
hemispheres.
CONTENTS
CHAP. PAGE
I. THE MEN AND THE MONOPOLY 9
II. THE SECRET REBATE 25
III. THE RAILROADS AND THE PIPE LINES 43
IV. THE BIRTH OF THE TRUST 63
V. BRIBERY: THE ARCHBOLD LETTERS 75
VI. ARSON AND ESPIONAGE 89
VII. THE “BOGUS INDEPENDENTS” 105
VIII. THE STANDARD’S “INVENTIONS” 123
IX. THE TRUST IN AMERICA AND ASIA 137
X. RUSSIA, GALICIA, AND ROUMANIA 155
XI. THE TRUST IN GERMANY, SWEDEN, AND FRANCE 171
XII. THE TRUST’S “TIED HOUSES” IN ENGLAND 189
XIII. THE FLASH-POINT SCANDAL 207
XIV. THE ROCKEFELLERS AND THE HOME OFFICE 217
XV. THE LUBRICATING OIL TRADE 237
INDEX 251
THE MEN AND THE MONOPOLY
“The oil business belongs to us.”
JOHN D. ROCKEFELLER _to an independent refiner_.
THE GREAT OIL OCTOPUS
CHAPTER I
THE MEN AND THE MONOPOLY
There has lately arisen at Queen Anne’s Gate, on the site of a fine
Victorian mansion demolished to make room for it, a gigantic palace,
steel-framed in the up-to-date style, clad in Portland stone, towering
seven stories high above the neighbouring buildings, looking down
upon Buckingham Palace on the one side of the park, and standing on
pretty nearly equal terms with the Government Offices and the Houses
of Parliament on the other. I was interested to learn that it has been
erected for the accommodation of the Anglo-American Oil Company, which
is the English branch of the famous Standard Oil Trust of the United
States. There were even people who suggested that in view of the action
of the United States Government against the Standard Oil Trust, still
pending in the American Courts, and the influence of Mr. Roosevelt with
his “trust-busting” aspirations, it may possibly be in contemplation
to transfer the headquarters of the petroleum empire from the present
offices of the Standard Oil Trust in Broadway, New York, to Queen
Anne’s Gate, Westminster. As Constantine transferred the capital of
the Cæsars from Rome to Byzantium, so these seers picture Mr. John D.
Rockefeller removing his seat of government eastward from New York to
London.
Time alone can test the value of this prophecy. Sufficient unto the day
is the evil thereof. The new Aladdin’s Palace that has sprung up in
Birdcage Walk is an eloquent manifestation of the growing wealth and
influence of the Great Oil Octopus in this country. That is a cogent
reason why the public throughout the United Kingdom should understand
without loss of time what this Trust is, and what reason there is for
men to be afraid of it. Echoes reach us of the iniquities charged
against Mr. Rockefeller and his colleagues in America, they circulate
vaguely about the country but make little impression. On the other
hand, strenuous efforts to convey a contrary impression have been
made with considerable skill. The Trust includes in its scientific
organisation an efficient Press department, and fights with the pen as
well as with other weapons. I have therefore made it my business to
undertake an exhaustive investigation of the history of the Trust and
its operations, not in America alone, but in Europe and Asia. There
is no great secret about the subject. But the materials are scattered
and difficult of access. A good deal of new light has been thrown
upon the history of the concern and its ramifications in the United
Kingdom and other countries in the course of the great action of the
United States Government against the Trust in the State of Missouri,
referred to a moment ago. In the Standard Oil Trust we have exhibited
the highest perfection yet achieved by a ring of capitalists in the art
of exploiting a great industry. The machinery that has been created for
this purpose is a masterpiece of human ingenuity. The methods by which
it has been employed seem to express the last word in craft, subtlety,
and unscrupulousness, as employed for the purpose of amassing wealth.
The Trust is consequently quite a fascinating subject for inquiry and
reflection, apart from the direct interest which we every one of us
have in its operations.
The indictment against the Standard, put briefly, is that its
founder, Mr. John D. Rockefeller, organised in 1870 a combination of
American oil refiners, who then controlled less than 10 per cent. of
the refining business, and that he secured from the United States
railroads secret rebates on the carriage of their oil, and even larger
rebates on oil carried for their competitors. The result was that it
became the interest of the railroads to discourage the shipments of oil
by refiners outside the Trust. Armed with this weapon of the secret
rebate, the Standard Oil Trust was able to undersell its competitors
and to force them to sell out at heavy loss. In ten years it had
obtained by those methods the control of 90 per cent. of the American
oil refining business, and being almost the sole buyer, it was able
to dictate prices to the oil producers at the wells. It has since
maintained its monopoly by elaborate espionage of its competitors’
business, by running ostensibly “independent” oil companies to take
advantage of the anti-Trust feeling, and by obtaining up to the present
day unfair railway discriminations in place of the secret rebate. It
maintains an expensive staff of lobbyists at the Legislative Chambers
of many lands, and it has constantly adopted the methods of bribery
(direct and indirect) in dealing with politicians and publicists. It
has always aimed, not at fair business competition, but at absolute
monopoly.
The principal figures in this great combination deserve a passing
word of introduction. There is first its founder, its creator, Mr.
John D. Rockefeller, who was born on a farm in New York State in
1839. His father, who was of Scottish extraction, moved to Ohio, and
in 1855 John Davison Rockefeller went into the town of Cleveland to
earn his living as a junior clerk at four dollars a week. He was
clever, industrious, steady and frugal, and he went into the produce
commission business with a young Englishman named M. B. Clark. In
1862 he met another Englishman, Samuel Andrews, who was a mechanical
genius, and had devised improved processes in the infant oil-refining
industry. They joined forces; Andrews looked after the refining and
Rockefeller attended to the pushing of the business, the buying and
selling. The firm grew and extended at first by legitimate, and then by
illegitimate, methods, and now Mr. Rockefeller has convinced himself
in his retirement that he has been the agent of Providence, and that
his business career entitles him to moralise to Sunday schools and
Bible classes. “I hope you young men are all careful. I believe it
is a religious duty to get all the money you can; get it fairly,
religiously, and honestly--and give away all you can.” So spoke Mr.
Rockefeller to his son’s Bible class in New York on March 27, 1897,
and it gives a complete picture of his life. The combination of Jekyll
and Hyde is well brought out in Miss Ida M. Tarbell’s “History of
the Standard Oil Company,” the ablest investigation ever made of the
American activities of this combination. Miss Tarbell says:--
Mr. Rockefeller was “good.” There was no more faithful Baptist in
Cleveland than he. Every enterprise of that Church he had supported
liberally from his youth. He gave to its poor. He visited its sick.
He was simple and frugal in his habits. He never went to the theatre,
never drank wine. He gave much time to the training of his children,
seeking to develop in them his own habits of economy and charity. Yet
he was willing to strain every nerve to obtain for himself special
and unjust privileges from the railroads which were bound to ruin
every man in the oil business not sharing them with him. Religious
emotions and sentiments of charity, propriety, and self-denial seem
to have taken the place in him of notions of justice and regard for
the rights of others.
In a character sketch of Mr. Rockefeller which she contributed to
_McClure’s Magazine_ in January, 1905, Miss Tarbell tells this story:--
Even in his own Church men say, “He’s a good Baptist, but look out
how you trade with him.” “I have been in business with John D.
Rockefeller for thirty-five years,” one of the ablest and richest
and earliest of Mr. Rockefeller’s colleagues once told me in a moment
of forgetfulness, “and he would do me out of a dollar to-day; that
is,” he added, with a sudden reversion to the school of cant in which
he had been trained--“that is, if he could do it honestly.”
In this picture Mr. Wm. Rockefeller hardly counts. The next figure in
the gallery of oils is that of the late Mr. Henry H. Rogers, who died
a few months ago--the “Iron Man” of the Standard directorate. Writing
in Chapter III. of “Frenzied Finance” in _Everybody’s Magazine_ for
August, 1904, Mr. T. W. Lawson, who knew him well, thus described Mr.
Rogers:--
Whenever the bricks, cabbages, or aged eggs were being presented
to “Standard Oil,” always was Henry H. Rogers’s towering form and
defiant eye in the foreground where they flew thickest. Whenever
Labour howled its anathemas at “Standard Oil” and the Rockefellers
and other stout-hearted generals and captains of this band of merry
moneymakers would begin to discuss conciliation and retreat, it was
always Henry H. Rogers who fired at his associates his now famous
panacea for all opposition, “We’ll see Standard Oil in hell before we
will allow any body of men on earth to dictate how we shall conduct
our business.”
In another passage in “Frenzied Finance” Mr. Lawson wrote of him:--
Rogers is a marvellously able man, and one of the best fellows
living. He is considerate, kindly, generous, helpful, and everything
a man should be to his friends. But when it comes to business--his
kind of business--when he turns away from his better self and goes
aboard his private brig and hoists the Jolly Roger, God help you!...
He is a relentless, ravenous creature, as pitiless as a shark,
knowing no law of God or man in the execution of his purpose.
Now that Mr. Rogers is dead, the active figure in the Trust is Mr. John
Dustin Archbold, who was originally a bitter opponent of the Standard
and its rebates. Since he joined its circle Mr. Archbold has figured in
two sensational episodes. He was one of the defendants in the charge of
conspiring to blow up a rival refinery at Buffalo, and escaped through
the judge withdrawing his case from the jury. He was the writer of the
famous letters to politicians which Mr. Randolph Hearst disclosed in
the Presidential campaign of 1908.
Of the rest of these men it is necessary to say less. They were very
diverse in their character. One of them, Henry M. Flagler, was the
pioneer of the vast hotels which line the Florida coast and make it a
winter resort for rich Americans. William T. Wardwell, the treasurer
of the Standard Oil Company, was an ardent teetotaler, and more than
once ran as Prohibitionist candidate for the Presidency before his
connection with Standard Oil was so notorious. Many of them were Scotch
Presbyterians, but the late Mr. Daniel O’Day, the man who faced fierce
obloquy as the manager of the Standard’s pipe-line monopoly, was an
Irish Catholic, who died a year or two ago, leaving several millions
behind him. The younger generation is growing old now, and sons of both
John and William Rockefeller have entered the business, carrying on the
traditions of the greatest combine on earth.
We will now proceed to trace the ramifications of the vast organisation
which these men have built up and control all over the world. The full
list of the subsidiary companies is so long that it is impossible
and unnecessary to print all the names. But a selection of them will
indicate the vastness and variety of the Rockefeller interests. They
are taken from the Report of the United States Government Commissioner
of Corporations on the Petroleum Industry (Part I., Table 8, p. 84),
supplemented by one or two other unimpeachable sources of information.
The central company of this joint-stock octopus is now the Standard
Oil Company of New Jersey, which holds large blocks of stock in the
other companies. It has a capital of $100,000,000 of common stock
and $10,000,000 of preferred stock. Among its directors are John
D. Rockefeller, William Rockefeller, Henry M. Flagler, John Dustin
Archbold, Wesley H. Tilford, Frank Q. Barstow, Charles M. Pratt,
Edward T. Bedford, Walter Jennings, James A. Moffet, C. W. Harkness,
John D. Rockefeller, jun., Oliver H. Payne, and A. C. Bedford. This
Company controls nine companies which are principally engaged in
refining oils:--
Capital.
Dols.
Atlantic Refining Company, Pennsylvania 5,000,000
Solar Refining Company, Ohio 500,000
Standard Oil Company of California 25,000,000
Standard Oil Company of Kansas 1,000,000
Standard Oil Company of Indiana 1,000,000
Standard Oil Company of New York 15,000,000
Security Oil Company, Texas 3,000,000
Standard Oil Company of Ohio 3,500,000
Corsicana Refining Company partnership
Then comes a group of lubricating oil companies:--
Dols.
Vacuum Oil Company, N.Y. 2,500,000
Borne, Scrymser & Co., N.J. 200,000
Chesebrough Manufacturing Company, N.Y. 500,000
Galena Signal Oil Company, Penn. 10,000,000
Swan and Finch Company, N.Y. 1,000,000
It will surprise many readers on this side to find in this list the
name of the Chesebrough Company, which lights the London sky with the
magic word “Vaseline,” but for years that article has paid its tribute
to the Standard Oil Trust. This story was told by Mr. John D. Archbold
in evidence in the proceedings by the United States Government against
the Trust in the State of Missouri, where much evidence, to which we
shall hereafter have to refer, was taken. Mr. Archbold then stated
that the Standard Oil Trust acquired 2,549 shares in the Chesebrough
Manufacturing Company, which was a little more than a majority of the
stock. Mr. Chesebrough and the other minority stockholders continued to
carry on the business in the old name until the present day. Vaseline,
of course, is a product of petroleum. With regard to the Galena Signal
Oil Company, which manufactures railway lubricating and signal oils,
it is stated by the United States Commissioner of Corporations in his
Report (Part II. p. x.) that American Railway officials are compelled
to purchase the Galena products at higher prices than their competitors
ask, because of the influence of the Standard Oil interests as large
consignors, or their power in financial circles, exerted on the railway
boards. The Vacuum Oil Company, which also appears in this list, became
a Standard corporation as long ago as 1879, and it was the company
concerned in the sensational prosecution of several Standard Oil men
at Buffalo for the alleged conspiracy to blow up a rival refinery. Its
speciality is the compounding of lubricating oils.
The list of companies next includes three crude oil-producing companies
and thirteen pipe line companies. Next comes the Union Tank Line
Company, of New Jersey, capital $3,500,000, which owns and operates
railway tank cars. Sixteen natural gas companies follow, and then six
American Marketing companies, of which the Waters-Pierce Oil Company,
of Missouri, has had, perhaps, the most remarkable modern history. Next
we come to the following foreign marketing companies, the first two of
which are duly recorded in the files at Somerset House:--
Capital.
Anglo-American Oil Company (London) £1,000,000
Vacuum Oil Company, Ltd. (London) £55,000
American Petroleum Company (Holland) Fl.7,850,000
Amerikanische Petroleum Company (Germany) M.200,000
Deutsche-Amerikanische Company (Germany) M.30,000,000
Danish Petroleum Company Not stated
Konigsberger-Handels Company (Germany) M.2,300,000
Mannheim-Bremen Company (Germany) M.3,000,000
Korff Refinery Company (Bremen) M.1,500,000
Stettin-Amerikanische Company (Germany) Not stated
Roumanian-American Petroleum Company Lei.12,500,000
Société ci-devant H. Reith et Cie. (Belgium) Fr.1,650,000
Italian American Petroleum Company Not stated
Vacuum Oil Company (Austria) Kr.10,000,000
International Oil Company (Japan) Yen.12,000,000
Imperial Oil Company (Canada) Not stated
Colonial Oil Company (Africa and Australasia) $250,000
But even this long list does not complete the companies in this
combination. It does not include many businesses which have been
bought by the Standard and are now run as parts of one or other of the
companies given. For example, the Devoe Manufacturing Company, which
manufactures all the tin cases in which oil and petrol are shipped, is
now absorbed in the Standard Oil Company of New York. Then there is
the Oswego Manufacturing Company, manufacturers of wood packing-cases
and barrels; the American Wick Manufacturing Company, which made lamp
wicks; and Thompson, Bedford & Co., who had a large European trade in
lubricating oils before their absorption. In addition, there should
be added a number of Vacuum Oil companies which have been established
abroad, in Copenhagen, Genoa, Paris, Hamburg, Moscow, Stockholm,
Bombay, Kobe, and Cape Town.
THE SECRET REBATE
“Mr. Rockefeller is the victim of a money-passion which blinds him to
every other consideration in life, which is stronger than his sense
of justice, his humanity, his affections, his joy in life, which is
the one tyrannous insatiable force of his being.”
IDA M. TARBELL _in_ “_McClure’s Magazine_.”