THE STANDARD’S “INVENTIONS”
The Standard achieved other ends by its system of creating bogus
competitors, besides avoiding public odium. It was enabled by their
operation to carry on a competitive warfare cheaply. The “bogus
independents” bought oil from the genuine independents, and proceeded
to retail it at the wholesale price. As the genuine independents then
came down a peg or two in their retail price to meet this competition,
and lowered their _wholesale_ price correspondingly, the bogus concerns
bought more at the new wholesale level, and then retailed it at that,
and so _ad infinitum_--or, rather, _ad infimum_--till the bottom
was reached, without their losing a cent in the process. Meantime
the Standard virtuously kept its prices up to its own customers in
that particular district, and protested against the ruin that was
being brought upon the trade by underselling. Thus the function of
the “bogus independent,” whether company or pedlar, was not to make
money for the Standard, but to kill off its competitors. It was an
instrument of assassination pure and simple. And just as a particularly
diabolical murderer arranges the time and manner of his victim’s death,
so that it shall seem to be self-inflicted, so the Standard arranged
by the working of these bogus concerns that the genuinely independent
firms outside its own charmed circle should seem to the public to be
perishing as the result of their own “cut-throat competition.” It was a
subtle game, and played with devilish cunning and persistency for many
years before it was definitely shown up in its true light. And it was
helped by the fact that many of the bogus concerns worked in this way
had once been genuinely independent concerns which the Standard had
secretly bought up.
Charles E. Farrell testified as a Government witness at the Missouri
trial--and no attempt was made to rebut his evidence--that he had been
a tank-wagon driver for the Standard Oil Company until events took
place as follows: About March, 1899, he was approached at his home
at night by the Standard’s agent at Troy, N.Y., who told him that
McMillan, the Standard’s manager at Albany, had some important work
for him to do which must be kept entirely secret even from Farrell’s
own family. At his instance Farrell met McMillan and Mason, the
Standard manager at Binghamton, N.Y., who told him that the Standard
had competition at Oneonta, N.Y., from the Tiona Oil Company, which had
got the bulk of the trade, and that they wanted to get it back, and
for that purpose to set the storekeepers fighting with one another.
He was directed to go to the Tiona Oil Company at Binghamton, N.Y.,
and buy twenty-five barrels of oil, and have it shipped to Worcester,
as the Tiona would not sell him oil to sell at Oneonta, where it was
already doing business. He was then to reship it from Worcester to
Oneonta, where he was to peddle it about, putting the sign “Tiona
Oil” on his wagon, at 8 cents (4d.) a gallon, the same price he had
to pay the Tiona for it at Binghamton. Strict secrecy was enjoined as
to whom he was working for. Farrell carried out the manœuvre till the
merchants cut against one another down to 2 cents a gallon retail, and
one even put out a sign: “Free oil; come and get your cans filled.”
Later Farrell could not succeed in getting any more Tiona oil; then the
Standard supplied him with its own oil, cautioning him not to sell too
much of it, but only to bell the low price about. Farrell was suspected
at last by the Tiona people of being sent by the Standard, but, acting
on instructions, denied it through thick and thin.
This nefarious game went on for six months, during which time Farrell
carried on his correspondence with Mason at Binghamton by addressing
the letters to a man named George Craven at a certain post-office box
in Albany, and Craven forwarded them to Mason. Most of the letters sent
by Mason in reply were on plain paper and unsigned, but not all. In one
which is signed, and which was exhibited in court, Mason says:--
I have your various letters.... Our salesman who visits Oneonta knows
nothing whatever of who you are, nor does any one except those you
saw in our office, and under no circumstances whatever do we want
any one to get the slightest hint that we are in any way concerned
in this matter. The Tiona people are denying that they have anything
to do with it, and claiming that we started you there. Of course, we
are denying this, and you must be very cautious, and not allow any
one to try to pump you.... You are doing first-rate and carrying out
the plan excellently, and very much to my satisfaction.... As soon as
you have read this, set a match to it and burn it up.... Don’t tear
it up, for some person might get hold of the pieces of paper and put
them together, but if you burn it with a match, then it is out of the
way wholly....
A further advance in Farrell’s commercial education and moral
edification took place six months after the Oneonta episode. The poor
fellow, selected no doubt for his blind fidelity, was told by his
employer at Albany, McMillan, that a man called Starks at Troy, who
had formerly been buying oil from the Standard, was then buying from
Dauchy, an independent wholesale dealer, and that he must buy oil from
Dauchy too, and cart it round after Starks’s wagon and sell it at the
wholesale price of 8 cents. In this way Farrell got about half of
Starks’s trade away from him, when the latter repented of his ways and
recommenced buying from the Standard. On the prodigal’s return Farrell
was called off. I select a peddling case of this sort to justify my
assertion that no low trick is too dirty or mean for the Standard’s
agents; to use a Transatlantic expression, they would take its candy
from a two-year-old kid.
The idea of the “bogus independent” worked as a system is a most
ingenious one, and could hardly have been invented by minds of any
ordinary calibre. Here, however, the inventive genius of the Trust
seems to end. It has been argued on behalf of the Trust that its
commercial success has been in part due to the various new technical
processes and other improvements which it has introduced--to the
benefit alike of the trade and the consumer. For this theory there
is no visible foundation, though it constitutes the staple material
of the ordinary Standard Oil apologist. Long articles have appeared
in American and English magazines, illustrated by pictures of the
Standard’s wonderful processes, and filled with majestic figures of
the pipe lines, and tank steamers, and tank cars that it owns. The
impression is adroitly left that the Rockefellers found a world of
crude oil and made their millions by showing ignorant and backward
competitors how to turn it into kerosene, lubricants, vaseline, and
petroleum wax. The truth about this imaginative literature is gradually
leaking out.
Pipe lines for oil transport are described as if they were a Standard
invention. As a fact, as early as 1862 a company was incorporated
in Pennsylvania for carrying oil in pipes or tubes from any point
on Oil Creek to its mouth or to any station on the Philadelphia and
Erie Railroad--the first record we have of the idea, which thus
suggested itself within a reasonably short time after oil was first
struck--namely, in 1859. Now, as we have seen, Mr. Rockefeller
only went into the oil trade as his sole business in 1865, though
he put money into it as early as 1862. Three short pipe lines were
working in 1863 (Tarbell, vol. i. p. 17), and they were first made an
undoubted success by a man named Samuel van Syckel, who completely
revolutionised the oil business in 1864, the year before Mr.
Rockefeller definitely took to it, by first pumping oil from the wells
to the railroad through a 2-inch pipe at the rate of eighty barrels an
hour.
The tank car has also been claimed as a Standard invention. Wooden
oil tanks were first built (Tarbell, vol. i. p. 12) by a young Iowa
school teacher almost immediately after oil was first struck, and
they continued to be built by him for about ten years, when, finding
that iron tanks were bound to supersede him, he retired from that
business. Wooden and iron tanks, whether stationary or set on cars,
were consequently a very natural development to meet the necessities of
the oil-carrying trade, and, as far as I can make out, were probably
running in 1869. Tank ships were an English invention, and their
adoption for the Suez Canal was strongly opposed by the Standard in
1891.
Lubricating oil, also claimed as a Standard invention, is due to Mr.
Joshua Merrill, a chemist, of the Downer Works. In 1869 he discovered
a process for deodorising petroleum, and thus rendering it fit for
lubricating purposes. He patented his process, and by it increased the
sale of the Downer Works’ lubricating oil by several hundred per cent.
in a single year (Tarbell, vol. i. p. 22).
A whole batch of these shadowy claims was disposed of once and for
all by Mr. J. D. Archbold’s admissions under cross-examination in
the Missouri case. Here is the official record of evidence on these
points:--
_Q._ The Standard Oil Company did not discover the process at all,
did it?
_A._ Oh, no.
_Q._ The process of making paraffin wax was in existence as early as
thirty years ago, wasn’t it?
_A._ Oh, it has been in existence a long time from the coal shales.
_Q._ Now, in the matter of a great many of these by-products, the
independent refineries, so called, have done the same as you have,
haven’t they?
_A._ Oh, they have, undoubtedly.
_Q._ Take many of those that you testified to the other day--for
instance, cylinder oil. The earliest manufacturers of cylinder oil
were at Binghamton, N. Y., were they not--a Mr. Brill?
_A._ There was a very early concern there--a small concern.
_Q._ And he is still in business, isn’t he, in Philadelphia?
_A._ I don’t know.
_Q._ Leonard and Ellis were very early manufacturers of cylinder oil;
isn’t that true?
_A._ They were--yes.
_Q._ Then lubricating oil--it was made from the petroleum stock
before 1870, wasn’t it?
_A._ It was to an extent--yes.
_Q._ Spindle oil, I think, is one thing you testified about the
other day. Wasn’t that first introduced by the Downer Manufacturing
Company, of Boston?
_A._ I think it likely. I do not know definitely. It probably was.
_Q._ Wool oil--wasn’t that sold or manufactured by Paine, Ablett &
Co., long before the Standard Oil Company combination or interests
got hold of it?
_A._ It may have been. I could not say.
_Q._ Was not vaseline made as early as 1860 by chemists in
Cincinnati, Ohio, from petroleum products?
_A._ If it was I never heard of it. I did not know of it.
Such being the Standard Oil people’s methods of dealing with their
neighbours, how have their neighbours dealt with them? The plain answer
to this is that their neighbours have simply “howled for their blood”
for the past thirty-nine years, since the time, in fact, when the
beginnings of the great conspiracy came to light in the detection of
the South Improvement Company scheme in 1872. Since then the Standard
Oil concern has had to face one public prosecution after another and
to witness a long series of hostile demonstrations on the part of the
public and of public inquiries directed by the Legislature that would
have shamed any concern capable of ordinary decent feeling out of
existence long ago. In 1879 the Standard Oil Trust was indicted for
fraudulent conspiracy in Pennsylvania at the suit of the Petroleum
Producers’ Union, who were thick-headed and weak-kneed enough to
accept a settlement out of court. In 1887 the Standard Oil Company
of Ohio was prosecuted by the State Attorney-General--Mr. David K.
Watson--for belonging to the Standard Oil Trust, an illegal combination
in restraint of trade, and in 1892 judgment was rendered prohibiting
it from being a party to any such Trust agreement. Ostensibly the
liquidation of the Standard Oil Trust followed; in reality it pursued
the even tenor of its way. In 1898 the Standard Oil Company of Ohio
was again prosecuted by the State Attorney-General, this time Mr.
Frank S. Monnett, for failing to obey the 1892 judgment, and the suit,
or series of suits, was prolonged by every device on the part of the
Standard till his term of office came to an end in January, 1900. His
successor, John M. Sheets, suppressed the suits, but matters had been
made so hot for the Standard Oil Trust that it took advantage of the
lax company law existing in the State of New Jersey to change its style
and title (including all its subsidiaries) into that of the Standard
Oil Company of New Jersey. As such it carries on its old conspiracy
against public law and the common weal just as before. In 1907 it was
again prosecuted in the person of one of its subsidiaries, the Standard
Oil Company of Indiana, for the same old charges of unjust and illegal
railway discriminations, and condemned on August 3, 1907, to pay a fine
of $29,240,000 (£5,848,000). This fine was set aside on appeal on the
ground that it had been assessed on the capital of the Standard Oil
Company of New Jersey instead of on that of the Standard Oil Company of
Indiana. On November 15, 1906, the prosecution, already more than once
referred to, of the Standard Oil Company of New Jersey by the United
States Government was commenced in the Eastern Judicial District of
Missouri Circuit Court. The Company was convicted of conspiracy; it
appealed, and the appeal was fixed for hearing in the Supreme Court
of the United States during the October term of 1909. It was further
postponed, however by the death of Judge Brewer, of the Supreme Court,
and is now expected to be decided in a few weeks.
THE TRUST IN AMERICA AND ASIA
“I know of nothing more despicable and pathetic than a man who
devotes all the waking hours of the day to making money for money’s
sake.”
JOHN D. ROCKEFELLER _in_ “_Random Reminiscences_.”