Suppose your opposition to be withdrawn,_The History of the Standard Oil Company

when does your profit come in? We are entitled to impartiality. As

we are advised, the law, common and statute, provides for it; it

pronounces those participating in such a scheme conspirators against

the public weal, and there is no court upon your line but what will

enforce by mandamus and injunction the impartiality that we ask. The

combination will promise you an immediate increase of revenue. If we

are well advised, will you realise upon that promise? Can you make a

contract with them that if we do not succeed in destroying, it will

be their interest to keep? You will not have a refinery left; and

they are now completing pipe-lines from Pittsburg to Oil City, and

can deliver the oil received by all their pipe-lines, independent of

your road and its branches. In case of a contract with them executed

but afterwards broken, from what source will you derive your oil

traffic and what court will enforce the broken contract in your

favour? We urge that you cannot enter into any arrangement with the

monopoly that can be permanently useful to it and to you, and doubt

if it can be made temporarily so.

Suppose that you decline to enter into such a treaty, or any such

scheme, but announce and adhere to the opposite policy? There is no

law, not even that of necessity, to compel you to serve the ends of

the Standard Oil Company.

If Messrs. Vanderbilt and Jewett believe that their aid alone is

insufficient to the establishment of the monopoly, for how long will

they carry its oil as at present for nothing, when they could have

full rates, by uniting the railroad interest, and leaving the

Standard Oil Company to do its business in common with all others?

If the Pennsylvania Railroad, having the geographical position in

its favour, will announce and adhere to the policy of impartial and

competitive rates, in three or six months, it can have all the

facilities and extent of business which the Standard Oil Company can

give the competitive roads, and by men who have all to gain by so

doing.

We ask consideration of our views and of our assurance of good

results from their favourable consideration.

If you choose to place the matter in the light of an experiment, its

trial can cost you nothing but the failure to realise upon the

immediate fulfillment of the promises of the common enemy, and that

realisation we believe will not be permitted.

Very respectfully,

B. B. CAMPBELL, of Pittsburg,

E. G. PATTERSON, of Titusville.

PHILADELPHIA, September 11, 1877.

NUMBER 32 (See page 1225)

PRODUCERS’ APPEAL OF 1878 TO GOVERNOR JOHN F. HARTRANFT, OF PENNSYLVANIA

[Proceedings in Relation to Trusts, House of Representatives, 1888.

Report Number 3112, pages 351–356.]

_Sir_: The undersigned, members of a committee appointed by the

General Council of the Petroleum Producers’ Union for that purpose,

address to you, as the official head of the Commonwealth, a plain

statement of facts, to a great extent known to be true from personal

knowledge, and all material parts of which are susceptible of proof

by competent evidence.

We address you, not only as individuals whose personal interests

have been affected, whose property has been rendered comparatively

valueless, and whose capital and labour are bound against their

consent, to increasing the gains of grasping corporations, but as

citizens of the great Commonwealth of Pennsylvania, apparently

prostrate and powerless to control one of its greatest products, and

the immense business that annually flows from it.

The petroleum production of Pennsylvania is confined geographically

to the Northwestern portion of the state, extending from its border

upon New York State nearly to Pittsburg, and is the chief interest

in the counties of McKean, Warren, Forest, Crawford, Venango,

Clarion, Butler and Armstrong.

The amount of money invested in well property, constantly to be

renewed and kept good, represents at least twenty millions of

dollars, and while the value of the lands upon which the wells are

located is not easily determined, it represents many times the value

of the well property.

Petroleum should yield at the wells, with its transportation and

sale unfettered, twenty-five to thirty-five million dollars

annually, while as an article of export, it ranks third among the

products of the nation, and as first among its manufactured exports.

For transportation outlets, it has the Pennsylvania Railroad to the

seaboard at an average distance therefrom of less than 400 miles.

The New York Central and Lake Shore Railroads reach Oil City by way

of Cleveland, Ohio, 764 miles from the seaboard, and Titusville, by

way of Dunkirk, New York, 571 miles to the seaboard, and the New

York, Lake Erie and Western, and Atlantic and Great Western Railways

reach Oil City by way of Meadville, 550 miles to the seaboard.

CONDITION OF THE TRADE IN 1871

At that time the lines of the Pennsylvania Railroad in the Oil

Region were dotted with refineries located at Tidioute, Henry’s

Bend, Oleopolis, Oil City, Corry, Titusville, Miller Farm,

Rouseville, and other points on the Oil Creek Railroad, at various

points on the Philadelphia and Erie Railroad, and on the Allegheny

Valley Railroad, these roads being tributaries of and controlled by

the Pennsylvania Railroad, while upon its main line extensive

refineries were located at Pittsburg and Philadelphia. The

refineries at Cleveland, Ohio, confined themselves in a measure to

the Western domestic trade, and those of Portland, Boston and New

York had generally specialties in the trade.

The markets were filled with buyers of crude and refined;

information as to stocks, production and consumption was open and

obtainable, and values were regulated by the law of supply and

demand.

In its relation to this trade, Western Pennsylvania almost

exclusively possessing this product, with ample refineries in its

midst, with its great state railroad penetrating the producing

region, and by it, having the shortest route to the seaboard, with

the Allegheny River as an additional means of transportation to

Pittsburg, the Western terminus of the Pennsylvania Railroad, and

with Philadelphia, its Eastern terminus as an exporting point,

Pennsylvania had, and was entitled to, the control of the refining

and transportation of its own product.

CONDITION OF THE TRADE IN 1877–1878

Now, this is all changed! The refineries on the lines of the

Pennsylvania Railroad have been demolished, excepting where reached

by rival railroads, and this business has been transferred to

Cleveland and New York, the refineries remaining in this state

having passed into the ownership and control of a foreign

organisation, as has also the local transportation from the wells,

by means of pipe-lines to the lines of the railways.

The transportation of every nature is subject to its dictation; it

possesses every avenue of information; it affixes its own value to

the crude product when purchasing and the refined products when

selling; it establishes its own rates of compensation to be paid the

railways, and the laws of commerce which govern values in other

products are in this a part of the history of the past. So far as

the petroleum trade is concerned an enterprise or investment therein

is only a wager as to what step the Standard Oil combination will

next take. With the world consuming double the amount of our

petroleum that it did in 1871, the thirty millions which should be

received from the crude product has dwindled to its half; the

fifteen millions which should be the profit of Pennsylvania

refineries has been transferred to Ohio and New York, and the twenty

millions which should have swelled the earnings of the railways have

gone—no one dare say where—but the colossal fortunes acquired since

1872 by every member (so far as its members are known) of this now

world-renowned organisation, are proofs of the success attendant

upon a scheme, no less unlawful than gigantic, and which has all the

outward and visible signs of inward and spiritual corruption. To-day

a foreign corporation is the absolute master of the production and

its value, of transportation by pipe-lines, transportation by

railroad and the compensation therefor, of storage and refining, and

the profit thereof, and dictates prices through the world of the

first, or among the first, of the products of Pennsylvania, and of

the United States, and this to the impoverishment of thousands of

citizens, and the destruction of each of these interests within the

state. That this has been accomplished through and by means of the

co-operation of the Pennsylvania Railroad, its management and

influence, is matter of record.

THE FIRST ATTEMPT TO MONOPOLISE THE TRADE

was initiated by the conveyance, by R. D. Barclay, Thomas A. Scott’s

private secretary, and S. S. Moon, the legislative agent of the

Pennsylvania Railroad, to a party composed principally of Cleveland

and New York men, headed by an agent of the New York Central and

Erie Railways, of a charter granted by the Legislature of

Pennsylvania for a different purpose, under which they organised for

the seizure of the petroleum trade, retaining the charter title of

“THE SOUTH IMPROVEMENT COMPANY,”

the then managers thereof being the managers of the organisation now

known as the Standard Oil Company.

With the South Improvement Company, not a member of which lived in

the Oil Region, or was an owner of oil wells or oil lands, the

Pennsylvania Railroad hastened to execute a contract (January 18,

1872), giving it the sole and exclusive control of all petroleum

shipments thereon, regardless of ownership, and securing this by the

payment by the railroad of a rebate or drawback to the South

Improvement Company of such a sum as would have inevitably driven

all others out of the trade, and lest there might be doubt as to the

intent to so do, it was expressly stipulated in the fourth article

thereof that that was the result aimed at, and the Pennsylvania

Railroad therein bound itself, so far as it legally might, to aid in

accomplishing it.

The action of the Legislature and of Congress, and the uprising of

the people against this unparalleled iniquity, destroyed the

combination for the time being, the railroads having pledged

themselves to never attempt a similar outrage.

The local transportation of crude petroleum had been gradually

changing from movement by barrels to carriage in

PIPE-LINES

from the wells to tankage located on the lines of railway, the

principal of which pipe-lines, at this time known as the

Pennsylvania Transportation Company (formerly Allegheny

Transportation Company), was under special charters of the

Legislature and owned and controlled by Messrs. Scott, of the

Pennsylvania, and Fisk and Gould, of the Erie Railways. The

Legislature had been petitioned at various times since 1866 to pass

a Free Pipe Law, but the various bills introduced for that purpose

could never overcome the opposition of the Pennsylvania Railroad in

the Legislature. During the excitement attendant upon the rise and

fall of the South Improvement Company scheme, the effort was

renewed, and the Legislature enacted a law, restricted to the eight

oil-producing counties, but the Pennsylvania Railroad influence was

strong enough to exclude Allegheny County from the operation of the

Act, thus shutting out Western Pennsylvania from Pittsburg, the

terminus of the Pennsylvania Railroad, the natural outlet of the Oil

Region, and the natural refining point of the United States.

The succeeding efforts to pass a Free Pipe Law, either general in

its nature or to permit construction of pipe-lines to lines of

railway within the state, or to include Allegheny County in the law

of 1872, have been defeated invariably by the opposition of the

Pennsylvania Railroad, and the law of 1874, known as the Wallace

Act, was so framed and enacted as to leave it doubtful whether it

had not succeeded in withdrawing from the eight counties referred to

all the rights conceded to them by the Act of 1872, a wrong which no

subsequent Legislature has been able to redress.

Under the law of 1872, pipe-lines owned by citizens in the Oil

Region had been organised and were in operation, giving free access

to the railways, but after the passage of the Wallace Act (April 29,

1874), the Standard Combination, which had never really abandoned

the South Improvement scheme, systematically undertook their

destruction by forcing them into insolvency and then absorbing them.

This required railway co-operation, and various means were employed

therein, notably among which is the scheme adopted by the ring and

promulgated by the railroads October 1, 1874. An explanation is

necessary to understand why the railroads should unite: _First_, to

carry oil received by them through pipe-lines that had combined to

maintain a given rate for pipage twenty-two cents per barrel cheaper

than on oil received from pipe-lines not so combining, and _Second_,

to further weaken the refineries remaining in Western Pennsylvania

by depriving them of their geographical advantage of proximity to

the crude product, to the coal used as fuel, and to the exporting

ports by _free transportation_ of crude petroleum to the ring

refineries in other states. Various pipe-lines had already been

forced out of existence, had been bought up and united under the

name of “The United Pipe Lines,” which was owned, one-third by the

Standard Oil Company, one-third by the Lake Shore and New York

Central Railroads, and one-third by individuals who were members of

and directors in the Standard Oil Company. The Pennsylvania Railroad

had as its particular feeder a similar organisation, known as the

“Empire Pipe Line.” This explains the _first_ point referred to

above. The _second_, so far as the Pennsylvania Railroad is

concerned, is inexplicable upon any ordinary hypothesis or under any

known theory in railroad politics. The scheme was a success,

pipe-lines one after another succumbed, and refiner after refiner

was bankrupted and his works absorbed.

This effected, the monopoly, backed by the New York railroads, in

one of which it exercised unlimited power, felt strong enough to

demand of the railroads that it should be given the future sole

conduct of the trade under the old South Improvement plan. Upon this

the Pennsylvania Railroad apparently awoke to its danger, resisted

the demand, and in July, 1877, President Scott announced as the

policy of the Pennsylvania Railroad open and free trade to all

shippers of petroleum. It was then conducting its oil traffic

through its ally, the Empire Transportation Company, which possessed

a system of pipe-lines (before referred to) extending over the Oil

Region, controlling a large portion of the production, with ample

tankage, with a large rolling stock upon the Pennsylvania Railroad,

and owning or controlling a refining capacity nearly equal to

one-half the consumption of the world. In the following month

(August, 1877), immediately after the riots at Pittsburg, which were

in their extent the natural outgrowth of railroad freight

discrimination against that city, the monopolists succeeded in

convincing the officials of the Pennsylvania Railroad that it was to

their or its interests to force the Empire Company, its cars, its

pipe-lines, its tankage and its refineries into their hands. The

people of Western Pennsylvania protested in a communication to the

president and directors of the Pennsylvania Railroad in September,

before the extent of the proposed iniquity had become fully known to

the public, which communication seems never to have reached the

board of directors. The outrage was finally consummated October 17,

1877, and the Pennsylvania Railroad was left without the control of

a foot of pipe-line together, a tank to receive, or a still to

refine a barrel of petroleum and without the ability to secure the

transportation of one except at the will of men who live and whose

interests lie in Ohio and New York.

Into those hands had now passed the last refineries of Pennsylvania,

the last means of transportation from the wells to the railroads,

and the last means of carriage to the markets of this country and of

the world. The South Improvement scheme (less its chartered

organisation as in 1872) was at last an accomplished fact, and in

the successful designing, prosecution, consummation and operation of

which it is impossible not to believe that railroad officials were

personally interested.

CONGRESSIONAL LEGISLATION

As the conspiracy was evidently gaining strength, the people of

Pennsylvania united in an effort to induce Congress to again

interfere as in 1872, and in 1876 it directed an investigation,

which was conducted in a dilatory manner by a committee, a prominent

member of the Standard Oil Company, and not a member of Congress,

presiding behind the seat of the chairman. Vice-President Cassatt,

of the Pennsylvania Railroad, was the only prominent railway

official who appeared in obedience to the subpœnas of the Speaker of

the House of Representatives, and he refused to give the committee

any information as to the matter under investigation, and the

counsel of the Pennsylvania Railroad, ex-Senator Scott, appeared

before the committee in justification of his so doing. The financial

officer of the Standard Oil Company appeared before the committee,

accompanied by a member of Congress—also a member of that Company,

and promptly refused to give the committee any information as to the

organisation, or the names of its members, or its relations with the

railroads. The influence and power of the combination was apparent;

the committee never reported, never complained of the contempt of

its witnesses, and all the evidence and record of its proceedings

effectively disappeared. In 1877–78, a bill was introduced by

Representative Watson, of Western Pennsylvania, seeking to prevent

discrimination in interstate commerce, which has been reported by a

committee, but which can hardly overcome the covert opposition which

it meets.

RECENT STATE LEGISLATION

All efforts to obtain a Free Pipe Law in this state having through a

series of years proved unavailing, although New York, in its efforts

to control the trade in Pennsylvania petroleum, had enacted such a

law, a bill was prepared enforcing in this state the Third and

Seventh Sections of the Seventeenth Article of its Constitution.

This bill, known as

THE ANTI-DISCRIMINATION ACT,

provided that shippers of property by car-load from any point on a

railroad within the state to any other point within the state,

should be charged equal rates and given equal facilities. Copies of

the proposed law were sent to the prominent railroad officials in

the state, but its provisions were so fair and protective to every

citizen of the state, and to every legitimate railroad interest,

that neither before the Judiciary Committee of the Senate, which

reported it favourably by an unanimous vote, nor in the Senate,

which passed it with but one dissenting voice, nor before the

Judiciary Committee of the House, which reported it unanimously, did

any railroad stockholder, official, or legislative agent appear to

offer an objection to its becoming a law. Yet it was killed in the

House by the familiar means employed by legislative agents in

disposing of measures objectionable, but not debatable. Had the bill

become a law, it would have rebuilt the refineries of the state,

with Philadelphia (whose petroleum trade under the monopoly has

gradually dwindled to a fraction of its former magnitude) as the

exporting point, with the Pennsylvania Railroad as the transporter

thereto, and the people of Western Pennsylvania might have arisen

from a community of miners, working for the benefit, and under the

rule, of a foreign corporation, to their former conditions as

citizens of a prosperous mining and manufacturing section of the

state.

RESULTS AND EFFECT OF THE SUCCESS OF THE CONSPIRACY

Upon or with the New York railroads no appeal or representation of

the people of this section would have any weight or influence. Their

managers reside in Cleveland and New York, and are subject to the

daily manipulations of the monopoly managers, while in our own

state, to all efforts for emancipation or toward the restoration of

trade to its natural channels the Pennsylvania Railroad and its

power is as a Chinese wall. Its president and vice-president admit

the preferences in rates given to the monopoly, and boldly announce

their intent to continue in so doing; they claim the legal right to

so do, and challenge resistance; they obstruct all efforts of

producers, shippers and refiners by delaying or restricting

facilities; by threatening other railroads with severance of

connections and deprivation of general traffic if they transport

petroleum for parties outside the monopoly; they refer applicants

for rates and facilities over the Pennsylvania Railroad to the

Standard Oil Company, and offering their personal service as

negotiators for such rates and facilities, assure all that there is

no hope of success in the trade unless by a coalition with the

Standard.

We have thus far given not more than an outlined sketch of this

enormous monopoly, its plan, its growth, and its results. We have

not burdened your Excellency with details of individual oppression

and outrage, but we should fail to discharge our duties to ourselves

and as citizens if we neglect to recite some of the means by which

the most deplorable results are produced to our state and section.

Wrong is constantly perpetuated and right driven from us. True it is

that in many things the monopoly has been unwittingly aided in its

schemes by unwary concessions as to the management of its business,

by producers of petroleum themselves, but they had a right, as men

pursuing an honest calling, to believe that they were dealing with

honest men, and not with a gang of public plunderers, leagued

together by no better tie than the sordid desire of gain, to be

acquired by methods of corruption and lawlessness.

By the theory of the law, corporations derive their powers from the

people of the Commonwealth in General Assembly convened; they have

no powers not delegated to them by the people; they take nothing by

implication; they are public servants, invested for the public

benefit with extraordinary privileges, and their charters may be

taken from them when they cease to properly perform the duties of

their creation. The railroad and pipe-line companies are common

carriers of freight for all persons, are bound to receive it when

offered at convenient and usual places, and to transport it for all,

for reasonable compensation, without unreasonable discrimination in

favour of any. These are but simple statements of well established

legal principles, never doubted in any court, but affirmed by every

tribunal that has ever considered them. Yet the people who granted

these special privileges are now upon the defensive, their rights

denied by these corporations, and they are challenged to enter the

courts to establish them, while in the meantime they are inoperative

to the irreparable injury of their business. They have yielded to

the railways that they have created a part of their sovereignty, and

given them the right to take private property for public use, but

restricting such taking, strictly to such use. Yet where the narrow

strip of land used as a railway roadbed runs through valuable oil

lands, this combination is strong enough to demand from the railways

its transfer to them, that they may and do thereon sink their own

oil wells, and thereby drain the oil from the adjoining lands whose

owners gave the strip for public use by a railroad.

The owners of lands along the line of the Allegheny Valley Railroad,

producing petroleum from those lands, with their own pipe-line

running to their own shipping racks by the side tracks of that

railroad, are unable to obtain cars in which to load their product

for transportation, at any rate of freight, while their tanks

overflow. Shippers of petroleum are refused cars, or are promised

them, only to find the promises broken, and their contracts rendered

impossible of fulfillment, while the monopoly demands and is given

all the cars belonging to the railroads, it permitting its own

private cars to meantime stand idle, so that the railroads may

assert its inability to accommodate all.

Owners of tanks connected with the monopoly pipe-lines, with ample

storage therein for their own product, are refused transportation

from their own wells upon the ground that “their tanks are full,” a

barefaced and daily demonstrated falsehood. Other producers of

petroleum are refused transportation by the pipe-lines, on the plea

of want of capacity to carry, and at the same time are informed that

their oil will be carried if they will sell it to the ring,

“immediate shipment.”

If the applicant’s tanks are overflowing, or if he needs money and

complies with their terms, he is offered a price from two and a half

to twenty-five cents below the market value. If he accepts and sells

a fixed amount of his oil, the pipe-line removes all but five or ten

barrels, delays for days and weeks to take the remainder, and

refuses to pay for any until all is taken. This is known as the

“immediate shipment swindle.”

By their use of the petroleum of others stored in their tanks and

lines; by the overissue of Pipe Line Certificates; by refusal to

perform their public duties; by open defiance of the law and

impudent evasions of its provisions, the pipe-line and railroad

companies leave to the people, whose creatures they are, but two

remedies—an appeal for protection, first to the law of the land,

next to the higher law of nature!

These corporations have made themselves the interested tools of a

monopoly that has become the buyer, the carrier, the manufacturer,

and the seller of this product of immense value. It needs no

argument or illustration to convince that in such a position this

foreign corporation is in direct antagonism to the producer, the

labourer and the consumer.

The South Improvement conspiracy embraced in its scheme the

ownership of the oil-producing territory, wells and machinery. If

the present course of its successor cannot be stayed, it is merely a

question of time when the ownership of the entire oil production

will fall into its hands through the impoverishment of thousands of

our citizens and their inability to contend longer.

That monopolies are dangerous to free institutions is a political

maxim so old as to have lost its force by irrelevant repetition, but

if anything were needed to awaken the public sense to its truth, the

immediate effect of this giant combination is before us. Throughout

the Oil Region, as wherever it does business, it now has its own

acid works, glue factories, hardware stores and barrel works. We

have seen that it is master of the railroads, and owns and controls

all the refineries, all the pipe-lines. All these enumerated

industries controlled by them employ large numbers of labourers

dependent for the support of themselves and their families upon the

daily labour given or withheld by this powerful conspirator. At the

flash of the telegraphic message from Cleveland, Ohio, hundreds of

men have been thrown out of employment on a few hours’ notice and

kept for weeks in a state of semi-starvation and justifiable

discontent, deceived meanwhile with delusive promises of work, until

the autocrat of a foreign corporation, maintained and upheld by the

chief among Pennsylvania corporations, gives leave from within the

borders of a foreign state for the Pennsylvania labourer to earn his

bread.

Along the valley of Oil Creek and the Allegheny Valley, where a few

years since the smoke of busy refineries and their attendant

industries darkened the air, piles of rusted iron and heaps of

demolished brick work mark the results of the conspiracy; where a

few years since busy men crowded to and fro in the pursuit of lawful

trade in a great staple, there is now silence and emptiness. The

producer, once surrounded with competitive buyers of his product,

now goes with crowds of his fellow victims to wait his turn for

leave to sell it at a dictated price to a single agent of a single

purchaser.

To permit to stand unattacked the foul principles of such an

organisation, to permit them to be fastened as lawful or right upon

the policy of the Commonwealth or the nation, is to lay the

foundation for the exile of capital, endless injury to the public

interests, endless oppression of the labourer, riots, tumults, and

the decay of the state.

So far as this public wrong is within the scope of Executive

interference, we ask that immediate steps be taken to enforce by

legislative enactment the wise provisions of our State Constitution,

and by such legal processes as are necessary, compel obedience to

law and the performance by chartered companies of their public

duties.

B. B. CAMPBELL, of Pittsburg,

E. W. CODINGTON, of Bradford, McKean County,

LEWIS EMERY, JR., of Bradford, McKean County,

GEORGE H. GRAHAM, of Petrolia, Butler County,

J. A. VERA, of St. Petersburg, Clarion County,

H. O. ROBBINS, of Turkey City, Clarion County,

L. H. SMITH, Petrolia,

R. B. BROWN, Clarion,

D. S. CRISWELL, Oil City,

A. J. SALISBURY, Karns City,

A. N. PERRIN, Titusville, Crawford County,

W. B. BENEDICT, Enterprise, Warren County,

H. W. BUMPUS, Monroe, Clarion County,

SAMUEL Q. BROWN, Pleasantville, Venango County.

NUMBER 33 (See page 1233)

STATEMENT OF CRUDE OIL SHIPMENTS BY GREEN LINE DURING THE MONTHS OF

FEBRUARY AND MARCH, 1878, TO NEW YORK, PHILADELPHIA, AND BALTIMORE;

SHOWING DRAWBACKS ALLOWED TO AMERICAN TRANSFER COMPANY

[Commonwealth of Pennsylvania vs. Pennsylvania Railroad Company,

United Pipe Lines, etc. Testimony. Appendix, page 737.]

SHIPPER. CONSIGNEE. DESTINATION. TOTAL.

NO. OF BARRELS. BARRELS.

Feb. March.

H. C. Ohlen H. H. Ohlen Com’paw 18,320 11,556 29,876

W. H. Nicholson 〃〃 16,983 31,169½ 48,152½

E. N. Hallock 〃〃 1,160½ 1,160½

S. Craig 〃〃 2,384½ 2,384½

H. L. Taylor & 〃〃

Co. 1,439½ 1,439½

Ayres, Lombard 〃〃

& Co. 2,688½ 2,688½

J. Rousseaux J. Rousseaux 〃 6,377½ 6,932½ 13,310

W. L. Fox 〃〃 3,150½ 3,150½

W. H. Nicholson Ayres, Lombard 〃

& Co. 979½ 979½

J. A. Bostwick J. A. Bostwick 〃

& Co. & Co. 43,074 45,915½ 88,989½

D. Grimm Jno. Ellis & 〃

Co. 722½ 1,185½ 1,908

———————— ———————— ————————

87,617 106,422 194,039

J. Bushnell Warden, Frew & Phila.

Co. 1,725½ 22,105½ 23,831

J. A. Bostwick 〃〃

& Co. 12,994 12,994

J. Bushnell care Atlantic 〃

Ref. Co. 10,137 31,917 42,054

J. Bushnell W. L. Elkins & 〃

Co. 14,684 7,793 22,477

G. M. Robinson 〃〃 761½ 1,382 2,143½

E. N. Hallock Greenwich 〃

Refining Co. 3,413½ 3,414½

Mary R. Fox 〃〃 1,308 1,308

S. Craig 〃〃 1,241½ 1,241½

Fox & Fink 〃〃 2,541 2,541

Fox Estate 〃〃 501 501

M. Lloyd M. Lloyd 〃 3,803 2,690 6,493

S. Craig 〃〃 2,426 2,426

W. L. Fox 〃〃 1,960½ 1,960½

G. M. Robinson F. Farnsworth 〃 362½ 80 442½

W. G. Laird, W. G. Laird, 〃

agent agent 302 302

Paine, Abbott & Paine, Abbott & 〃

Co. Co. 403 403

J. S. Davis J. S. Davis 〃 501 501

A. & G. W. R. R A. & B. Cooley 〃

& Co. 25 25

———————— ———————— ————————

51,135½ 73,922 125,057½

J. Bushnell Balto. United Balto.

Oil Co. 7,435 16,692½ 24,127½

G. M. Robinson 〃〃 261½ 261½

E. J. Waring & E. J. Waring & 〃

Co. Co., care of

S. E.

Poultney 282 282

———————— ———————— ————————

7,717 16,954 24,671

======== ======== ========

Grand Total 146,469½ 197,298 343,767½

Total, 343,767½ barrels at 20 cents per barrel, $68,753.50.

This amount, $68,753.50 to be paid to American Transfer Company, per

Daniel O’Day, general manager.

Audited May 29, 1878.

G. H. D.

Approved,

A. J. CASSATT,

_Third Vice-President_.

NUMBER 34 (See page 1239)

BILL OF PARTICULARS OF EVIDENCE TO BE OFFERED BY THE COMMONWEALTH

[In the case of Commonwealth of Pennsylvania _vs._ John D.

Rockefeller, William Rockefeller, Jabez A. Bostwick, Daniel O’Day,

William G. Warden, Charles Lockhart, Henry M. Flagler, Jacob J.

Vandergrift, Charles Pratt and George W. Girty, in the Court of

Quarter Sessions of the Peace for the County of Clarion,

Pennsylvania, 1879.]

FIRST COUNT. _First._—That each one of the defendants is associated

with each and all others, in business, by means of stock, issued to

each, of several corporations, to-wit: The Standard Oil Company of

Cleveland, Ohio. The Standard Oil Company of Pittsburg,

Pennsylvania. The Acme Oil Company of Titusville, Pennsylvania. The

Imperial Refining Company of Oil City, Pennsylvania. The Camden

Consolidated Oil Company of West Virginia. The Devoe Manufacturing

Company of New York.

_Second._—That Charles Pratt is associated in business with others,

under the name of Charles Pratt and Company; that William G. Warden

and Charles Lockhart are associated in business with others under

the firm name of Lockhart and Frew, and Warden, Frew and Company;

that J. A. Bostwick is associated with others in business under the

name of J. A. Bostwick and Company.

_Third._—That the several defendants and others now unknown are

associated together by means of the corporate and co-partnership

organisations stated in paragraphs one and two for the purpose of

carrying on the business of refining crude petroleum and selling the

refined product. That each of the said defendants is interested in

each of the several corporations and firms in refining and selling

refined petroleum, and, in refining and selling, the said

defendants, each and all, act in concert and harmony with each

other, and as against all other persons not associated with them,

and share in the profits of the business.

_Fourth._—That the said several defendants, and all of them, and the

said several firms and corporations of which they and each of them

are members, by stock ownership or otherwise, are engaged in the

business of buying crude petroleum, in the county of Clarion, in the

state of Pennsylvania, and also in the counties of Armstrong,

Butler, Crawford, Forest, McKean, Venango, and Warren, in the state

of Pennsylvania, also in the counties of Allegheny and Philadelphia

in said state, and in the counties of Cattaraugus and New York, in

the state of New York, also in the city of Cleveland in the state of

Ohio, and in counties in the state of West Virginia.

_Fifth._—That in the said several states and counties, and in divers

localities in said several states and counties, to-wit: at

Pittsburg, Philadelphia, Butler, Carbon Centre, Millerstown,

Petrolia, Parker’s Landing, Foxburg, Turkey City, Edenburg,

Shippensville, Pickwick, Elk City, Monterey, Emlenton, Bullion,

Scrubgrass, Forster’s Station, Oil City, Franklin, Reno, Rouseville,

Titusville, Warren, Tidioute, Hickory, Bradford, Degolia, Derrick

City, Gilmore, Forster Brook, and Tarport, in the State of

Pennsylvania; Knap Creek, Rock City, Four Mile, Two Mile, Olean,

Carrollton, Salamanca, and in the city of New York, in the state of

New York, the said defendants, and the several firms and

corporations with which they are associated and in which they were

interested, carried on the business of buying crude petroleum from

producers and owners thereof, and the business of refining said

crude petroleum, and selling the refined product, and in so doing

acted in concert.

_Sixth._—That the said business thereinbefore referred to was so

carried on at the several counties, cities, localities, and in the

several states aforesaid, by the said defendants in concert, in

person, and through agents acting under the instructions of the said

defendants, and pursuant to their directions.

_Seventh._—That the said defendants were engaged, and are engaged,

in the business of transporting crude petroleum through iron pipes,

in the counties of Allegheny, Armstrong, Butler, Clarion, Crawford,

Forest, McKean, Warren, and Venango, in the state of Pennsylvania;

and the county of Cattaraugus, in the state of New York. That they

are so engaged by being associated together in the ownership of

several pipe-lines, such association being accomplished by the said

defendants being owners of shares of stock in incorporated

companies, to-wit: the United Pipe Line and American Transfer

Company, and interest in capital in limited partnerships, to-wit:

the Tidioute and Titusville Pipe Companies, Limited, and others,

which said companies, the said defendants, at the time of the

conspiracy and combination charged in the indictment, controlled,

and thereby controlled the transportation of crude petroleum from

wells and points of storage in said several counties and at the said

several localities.

_Eighth._—That the said defendants, and each of them, and the said

several corporations, firms, and limited partnerships, were and are

engaged by means of the ownership and control of said several firms,

limited partnerships, and corporations, and by means of ownership of

stock and interests therein, were and are engaged in the business of

storing crude petroleum in the said several localities, cities,

counties and states, by means of storage tanks, and said business

was carried on in said counties, each and all of them, by

themselves, personally, and also through agents acting by their

directions.

_Ninth._—That each one of the said defendants and all of them in

concert were engaged in the several kinds of business hereinbefore

referred to, by themselves and their agents in the county of

Clarion, and in the other places mentioned hereinbefore, during the

whole period of two years prior to the day upon which the indictment

was found against them in this case, and during that time by

themselves and their agents acting under their directions in the

said county of Clarion, combined, confederated and conspired

together to cheat and defraud numerous citizens of the county of

Clarion, to-wit: J. A. Vera, William L. Fox, and M. L. Lockwood, and

divers others, and to cheat and defraud the public by securing to

themselves a monopoly of the business and occupation of buying and

selling crude petroleum in the county of Clarion, and to prevent all

other persons engaged in said business, from making, receiving and

obtaining the fair value, profit, price and return from such

business, by fraudulent devices, practices and secret contrivances,

and among others the following:

_A._—Falsely pretending during the times aforesaid and at all times

that the storage tanks owned and controlled by them, and of which

they had the possession, measurement and accounts, were full of

crude petroleum to the extent of the capacity of said tanks, and

that the said defendants could not receive and store crude petroleum

from and for citizens of Clarion County and the other counties and

localities named, when in truth such representations and statements

were false, and thereby divers citizens lost oil and were compelled

to sell petroleum at less than the value thereof.

_B._—By representing to divers citizens of the county of Clarion

engaged in the business of producing, buying and selling petroleum,

and to divers other persons engaged in said business in the other

counties and localities named, that the said defendants were enabled

to receive and transport for said well owners, citizens and

producers of such petroleum, by reason of lack of capacity and

transportation facilities, when in fact said representations were

false, and thereby divers producers dealers and well owners were

compelled to sell petroleum at less than the value thereof.

_C._—That said defendants by themselves and their agents within the

county of Clarion, in the state of Pennsylvania, and at the other

counties, cities and localities, hereinbefore named, had the control

of the entire transportation of crude petroleum from the producing

wells and districts, and the control of storing of crude petroleum

produced, that they and the several firms and corporations of which

they were members, and their agents and the agents of said firms and

corporations acting under the direction of the said defendants

corruptly and oppressively used the power and control they so as

aforesaid held, to compel producers and owners of petroleum to sell

the same to them, the said defendants, their agents and the several

firms and corporations aforesaid and their agents, and to sell the

said crude petroleum at less than its value, and less than the

market price thereof.

_D._—That the said defendants and each of them, through the several

firms and corporations of which they were members, and by their

agents acting under their directions and the agents of the said

firms and corporations, corruptly and oppressively used the power so

acquired by them to enable them to become the sole buyers and

refiners of crude petroleum.

_E._—That among the means used to obtain control of the business of

transporting crude petroleum were the following:

_First._—The said defendants and the several firms and corporations

of which they were members laid iron pipes in the county of Clarion,

and the other counties and states named, under charters and

pretended charters from the state of Pennsylvania, pretending that

they so did for the purpose of transporting for the public petroleum

from the oil wells and producing districts, to the railroads, for

shipment to the seaboard, when in fact the said pipe-lines were not

laid for that purpose, but for the purpose of transporting oil for

the said defendants, and the said several firms and corporations of

which they were the members, and not for the public, and to enable

the said defendants and the said firms and corporations to dictate

the rate of freight to be charged to them by the railroad companies

engaged in the business of carrying petroleum as common carriers,

and to force the said railroad companies to charge a greater and

unreasonably high rate of freight to all others, and that this was

for the purpose of preventing citizens of Clarion County and the

public from engaging in the business of buying, selling and shipping

crude petroleum.

_Second._—The said defendants, and their agents acting under their

directions, and the several firms and corporations of which they

were members also so acting, pretended and represented to the

several railroad companies engaged in the transportation of

petroleum, and to the agents and officers of said companies, that

they, the said defendants and the several firms and corporations of

which they were members, and in which they were interested,

controlled the shipments of said crude and refined petroleum, by

deliveries thereof to the said railroad companies, and that the said

defendants were enabled to withhold, and drive said traffic and

business from them.

Said representations were false, but by means thereof, they, the

said defendants, procured and obtained from said several railroad

companies enormous and unjust rebates, commissions and deductions

from the rates of freight charged to citizens of Clarion County and

the public. The Citizens of Clarion County and the public were

thereby prevented from engaging in the business of producing and

shipping crude petroleum.

_Third._—That on or about the thirtieth day of August, 1877, and

again on or about the seventeenth day of October, 1877, the said

defendants met together in the city of Philadelphia and then and

there agreed together that they would represent to the officers of

the Pennsylvania Railroad Company that they, the said defendants,

and the several firms and corporations of which they were members,

could and would control and guarantee to the said railroad company a

certain proportion of the carrying traffic of crude petroleum over

said railroad.

And on or about the same dates the said defendants further agreed

together and did represent to the officers of the New York, Lake

Erie and Western Railroad Company, and to the officers of the Erie

Railroad Company, and to Mr. Jewett, receiver of the Erie Railroad

Company, and to the officers of the New York Central and Hudson

River Railroad Company, and to the officers of the Atlantic and

Great Western Railroad Company, and to V. H. Devereux, receiver

thereof, and to the officers of the Michigan Southern and Lake Shore

Railroad Company, and to the officers of the Baltimore and Ohio

Railroad Company, that they the said defendants and the several

firms and corporations of which they were members, could and would

control and guarantee to each of them a certain proportion of the

carrying traffic of the crude petroleum over said railroads

respectively. But by reason thereof the said Pennsylvania Railroad

Company and the Empire Transportation Company were induced to, and

did sell, transfer, mortgage and dispose of, to said defendants and

to the several corporations and firms of which they were members,

all of the pipe-lines, crude oil cars and transportation equipment

of which they had control or ownership in the Oil Regions of

Pennsylvania, including the county of Clarion, and all the

refineries, for refining crude petroleum, of which they had

ownership or control.

_Fourth._—The objects and purposes of said representations and said

transfer were to enable the said defendants to control the business

of buying and selling crude and refined petroleum, and the

transportation and storage thereof.

_Fifth._—That, as stated in the foregoing paragraphs, during the

greater part of the year of 1877, and for some time previously, the

Pennsylvania Railroad Company owned or controlled through its

shipping agents, the Empire Line, a full and complete system of

pipe-lines throughout the counties of Clarion, Armstrong and Butler,

known as the Empire Line, numerous and well appointed tank oil cars,

the shortest and best route to the seaboard over its own lines and

the Allegheny Valley Railroad, and other connecting lines, also

controlled large and complete refineries, situated in Pittsburg,

Philadelphia and New York, and was by these means a competitor with

the defendants and the several corporations owned by them, in the

business of piping, transporting, buying and refining crude oil,

enabling producers, citizens of Clarion County and elsewhere,

without difficulty, to have their oil piped and transported, and to

sell the same at enhanced prices, owing to competition. That the

defendants, combining and conspiring to monopolise the entire and

sole business of buying, selling and refining oil in Clarion County

and elsewhere, did demand of the Empire Line and the Pennsylvania

Railroad Company that they and each of them should abandon and

desist from the said business of buying, selling and refining oil,

and that the said railroad company and Empire Line should grant to

them exclusively large rebates and low or cheap rates of

transportation of oil, and by means of withdrawing and procuring

others to withdraw the transportation of crude and refined oil over

and along said Pennsylvania Railroad, and by means of the procuring

from other railroads exclusive rebates and low rates of freight for

transportation below a fair and just compensation for such

transportation did compel the said Pennsylvania Railroad Company and

the Empire Line to sell to said defendants, or to some of the

corporations controlled and owned by them, said pipe-line, tank cars

and refineries, to the injury of the producers of oil of Clarion

County and elsewhere, by depriving them of the benefit of

competition in buying, piping, storing or refining this crude oil.

_Sixth._—That the defendants and others combined and confederated

with them did conspire to monopolise the entire and exclusive

business of refining crude petroleum in Clarion County and elsewhere

by means of throwing quantities of refined oil on the market and

selling the same at less price than the fair market value of the

same in the vicinity of independent refiners in Clarion County and

elsewhere, and by means of such sales did compel such refineries to

sell out to companies with which defendants were connected, or to

abandon or quit the business of refining.

_Seventh._—That the said defendants did with others conspire

together to purchase all the pipe-lines for the transportation of

oil within the producing oil region and all the refineries for the

refining of oil, for the purpose of controlling the price of oil and

compelling the oil producers of Clarion County and elsewhere to sell

their oil to the said defendants at ruinous low rates far below the

value thereof and the price that could have been obtained for the

same in a competitive market.

_Eighth._—Although the said representations were false, the said

defendants and the several firms and corporations of which they were

members procured the control of the business of producing, buying

and selling crude petroleum, and of about ninety per cent. thereof

by following acts done in furtherance of the agreements aforesaid:

_A._—To buy only petroleum for immediate shipment from the wells of

producers. And when so bought they refused to remove it. It was so

bought at less than its value and market price, and the producers of

petroleum were compelled to sell the same by reason of the false

representations as to capacity, storage and transportation

hereinbefore fully set forth.

_B._—By giving themselves and procuring for themselves exorbitant

and unreasonable rebates, commissions and allowances from the

railroads and pipe-lines owned and controlled by them, which

rebates, commissions and allowance could not be procured by any

other than the said defendants and the several firms and

corporations of which they were members.

_C._—By impeding transportation by railroads, procuring them to

refuse and delay cars for shipment of petroleum, procuring the

breaking connections with connecting railroad lines, refusing and

procuring the refusal of railroad companies and pipe-lines to

receive and transport petroleum, by refusals and procuring refusals

to store petroleum, by refusing and procuring the refusal of

railroad companies to furnish side tracks, cars and transportation

facilities to pipe-line companies other than those of the defendants

and to individuals, by selling refined petroleum at less than the

cost of manufacture, by carrying and storing oil at less than the

cost of transportation and storage, by thereby forcing competing

lines to sell to them at a loss, by issuing certificates or accepted

orders of pipe-line companies in violation of law not representing

the petroleum in the custody of said corporations of the said

defendants, and placing such certificates upon the market, thereby

causing an apparent increase in the quantity of oil in the market

for sale and depressing the price of crude petroleum by making false

and fictitious reports of stock of petroleum in the custody of the

United Pipe Lines, a corporation of which the defendants are the

owners and which they control, by violating the laws relative to

making reports of business of the said pipe-line company; by

neglecting and refusing to make the required oath thereto, by

destroying refineries purchased by them at less than their value, of

those they had compelled to sell to them by the fraudulent acts

aforesaid, by hiring and paying salaries to men to remain out of

business for a term of years, and to act as spies for the said

defendants and the corporations and firms of which they are members;

by selling crude and refined petroleum at less than its cost to

them; by increasing the production by entering into agreements

relative to the price the said defendants and the corporations and

firms of which they were members; by threatening common carriers

with destruction of the business of carrying oil, if they carried

for others than themselves, and those associated with them, or

permitted other pipe-line companies to deliver petroleum to them, or

railroads to carry to them; by means of said threats to prevent the

building or operation of competing lines of pipe or railroad for

transportation of petroleum; by refusing to store petroleum in tanks

owned by individuals for them, and by filling such tanks with their

own oil, thereby causing a waste and loss both of petroleum and in

the price obtained; by refusals to the citizens of Clarion County

and elsewhere, at the several localities named, to transport or

store crude petroleum.

SECOND COUNT. All of the evidence hereinbefore offered in support of

the first count.

THIRD COUNT. All of the evidence hereinbefore stated to be offered

in support of the first and second counts, and, in addition thereto,

evidence of purchase of refineries under false representations; that

refiners were forced to sell by reasons of enormous rebates,

fraudulently obtained from railroad companies, as hereinbefore

stated, the business being thereby, and not otherwise, rendered

unprofitable to such refineries as could not obtain said rebates,

commissions and allowances, they being all in the said business,

except the said defendants, and the firms and corporations of which

they were members.

FOURTH COUNT. All the evidence hereinbefore stated to be offered in

support of the first, second and the third counts, and, in addition

thereto, that the said defendants and their agents diverted traffic

from the Allegheny Valley Railroad Company by threatening the said

company and those who were delivering petroleum to it for

transportation, with loss and injury to their business, and by

shipping themselves over other railroads, unless the said Allegheny

Valley Railroad Company would allow them exorbitant rebates,

commissions and allowances upon petroleum carried, that other

dealers and shippers could not obtain.

FIFTH COUNT. All the evidence hereinbefore stated to be offered in

support of the first, second, third and fourth counts, and, in

addition thereto, that the traffic was diverted from the

Pennsylvania Railroad Company, a common carrier, by the same means,

devices and threats as hereinbefore stated.

SIXTH, SEVENTH AND EIGHTH COUNTS. All the evidence hereinbefore

stated to be offered as the first, second, third, fourth and fifth

counts.

NUMBER 35 (See page 1253)

CONTRACT OF PETROLEUM PRODUCERS’ UNION WITH STANDARD COMBINATION

[From “A History of the Organisation, Purposes and Transactions of

the General Council of the Petroleum Producers’ Unions, and of the

Suits and Prosecutions instituted by it from 1878 to 1880,” pages

41–44.]

Articles of agreement made the 29th day of January, 1880, by and

between the Standard Oil Company, a corporation of the state of

Ohio; the Standard Oil Company of Pittsburg, a corporation of the

state of Pennsylvania; the Imperial Refining Company (limited) of

Oil City, Pennsylvania; the Acme Oil Company of New York and

Pennsylvania; the Atlantic Refining Company of Philadelphia; the

American Transfer Company; the United Pipe Lines, a corporation of

Pennsylvania; the Devoe Manufacturing Company of New York; the

Eclipse Lubricating Oil Company (limited) of Franklin, Pennsylvania;

J. D. Rockefeller, William Rockefeller, H. M. Flagler, William G.

Warden, Charles Lockhart, William Frew, Charles Pratt, Henry H.

Rogers, Jabez A. Bostwick, Jacob J. Vandergrift, O. H. Payne, John

D. Archbold, respectively, buyers, refiners and carriers of

petroleum, parties of the first part, each, however, contracting

severally for himself, themselves or itself, and not one for the

others, and Benjamin B. Campbell, for himself and as president of

the General Council of Petroleum Producers’ Union, and for the

members thereof as shall signify their assent hereto by signing this

agreement within sixty days from the date thereof, the parties of

the second part, each contracting severally and in the manner

aforesaid, Witnesseth,

_Whereas_, The several parties above named have been and are now

engaged in some one or all of the branches of business connected

with the petroleum trade, in buying, selling, shipping, storing,

refining, transporting and producing petroleum, and controversies

have arisen between the said parties of the first and second part

hereinbefore named, out of which have grown certain suits

hereinafter named, and it is desirable to amicably adjust said

controversies and settle said suits and proceedings, therefore, it

is hereby agreed between the said parties of the first and second

parts:

I. That the said parties of the first part shall and will make no

opposition to an entire abrogation of the system of rebates,

drawbacks and secret rates of freight in the transportation of

petroleum on the railroads.

II. That said parties of the first part further agree that the

railroad companies may make known to the other shippers of petroleum

on their several roads all the rates of freight, and that said

parties of the first part or any of them will not receive any rebate

or drawback that the railroad companies are not at liberty to give

to other shippers of petroleum.

III. The said parties of the first part further agree that so far as

the said pipe-lines are concerned there shall be no discrimination

used or permitted by the said pipe-line companies between or against

their patrons; that the rates of pipage and storage shall be

reasonable, uniform, and equal to all parties, and shall not be

advanced except on thirty days’ notice; that to the extent of their

influence the United Pipe Lines and the other companies parties

hereto do agree that there shall be no difference in the price of

crude oil between one district and another, excepting such as may be

based upon a difference in quality, to be determined by tests; that

the said pipe-lines will make every reasonable effort to receive,

transport, store and deliver all oil tendered them, and will

receive, transport, store and deliver all oil so tendered so long as

the production does not exceed an average of sixty-five thousand

barrels per day during fifteen (15) consecutive days, unforeseen

emergencies and unavoidable accidents excepted, and if the

production shall exceed the amount stated, and also the storage

capacity of the pipe-lines, the parties of the first part, buyers of

oil, agree that they will not purchase any so-called immediate

shipment oil, at a lower price than the price of certificate oil,

provided that the owners of immediate shipment oil in the Oil Region

do not sell to any other party or parties at a lower price.

IV. And all the parties of the first part further agree that until

the production of oil reaches the daily maximum of sixty-five

thousand barrels as aforesaid, certificates or other vouchers will

be given for all oil taken into the custody of the pipe-lines and

the transfer of such certificates or other vouchers in the usual

manner shall be considered as a delivery of the oil mentioned

therein as between the pipe-lines and the seller, subject to the

provisions of such certificate or other vouchers.

In consideration of the agreement hereinbefore set forth, and of the

execution thereof by the first parties, the said second parties do

hereby agree as follows:

That the Governor and Attorney-General of the Commonwealth of

Pennsylvania shall be requested by them within ten days of the

execution hereof, to enter a motion to dismiss the bill filed by the

Commonwealth of Pennsylvania against the United Pipe Lines and

others at Number 309, October and November term, 1878, in the

Supreme Court of Pennsylvania, and the proceedings by _quo warranto_

Number 12, November term, 1878, in Venango County, and will do all

that may be lawfully done to have the same dismissed of record. That

upon written motion and agreement the Supreme Court of Pennsylvania

may make of record by consent of both parties, an order discharging

the rules to show cause in the case of the Commonwealth _vs._

Rockefeller _et al._, granted by E. M. Paxson on the 11th day of

December, 1879, and made returnable January 5, 1880, and annulling

the order staying proceedings made by the Supreme Court on the 8th

day of January, 1880.

It is further agreed that this agreement shall, upon execution

thereof by the parties, be a full release and satisfaction between

the parties of all causes of action of any and every kind

whatsoever, arising out of the past transactions involved in the

said several suits, controversies, or prosecutions, or incident

thereto, so far as the parties hereto or any of them are in any

manner interested or have any cause or rights of action for or

against each other. And it is hereby further agreed that the Court

of Quarter Sessions of Clarion County be, and they are hereby

respectfully requested to give their consent to the entering of a

_nolle prosequi_ in the case of the Commonwealth of Pennsylvania

_vs._ John D. Rockefeller _et al._, of April sessions, 1879, Number

25, in which the defendants named in said case are charged with

conspiracy, and the district-attorney of said county is hereby

requested, on receiving the consent of the said court, to enter in

said case a _nolle prosequi_, and the same to be entered of record

in said court, with the intent that the same be a judgment of said

court disposing of and ending all proceedings under indictment

hereinbefore referred to, forever.

_In Witness Whereof_ the aforesaid parties to these presents have

hereunto set their hands and seals, the said corporations having

caused their seals to be affixed this fifth day of February, A.D.

1880.

Standard Oil Company, by

(Seal) JOHN D. ROCKEFELLER, _President_, [L.S.]

Attest: H. M. FLAGLER, [L.S.]

JOHN D. ROCKEFELLER, [L.S.]

O. H. PAYNE. [L.S.]

United Pipe Lines, by

(Seal) J. J. VANDERGRIFT, _President_, [L.S.]

Attest: H. M. HUGHES, _Secretary_, [L.S.]

HENRY M. FLAGLER, [L.S.]

J. J. VANDERGRIFT, [L.S.]

WILLIAM ROCKEFELLER. [L.S.]

Imperial Refining Company, Limited, by

(Seal) J. J. VANDERGRIFT, _Chairman_, [L.S.]

Attest: D. MCINTOSH, _Secretary_. [L.S.]

Eclipse Lubricating Oil Company, Limited, by

THOMAS BROWN, _Chairman_, [L.S.]

F. Q. BARSTOW, _Secretary_. [L.S.]

Standard Oil Company, by

(Seal) CHARLES LOCKHART, _President_, [L.S.]

A. F. BROOKS, _Secretary_, [L.S.]

W. G. WARDEN, [L.S.]

CHARLES LOCKHART. [L.S.]

The Atlantic Refining Company, by

CHARLES LOCKHART, _President_, [L.S.]

CHARLES PRATT, [L.S.]

HENRY H. ROGERS. [L.S.]

Acme Oil Company, by

JOHN D. ARCHBOLD, _President_, [L.S.]

Attest: GEORGE F. CHESTER, _Secretary_, [L.S.]

JOHN D. ARCHBOLD. [L.S.]

American Transfer Company, by

GEORGE H. VILAS, _President_, [L.S.]

Attest: GEORGE F. CHESTER, _Secretary_, [L.S.]

J. A. BOSTWICK, [L.S.]

B. B. CAMPBELL. [L.S.]

Witness, JOHN V. KEEF.

Witness as to signature of B. B. Campbell,

W. BAKEWELL.

NUMBER 36 (See page 1254)

AGREEMENT BETWEEN B. B. CAMPBELL AND THE PENNSYLVANIA RAILROAD COMPANY

[From “A History of the Organisation, Purposes and Transactions of

the General Council of the Petroleum Producers’ Unions, and of the

Suits and Prosecutions instituted by it from 1878 to 1880,” pages

45–46.]

This agreement, made on the twenty-seventh day of April, A.D. 1880,

between B. B. Campbell and the Pennsylvania Railroad Company.

_Whereas_, It having been alleged by persons engaged in the

production and shipping of petroleum and the products of petroleum,

that discrimination had been practised in the rates of freight and

in the distribution of cars by the Pennsylvania Railroad Company, in

such manner as to be injurious to the business of such producers,

and bills in equity having been filed in the name of the

Commonwealth in the Western District of the Supreme Court of the

state of Pennsylvania, for the purpose of restraining such

discrimination; and

_Whereas_, In pursuance of an agreement signed on the twelfth of

February, 1880, by the said B. B. Campbell, representing the oil

producers, at whose instance such bills were filed, and Thomas A.

Scott as president of the Pennsylvania Railroad Company, the said

bills were withdrawn; and

_Whereas_, In said agreement the Pennsylvania Railroad Company

agreed, upon the withdrawal of said bills, that it would enter into

written contracts with the said B. B. Campbell, representing said

producers, and all such producers as should within sixty days after

the date of said agreement signify their assent to said agreement by

signature to the same or duplicate thereof, which contracts should

stipulate as therein mentioned, and as hereinafter provided; and

_Whereas_, On the twenty-fifth of February, 1880, the board of

directors of the Pennsylvania Railroad Company approved the action

of the president in signing said agreement, and authorised the

president or one of the vice-presidents to execute such further and

formal agreements as might be deemed necessary to carry out the

terms of said agreement,

_Now therefore_, this agreement witnesseth, That in consideration of

the premises, and other good and valuable considerations to them

thereunto moving, it is covenanted and agreed between the parties

hereto as follows, to wit:

_First_, That the Pennsylvania Railroad Company shall and will make

known to all shippers of petroleum and its products all the rates of

freight intended to be charged to all shippers upon such petroleum

and its products.

_Second_, That the said Pennsylvania Railroad Company shall not and

will not pay or allow any shipper of petroleum or its products any

rebate, drawback or commission upon the shipments of such petroleum

or products different from or greater than that which shall be paid

to any other person shipping or offering to ship like quantity; and

that any discrimination that may be made in favour of shippers of

the large quantities shall be reasonable, and shall, upon demand

made, be communicated to all persons shipping, or who are now or may

be hereafter engaged in the business and desire to ship petroleum

and its products.

_Third_, That the said Pennsylvania Railroad Company further agrees

that upon its own road, and upon any other road or roads upon which

it shall furnish cars and engage in the business of a common carrier

of petroleum and its products, it will not practise any

discrimination in the distribution of its cars, but will make fair

apportionment in such distribution among all applicants for cars

having actually in their custody and ready for shipment at the time

of their application the petroleum or products for the shipment of

which they ask facilities.

_In Witness Whereof_, the individuals parties hereto have hereunto

set their hands and seals, and the said Pennsylvania Railroad

Company has caused its corporate seal to be hereunto affixed, duly

attested, the day and year first above written.

The Pennsylvania Railroad Company, by

THOMAS A. SCOTT,

_President_.

Attest JOHN C. SIMS,

_Assistant Secretary_.

B. B. CAMPBELL.

(Seal)

THE HISTORY OF

THE STANDARD OIL COMPANY

[Illustration:

JOHN D. ROCKEFELLER

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

]

THE HISTORY OF

THE STANDARD OIL COMPANY

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

[Illustration]

VOLUME TWO

NEW YORK

McCLURE, PHILLIPS & CO.

MCMV

_Copyright, 1904, by_

McCLURE, PHILLIPS & CO.

Published, November, 1904, N

SECOND IMPRESSION

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 BECAUSE 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 COMPANY 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—AGREEMENT ENTERED INTO WITH PENNSYLVANIA

RAILROAD TO DIVIDE THE BUSINESS OF TRANSPORTING OIL Pages 2003–2030

CHAPTER TEN

CUTTING TO KILL

ROCKEFELLER NOW PLANS TO ORGANISE OIL MARKETING AS HE

HAD ALREADY ORGANISED OIL TRANSPORTING AND

REFINING—WONDERFULLY EFFICIENT AND ECONOMICAL SYSTEM

INSTALLED—CURIOUS PRACTICES INTRODUCED—REPORTS OF

COMPETITORS’ BUSINESS SECURED FROM RAILWAY

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 INFORMATION 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 LOWERING OF PRICES—PRICES MADE

ABNORMALLY HIGH WHEN COMPETITION IS DESTROYED Pages 2031–2062

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 CONSPICUOUS—THE 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 2063–2087

CHAPTER TWELVE

THE BUFFALO CASE

THE STANDARD BUYS THREE-FOURTHS OF THE VACUUM OIL WORKS

OF ROCHESTER—TWO VACUUM EMPLOYEES ESTABLISH BUFFALO

LUBRICATING 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 Pages 2088–2110

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—POPULAR 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 Pages 2111–2128

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—INVESTIGATION 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 PERSUADE WATSON NOT TO PRESS THE

SUIT—WATSON PERSISTS—COURT FINALLY DECIDES AGAINST

STANDARD AND TRUST IS FORCED TO MAKE AN APPARENT

DISSOLUTION Pages 2129–2155

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 REFINERS

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 BECOMES HEAD OF

INDEPENDENT CONSOLIDATION—INDEPENDENCE POSSIBLE, BUT

COMPETITION NOT RESTORED Pages 2156–2191

CHAPTER SIXTEEN

THE PRICE OF OIL

EARLIEST DESIGNS FOR CONSOLIDATION INCLUDE PLANS TO

HOLD UP THE PRICE OF OIL—SOUTH IMPROVEMENT COMPANY SO

INTENDS—COMBINATION 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 FOREIGN 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 2192–2230

CHAPTER SEVENTEEN

THE LEGITIMATE GREATNESS OF THE STANDARD OIL COMPANY

CENTRALISATION OF AUTHORITY—ROCKEFELLER AND EIGHT OTHER

TRUSTEES MANAGING THINGS LIKE PARTNERS IN A

BUSINESS—NEWS-GATHERING 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 2231–2255

CHAPTER EIGHTEEN

CONCLUSION

CONTEMPT PROCEEDINGS BEGUN AGAINST THE STANDARD IN OHIO

IN 1897 FOR NOT OBEYING THE COURT’S ORDER OF 1892 TO

DISSOLVE THE TRUST—SUITS BEGUN TO OUST FOUR OF THE

STANDARD’S CONSTITUENT COMPANIES 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 INCREASED, AND ALL STANDARD OIL

BUSINESS TAKEN INTO NEW ORGANISATION—RESTRICTION 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 UNSOLVED—THE ETHICAL

QUESTIONS INVOLVED Pages 2256–2292

APPENDIX Pages 2293–2396

INDEX Pages 2397–2409

LIST OF ILLUSTRATIONS

SKETCH OF JOHN D. ROCKEFELLER _Frontispiece 2_

A sketch from life by George Varian, made in

Cleveland, October, 1903.

FACING PAGE

PORTRAIT OF ALANSON A. SUMNER 2004

Prominent supporter of the Tidewater Pipe

Company, still active in its counsels.

PORTRAIT OF HENRY HARLEY 2004

President of the Pennsylvania Transportation

Company. Projector of the first seaboard pipe

line.

PORTRAIT OF SAMUEL VAN SYCKEL 2004

The first successful pipe line for gathering and

transporting oil was completed by Mr. Van

Syckel in 1865.

PORTRAIT OF GENERAL HERMAN HAUPT 2004

Civil Engineer for the first and second pipe

lines projected to the seaboard.

PORTRAIT OF BYRON D. BENSON 2012

The first president of the Tidewater Pipe

Company.

PORTRAIT OF DAVID K. McKELVY 2012

The successor of Mr. Benson as president of the

Tidewater.

PORTRAIT OF MAJOR ROBERT E. HOPKINS 2012

Treasurer of the Tidewater from its organization

until his death in 1901.

PORTRAIT OF SAMUEL Q. BROWN 2012

The present president of the Tidewater, successor

to Mr. McKelvy.

PORTRAIT OF JOHN D. ROCKEFELLER IN 1880 2032

From a photograph by Sarony.

PORTRAIT OF WILLIAM C. SCOFIELD 2068

Senior member of the firm of Scofield, Schurmer

and Teagle, of Cleveland. Plaintiff in

important suits against Lake Shore Railroad for

freight discriminations.

PORTRAIT OF DANIEL SCHURMER 2068

Associate of Mr. Scofield and Mr. Teagle in the

war on railroad rebates which the firm waged

for nearly twenty years.

PORTRAIT OF JOHN TEAGLE 2068

Independent refiner of Cleveland, Ohio, prominent

in struggle against freight discriminations by

the railroads.

PORTRAIT OF CHARLES B. MATTHEWS 2068

Independent refiner of Buffalo. Plaintiff in

“Buffalo case,” where members of the Standard

Oil Company were indicted for conspiracy.

BURST IN A PIPE LINE 2076

BLEACHING TANK 2092

CONSTRUCTING AN IRON TANK FOR STORING OIL 2092

OIL AGITATORS 2092

FIVE-BARREL STILL USED IN THE FIFTIES IN DISTILLING

CRUDE OIL AS A LUMINANT 2092

PORTRAIT OF JOHN D. ROCKEFELLER 2120

By Eastman Johnson.

PORTRAIT OF DAVID K. WATSON 2142

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 2142

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. 2142

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 2142

Plaintiff in numerous cases brought against the

Standard Oil Company. Prominent independent

witness in various State and congressional

investigations.

GROUP OF CLEVELAND CITIZENS 2146

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.

MICHAEL MURPHY 2164

The present President of the Pure Oil Company.

DAVID KIRK 2164

The first President of the Pure Oil Company.

JAMES W. LEE 2164

The chief counsel of the Pure Oil Company.

President of the company from 1897 to 1901.

THOMAS W. PHILLIPS 2164

A leader in the independent movement, which

resulted in the Pure Oil Company.

LAYING A SIX-INCH PIPE LINE, CAIRO, WEST VIRGINIA 2182

A TYPICAL OIL FARM OF THE EARLY DAYS 2216

PORTRAIT OF S. C. T. DODD 2232

Chief counsel of the Standard Oil Company. Framer

of the Trust agreement of 1882.

PORTRAIT OF JABEZ A. BOSTWICK 2232

From 1872 to 1892 the chief oil buyer of the

Standard Oil Company.

PORTRAIT OF JOSEPH SEEP 2232

Head of the “Seep Agency,” through which all oil

transported by the Standard Oil Company goes.

PORTRAIT OF DANIEL O’DAY IN 1872 2232

Vice-president of the National Transit Company,

the pipe-line company owned by the Standard Oil

Company.

PORTRAIT OF JOHN D. ROCKEFELLER 2256

From a photograph by Allen Ayrault Green, taken

about 1892.

A 25,000–BARREL TANK OF OIL IN FLAMES 2280

THE HISTORY OF

THE STANDARD OIL COMPANY

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 BECAUSE 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 COMPANY 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—AGREEMENT ENTERED INTO WITH PENNSYLVANIA RAILROAD TO

DIVIDE THE BUSINESS OF TRANSPORTING OIL.

The project for a seaboard pipe-line to be built by the producers and to

be kept independent of Standard 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 telegraph 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 former

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. 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 Company, 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.[86]

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 Williamsport 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

exclusive 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 succeeded 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 shipments of supplies. At

Williamsport, where the pipe crossed under the railroad, it was torn out

once. The Tidewater had no trouble in this case in getting an injunction

which prevented further lawlessness.

[Illustration:

ALANSON A. SUMNER

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

counsels.

]

[Illustration:

HENRY HARLEY

President of the Pennsylvania Transportation Company. Projector of the

first seaboard pipe line.

]

[Illustration:

SAMUEL VAN SYCKEL

The first successful pipe line for gathering and transporting oil was

completed by Mr. Van Syckel in 1865.

]

[Illustration:

GENERAL HERMAN HAUPT

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

seaboard.

]

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

connected 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 gathered 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,

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 and

shipped the oil over the Erie; special rates were given him, and the

Stokes refinery soon began to flourish at the expense of the former

shippers of the Erie. Mr. Lombard finding, 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. Ayres, 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 manœuvres 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 association, 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 part of their oil at this time

from Adnah Neyhart. Now, sometime 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 discriminating contracts with the Standard. Again

the firm changed, buying its oil from J. A. Bostwick and Company 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 18th of May, 1877, he went to Philadelphia

and saw Colonel Potts, who told him he would be glad to have his

shipments 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

Pennsylvania refused to renew it on the terms they gave the Standard.

Mr. Lombard gave a very interesting account of the interview 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 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 Railroad

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 Pennsylvania

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 understood 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 profitable

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 discrimination 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 succeed. 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

promote 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.

“There was another interview at which Mr. Bush, Mr. Ohlen, Mr.

Cassatt, and myself were the only parties as I remember it; it was

held in Pennsylvania, at the office of the Pennsylvania Railroad

Company, in the last part of May or early part of June; it was at

the time of what we called the squeeze in cars. Previous to that

time we had had all the cars we wanted without any difficulty; at

that time and when we were wanting just about the same kind of cars

we had previously been wanting, and business was running on very

easily, we found we were unable to get anything like the amounts we

had before; instead of getting for the firm I represented from

twelve to fifteen cars a day, we were getting only one or

two—utterly insufficient for the business. We came over to see Mr.

Cassatt about it—Mr. Bush, Mr. Ohlen, and myself. He said he knew

there was trouble; that the other side, the Standard Oil Company,

had some five hundred cars full here at Philadelphia and Baltimore;

that he had not discovered it until recently, but that he would have

it remedied. They had been holding them here full. I asked him why,

if he knew of the cars being detained, he kept giving them cars. He

said he did not know exactly how that was. I told him if these cars

were shipped here and held, it seemed to me they ought to stop

giving cars to parties holding them. He said the matter would be

remedied soon. We asked him how soon. He could not tell exactly. I

said, ‘Can’t you stop giving them cars?’ He said he would remedy the

matter, we should have all the cars we needed; and it was at that

time that he made the remark to which Mr. Bush testified, when we

had some little general conversation, that if we built a pipe-line

he would buy it up for old iron in sixty days. I think I remarked

that the Conduit Pipe brought a good price for old iron, in a

laughing way. The interview was pleasant enough. Then early in

July—I think it was the last part of June or early part of July—Mr.

Ohlen, Mr. Bush, Mr. Wilson, Mr. King, Mr. Gregory, and myself came

to Philadelphia and met Colonel Scott, president of the Pennsylvania

Railroad, Mr. Cassatt and Mr. Brundred at the office of the

Pennsylvania road, with the same trouble, the same two troubles as

of old, a scarcity of cars and a discrimination in freight. As to

scarcity of cars, they claimed that we were getting our allotment.

We told them we knew nothing about an allotment, that previous to

the first of May we had sufficient cars for our business; since that

time we got scarcely any; that if they had not sufficient cars to do

the business with we would put on cars. Mr. Scott said they would

not allow that, they had bought out one line and did not propose to

have another; we then demanded cars for the business, making again

the offer to put on cars if they could not furnish them, with the

same result. He said they had already fought one fight in our behalf

which cost them a million and a half of dollars. We told them not at

all in our behalf, we had nothing to do with it; we were simply

shippers over the road and did not participate in the matter at all;

it was a matter of their own. He seemed to be a little sore about

that. When he made the remark which has been given in evidence

before, he said there would be no peace or profit in the business

until we made some arrangement with the 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 transportation 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 experiences 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 serious 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 Company 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 16⅔ 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. 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

transportation; 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 Jersey, 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 railroads 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

which the National Transit Company now bought seems to have gone into

hiding when the character of its mate was disclosed 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.”

[Illustration:

BYRON D. BENSON

The first president of the Tidewater Pipe Company.

]

[Illustration:

DAVID K. MCKELVY

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

]

[Illustration:

MAJOR ROBERT E. HOPKINS

Treasurer of the Tidewater from its organization until his death in

1901.

]

[Illustration:

SAMUEL Q. BROWN

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

]

Suppose your opposition to be withdrawn, and you join the alliance,