or their creditors, by making one shipper pay tribute to his rival
in business at the rate of twenty-five dollars per day, or any
greater or less sum, thereby enriching one and impoverishing
another, is a gross, illegal, inexcusable abuse of a public trust
that calls for the severest reprehension. The discrimination
complained of in this case is so wanton and oppressive it could
hardly have been accepted by an honest man having due regard for the
rights of others, or conceded by a just and competent receiver who
comprehended the nature and responsibility of his office; and a
judge who would tolerate such a wrong or retain a receiver capable
of perpetrating it ought to be impeached and degraded from his
position.
“A good deal more might be said in condemnation of the unparalleled
wrong complained of, but we forbear. The receiver will be removed.
The matter will be referred to a master to ascertain and report the
amount that has been as aforesaid unlawfully exacted by the receiver
from Rice, which sum, when ascertained, will be repaid to him. The
master will also inquire and report whether any part of the money
collected by the receiver from Rice has been paid to the Standard
Oil Company, and if so—how much, to the end that, if any such
payments have been made, suit may be instituted for its
recovery.”[107]
On December 18 George K. Nash, a former governor of Ohio, was appointed
master commissioner to take testimony and clear up the point doubtful in
the judge’s mind—to whom had the extra money paid by Rice been paid; the
receiver declared that he never paid the Standard Oil Company any part
of Rice’s money. Mr. Nash summoned a large number of witnesses and
gradually untangled the story told above. Mr. Pease spoke truly, he had
never paid the Standard Oil Company any part of Mr. Rice’s money. A
joint agent of the railroad and the pipe-line had been appointed, at a
salary of eighty-five dollars a month, sixty dollars paid by Pease and
twenty-five dollars by the Standard, who collected the freight on
independent shipments and divided the money between the two parties. It
was from this agent that it was learned that, twelve days _after_ Judge
Baxter ordered Receiver Pease to bring his contracts into court, the
money paid on Mr. Rice’s oil had been returned by the Standard Oil
Company.[108] While the investigation in regard to Mr. Rice’s oil was
going on, complaints came to Commissioner Nash from two other oil works
at Marietta that they had been suffering a like discrimination for a
much longer time. The commissioner investigated the cases and found the
complaints justified. The Standard Oil Company had received $649.15 out
of the money paid by one concern to the railroad for carrying its oil,
and $639.75 out of the sum paid by another concern! Both of these sums
were returned by the Standard.[109]
Of course the case aroused violent comment. In 1888 it came before the
Congressional Committee which was investigating trusts, and an effort
was made to explain the twenty-five cents extra as a charge of the
pipe-line for carrying oil to the railway. Now, the practice in vogue in
the Oil Regions then and now is that the _purchaser of the oil pays the
pipe-line charge_. The railroad has nothing to do with it. Even if the
Standard Oil Company puts a tax on railroads for allowing them to take
oil carried by its pipe-lines—thus collecting double pay—the tax would
not apply in Mr. Rice’s case, for the oil came to the Cincinnati and
Marietta road not through Standard pipes but through Mr. Rice’s own
pipes. This much Mr. O’Day was obliged to admit in 1888:
_Q._ But did that other oil which was in competition with you pass
through your pipe?
_A._ No, sir.
_Q._ Did not they, therefore, on that oil which only passed over
their railroad and not through your pipe-line, pay to you the same
allowance or rebate that they did on your oil which did pass?
_A._ They did, but we returned it through the advice of our counsel,
Mr. Dodd.
_Q._ Now, out of that sum how much did you get from the railroad out
of what they had received from Mr. Rice?
_A._ We did not get any; that is, we did not retain any. The
railroad company agreed to account to us for the oil that went over
its lines, and they did make an accounting, to my recollection, of
about $200, or something like that, on oil other than that which
passed through the lines. Our counsel, Mr. Dodd, advised me that we
could not do that business, and we refunded the money.
Soon after the report of the Congressional Committee was published John
D. Rockefeller himself explained the case in an interview published in
the New York World for March 29, 1890: “When the arrangement was
reported to the officers of the company at New York,” Mr. Rockefeller
told the interviewer, “it was not agreed to because our counsel
pronounced it illegal in so far as it embraced oil carried by the
pipe-line. Some $250 had been paid to the pipe-line under this contract
on oil which the line had not transported. This was refunded. We
repudiated the contract before it was passed upon by the courts and made
full recompense. In a business as large as ours, conducted by so many
agents, some things are likely to be done which we cannot approve. We
correct them as soon as they come to our knowledge. The public hears of
the wrong—it never hears of the correction.” In the Digest of Evidence
made by the Industrial Commission in its report published in 1900 (page
158), it is stated that the money collected was refunded _before_ suit
was brought. The facts show that the statement in the report of the
Industrial Commission that the money was refunded _before_ suit was
brought is wrong, and that, while Mr. Rockefeller is technically correct
in stating that the Standard repudiated the contract before it was
passed on by the courts, he should have added they did not repudiate the
contract until _eight months after_ it was made, and did not refund the
money until _twelve days after_ it became certain that the contract
would be produced in court. He also does not explain why the Standard
Oil Company did not return the money unjustly paid to them on the
shipments of the other independent oil concerns of Marietta until
exposure by Commissioner Nash’s investigation made it inevitable.[110]
But it was not only manipulation of the railroads by the Standard Oil
Company of which the public was complaining at this time. The policy of
making it impossible for even small independent concerns to do business
was attracting more and more attention. Indeed, there was going on in
Buffalo, New York, simultaneously with these two cases, a most
sensational trial, growing out of an indictment for the crime of
conspiracy, by the Grand Jury of Erie County, New York, of three
prominent members of the Standard Oil Company—H. H. Rogers, John D.
Archbold and Ambrose McGregor—with two refiners with whom they were
associated—H. B. Everest and C. M. Everest. The case is reported in the
next chapter at some length, because of the importance it has assumed in
the popular controversy which has been going on for the last twenty
years over “Standard methods,” it being the case on which is based the
often-repeated charge that Mr. Rockefeller, to win his point, has been
known to burn refineries.
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.
Very soon after Mr. Rockefeller began to “acquire” independent
refineries, whose owners were loath to sell or go out of business,
unpleasant stories began to be circulated in the oil world of the
methods used in getting the offending plants out of the way. When
freight discriminations, cutting off of crude supply, and price wars in
the market failed, other means were tried, and these means included
sometimes, it was whispered, the actual destruction of the plants. The
only case in which this charge was made which ever came to trial was
that of the Buffalo Lubricating Oil Company, Limited. For sake of
clearness, a narrative of the case has been drawn from the testimony
offered, no statements being admitted which were not brought out in the
trials.
It seems that some time in 1879 the owners of the Vacuum Oil Works, of
Rochester, New York—H. B. and C. M. Everest, father and son—sold to H.
H. Rogers, J. D. Archbold and Ambrose McGregor of the Standard Oil
Company, for $200,000, a three-fourths interest in that concern. The
purchase was not made for the gentlemen in whose names it appeared, but
for the Standard. Thus, when on the witness-stand J. D. Archbold was
questioned as to the real ownership of the stock which had been bought
in his name, the examiner wanted to know whether the purchasers
represented themselves or somebody else.
“Mr. Archbold,” he asked, “you made the contract, did you not, with
reference to the transfer of the seventy-five shares of the Vacuum
Oil Company’s stock by the Messrs. Everest?”
_A._ I bought the seventy-five shares, yes, sir.
* * * * *
_Q._ Whom did you represent in that transaction?
_A._ I represented the shareholders of the Standard Oil Company.
_Q._ After this purchase was made did you continue to represent the
purchasers in the management of the affairs of the Vacuum Oil
Company?
_A._ I did.
_Q._ By virtue of power delegated to you, or by virtue of being a
member of the board of directors or trustees of the Vacuum?
_A._ By the virtue of power delegated to me.
_Q._ By the purchasers?
_A._ By the purchasers.
The Vacuum manufactured principally lubricating oils used on harness and
car wheels. It controlled several valuable patents and had been doing a
prosperous business for a number of years. By the terms of the sale in
1879 the Everests remained as managers of the refinery, on a salary of
$10,000 a year. They also contracted to enter into no outside oil
business for ten years. The business policy of the Vacuum, including the
fixing of salaries, was dictated by a board of directors made up of
Messrs. Rogers, Archbold, McGregor and the two Everests. The meetings of
this board were held at the office of the Standard Oil Company, in New
York or in Rochester, as convenient.
So far as can be inferred from the testimony, the works were well
managed, the dividends large, and the employees well treated. In 1880
the salesman of the concern, J. Scott Wilson, decided to leave the
Vacuum and go into business for himself. The decision seems natural, for
until 1878 Mr. Wilson had carried on an independent oil business of one
kind or another. He had been a partner in a refinery and understood
making oils. He had been a jobber on his own account before going with
the Everests, and as such had had a considerable clientele. Wilson told
one of his fellow employees, Charles B. Matthews, of his decision, and
asked him to go with him. Matthews had been with the Everests about the
same length of time as Wilson—some two years. Previous to this
engagement he had been a farmer, and his acquaintance with the Vacuum
people had come about by his drilling on his farm for oil. Matthews was
worth some $20,000, but he had had no experience in oil refining, for
his duties at the Vacuum had been mainly looking after outside
business—for instance, he had several times gone to New York to consult
J. D. Archbold and H. H. Rogers concerning business matters, and
particularly concerning patents owned by the Vacuum, of whose validity
there was some doubt. For some time Matthews had been dissatisfied with
his salary—he had asked for a raise, but had not got it—a fact which
probably made him more favourable to Wilson’s suggestion.
The two men decided finally to form a company and to build an oil
refinery at Buffalo. Wilson said on the witness-stand that he did not
want to handle the Vacuum processes in the new works, but to make only
the oils with which he was familiar. Matthews, however, had convinced
himself that the patents which covered certain of the Vacuum processes
and apparatus were invalid, and insisted that they build at least one
Vacuum still. The question of what steps the Vacuum might take to stop
them was discussed, and according to Wilson’s testimony Matthews
remarked that he expected they would pay $100,000 or $150,000 to prevent
their going into business. Matthews’s remark was natural enough,
considering the conditions under which outside refiners were forced to
do business. It is probable that no man undertook any kind of
independent oil business at that time, particularly oil refining,
without considering the possibility of being driven to sell.
The new firm needed an experienced stillman accustomed to the Vacuum
processes, and early in 1881 they asked one Albert Miller, a stillman in
the Vacuum works, to join them. “If we have Miller,” they told each
other, “we can go to the customers of the Vacuum Oil Company and say to
them: ‘We have the same process and the same apparatus and the same oils
as the Vacuum Oil Company, and we have their former superintendent, Mr.
Miller, to manufacture the oils.’” Miller had been with the Everests for
several years, having worked his way up from a labourer at two dollars a
day to a position where, as stillman, he was paid by the hour, and
earned from $1,200 to $1,400 a year. He and his wife had been thrifty,
and had several thousand dollars in property. Miller thought there was
money in the new venture, and consented to join Wilson and Matthews. The
three set about carrying out their plans before they notified their
employers of their intention to leave—Miller going so far as to order
certain iron castings needed in the construction of their works, made
after patterns owned by the Everests. He had these made at the foundry
patronised by the Everests. He paid for them himself, and carried them
away, presumably giving the impression that they were for his employers.
Early in March Matthews and Miller notified C. M. Everest, who was in
charge, his father being in California, that they were going to leave
and establish at Buffalo an independent oil refinery. Mr. Everest,
surprised out of discretion by the news, told them plainly that although
he had nothing against them personally, he should do all in his power to
injure the proposed concern. He asked them where they expected to get
oil, and they replied that they would get it from the Atlas Refining
Company, an independent concern in Buffalo, which had its own pipe-line.
“You will wake up some morning and find it is in the Standard,” replied
Mr. Everest. Apparently Mr. Everest’s threat had little influence on the
men, for they pushed the building of the works in Buffalo as rapidly as
possible. On March 15 they signed an agreement to carry on the proposed
business for five years, each man to put in $2,000. A month later the
three men, with two relatives of Matthews, organised a stock company—the
Buffalo Lubricating Oil Company, Limited—with a capital of $40,000.
Although Miller had gone to Buffalo the first of March with Matthews and
Wilson, he returned frequently to Rochester to see his family. On
several of these visits he saw C. M. Everest, who never failed to ask
about the progress of the new concern, and to warn him that the Vacuum
Company would never allow it to do business. “Don’t you think, Miller,”
Everest said to him once, “that it would be better for you to leave
those men and have $20,000 deposited to your wife’s credit than to go to
these parties?” Miller affirms that he answered that he had gone with
the new firm in good faith, and thought he ought not to leave them.
[Illustration:
BLEACHING TANK
]
[Illustration:
CONSTRUCTING AN IRON TANK FOR STORING OIL
]
[Illustration:
OIL AGITATORS
]
[Illustration:
FIVE-BARREL STILL USED IN THE FIFTIES IN DISTILLING CRUDE OIL AS A
LUMINANT
]
About two months after the new firm began building, the elder Everest,
who had been in California, returned to Rochester, and soon after had
several interviews with Miller. He impressed on the man, as his son had
done, that the Buffalo Lubricating Works would never succeed. He told
him that the Vacuum meant to bring suit against them for infringing
their patents, and would get an injunction and stop the works; that
Miller would lose all the money he had put in. To save himself, Everest
advised Miller to come back to the Vacuum. “But that would leave them in
a pretty bad fix,” Miller said. “That is exactly what I want to do,”
replied Everest. The fear that the new concern might be ruined through
the hostility of the Vacuum, and he lose his savings, seems to have
preyed on Miller’s mind. He took his wife into his confidence, and she,
too, became alarmed. He began to neglect his work in Buffalo. He was
often away at nights. Matthews began to be worried by Miller’s neglect
and absence, and to watch the stations to find, if possible, where he
went. Miller’s question now became, how could he get away from the
Buffalo firm? He had signed for the company a note for $5,000. He was
under contract for a term of years. He discussed the question with the
Everests, and they advised him to see his lawyer. On the seventh of
June, according to H. B. Everest,[111] who went with him to help present
the case, Miller did consult George Truesdale, a lawyer of Rochester,
who had always handled his business. Mr. Truesdale afterwards told in
court what occurred:
“Mr. Everest stated that Miller had left his employ, and got engaged
with another oil concern in the City of Buffalo; that he desired to
get back again; he wanted him to come back; and he said he supposed
Miller had explained to me his situation, and the obligations he was
under to the Buffalo company. I told him that he had made some
statements to me about his contract with the parties in Buffalo;
that he had spoken about being an endorser or party to the note made
by, I think he said, Matthews and Wilson and himself, and I think
another party—four or five of them had made, endorsed a note to
raise money, done to start the Buffalo business, and that he had a
contract or an arrangement with them to go into a company at Buffalo
to manufacture oil, and that he wanted to know how he could get out
of that arrangement. I stated what I had said to Miller, that he
would, of course, be liable on the note, if he was _charged_
properly when it became due, and that if he wanted to get out of
that arrangement my advice to him had been to see if he couldn’t get
released; if they wouldn’t release him or buy out his interest;
then, if he couldn’t do that, the only other way I saw was for him
to leave them and take the consequences. I told him that I did not
know the exact terms of his contract, but, if he had entered into a
contract and violated it, I presumed there would be a liability for
damages, as well as a liability for the debts of the Buffalo party.
Mr. Miller and Everest both talked on the subject, and Mr. Everest
says, ‘I think there is other ways for Miller to get out of it.’ I
told him I saw no way except either to back out or to sell out; no
other honourable way. Mr. Everest says, substantially, I think, in
these words: ‘Suppose he should arrange the machinery so it would
bust up, or smash up, what would the consequences be?’—something to
that effect. ‘Well,’ I says, ‘in my opinion, if it is negligently,
carelessly done, not purposely done, he would be only civilly liable
for damages caused by his negligence; but if it was wilfully done,
there would be a further criminal liability for malicious injury to
the property of the parties, the company.’ Mr. Everest said he
thought there wouldn’t be anything only civil liability, and said
that would—he referred to the fact that I had been police justice,
had some experience in criminal law—and he said that he would like
to have me look up the law carefully on that point, and that they
would see me again.”
Miller’s version of this interview is similar:
“I think Mr. Truesdale or myself, I am not positive which, asked the
question what means I could take to get out of the company. H. B.
says, ‘There is a good many ways he could get out.’ Either Mr.
Truesdale or myself asked him how. ‘Well,’ he says, ‘he can cut up
something or do something to injure them; something of that kind, to
get out’; H. B. said this. Mr. Truesdale spoke up and said, ‘You
must be very careful what you do or you will lay yourself criminally
liable.’ Mr. Everest says to me, ‘There is ways that you can get
out.’ I says to him, ‘You wouldn’t want me to do anything, would
you, to lay myself liable?’ I think Mr. Truesdale spoke up and says,
‘You must be very careful or you will end in state’s prison,’—that
is, I. There was considerable conversation I cannot just exactly
remember; I have told all I recollect at present. Mr. Truesdale
asked me if I had a contract with the Buffalo parties; I told him I
had; ‘Well,’ he says, ‘the best thing you can do is to stay there,
then,’ or something of that kind. I cannot say those were his exact
words. H. B. Everest says, ‘If he comes back with us, why, we will
look after him.’ I think Mr. Truesdale said that these men would be
after me for leaving them. I think I told him the terms of the
contract.... Mr. Everest says, ‘They will have to catch Miller
before they can do anything to him; we will take care of him.’”[112]
In a talk with Miller a little while after this, C. M. Everest said to
him: “You go back to Buffalo and construct the pipes so that they cannot
make a good oil, and then, I think, if you would give them a little
scare. You might scare them a little, they not knowing anything about
the business, and you know how to do it.” On account of Miller’s
neglect, the first still in the new refinery was not ready to be fired
until June 15—it was an ordinary still, as was the second one built—the
third only was built for the Vacuum process. As soon as the still was
ready it was filled with some 175 barrels of crude oil and a very hot
fire—“inordinary hot” was the droll description of the fireman—built
under it. Miller, who superintended the operations, swore at the fireman
once or twice because the fire was not hot enough, and then disappeared.
While he was gone the brickwork around the still began to crack. The
safety valve finally blew off, and a yellow gas or vapour escaped in
such quantities that the superintendent of a neighbouring refinery came
out and warned the fireman that he was endangering property. Miller was
hunted up. He had the safety valve readjusted—it was thought by certain
witnesses that he had it too heavily weighted—and ordered the fires to
be rebuilt, hot as before. He again disappeared. In his absence the
safety valve again blew off. The run of oil was found to be a failure.
It was not a pleasant augury, but oil refiners are more or less hardened
to explosions and no one seems to have thought much of the accident.
Nobody was injured; nothing was burned, nothing but 175 barrels of oil
spoiled; that, in an oil refinery, is getting off easy.
On the 23d of June Miller made the transfer of property advised by the
Everests, talked over things with Truesdale, and a week later left the
Buffalo Works suddenly on receipt of a telegram, and joined H. B.
Everest at the Union Square Hotel in New York. Here Everest advised him
to telegraph his wife to move at once to Rochester lest Matthews attach
their household goods, and then proposed the two go to Boston. The only
event of interest at the Union Square Hotel was an entirely casual
meeting with H. H. Rogers, one of the directors of the Vacuum Oil
Company. Mr. Rogers seems to have had no conversation with Miller other
than to remark, in leaving, that he would see him the next day if he did
not go to Boston. The men did, however, go to Boston, where they
registered as “H. B. Everest and friend,” and where several times, at
least, Everest introduced Miller under an assumed name. They junketed
about for some days on what Everest tried, with indifferent success, to
persuade Miller was a pleasure excursion! While they were amusing
themselves, Everest hired Miller at $1,500 a year to “do any fair job we
put him at, either at Rochester or some other place.” The job turned out
to be a rambling one—a few weeks of semi-idleness in Boston—then nothing
until September, when he undertook to supervise the drilling of a salt
well in Leroy, New York. This lasted until February, 1882; then nothing
until May, when, on the advice of H. B. Everest, who had returned to
California, Miller went there: “Pack up, sell your property there and
come on. Come right to my house and I will help you to get a place and
show you how to raise fruit and be an independent man.” Miller went, the
Vacuum Oil Company paying his expenses. On his arrival he was put to
work in a cannery. The Everests explained that they made this
arrangement because they thought it would put Miller where he could not
be brought back to trouble them any more.
In the meantime things were going badly with the Buffalo Lubricating
Works. Miller’s loss was a severe one. The men were all novices in
making oil, save Wilson, and he was on the road, and they seem to have
been unable to find a competent manager. The Everests soon succeeded,
too, in getting Wilson out of the new firm by bringing a suit against
him for damaging its business by unlawfully leaving it. The suit was
withdrawn and the costs paid, when Wilson consented, in December, 1881,
to leave the Buffalo Works. Wilson’s loss was particularly serious, as
he was a salesman of experience.
The suits for infringing the Vacuum patents and processes, which Everest
at the start had warned Matthews would be brought, were begun in
September, 1881—four separate suits within a year. Matthews, as has been
said, had convinced himself that the patents were not valid, and some
time in the spring of 1882 he saw H. H. Rogers in New York concerning
the suits. “I told him I had come in to talk with him about the patent
litigation, or suits that were begun by the Vacuum Oil Company against
my company,” Matthews said in his testimony. “‘Well,’ he said, ‘well,
what about it?’—something like that. I told him that the product patent,
that I well knew, was without merit, and that he knew it was without
merit, and I could not see what object or good they could get out of it
by bringing suit on that patent. And also the steam patent I considered
was without value, and that he knew it was without value. He said that
if one court did not sustain the patents they would carry along up until
we got enough of it—that was the substance of that talk.”
Matthews was evidently discouraged by the result of his talk with Mr.
Rogers, for, meeting Benjamin Brewster, of the Standard Oil Company, he
offered to sell the Buffalo Lubricating Works for $100,000. The offer
was refused, and the suits against which Mr. Matthews protested were
pushed. On the 21st of February, 1882, the Vacuum Oil Company filed a
complaint in the United States Circuit Court of the Northern District of
New York, asking that the Buffalo company be prevented from
manufacturing lubricating oils, on the ground that the Vacuum Oil
Company had a patent covering the process of manufacturing lubricating
oils. The action was regarded as unfounded by the court, and was
dismissed on July 16, 1884, “the ground being that the letters sued on
in this cause are void.” April 25, 1882, another action was commenced by
the Vacuum Oil Company against the Buffalo company to obtain an
injunction and an accounting for damages upon the ground that the
Buffalo company was using an apparatus covered by a patent belonging to
the Vacuum Oil Company, but this action also was dismissed March 17,
1885, upon the ground that the letters patent sued upon were “null and
void.” On February 23, 1883, the Vacuum Oil Company commenced still
another action against the Buffalo company asking for an injunction to
prevent the Buffalo company from using a label advertising “The Acme
Harness Oil made by the Vacuum Process,” because the Vacuum Company had
long used a somewhat similar label advertising “The Vacuum Harness Oil
manufactured by Vacuum Oil Company,” but the judge in the case decided
that the Vacuum Company had no more right to use labels than the Buffalo
company. This decision has since been affirmed by the General Term of
the Supreme Court. Still another action was brought against the Buffalo
company April 25, 1882, for infringing a patent on a steam process, also
a patent upon a fire test. This action resulted in a decree sustaining
the fire-test patent, but declaring the steam patent void. The case was
then referred to James Breck Perkins, of the Rochester bar, to decide
the amount which the Buffalo company had infringed on this patent. Mr.
Perkins on a number of different occasions took a large amount of proof
there in behalf of the Vacuum Company upon which its counsel claimed
that it was entitled to $12,000 damages upon the accounting. The Buffalo
company submitted no proof in contradiction, but insisted that the whole
proof showed nothing more than a purely technical infringement of the
patent, and this view was sustained by Mr. Perkins in his report which
awarded six cents damages against the Buffalo company.
The disappearance of Miller, the man on whom the firm had depended for
superintending building and refining, the withdrawal of Wilson, with
whom the enterprise had originated and on which it had staked its hopes
of finding a ready market, and the series of suits for infringement of
patents, suits which cost Matthews thousands of dollars as well as much
embarrassment and delay, were troubles brought on him, so he believed,
as the result of a deliberate attempt on the part of the Vacuum Oil
Company to make good C. M. Everest’s threat to do all in his power to
ruin the Buffalo Lubricating Works, and, in the spring of 1883, he
brought a civil suit against the Everests for $100,000. While Matthews
was working up his case he learned that Miller had returned from
California, that he had left the Everests because he claimed they had
“not treated him right,” and that he was idle in Rochester. Miller seems
to have left California chiefly because he had gotten it into his head
that the information he had about the measures the Vacuum had taken to
prevent the Buffalo Works carrying on their business was valuable. H. B.
Everest testified that Miller once said to him after he was settled in
California: “Mr. Everest, you have always been kind to me, and I shall
do nothing to injure you, but I am going to bust the Standard.” I said:
“Al, how will you go to work to do that?” “More ways than one,” he said;
“they can’t afford to let me loose,” he said. “Sha’n’t be bought off,
either, unless I get something for it. It will cost them more than
twenty-five or fifty thousand dollars before they get through with me.”
I said: “Al, I think you can make more money raising fruit in California
than you can fighting the Standard.” This conversation was held
immediately after the Vacuum had paid Miller $1,000, in addition to the
salary of $1,500 they gave him, and for no apparent purpose except to
keep him quiet.
When Matthews learned of Miller’s return he asked him to come to
Buffalo, and evidently got from him then, for the first time, the story
of the pressure the Everests had brought to bear on him to leave the
Buffalo Lubricating Works, the “fixing” of the still at their advice so
that something would “smash,” the transfer of his property, his two
years of semi-idleness on $1,500 a year and a bonus of $1,000, paid for
a reason which can only be surmised, and his final breaking in
California, because, as he claimed, he saw no settled employment in view
and no prospect of the Everests doing more for him than they were, and,
as they claimed, because he believed he could get a big sum from the
Standard to keep silent. To all of this Miller made deposition in July,
1884.
The first civil suit was brought to trial early in March, 1885, and it
resulted in the jury giving a verdict of $20,000 to Matthews for
damages. The court set the sum aside, claiming that they had proved only
$4,000 in damages and that he would not sustain an award of punitive
damages. Matthews’s counsel now obtained a stay of proceedings and
finally a new trial. Now about this time Matthews secured evidence which
emboldened him to give his suit a much wider range than he had at first
intended. This was the testimony of the lawyer Truesdale, quoted above,
that in his office Everest had suggested that Miller “arrange the
machinery so that it would bust up or smash up.” The explosion of June
15 was immediately construed as the result of this counsel. On the
strength of this evidence Matthews instituted a second civil suit for
damages of $250,000 caused by conspiracy to blow up the works of the
Buffalo company, to entice away its employees, to bring unfounded suits
against it, and to slander the company’s product, and he added to the
original defendants the three other directors of the Vacuum Works—H. H.
Rogers, J. D. Archbold and Ambrose McGregor—and the Standard Oil Company
of New York, the Acme Oil Company of New York and the Vacuum Oil
Company. Matthews seems to have argued that, as Rogers, Archbold and
McGregor were directors with the Everests in the Vacuum Oil Company,
they had probably been consulted by the Everests concerning Miller, and
could be included in the conspiracy, and, as the Vacuum, Standard Oil
Company and Acme Oil Company were all concerns in the Standard Oil
Trust, they, too, could be included. He also went before the Grand Jury
of Erie County in opposition to the advice of his counsel and secured
there an indictment of H. H. Rogers, J. D. Archbold, Ambrose McGregor
and the two Everests for criminal conspiracy. The defendants succeeded
in getting the indictment set aside the first time, but Matthews
represented the case, and a second indictment was found of the same
persons. It should be noted that Mr. McGregor was indicted only because
he was a director of the Vacuum Works, his name not being mentioned in
the evidence presented to the Grand Jury.
An indictment for conspiracy of three men of such prominence as Mr.
Rogers, Mr. Archbold and Mr. McGregor riveted the attention of the whole
country on the coming trial. It was apparent from the first that the
Standard meant to put up a big fight to have the indictment quashed.
They had, indeed, set a strong machinery at work immediately to get
evidence on which to bring a counter charge of conspiracy; that is, that
Matthews’s intention in starting the Buffalo Lubricating Works was never
to do business, but to force the Standard to buy him out at a big price.
They at once set a detective to work on the case, one item of his
instructions reading: “We have reason to believe that the suit is
brought for the purpose of forcing the Standard to purchase the works of
the Buffalo Lubricating Company, and Matthews has made certain
statements to that effect; would like reports of any statements or
admissions by him in relation to his objects in these suits.” Under the
direction of this detective, a man employed in Matthews’s works for some
months made daily reports of what he saw and heard there, copies of
which were forwarded to the Standard office in New York. A detective was
also put on Miller’s track. Miller was now employed in a refinery in
Corry, Pennsylvania, and here he was for a long time under espionage.
The chief expression obtained from him was by luring him into a saloon
one Sunday afternoon and getting him half drunk. While in this
condition, the saloon-keeper testified, he said the Buffalo suit was a
—— humbug, but there was money in it and that they (he and the persons
who were drinking with him) might as well make it as anybody.
It was on May 2, 1886, that the trial began. The array of wealth and
legal learning in the Buffalo court-room during the fourteen days’ case
set not only the town, but the country agape. There were not only the
Standard men indicted for conspiracy—H. H. Rogers, J. D. Archbold,
Ambrose McGregor—but Mr. Rockefeller himself was there, quiet, steady,
watchful. The hostile said the accused and their counsel were disdainful
of the proceedings—nobody charged Mr. Rockefeller with disdain. With him
were other strong men of the concern, William Rockefeller, Daniel O’Day,
J. P. Dudley. There was a great array of legal learning—five eminent
lawyers—Wilson S. Bissell, a former law partner of ex-President
Cleveland; W. F. Cogswell, of Rochester, counted then one of the ablest
lawyers of the state; Theodore Bacon and F. G. Outerbridge, both of
Rochester; Daniel Lockwood, famous in politics as well as law; and, of
course, S. C. T. Dodd. This for the accused. For the people was the
district-attorney of Erie County, George T. Quinby, with one assistant.
For fourteen days witnesses were examined, and the above story was
dragged from them by dint of questioning and cross-questioning. On May
10 the testimony for the prosecution ended, and the “people rested.” The
Standard lawyers immediately applied for the acquittal of Mr. Rogers,
Mr. Archbold and Mr. McGregor, on the ground that no fact or
circumstance had been proved that connected them in the slightest degree
with the charge of conspiracy to lure Miller away or to destroy the
Buffalo Works. The district-attorney combated the proposition
vigorously. These gentlemen, he contended, owned three-fourths of the
Vacuum Works; they were always present at directors’ meetings; it was a
fair presumption that they knew what was done to persuade Miller to
leave the Buffalo Works; they must have known the moneys paid him while
he was doing little work. Mr. Rogers had certainly threatened Matthews
that he would carry up the patent suits until the Buffalo Works got
enough of it. Judge Haight, however, advised the jury to acquit Mr.
Rogers, Mr. Archbold and Mr. McGregor. “The indictment charges a
conspiracy,” the judge said. “It also charges certain overt acts. One of
the acts charged in the indictment is the enticing away from the Buffalo
company of a servant. Another of the acts alleged is an attempt to blow
up or destroy the Buffalo Works, and another act that of bringing false
suits against the corporation. So far as the agreement or combination to
entice away a servant from the Buffalo company is concerned, I have not
been able to recall any evidence which shows that either of these three
defendants ever knew of it, ever heard of it, or ever took any part in
it at all. So far as the charge of an attempt to blow up the Buffalo
Works is concerned, I have been unable to recall any evidence that has
been given in which either of these three defendants ever knew of it,
ever heard of it, ever advised it, or ever took any part in it whatever.
The only thing about which I have had any doubt was in reference to the
maintaining of actions which have been brought upon patent rights which
were formerly owned by the Everests, and by the Everests transferred to
the Vacuum Oil Company, and it appears that two suits were brought upon
patents, and that there was another suit, a third one, in reference to a
trade-mark. It appears from the evidence that upon one occasion Mr.
Matthews went to New York and had a talk with Mr. Rogers, and that his
conversation has already been discussed and related in your hearing. The
query in my mind was as to whether or not the inference could not be
drawn, from this conversation, that Rogers did know of the bringing of
these actions, acquiesced in their being brought, and in that way became
a party to them; but, even conceding that the actions were brought with
his knowledge and consent, I am inclined still to think that the
evidence is hardly sufficient to warrant his conviction, for the reason
that it does not appear that the actions were brought without probable
cause; in other words, the bringing of an action and being defeated in
the action is not of itself sufficient to authorise a jury to say that
it was a false action. That standing alone is not sufficient to
authorise a jury to say that it is a false action, but there must be
shown in addition to that that there was a want of probable cause; in
other words, that the party bringing the action knew and understood
beforehand that he had no good cause of action.... I am inclined to the
opinion that the evidence would not warrant his conviction upon that
ground.”
The acquittal of the three Standard gentlemen was followed by an
application for the acquittal of the Everests, but the case with them
was different. It had been proved conclusively that they threatened at
the start to ruin the new concern, and that they had counselled Miller
“to arrange the machinery so it would bust up or smash up”; there was a
strong presumption that Miller, acting on this advice, had arranged for
the explosion of June 15, though, as he claimed, he meant only to “give
them a scare.” The judge denied the application in their case,
therefore, and the trial went on. The whole force of the defence was now
thrown to proving that Matthews had gone into the Buffalo Lubricating
Company merely to sell out. His offer to Mr. Brewster in 1882, his talk
of making the Standard settle, were rehearsed. Two witnesses were
produced also who told of seeking Matthews in 1885, after the criminal
suit was brought, and of offering, on the ground that they knew the
Standard defendants, to attempt to settle the affair. Matthews had told
these men that if the Standard would give him $250,000 for his refinery,
he would withdraw the civil suit, but that he could not touch the
criminal suit, as it was in the hands of the district-attorney. The jury
was not greatly influenced by the evidence produced to show that
Matthews was a blackmailer. Evidently they concluded that, granting that
the Everests had cause of complaint against the men for using their
processes—they certainly had no just cause in the fact of the three men
setting up in business for themselves—granting that the enterprise was
started for blackmailing purposes—and there was no proof offered that it
was—the Everests should have taken their case into the courts—not
plotted the destruction of the refinery by any such underhand methods as
they employed. Whatever the jury’s process of reasoning, however, it is
certain that on May 16 they brought in a verdict of “guilty as charged
by the indictment.”
The most strenuous efforts were made to set the verdict aside. The judge
granted a stay, and an attempt to get a new trial was made, but
unsuccessfully. The sentence was stayed until May, 1888. The statute
provided a penalty of one year’s imprisonment or $250 fine, or both.
Efforts were at once made to soften the sentence. A petition signed by
over forty “leading citizens” of Rochester, New York, the home of the
Everests, was sent to Judge Haight, praying him, on account of the
“untarnished fidelity and integrity” of the convicted men, to make the
penalty as light as the court was authorised by law to fix. Six of the
jurors were induced by Standard agents to sign a paper claiming that in
their belief the jury in rendering its verdict of guilty did not mean to
pronounce the Everests guilty of an attempt to blow up or burn the works
of the Buffalo company, but guilty only of enticing Miller away, and
they recommended that the sentence, therefore, be a fine and not
imprisonment. District-Attorney Quinby offered to prove on a hearing for
a new trial that the Standard’s representatives used money in getting
these affidavits. The result was that the two Everests were each fined
$250. This sentence was made light, the judge explained, because of the
civil suits brought to recover damages for the very same acts—a person
could not be punished twice for the same offence.
The first civil suit referred to above resulted in an award by the jury
of $20,000 to Matthews. The second civil suit was for $250,000, but
before it was tried Matthews’s business had become so involved by all
this trouble that in January, 1888, it was put into the hands of a
receiver. The defendants finally offered to settle the civil suits for
$85,000. The judge ordered the receiver to accept the offer, on the
ground that the Everests had already been declared guilty of criminal
conspiracy and had been fined, and that a person could not be punished
twice for the same offence!
It was not until June, 1889, that the receiver filed his account of the
settlement of the affairs of the Buffalo Works. Of the $85,000 paid by
the Standard, Matthews seems not to have gotten a cent. The entire sum
went to settle the debts of the concern and pay the lawyers. The leading
claimants among the lawyers were Thomas Corlett, Edward W. Hatch and
Adelbert Moot, all of Buffalo. Their claims aggregated nearly $35,000.
The receiver thought these fees exorbitant, and a referee was appointed
by the court to take the testimony of the claimant as to their services.
The testimony was voluminous, and the upshot was that the referee cut
these claims to about $22,000. The final account filed by the receiver
shows that the three gentlemen finally were paid about $15,000.
The large claims made by the lawyers and certain circumstances of the
settlement have led the Standard, in later years, to advance a counter
charge of conspiracy of much more serious nature than that which they
depended on in the trial. This new charge makes Matthews’s counsel his
fellow conspirators, and alleges that at least two of them used
important official positions to influence the verdict. In the present
year (1904) the Standard’s official organ, the Oil City Derrick,
published a supplement containing the evidence on which this counter
charge is based, and editorially accused the writer of bias in not using
this material in the story of the Buffalo case which was published
practically as it stands here in McClure’s Magazine for March, 1904. It
is true, as the Derrick claims, that through the courtesy of the
Standard Oil Company this material was placed in the writer’s hands
before the article was published. It was not used because it was not
thought it established the charge.
The points brought out in the evidence published by the Derrick which
are held by the Standard to establish the charge of a conspiracy between
Matthews and his counsel are the following: In the first place, they
declare it a conspiracy because Corlett, who was called to the bench in
January, 1884, and Hatch, who was called to the bench in January, 1886,
were both in consultation with their successors after they became
judges. That this is true there is no doubt whatever. Mr. Moot in his
full statement of his services made to the referee refers again and
again to consultations with Corlett and Hatch after they had given up
the case. Hatch speaks freely in his statement to the referee of
counselling with Quinby and Moot.[113] If there was an impropriety in
what he did, he certainly made no effort to conceal it, nor did the
referee, the court, or the receiver, to whom this statement was
submitted, raise any question of impropriety. The counsel which both
Judge Corlett and Judge Hatch gave Quinby and Moot they owed Matthews.
They had been his counsel for years. They were obliged to give up his
cases because of their election to the bench. They were debarred by
their relation to the case, of course, from hearing it, but there was no
reason why their knowledge and experience should not be drawn upon to a
reasonable degree by the new attorneys. Certainly this is a universal
practice in law courts. It is difficult to see how it could be
otherwise. If either judge had used his position to influence his fellow
judge who heard the case there would be a just criticism, but no such
intimation has ever been made, to the writer’s knowledge.
The second proof of conspiracy drawn from this testimony to the referee
is the statements of both Hatch and Moot that they had no contracts for
compensation and that they knew they would receive nothing if they lost.
For instance, when Moot was examined by the referee he was asked:
_Q._ Did you have any contract or agreement as to how you should be
compensated?
_A._ Not the slightest. I never had such a contract in my life,
except that I should be liberally paid if I succeeded. If I did not
succeed, the party being poor, my work would be without
compensation....
_Q._ Did you ever have any conversation with Matthews or with any
officer of the company with reference to that?
_A._ No, sir. I feel very clear that I never had a conversation with
a single member of this company about what we should receive for our
services, except to this extent: Mr. Matthews once said, in
referring to or commenting on these litigations, that they were like
any other independent company, as I very well knew; that if the
lawyers could not keep them alive with litigation, the Standard
would beat them—we would not get anything.
Judge Hatch in his statement said: “Matthews and I or any one for his
company never had any talk with respect to compensation for services at
the time of their commencement or during their rendition. I knew,
however, that the payment for services was largely contingent upon the
success of the litigation, and the company was not able to pay much more
than the actual expenses in the event they failed to succeed, and that
we would get a very meagre compensation unless we succeeded in the
actions. I think no conversation was ever had except Mr. Matthews
stating that if we should succeed we should be well paid. I think he
mentioned that once or twice.”
It is not an unusual thing for lawyers to take cases they believe just,
knowing that their compensation depends on their winning. Many clients
with just cases would be deprived of counsel if they had to insure a
fixed compensation, for not infrequently all that a client has is
involved in a suit. The practice is so common among reputable lawyers
that it certainly cannot be regarded as a proof of a conspiracy, unless
there is a reason to suppose that they have taken a case of whose merits
they themselves are suspicious. There is absolutely no evidence that
Matthews’s counsel were not convinced from the first that they had a
strong case. Quinby, the district-attorney who tried the criminal case,
certainly conducted it with a fire and a logic which nothing but
conviction could have inspired. Moreover, it must be remembered that
these attorneys never failed to convince the juries before whom they
appeared of the merits of their case. Four juries, two grand juries and
two petit juries gave unanimous verdicts of conspiracy against the
defendants in the course of the litigation. A case backed by evidence
which would convince such diversified bodies of men could hardly be
called a speculation. Their claims were large, but lawyers are not
proverbial for the modesty of their charges, and in the cases of Hatch
and Moot, the two making the largest claims, the labour had been very
great and had extended over long periods, as one can see who will
examine the testimony published by the Derrick; and besides, exorbitant
charges can hardly be construed as a proof of conspiracy.
This, then, in outline, is the history of the case on which are based
all charges, so far as the writer knows, that the Standard Oil Company
has deliberately destroyed property to get rid of rivals. The case is of
importance not only as showing to what abuses the Standard policy of
making it hard for a rival to do business will lead men like the
Everests, but it shows to what lengths a hostile public will go in
interpreting the acts of men whom it has come to believe are lawless and
relentless in pursuing their own ends. The public, particularly the oil
public, has always been willing to believe the worst of the Standard Oil
Company. It read into the Buffalo case deliberate arson, and charged not
only the Everests, but the three co-directors, with the overt acts. They
refused to recognise that no evidence of the connection of Mr. Rogers,
Mr. Archbold and Mr. McGregor with the overt acts was offered, but
demanded that they be convicted on presumption, and when the judge
refused to do this they cursed him as a traitor. To-day, in spite of the
full airing this case has had in the courts and investigations, Judge
Haight is still accused of selling himself to a corporation, and Mr.
Rogers is accused daily in Montana of having burned a refinery in
Buffalo. As a matter of fact, no refinery was burned in Buffalo, nor was
it ever proved that Mr. Rogers knew anything of the attempts the
Everests made to destroy Matthews’s business.
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.
The cases described in the last two chapters naturally aroused intense
interest in the Oil Regions. The two in Ohio demonstrated afresh the
chief grievances which the oil men had against the Standard Oil Company
since 1872—that they were securing rebates on their own shipments and
drawbacks on those of their competitors. The Buffalo case demonstrated
that when their ordinary advantages failed to get a rival out of the way
they winked at methods which a jury called criminal. It was fresh proof
of what the oil men had always claimed, that the Standard Oil Company
was a conspiracy! At the same time that these cases were arousing their
indignation anew there occurred in Ohio an affair which gave them new
evidence of their old charge that the Standard was steadily intrenching
itself in state and national politics in order to direct the course of
legislation to suit itself. There had been many evidences of this,
satisfactory enough to the initiated. There was no doubt that the
investigation of 1876 and the first bill to regulate interstate commerce
introduced at that time had been squelched largely through the efforts
of two members of Congress, one of them directly and the other
indirectly interested in the Standard—these were J. N. Camden of West
Virginia, head of the Camden Consolidated Oil Company, now one of the
constituent companies of the Standard Oil Trust, and H. B. Payne of
Ohio, the father of the treasurer of the Standard, Oliver H. Payne. It
had certainly used its influence to oppose the free pipe-line bill which
the independent oil men had been fighting for since the early days of
the industry. In 1878 and 1879, during the prosecution of the suits
against the railroads and the Standard by the Petroleum Producers’
Union, there had been incessant charge of the use of political influence
to secure delay. It was a matter of constant comment in Ohio, New York
and Pennsylvania that the Standard was active in all elections, and that
it “stood in” with every ambitious young politician, that rarely did an
able young lawyer get into office who was not retained by the Standard.
The company seems to have taken a hand in politics even before the days
of the South Improvement Company, for Mr. Payne once said in the United
States Senate that when he was a candidate for the House of
Representatives in 1871, “no association, no combination” in his
district did more to bring about his defeat or spent so much money to
accomplish it as the Standard Oil Company![114]
But all of the examples they quoted were more or less poor in evidence.
Of no one of them perhaps could they have produced satisfactory proof.
Now, however, simultaneously with the three cases outlined in the last
two chapters there came a case of bribery in an election which they held
established their charge. The case was the familiar one of the election
of H. B. Payne of Ohio to the United States Senate in January, 1884. Mr.
Payne was at the time of his election the aristocrat _par excellence_ of
Cleveland, Ohio. He had birth and education, distinction of manner and
mind. His fine old mansion still remains one of the most distinguished
houses in a city of beautiful homes. He had been active in Democratic
politics for many years—a member of the state Senate and a member of
Congress, and he had been mentioned as the Democratic candidate for the
presidency in 1880, receiving eighty-one votes on the first ballot. At
the time of his election to the Senate he was a man seventy-four years
old. Now Mr. Payne’s son, Oliver H. Payne, was one of the thirteen
original members of the South Improvement Company, and one of the rare
Cleveland refiners who had a strong enough stomach to go into the
Standard Oil Company when it swept up the oil trade of Cleveland in
1872, and he had gathered in his share of the spoils of that raid.
Oliver Payne was proud of his father, and it was well known that he
wanted to see him in the Senate of the United States, but there had been
no movement to nominate him, and in 1883 he seems to have made up his
mind to see what he could do.
A United States Senator was to be elected in Ohio in November. In
October a new State Legislature was chosen, and the Democratic members
were instructed for one of two candidates for the Senate, George H.
Pendleton or General Durbin Ward, both men of prominence and long
service in the public life of the state. Mr. Payne’s name was not
mentioned in the canvass. Nevertheless, hardly had the Legislature
convened when there sprang up at the Neil House in Columbus an
extraordinary Payne boom. Its backers were Senator Payne’s own son,
Oliver H. Payne, at that time treasurer of the Standard Oil Company, and
Colonel Thompson, a prominent personage in the same concern. Their
lieutenants were also members of the company in one capacity or another.
Large sums of money were alleged to have been circulated. There was a
rumour that Oliver Payne said the election cost him $100,000. It was
claimed that it could be proved that a check for $65,000 had been cashed
in Cleveland by one of the men most prominent in the Payne boom, and
that the whole sum had been spent in Columbus.
A perfect uproar of indignation followed the announcement of Mr. Payne’s
choice. All over the state the Standard Oil Company was charged with the
election. The Democratic press was particularly bitter:
Said the Butler County Democrat: “It was simply a question whether
Pendleton, Ward, Thurman, Converse, Follett, Geddes, or any other
capable and honest Democrat, should receive the compliments of a
seat in the Senate, or that the Standard Oil Company should buy the
place for Henry B. Payne. It was an honest and divided Democracy
against a hydra-headed dictatorship of rich men on whose banner was
inscribed ‘Money Talks.’”
The Carroll County Chronicle in commenting on the election said: “It
is a great mistake to suppose Standard Oil has captured the
Democratic party of Ohio. It may have captured a score or two of men
elected to the Legislature, but they are not the Democracy of Ohio
by a long shot. When the British got General Benedict Arnold they
imagined they had captured the United States army, but it was a
mistake.”
“The monopoly of the Standard Oil Company must be destroyed,”
declared the Columbus Times. “Its intrusion into political circles
must be prevented. There must be no later acceptance of this
outrage. Political purity and perpetuity permit no complacency.
These pernicious foreign elements must be eradicated, and until they
are no Democrat will enter the capitol of Ohio or of the nation. The
rottenness that uncovered itself last night has not its confines in
Ohio.”
The comments were not confined to papers of the state. The New York Sun,
under the head “Was Payne’s Election Bought?” said:
“The subjoined communication from a source which we always respect
is worthy of more attention than is usually bestowed upon the
animated expressions of those whose preferences have not been
realised:
“‘It is now believed, and I believe, that the Standard Oil Company
recently bought with money Ohio’s seat in the Senate of the United
States for Mr. Payne. Now, can the social respectability of a man
make such a crime respectable? Or is there to be one standard of
political morality for Republicans and another for Democrats? Or are
Democrats expected to condemn corruption only when practised by
Republicans, and to condone, defend, and cover it up when practised
by Democrats, or when it is found only in the Democratic party? In
my opinion there is no danger so threatening to free institutions as
the sale and purchase of political power, and nothing more to be
condemned.’”
Although these charges were kept up for two years neither the Standard
Oil Company, Mr. Payne, nor the Legislature which had elected him
noticed them. The scandal became one of the issues of the next campaign
and was instrumental in making the next Legislature of Ohio Republican.
As soon as the new Legislature convened at the opening of 1886 an
investigation of the Payne case was ordered. Some fifty-five witnesses
were examined, and the resulting testimony turned over to the Senate of
the United States for its examination. The testimony did not prove the
charge of bribery, the Ohio Legislature said, but it was of such a
nature as to require the Senate’s attention. The matter went to the
Senate Committee on Elections, and in July, 1886, a majority reported
against the further investigation asked by the state of Ohio.[115]
Against this decision two members of the committee, Senators Hoar and
Frye, protested:
“Is the Senate to deny to the people of a great state, speaking
through their Legislature and their representative citizens, the
only opportunity for a hearing of this momentous case which can
exist under the constitution? We have not prejudged the case, nor do
we mean to prejudge it. We sincerely trust that the investigation,
which is as much demanded for the honour of the sitting members as
for that of the Senate or the state of Ohio, may result in
vindicating his title to his seat and the good name of the
Legislature that elected him.
* * * * *
“How can a question of bribery ever be raised or ever be
investigated if the arguments against this investigation prevail?
You do not suppose that the men who bribe or the men who are bribed
will volunteer to furnish evidence against themselves? You do not
expect that impartial and unimpeachable witnesses will be present at
the transaction? Ordinarily, of course, if a claim like this be
brought to the attention of the Senate from a respectable quarter
that a title to a seat here was obtained by corrupt means, the
Senator concerned will hasten to demand an investigation. But that
is wholly within his own discretion and does not affect the due mode
of procedure by the Senate. From the nature of the case, the process
of the Senate must compel the persons who conducted the canvass and
the persons who made the election to appear and disclose what they
know; and until that process issue, you must act upon such
information only as is enough to cause inquiry in the ordinary
affairs of life.
“The question now is not whether the case is proved; it is only
whether it shall be inquired into. That has never yet been done. It
cannot be done until the Senate issues its process. No unwilling
witness has ever yet been compelled to testify; no process has gone
out which could cross state lines. The Senate is now to determine,
as the law of the present case and as the precedent for all future
cases, as to the great crime of bribery—a crime which poisons the
waters of republican liberty in the fountain—that the circumstances
which here appear are not enough to demand its attention.”
For three oppressive July days the Senate gave almost all of its time to
a bitter debate on the report. The name of the Standard was freely used.
“The Senate of the United States,” said Senator Frye, “when the question
comes before it as this has been presented, whether or not the great
Standard Oil Company, the greatest monopoly to-day in the United States
of America, a power which makes itself felt in every inch of territory
in this whole republic, a power which controls business, railroads, men
and things, shall also control here; whether that great body has put its
hands upon a legislative body and undertaken to control, has controlled,
and has elected a member of the United States Senate, that Senate, I
say, cannot afford to sit silent and let not its voice be heard in an
inquiry as to the truth of the allegation.” The majority report was
adopted, however, by a vote of forty-four to seventeen. “The most
unfortunate fact in the history of the Senate,” said Senator Hoar.[116]
For the time the matter rested, but only for the time. The failure to
investigate rather intensified the convictions that Payne’s seat was
bought by the Standard Oil Company. In 1887 Mr. Payne voted against the
Interstate Commerce Bill. “That is why he was put in the Senate,” people
said bitterly. The feeling became still more intense in 1888. The
question of trusts was before Congress. The Republicans had come out
with an anti-trust plank in their platform; the Democrats, in response
to Mr. Cleveland’s message, were declaring the tariff the greatest
trust-builder in existence, and calling on their opponents for reform
there if they were sincere in their anti-trust attitude. In this
agitation the Standard Oil Company undoubtedly exerted its influence
against all trust investigation and legislation. The charge became
general that they were helping the Democrats. This is why they wanted a
Democratic Senate. In September, 1888, when a phase of the question was
before the Senate, Mr. Hoar, with his genius for asking far-reaching
questions, said one day: “Is there a Standard Oil Trust in this country
or not?... If there be such a trust, is it represented in the Cabinet at
this moment? Is it represented in the Senate? Is it represented in the
councils of any important political party in the country?”
It was the first time that Mr. Payne had been sufficiently aroused to
reply. “There is nothing whatever to sustain the insinuation which the
honourable Senator conveys. I make the declaration now for the first
time, and it will be the last time I shall ever take notice of it. The
Standard Oil Company is a very remarkable and wonderful institution. It
has accomplished within the last twenty years of commercial enterprise
what no other company or association of modern times has accomplished,
but, Mr. President, I never had a dollar’s interest in that company. I
never owned a dollar of its stock; I never rendered it any service, and
that company never rendered me any service. On the contrary, when a
candidate for the other House in 1871, no institution, no association,
no combination in my district did more to bring about my defeat and went
to so large an expense in money to accomplish it as the Standard Oil
Company....
“As a matter of fact, nine-tenths of the stockholders of the Standard
Oil Company are now and always have been Republicans. Within my
knowledge there are but two Democrats who have ever been stockholders in
that company.” Farther on Mr. Payne interpolated this irrelevant remark:
“Not only are the majority Republicans, but they are very liberal in
their philanthropic contributions to charities and benevolent works, and
I venture the assertion that two gentlemen in that company have donated
more money for philanthropic and for benevolent purposes than all the
Republican members of the Senate put together.”
Mr. Payne’s denial was not sufficient to silence Senator Hoar. He
returned to the attack. It was a “general public belief,” he declared,
that the Standard Oil Company was represented in the Cabinet and Senate.
He called attention to the newspapers’ charge to that effect, and
declared that he had received many personal letters charging that the
Standard was helping the Democrats. He asked for information when he
asked his question; he made no charges. Mr. Whitney was the member of
Mr. Cleveland’s Cabinet to whom Senator Hoar referred, and he promptly,
in a public letter, disclaimed all connection with the Standard Oil
Company. Mr. Hoar said he “cheerfully accepted” the denial. As for Mr.
Payne, he was not satisfied, and when Mr. Payne in heat replied to him,
Senator Hoar closed his lips forever in a burst of biting sarcasm:
“A Senator who, when the Governor of his state, when both branches
of the Legislature of his state complained to us that a seat in the
United States Senate had been bought, when the other Senator from
the state rose and told us that that was the belief of a very large
majority of the people of Ohio without distinction of party, failed
to rise in his place and ask for the investigation which would have
put an end to those charges if they had been unfounded, sheltering
himself behind the technicalities which were found by some gentlemen
on both sides of this chamber, that the investigation ought not to
be made, but who could have had it by the slightest request on his
own part and then remained dumb, I think should forever after hold
his peace.... I think few men ever sat in the Senate who would
refrain from demanding an investigation under such circumstances,
even if it were not required by the Senate itself.... There were
Senators who thought that the admission of that Senator, the
continuance of that Senator in his seat without investigation,
indicated the low-water mark of the Senate of the United States
itself.”[117]
And there the Payne case rested. It was never _proved_ that the Standard
Oil Company had contributed a cent to his election. It was never
_proved_ that his seat was bought, but the fact that, in the face of
such serious charges, rehearsed constantly for four years, neither Mr.
Payne nor the Standard Oil Company had done aught but keep quiet,
convinced a large part of the country that the suspicion under which
they rested was less damaging than the truth would be. In the minds of
great numbers this silence was a confession of guilt. The Payne case
certainly aggravated greatly the popular feeling that the Standard Oil
Company was using the legislative bodies of the country in its own
interest.
This feeling was intensified in 1887 by a terrific battle between the
oil producers and Standard forces in the Legislature of the state of
Pennsylvania. Since the compromise of 1880 the body of the oil producers
had been taking no concerted action against the Standard. But their
inaction was not due to reconciliation to Standard domination. As a
matter of fact they were almost as bitter in 1886 as they had been in
1878, when they formed the Union which for two years fought so good a
fight. The specific complaint of the oil producers at this time was that
they were being “robbed” by the National Transit Company—the big
Standard pipe-line consolidation, which had secured by the series of
manœuvres already outlined the monopoly of handling and transporting
crude oil. If the oil producers had been making money at this time it is
quite possible that they would have paid little attention to the profits
of the National Transit Company. The service they got was about as
perfect as any human machine could render, and they would probably have
recognised this and been willing to pay high if they too had been
prosperous. But the condition of the oil producer in these days was in
glaring contrast to that of Mr. Rockefeller. They had piled up oil until
there were in 1886 over 33,000,000 barrels on hand. Naturally this had
driven prices down. The average price for the last years had been under
a dollar a barrel. In 1886 it fell down to 71⅜, and everyone said it
must go lower. Embittered and discouraged, the producers fell to
comparing what they were getting out of the business with what Mr.
Rockefeller was getting. It was not a consoling showing. The Standard
Oil Trust had from its organisation in 1882 paid dividends on its
$70,000,000 capital. In spite of the extraordinary outlay for tank
building and seaboard pipe-lines made from 1881 to 1884—$30,000,000 it
is computed to have been—the trust paid 10½ per cent. in 1885, ten per
cent. in 1886, and Standard Oil stock stood near 200! In contrast, the
oil producer, in 1886, is estimated to have lost about six per cent. on
his expenditures, and oil property depreciated one-third in value.[118]
[Illustration:
JOHN D. ROCKEFELLER
By Eastman Johnson
]
Something was wrong. They could not charge the Standard with the price
of oil. As long as over 33,000,000 barrels in stock lay on the market it
could not rise. But they could and did complain of what it cost them to
handle this oil, of storage and carrying charges, of the deductions for
shrinkage and for loss by fire. If the Standard had not forced out every
competing line, there would have been sufficient competition to have
lowered these items—which at the present prices soon ate up the value of
oil. And they fell to rehearsing the raids by which the various
transporting companies which had fought themselves into independent
positions had been forced into combination, their chief grievances being
naturally the affair of the Tidewater. In this state of mind, and
incited by the Buffalo, the Payne, and the Rice cases, it was natural
enough that when suddenly, at the opening of 1887, a bill evidently
intended to strike a blow at the Standard was introduced into the
Legislature of Pennsylvania, the oil producers rushed pell-mell to
support it. The opening sentence was enough for them. It was “An act to
_punish_ corporations.”[119] This was what they had always sought, some
way to _punish_ Mr. Rockefeller for what they believed to be a
conspiracy against their interests. The way in which the Billingsley
Bill, as it was called from the name of its father, proposed to punish
the Standard was to make it a criminal offence to charge in excess of
certain rates it fixed—ten cents a barrel for gathering and delivering
oil to storing points (the current rate was twenty cents); one-sixtieth
of one per cent. per barrel a day for storage, with no storage charge
for the first thirty days (one-half of one per cent. was the current
rate); one-half of one per cent. shrinkage, instead of three per cent.
Besides, the bill required the Standard to go to any well on application
of the owner, it made the company liable for damage, and it required it
to deliver oil of like kind and quality as that received.
The enthusiasm with which the bill was greeted was cooled a little by
the announcement that as it stood it was unconstitutional—acts to punish
being forbidden by the constitution of the state—as well as by an
immediate realisation that the prices fixed for services were in nearly
every case less than cost. The bill was immediately amended. When it
came back it was at once apparent that, in spite of this preliminary
hitch, a tremendous fight to carry it was being organised by the oil
men. Then determination to push it grew in proportion to the Standard
opposition. The Standard, indeed, realised immediately that unless a
hard fight was made the bill would go through by popular clamour, and
they turned their big lawyer, Mr. Dodd, against it, set their
newspapers—the Oil City Derrick, Titusville Herald and Bradford Era, all
of them by this time subsidised organs—to argue against it, and sent Mr.
Scheide, one of the ablest of their pipe-line managers, to present their
side at Harrisburg. They also secured the services of a well-known young
Republican member of the Legislature, Wallace Delemater, of Crawford
County, one of the counties in the Oil Regions, to organise an
opposition to the bill in the Legislature.
In February a hearing was given the bill, Mr. Dodd presenting the
Standard side. It is rare that so able a lawyer has to fight so weak a
measure, and Mr. Dodd riddled it easily. As a matter of fact the
Billingsley Bill was as bad as it could be. It was characterised by all
sorts of constitutional, legal and practical difficulties. The pipe-line
business was an interstate business, and this bill attempted to regulate
it—which evidently it could not do. It could, of course, regulate
Pennsylvania oil, but, by so doing, it created two classes of oil in the
lines, a situation which would have been confusing and undesirable. It
was evidently intended that the prices it fixed should apply to the
30,000,000 barrels of stocks on hand, but these were held under
contract, and could not be touched. There were many other objections to
the bill. Even Judge Heydrick, the able lawyer whom the oil men had
engaged to defend it, was obliged to apologise for it at every point,
and its most valiant supporter, Senator Lewis Emery, Jr., said frankly
that the framer of the bill knew too little of the oil men’s needs to be
able to make a bill, and that this would have to be thoroughly revised.
In spite of all the reasonable, indeed overwhelming, objections to the
Billingsley Bill, the oil men clung to it. Mass-meetings were held
nightly from one end of the region to the other, petitions flooded the
Legislature, a big delegation was kept constantly in Harrisburg lobbying
for it. The support was intemperate, bitter, unreasonable. In March it
was intensified by the knowledge that a self-constituted committee of
leading oil men were in New York treating with the Standard in regard to
certain of the abuses the bill aimed to cure. These men felt that the
Standard was unjust in its dealings with the oil men, excessive in its
charges, and arbitrary in its service, but they felt that the confusion
the Billingsley Bill would bring into the business more than offset the
grievances it righted, and they had gone to Mr. Rockefeller to see if
matters could not be compromised. Now nothing could have more
effectually added to the warlike spirit abroad in the Oil Regions at
that moment than the suggestion of a compromise. Their cause was being
“sold.” It was “compounding with felony,” and when, after a three days’
sitting in New York, the committee came home with an agreement from the
National Transit Company, making certain concessions—as two per cent.
instead of three for shrinkage, twenty-five cents a day per 1,000
barrels, instead of forty, for storage, and with a promise that certain
other points should be settled by joint committees—two of the leading
members were hung in effigy in Titusville!
In April the final vote on the Billingsley Bill came. Harrisburg was
alive with oil men determined that the bill should go through. The
Standard was present, and if it had less of a _claque_, it had more of
the “sinews of war.” Indeed, it was charged later by Senator Lewis Emery
that the leader of the Standard forces in the Senate received $65,000
for his services—a charge which, so far as the writer knows, has never
been either proved or disproved. The bill came to a vote after a
passionate wrangle. It was defeated eighteen to twenty-five. A storm of
violent protest from the oil men’s representatives followed the defeat,
and the lobbies, the hotels, and even the streets of Harrisburg were
scenes in the next hours of bitter quarrels and excited gatherings. When
finally the oil men withdrew from the town it was with the understanding
that they were to meet two weeks later in Oil City to organise a new
protective association. The protests and resolutions passed at their
final gatherings foreshadowed no intention of reviving the Billingsley
Bill. Indeed, the bill itself had received scant attention from them in
the violent campaign over its passage which they had carried on for
three months. All their passion had been expended on the Standard. This
was a question of whether the Standard Oil Company ruled the Legislature
of Pennsylvania or whether the people ruled it—so declared the oil men;
and when their bill was defeated they charged it was by bribery, and
henceforth quoted the defeat of the Billingsley Bill along with the
Payne case as proof of the corrupt power of the Standard Oil Company in
politics. Their outbreak, for it was nothing else, was the culmination
of their indignation and resentment at fifteen years of unfair play on
the part of the Standard Oil Company, of resentment at the South
Improvement Company, at forced combination of refineries and pipe-lines,
at railroad rebates and drawbacks, at the immediate shipment outrages,
at the Tidewater defeat. It was revolt against the incessant pressure of
Mr. Rockefeller’s pitiless steel grip. It was bitterness at the idea
that it was he who was reaping all the profit of a business in which
they were taking the chief risks, and if things went on as they were
that it was he who always would. Out of their burst of passion was to
grow a solid determined effort, but for the moment they were defeated,
and the defeat, which really was merited, was another added to their
series of just and unjust complaints against Mr. Rockefeller.
All of these bitter and spectacular struggles aroused intense public
interest. The debate on the Interstate Commerce Bill was contemporaneous
with them—the bill was passed in 1887, and had its effect. The feeling
grew all over the country that whatever the merits of these specific
cases, there was danger in the mysterious organisation by which such
immense fortunes and such excessive power could be built up on one side
of an industry, while another side steadily lost money and power. A new
trial was coming to Mr. Rockefeller, one much more serious than any
trial for overt acts, for the very nature of his great creation was to
be in question. It was a hard trial, for all John D. Rockefeller asked
of the world by the year 1887 was to be let alone. He had completed one
of the most perfect business organisations the world has ever seen, an
organisation which handled practically all of a great natural product.
His factories were the most perfect and were managed with the strictest
economy. He owned outright the pipe-lines which transported the crude
oil. His knowledge of the consuming power of the world was accurate, and
he kept his output strictly within its limit. At the same time the great
marketing machinery he had put in operation carried on an aggressive
campaign for new markets. In China, Africa, South America, as well as in
remote parts of Europe and the United States, Standard agents carried
refined oil. The Standard Oil Company had been organised to do business,
and if ever a company did business it was this one. From Mr. Rockefeller
himself, sitting all day in his den, hidden from everybody but the
remarkable body of directors and heads of departments which he had
“acquired” as he wiped up one refinery and one pipe-line after another,
to the humblest clerk in the office of the most remote marketing agency,
everybody worked. There was not a lazy bone in the organisation, nor an
incompetent hand, nor a stupid head. It was a machine where everybody
was kept on his mettle by an extraordinary system of competition, where
success met immediate recognition, where opportunity was wide as the
world’s craving for a good light to cheer its hours of darkness. The
machine was pervaded and stimulated by the consciousness of its own
power and prosperity. It was a great thing to belong to an organisation
which always got what it wanted, and which was making money as no
business in the country had ever made it.
What more, indeed, could Mr. Rockefeller ask than to be let alone? And
why not let him alone? He had the ability to keep together the
wide-spread interests he had acquired—not only to keep them together,
but to unify and develop them; why not let him alone? Many people even
in the Oil Regions were inclined to do so, some because they feared
him—rumour said Mr. Rockefeller was vindictive and never forgot
opposition; others because they were canny and foresaw that they might
want his help one day; still others because criticism of success is an
ungracious business and arouses a suspicion that the critic may be
envious or bitter. But there were a few people, as there always are,
whom no cowardice, no self-interest, no fear of public opinion could
keep quiet, and these people insistently urged that the Standard Oil
Company was a menace to the commerce of the country. We have been and
are being wronged, they repeated. We have a right to do an independent
business. Interference to drive us out is conspiracy. Let Mr.
Rockefeller succeed in the oil business and he will attack other
industries; he will have imitators. In fifty years a handful of men will
own the country.
Mr. Rockefeller handled his critics with a skill bordering on genius. He
ignored them. To see them, to answer them, called attention to them. He
was too busy to answer them. “We do not talk much—we saw wood.” This
attitude of serene indifference is supremely wise. It belittles the
critic and it gives the outsider who watches the game a feeling that a
serenity so high must come from an impregnable position. There is no
question but many a mouth opened to testify against the Standard Oil
Company has been closed by Mr. Rockefeller’s policy of silence. Only the
few irreconcilables withstood his sphinx-like attitude, and yearly, from
the compromising of 1880, these warnings and accusations were louder and
more fierce. Probably the greatest trial Mr. Rockefeller has ever had
has come from the persistency with which the few malcontents kept him
before the public. They interfered with two of his great
principles—“hide the profits” and “say nothing.” It was they who had
ruined the South Improvement Company; it was they who had indicted him
for conspiracy and compelled him to compromise in 1880. It was they who
now, after the splendid pipe-line organisation was completed and his
market machinery was in order, kept up their agitation and their
cursing. Their work began to tell. The feeling grew that the Standard
Oil Company, or Trust, as it was by this time generally called, must be
looked into. Even those who, dazzled by Mr. Rockefeller’s achievement,
were inclined to overlook its ethical side and to refuse to consider to
what aggregation of power and abuse it might lead, began to feel that it
would be quite as well to have the matter thrashed out, to have it
settled once for all, whether the thing had been so bad in its making
and was so dangerous in its tendencies as the “oil-shriekers” pretended.
In the House of Representatives, when the question of ordering an
investigation of trusts by the Committee on Manufactures was up in 1887,
the liveliest concern was shown as to whether the Standard Oil Company,
“the most important case” of all, would escape. More than one member
asked to be assured before consenting to the investigation that the
Standard would be put on the rack. The same interest was shown in the
Senate of New York State, where an investigation was ordered for
February, 1888. It was certain indeed now that Mr. Rockefeller would not
be allowed much longer to work in the dark. He was to be dragged into
the open, much as he might deplore it, to explain what his trust really
was, to prove to a suspicious and hostile public that he had a right to
exist.
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.
There was no characteristic of Mr. Rockefeller and his great corporation
which from the beginning had been more exasperating to the oil world
than the secrecy with which operations were conducted. The plan of the
South Improvement Company had only been revealed to those who signed an
agreement to keep secret all transactions they might have with it. The
purchase in 1874 and 1875 by the Standard Oil Company of Lockhart, Frew
and Company of Pittsburg, of Warden, Frew and Company of Philadelphia,
and of Charles Pratt and Company of New York was so thoroughly concealed
that Mr. Rockefeller, five years after it occurred, dared make an
affidavit that it had never occurred![120] Men who entered into running
arrangements with Mr. Rockefeller were cautioned “not to tell their
wives,” and correspondence between them and the Standard Oil Company was
carried on under assumed names! Whenever the subject of the relations
between the various companies came up in a lawsuit or an investigation,
a candid and straightforward answer was always avoided by both Mr.
Rockefeller and the men known to be associated with him in some way. For
instance, in 1879, when H. H. Rogers was before the Hepburn Committee,
an effort was made to find out what relation the firm of Charles Pratt
and Company, of which he was a member, sustained to the Standard Oil
Company. Mr. Rogers’s testimony was a masterpiece of good-natured
evasion,[121] and all that the examiners could get, though they returned
again and again to the inquiry, was that Charles Pratt and Company
worked in “harmony” with the Standard Oil Company.
When ex-Governor Nash of Ohio was investigating the relations of the
Cleveland and Marietta Railroad and the National Transit Company, try
his best he could not find out anything definite. In his report Mr. Nash
said: “I have purposely referred to the parties who entered into this
arrangement with Receiver Pease and his freight agent, J. E. Terry, as
the parties represented by O’Day and Scheide, for the reason that I have
not been able to ascertain who or what the parties are.” That they were
officers of the National Transit Company he had evidence, but what
relation had the National Transit Company to the Standard Oil Company?
Was it a part of it? Mr. Nash was unable to find from Mr. O’Day, closely
as he might question him.[122]
In the Buffalo case, when John D. Rockefeller was on the stand, he was
put through a questioning in regard to the relations of the persons
concerned in the suit to the Standard Oil Trust, whose existence he
admitted. Mr. Rockefeller answered all the questions his lawyers would
allow, but at the end the plaintiffs had gained little or nothing, and
there was a strong impression, from the attitude of his lawyers rather
than from that of Mr. Rockefeller, that an effort was making to conceal
the nature of the agreement or charter or whatever it was under which
the companies involved were working. Naturally enough this attitude
inspired resentment and aggravated the feeling that this secrecy meant
evil-doing. When the epidemic of trust investigation broke out in 1888,
and the Standard Oil Trust was brought up for examination, there was a
general public demand to have the matter cleared up. The first
investigation of importance took place in February, 1888, in New York
City, and by the direction of the Senate of New York State. A list of
more than a score of trusts was in the hands of the committee, and, with
the limited time at their disposal, it was certain that they could not
look into more than half a dozen. There seems to have been no hesitation
about including the Standard Oil Trust. “This is the original trust,”
wrote the committee. “Its success has been the incentive to the
formation of all other trusts or combinations. It is the type of a
system which has spread like a disease through the commercial system of
this country.”
There were several things the committee wanted to know about the
Standard Oil Trust, and its president was summoned for examination. (1)
What was it? Was it an organisation recognised by any law of the land?
Long ago men had decided that partnerships, corporations, companies, in
which men united to do business, must be regulated by law and subjected
to a certain amount of publicity, if the public good was to be
protected. Was the Standard Oil Trust within or without the law? (2) By
the testimony of its own members, in other years the Standard
Combination controlled from eighty to ninety per cent. of the oil
business of the country. Was this supremacy due in any measure to
special privileges, such as discrimination in railroad rates? (3) Was
its power used to manipulate production and prices, and to prevent men
outside entering the oil business?
It was to learn these things that the commission summoned Mr.
Rockefeller. Flanked by Joseph H. Choate, present Ambassador to the
Court of King Edward and the most eminent lawyer of the day, and S. C.
T. Dodd, a no less able if a less well-known lawyer, Mr. Rockefeller
submitted himself to his questioners. In no case where he has appeared
on the stand can his skill as a witness be studied to better advantage.
With a wealth of polite phrases—“You are very good,” “I beg with all
respect”—Mr. Rockefeller bowed himself to the will of the committee.
With an air of eager frankness he told them nothing he did not wish them
to know. The committee had a desire to begin at the beginning. It
evidently had heard that a short-lived organisation, called the South
Improvement Company, had given Mr. Rockefeller his whip-hand in the oil
business as far back as 1872, enabling him in three months’ time to
raise his daily capacity as a refiner from 1,500 to 10,000 barrels, and
so they asked Mr. Rockefeller:
_Q._ There was such a company?
_A._ I have heard of such a company.
_Q._ Were you not in it?
_A._ I was not.[123]
It is a perfectly well-known fact that Mr. Rockefeller owned 180 shares
in the South Improvement Company, of which he was a director; that, when
a public uprising caused the destruction of the company, he was one of
the two men who tried to save it; also that the Standard Oil Company of
Ohio was the only concern which profited by the short-lived conspiracy.
Another staggering bit of testimony concerned railroad rates. Asked if
there had been any arrangements by which the trust or the companies
controlled by it got transportation at any cheaper rates than was
allowed to the general public, Mr. Rockefeller answered: “No, sir.” As a
matter of fact, the three great oil-carrying systems of the country—the
Central, Erie and Pennsylvania—had all of them, for much of the period
between 1872 and 1888, granted to Mr. Rockefeller rebates calculated to
keep freight rates down for the Standard Oil Company and up for its
competitors. Contracts and agreements to this effect are easily
accessible to any one caring to investigate the quality of Mr.
Rockefeller’s “no.” “No,” said Mr. Rockefeller, “we have had no better
rates than our neighbours,” and then, with that lack of the sense of
humour which, ethical qualities aside, is his chief limitation, he
hastened to add: “But, if I may be allowed, we have found repeated
instances where other parties had secured lower rates than we had.”
Later in the day the committee, which seems to have known something of
Mr. Rockefeller’s former contracts with the railroads, returned to the
subject, and the following colloquy, worthy of the study of all
witnesses interested in how not to tell what you know, took place:
_Q._ Has not some company or companies embraced within this trust
enjoyed from railroads more favourable freight rates than those
rates accorded to refineries not in the trust?
_A._ I do not recall anything of that kind.
_Q._ You have heard of such things?
_A._ I have heard much in the papers about it.
_Q._ Was there not such an allegation as that in the litigation or
controversy recently disposed of by the Interstate Commerce
Commission, Mr. Rice’s suit; was not there a charge in Mr. Rice’s
petition that companies embraced within your trust enjoyed from
railroad companies more favourable freight rates?
_A._ I think Mr. Rice made such a claim; yes, sir.
_Q._ Did not the commission find that claim true?
_A._ I think the return of the commission is a matter of record; I
could not give it.
_Q._ You don’t know it; you haven’t seen that they did so find?
_A._ It is a matter of record.
_Q._ Haven’t you read that the Interstate Commerce Commission did
find that charge to be true?
_A._ No, sir; I don’t think I could say that. I read that they made
a decision, but I am really unable to say what that decision was.
_Q._ You did not feel interested enough in the litigation to see
what the decision was?
_A._ I felt an interest in the litigation; I don’t mean to say that
I did not feel an interest in it.
_Q._ Do you mean to say that you don’t know what the decision was?
that you did not read to see what the decision was?
_A._ I don’t say that; I know that the Interstate Commerce
Commission had made a decision; the decision is quite a
comprehensive one, but it is questionable whether it could be said
that that decision in all its features results as I understand you
to claim.
_Q._ You don’t so understand it? Will you say, as a matter of fact,
that none of the companies embraced within this trust have enjoyed
more favourable freight rates than the companies outside of your
trust? Will you say, as a matter of fact, that it is not so?
_A._ I stated in my testimony this morning that I had known of
instances where companies altogether outside of the trust had
enjoyed more favourable freights than companies in this trust; and I
am not able to state that there may not have been arrangements for
freight on the part of companies within this trust as favourable as,
or more favourable than, other freight arrangements; but, in reply
to that, nothing peculiar in respect to the companies in this
association; I suppose they make the best freight arrangements they
can.[124]
The committee had a vague idea that refineries outside of the Standard
Combination had had a hard time to live, and asked if the trust had
sought in any way to make the operations of outsiders so unprofitable
that they would either have to come in or go out of the business.
“They have not; no, sir, they have not,” replied Mr. Rockefeller.
“And they have lived on good terms with their competitors?”
“They have, and have to-day very pleasant relations with those
gentlemen.”
It would have been interesting to have heard the comments of a number of
gentlemen trying to carry on an independent business in 1888 on that
answer: of the refiners in Oil City and Titusville, at that time
preparing to carry their troubles to the Interstate Commerce Commission;
of George Rice and others at Marietta, Ohio; of H. H. Campbell, of the
Bear Creek Refining Company at Pittsburg; of Scofield, Shurmer and
Teagle at Cleveland.
If all of Mr. Rockefeller’s testimony had been of the nature of the
above, the investigation would have been worth little to the people who
demanded it. But when it came to the questions which, after all, it was
most essential to have answered at that moment, Mr. Rockefeller, after
some skirmishing, gave the committee as frank testimony as is on record
from him. The information wanted was in regard to the organisation of
the Standard Oil Trust. As pointed out in a previous chapter, there had
been some kind of an agreement adopted in 1882, binding together the
varied interests which controlled the oil business. But what it was,
where it was kept, by what authority it lived, nobody knew. For six
years it had succeeded in hiding itself. What was the understanding
which had made a trust of a company? The committee asked to know. Mr.
Rockefeller and his counsel were the soul of amiability under the
demand. They had only one request, and Mr. Choate made it persuasively:
“If the committee please,” he said, “I do not arise to make an
objection to a request of the committee; we think that it is very
proper that the committee should be made acquainted with this
document and everything pertaining to it in order to advise them as
to the nature and operation of this trust; at the same time, there
are private interests and controversies involved which might be
seriously prejudiced by a public exposition of its details, and
therefore, in producing it, we, without asking the committee to make
any promise or to commit themselves at all, request that while they
make whatever use of it they please, it shall not be in all its
details made a matter of public record or exhibition unless in their
final judgment, after consideration of the matter, they shall
consider it necessary. There are very important private interests
involved that ought not, under the guise of a public investigation,
to be interfered with.”
The committee examined the document and concluded to include it in its
report.[125] Like all great things, it was simplicity itself—an
agreement which anybody could understand, by which some fifty persons
holding controlling interests in corporations, joint stock associations,
and partnerships of different states, placed all their stock in the
hands of nine trustees, receiving in return trust certificates. These
nine trustees themselves owned a majority of the stock and had complete
control of all the property. Mr. Rockefeller, when questioned, stated
that one of the trustees was a responsible officer in almost every
refinery or organisation in the trust; that the trustees, as a body,
knew by reports and correspondence, and by frequent consultation in New
York with active promoters of each concern, just how the business was
going on. “We all know how the business goes,” said Mr. Rockefeller; “we
get reports once in thirty days showing what it has cost for
everything.”
The trustees evidently ran the entire great combination under the
agreement. But consider the anomaly of the situation. Thirty-nine
corporations, each of them having a legal existence, obliged by the laws
of the state creating it to limit its operations to certain lines and to
make certain reports, had turned over their affairs to an organisation
having no legal existence, independent of all authority, able to do
anything it wanted anywhere; and to this point working in absolute
darkness. Under their agreement, which was unrecognised by the state, a
few men had united to do things which no incorporated company could do.
It was a situation as puzzling as it was new. The committee in reporting
on what it discovered did nothing to solve the puzzle. It simply sounded
a warning:
“The actual value of property in the trust control at the present
time is not less than one hundred and forty-eight millions of
dollars, according to the testimony of the trust’s president before
your committee. This sum in the hands of nine men, energetic,
intelligent, and aggressive—and the trustees themselves, as has been
said, own a majority of the stock of the trust which absolutely
controls the one hundred and forty-eight millions of dollars—is one
of the most active and possibly the most formidable moneyed power on
this continent. Its influence reaches into every state and is felt
in remote villages, and the products of its refineries seek a market
in almost every seaport on the globe. When it is remembered that all
this vast wealth is the growth of about twenty years, that this
property has more than doubled in value in six years, and that with
this increase the trust has made aggregate dividends during that
period of over fifty millions of dollars, the people may well look
with apprehension at such rapid development and centralisation of
wealth wholly independent of legal control, and anxiously seek out
means to modify, if not to prevent, the natural consequence of the
device producing it, a device of late invention, namely, the
aggregation of great corporations into partnerships with unbounded
resources and a field of operations quite as extended as its
resources. So much for the nature of the Standard Oil Trust. The
committee regret that they are not able to make a more complete and
satisfactory report as to the method of its operations and its
effect upon public interests.
“The brevity of the time within which the investigation was required
to be made rendered it impossible for your committee to do more than
examine the persons most prominent in the management of its affairs.
Its cause was thus presented to the most favourable light possible,
and it is only fair to conclude that nothing was left unsaid by them
that could be said in its favour. No witness came forward to accuse
it of the great offences commonly laid to its charge. No proofs were
made of its rapacity or of the greed with which it lays hold of
every competitive industry, except such as might be drawn from the
fact that it is the almost sole occupant of the field of oil
operations, from which it has driven nearly every competitor. No
witness appeared to prove its power over railroad and transportation
companies and to wring from already impoverished lines better terms
than other shippers, except such as might be drawn from the
admission of its officers, made with hesitation, that this wealth
and the amount of its business enabled it to obtain better terms
than its poorer competitors.”[126]
The New York Senate made its investigation of trusts in February, 1888.
In March the Committee on Manufactures of the House of Representatives
began a similar inquiry. This committee, like the earlier one, made the
Standard its principal subject. Fully 1,000 pages of a report of 1,500
pages are devoted to Mr. Rockefeller’s creation—five times the space
given to the Sugar Trust, ten times that given to the Whiskey Trust. The
testimony was wide in range. Indeed, from the volume alone, a pretty
complete history of the Standard Oil Company up to 1888 could be
written. Here are found the South Improvement Company charter and
contracts in full. Here is Mr. Cassatt’s testimony, taken in the case of
the Commonwealth of Pennsylvania _vs._ the Pennsylvania Railroad,
showing the character of the rebates the Standard Combination was able
to secure from the railroads at that time. Here is a partial history of
the growth of the Standard pipe-lines. Many personal histories of
refiners driven out of business by the conditions brought about by
railroad discriminations; full accounts of the war of the producing
element on the Standard; all of the testimony in the Buffalo case, where
two refiners were found guilty of conspiring to ruin an independent
refining concern; the reports of the Interstate Commerce Commission in
the cases of George Rice; and much interesting explanation of various
matters by leading Standard Oil officials appear in the report.
Mr. Rockefeller was on the stand, and one item of his testimony affords
a curious comparison. On the 28th of February, when before the New York
Senate committee, Mr. Rockefeller was asked if he was not a member of
the South Improvement Company.
“I was not,” he replied.
On the 30th of the April following, when before the House Committee, the
following colloquy took place:
_Q._ I want the names particularly of gentlemen who either now or in
the past have been interested with you gentlemen who were in the
South Improvement Company?
_A._ I think they were O. T. Waring, W. P. Logan, John Logan, W. G.
Warden, O. H. Payne, H. M. Flagler, William Rockefeller, J. A.
Bostwick, and—_myself_.
It was in this investigation that Henry M. Flagler gave explanations of
various operations of the Standard, which have been quoted in the course
of this narrative, notably explanations of the South Improvement
Company, of the ten-cent rebate secured from all the railroads in 1875,
of the purchase of the Empire Transportation Company, of the rebate on
other people’s shipments enjoyed in 1878 by the American Transfer
Company. Some of Mr. Flagler’s testimony in this investigation compares
as curiously with affidavits of his made in 1880 as does that of his
great chief. For instance, in 1880 Mr. Flagler swore that “the Standard
Oil Company owns and operates its refineries at Cleveland, Ohio, and
also a refinery at Bayonne in the state of New Jersey. That at no other
place in the United States does the said Standard Oil Company _own_,
operate, or control any refinery or refineries.”[127] But in this
investigation the following colloquy took place:
_Q._ When did the Standard Company of Ohio first enter into an
alliance with other refineries?
_A._ If you mean (by) an alliance, Mr. Gowen, I should say never.
_Q._ I am only endeavouring to aid your friends in getting at what
they want. Here, I notice, they propose to prove by you—I will give
it in this way—that on account of the disastrous condition of the
refining business, the Standard, on October 15, 1874, entered into
an alliance with a number of Pittsburg refineries.
_A._ That is more correctly stated by saying that the Standard Oil
Company _purchased_ the refineries owned by the parties in
Pittsburg.
_Q._ Who were they?
_A._ Lockhart, Frew and Company, I think, was the company. Wait a
moment. It was the Standard Oil Company of Pittsburg, it being a
corporation, and Warden, Frew and Company, of Philadelphia, and, I
should say, Charles Pratt and Company, of New York.
_Q._ Any others?
_A._ That is all.
_Q._ All those gentlemen, Warden, Frew and Company, and the Standard
Oil Company of Pittsburg, Charles Pratt and Company, of New York,
are now associated with you as parties interested in the present Oil
Trust?
_A._ They are stockholders. The property formerly owned by them was
at that time purchased by the Standard Oil Company.
_Q._ When you speak of purchasing their interest, you do not exclude
them from their interest? They united with you and remained as your
associates in the business?
_A._ If it was not from the fact that ours was a corporation, we
might call it a co-partnership.
_Q._ They becoming interested in yours, and you in theirs?
_A._ Yes, sir.
_Q._ And you simply used your name to represent the joint ownership,
as it was a corporation?
_A._ Yes, sir.[128]
Full as the testimony on the Standard Oil Trust gathered by the Federal
committee of 1888 is, its report touched but one point, and that was its
organisation. To the committee it seemed that the agreement under which
the trust operated was such as to make it exempt from the anti-trust
legislation which was then contemplated by Congress. The legislation
proposed was directed against “combinations to fix the price or regulate
the production of merchandise or commerce.” Now a mass of testimony had
been presented showing that, from the starting-point of the Standard’s
history with the South Improvement Company, its aim has been to regulate
the output of refined oil so as to fix the price, but this testimony,
the committee saw clearly enough, did not apply to the trust which it
was investigating. For—so swore the trustees—they had nothing to do with
the business operations of the separate concerns. They simply held the
stock of the various corporations, exercised their right as
stockholders, received and distributed the dividends. Each company did
its own business in its own way. The trustees were not responsible for
it. There was something humorous to those familiar with the oil world,
in the idea of J. D. Rockefeller, William Rockefeller, J. D. Archbold,
Henry H. Rogers, Charles Pratt, H. M. Flagler, Benjamin Brewster, W. H.
Tilford and O. B. Jennings, having nothing to do, as trustees of the
Standard Oil Trust, but to receive and divide dividends, engrossing and
interesting a task as that undoubtedly was. But, as a matter of fact,
nothing else could be settled on them by anything in the testimony. For
instance, in 1887 there was an alliance formed between the Oil
Producers’ Protective Association and the Standard for limiting the
production of crude oil (a movement of which we shall hear more later).
This certainly was in restraint of trade. But, on examination, the
committee found the contract had been signed by the Standard Oil Company
of New York. The trustees had nothing to do with it! Taking up, point by
point, the conditions of which the oil producers complained, not one of
them could be fixed on the trust. It had made no agreements, signed no
contracts, kept no books. It had no legal existence. It was a force
powerful as gravitation and as intangible. You could argue its existence
from its effects, but you could never prove it. You could no more grasp
it than you could an eel. Certainly the Committee on Manufactures was
justified in confining its report to pointing out the fact that the
Standard Oil Trust agreement was a shrewd and slippery device for
evading responsibility.
And there the investigations of 1888 ended. There had been much noise
over them, and for what good? So asked the discontented oil public. It
simply had secured the form of an agreement which could no more be
touched by legislation than human greed. It was characteristic that the
oil public, intent on immediate remedies, should be discouraged. If they
had applied to their cause the same patience and foresight Mr.
Rockefeller did to his, they would have realised that, as a matter of
fact, a respectable first step had been taken toward their real goal, a
goal which has not by any means been reached—that is, a legal form of
organisation for corporations doing interstate business which would
enable the public to know promptly if they were securing special
privileges or were restricting trade. This first step was in securing
the famous trust agreement. That was now in the hands of people given to
thinking about things, and something came of it, even more quickly than
the philosophical observer of public events might expect, and in this
wise:
In 1887 there was elected to the attorney-generalship of Ohio a lawyer,
something under forty years of age, named David K. Watson. Two years
later Mr. Watson was a candidate for re-election. One day, while busy
with his campaign, he came out of his office in the state-house on the
public square in Columbus, and, crossing the street, stopped, as he
often did, at a book-shop to look over new publications. He happened
there on a small yellow leatherette volume entitled “Trusts.” It was
written by William W. Cook, of the New York bar, and cost fifty cents.
Mr. Watson bought the book and spent the evening reading it. At the end
he found the Standard Oil Trust agreement. It was the first time he had
ever seen it. He read it carefully and saw at once that, if it was a
bona fide agreement, the Standard Oil Company of Ohio was and had been
for seven years violating the laws of the state of Ohio by taking the
affairs of the company from the directors and placing them in the hands
of trustees, nearly all of whom were non-residents of the state. Mr.
Watson knew on the instant that, if this were a bona fide agreement and
he were re-elected attorney-general of Ohio, it would be his duty to
bring an action against the Standard Oil Company of the state. He laid
the little book away until he knew the result of the election.
[Illustration:
DAVID K. WATSON
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.
]
[Illustration:
FRANK S. MONNETT
Attorney-General of Ohio from 1895 to 1899. Mr. Monnett brought suit
against the Standard Oil Company in 1897 in the Supreme Court of
Ohio.
]
[Illustration:
LEWIS EMERY, JR.
Independent oil operator and refiner. Leader in movement for free
pipe-line bill and anti-discrimination laws. Founder of the United
States Pipe Line.
]
[Illustration:
GEORGE RICE
Plaintiff in numerous cases brought against the Standard Oil Company.
Prominent independent witness in various State and congressional
investigations.
]
A few weeks later Mr. Watson was re-elected attorney-general. He at once
began a search into the authenticity of the documents in Mr. Cook’s
little volume. He sent for the reports of the investigations by the
committees of the New York Senate and of Congress. He read the testimony
word for word. But he still doubted the correctness of the document,
fearing that, even if it were in the main correct, there might be some
loophole by which the Standard Oil Company could escape. Now, in reading
the report of the House investigations, Mr. Watson had been particularly
impressed with the clearness and directness of the questions put by one
of the members of the investigating committee, Mr. Buchanan, of New
Jersey. He accordingly went to Washington, inquired from a friend if Mr.
Buchanan could be relied upon, and, receiving the assurance of his high
character, sought an interview with him. “Was the Standard trust
agreement as published in the committee’s report _bona fide_?” was the
inquiry. “Yes,” said Mr. Buchanan. “But why do you ask?” “Because if it
is,” replied Mr. Watson, “I believe the Standard Oil Company of Ohio has
violated the laws of the state, and on my return to Columbus I shall
file an action in _quo warranto_ against it in the Supreme Court of the
state.”
“You would not _dare_ do that, would you?” exclaimed Mr. Buchanan.
“I was young then,” Mr. Watson told the writer in describing this
interview, “and I supposed it was expected of a public officer to
perform his duty. So I explained to Mr. Buchanan that there was a
statute in Ohio which required an attorney-general to bring suit against
any corporation which he had reason to believe was violating the laws of
the state; that I had no personal feeling against the Standard Oil
Company, but I meant to enforce the law against it as I would against
any other company which I believed to be violating the law.”
“I admire your courage,” said Mr. Buchanan, “but I would not do it.”
On May 8, 1890, Mr. Watson filed his petition in the Supreme Court of
Ohio.[129] The petition averred that, in violation of the law of Ohio,
the Standard Oil Company had entered into an agreement by which it had
transferred 34,993 shares out of 35,000 to the trustees of the Standard
Oil Trust, most of whom were non-residents of the state; that it was
these trustees who chose the board of directors of the Standard Oil
Company of Ohio, and directed its policy, and prayed that, on account of
this violation of law, the company should be “adjudged to have forfeited
and surrendered its corporate rights, privileges, powers and franchises,
and that it be ousted and excluded therefrom, and that it be dissolved.”
The petition came on the trust like a thunderbolt. There had been
already more or less erratic and ill-advised anti-trust legislation in
various states, but it had been framed in ignorance of the actual
organisation of the trust, and carried out with a crude notion that the
trust, in spite of the fact that it was already thoroughly intrenched in
the business life of the country, could be destroyed by a hostile act of
a Legislature. Mr. Watson’s suit was something very different. It was an
application of recognised laws to admitted facts. It brought the
Standard Oil Company face to face with several legal propositions it did
not like to meet. After a long delay an answer was filed by the
Standard. To Mr. Watson’s joy, the one thing he feared—the denial of the
correctness of the agreement—made no part of this answer. It admitted
the agreement, but it denied that the Standard Oil Company of Ohio was a
party to it. The agreement was signed by the individual stockholders of
the Standard Oil Company, not by the company in its corporate capacity.
The Standard Oil Company of Ohio had nothing to do with the Standard Oil
Trust. True, certain of its stockholders had turned over their stock to
the nine trustees, but the company did its business as before,
discharging all its duties as its charter required. This was the
essential point of the defendant’s answer. This, and the claim that if
the court should hold that the action of the stockholders in becoming
parties to the agreement in their individual capacity was a corporate
act of the Standard Oil Company, even then the charter should not be
forfeited, since the law barred an act committed more than five years
before a petition was filed.
Anticipating that the trust would get together a strong array of counsel
to defend its attacked member, Mr. Watson retained his personal and
professional friend, John W. Warrington, an eminent lawyer of
Cincinnati, to assist him. They were opposed by Joseph H. Choate, S. C.
T. Dodd and Virgil P. Kline of Cleveland.
But, while the preparation for the argument of the case was going on,
the courageous young attorney-general was beset on all sides for an
explanation. _Why_ had he brought the suit? What was the influence which
had controlled him? Men in power took him aside to question him,
incapable, evidently, of believing that an attorney-general could be
produced in Ohio who would bring a suit solely because he believed it
was his duty. Some suggested that some big interest, hostile to the
Standard, was behind him; others said the suit was suggested by Senator
Sherman, then interested in his anti-trust bill. Along with this
speculation came the strong and subtle restraining pressure a great
corporation is sure to exert when its ambitions are interfered with.
From all sides came powerful persuasion that the suit be dropped. Mr.
Watson has never made public the details of this influence in any
documentary way, but the accounts he at the time gave different friends
of it led to so much gossip in Ohio that in 1899 the attorney-general of
the state, F. S. Monnett, made detailed charges of six deliberate
attempts to bribe Mr. Watson to withdraw the suits.[130] But one bit of
documentary proof of the efforts to reach the attorney-general ever
reached the public—that came out without his knowledge or consent, Mr.
Watson claims, seven years after the suit was brought. It is interesting
enough as evidence of the character of the pressure Mr. Rockefeller can
set in motion when he will. Among Mr. Rockefeller’s Ohio friends was the
late Marcus A. Hanna, who was even then a strong factor in the
Republican party of the state. A few months after the suit was brought
he wrote Mr. Watson a letter of remonstrance. Many of Mr. Watson’s
friends saw this letter at the time and felt deep indignation over its
contents. In 1897, when Mr. Hanna was a candidate for the United States
Senate, an enterprising newspaper man of Ohio recalled that during 1890
it was common gossip in Ohio that Mr. Hanna had written the
attorney-general a letter asking him to withdraw his suit against the
Standard Oil Company. The correspondent sought Mr. Watson, who, so he
avers, let him read the letter through, although he refused to allow him
to copy it for publication. “No one could read it and ever forget it,”
said the correspondent; but to reinforce himself he sought persons who
were associated with Mr. Watson at the time—yes, they remembered the
letter perfectly. Certain of them said that they could never forget some
of its expressions. Between them they pieced up the following portions
of the letter which they declared correct and which the correspondent
published in the New York World for August 11, 1897:
“I noticed some time ago that you had brought suit to take away the
charter of the Standard Oil Company. I intended at the time to write
you about it, but it slipped my memory. A few days ago while in New
York I met a friend, John D. Rockefeller, and he called my attention
to the fact that you had brought the suit, but did not ask me to
influence you in any way.”
* * * * *
“I have always considered you in the line of political promotion,”
said Hanna, and then went on to intimate that unless the suit
against the Standard was withdrawn, Watson would be the object of
vengeance by the corporation and its friends forever after. As if to
clinch his threat and argument, Hanna wrote: “_You have been in
politics long enough to know that no man in public office owes the
public anything._”
[Illustration:
GROUP OF CLEVELAND CITIZENS
Who called on John D. Rockefeller at his residence, “Forest Hill,”
on July 25, 1896, to thank him for his gift of park lands to the
city. Mr. Rockefeller is in the centre of the group, the late
Senator Marcus A. Hanna in the right lower corner, and Governor
Myron T. Herrick in the centre of the top row.
]
* * * * *
The letter concluded with a reference to the present Secretary of
State, John Sherman. Hanna wrote: “I understood that Senator Sherman
inspired and instigated this suit. If this is so I will take
occasion to talk to him sharply when I see him.”
The letter was written on the typewriter and letter-heads of Hanna’s
business office in Cleveland.
Having secured this much, the correspondent, thinking it possible Mr.
Watson might have answered Mr. Hanna’s letter, undertook a bit of
original investigation. He sought the files of the attorney-general’s
official correspondence for 1890, and the following is what he found.
This letter certainly is evidence enough of the sort of letter Mr. Hanna
had written even if the above restoration is not absolutely accurate:
December 13, 1890.
HON. MARK HANNA,
Cleveland, Ohio.
_My dear Sir_:—Your communication of the 21st ult. came to hand. The
delay in answering it has been caused largely by my being ill for
several days. I did not intend that bringing the action to which you
refer in your letter should be an attack on my part on “organised
capital,” for I am aware that great business transactions require
the union and concentration of moneyed interests, and fully
appreciate what has been done in that direction, yet I cannot but
feel that I am justified in bringing the suit against the Standard
Oil Company, and believe that there are many things relating to the
case which, if you understood, would cause you to entertain
different views concerning it and my relation to it. Let me impress
one thing on you with special particularity, and you may depend
absolutely on its truthfulness. Senator Sherman never suggested or
encouraged this suit, either directly or indirectly. This must be
understood in its broadest sense. The report probably arose from the
fact that the action was brought shortly after the Senator made his
great speech in support of his anti-trust bill. You will hardly
receive my statement with favour, I fear, but I am alone responsible
for the action. No one encouraged me to bring it or knew that it
would be brought until I determined to do so, and it is unfair to
other persons to charge them with suggesting it or encouraging it.
With the highest appreciation of your personal friendship, I am,
with great respect,
Truly yours,
DAVID K. WATSON.
The part which the terse phrase attributed to Mr. Hanna,
“NO MAN IN PUBLIC OFFICE OWES THE PUBLIC ANYTHING,”
played in the Senatorial campaign of 1897 is familiar to those who
follow politics. It was kept standing for days in black-faced capitals
at the head of the opposition newspapers in Ohio, and remained a potent
weapon in the hands of Mr. Hanna’s enemies to the time of his death.
Whatever the pressure Mr. Watson encountered, it had no effect on his
purpose. He quietly went ahead, presented his brief, and, when the time
came, he and Mr. Warrington argued the case. The following proposition
from the brief presented by Mr. Watson and Mr. Warrington show tersely
the line of their argument: