people of the United States, and nobody else, must cure whatever is
wrong in the industrial situation, typified by this narrative of the
growth of the Standard Oil Company. That our first task is to secure
free and equal transportation privileges by rail, pipe and waterway is
evident. It is not an easy matter. It is one which may require
operations which will seem severe; but the whole system of
discrimination has been nothing but violence, and those who have
profited by it cannot complain if the curing of the evils they have
wrought bring hardship in turn on them. At all events, until the
transportation matter is settled, and settled right, the monopolistic
trust will be with us, a leech on our pockets, a barrier to our free
efforts.
As for the ethical side, there is no cure but in an increasing scorn of
unfair play—an increasing sense that a thing won by breaking the rules
of the game is not worth the winning. When the business man who fights
to secure special privileges, to crowd his competitor off the track by
other than fair competitive methods, receives the same summary
disdainful ostracism by his fellows that the doctor or lawyer who is
“unprofessional,” the athlete who abuses the rules, receives, we shall
have gone a long way toward making commerce a fit pursuit for our young
men.
THE END
APPENDIX
NUMBER 37 (See page 2004)
ARTICLES OF INCORPORATION OF THE TIDEWATER PIPE LINE
Incorporation Tidewater Pipe Company, Limited, of Titusville,
Pennsylvania. Recorded November 22, 1878. William F. Dickson,
Recorder.
The undersigned persons, to wit: Byron David Benson, Robert Emmet
Hopkins, Andrew Worton Perrin, Alanson Ashford Sumner, David Boyd
Stewart, David McKelvy, Samuel Queen Brown, Adam Clark Hawkins,
Willis Booth Benedict, Marcus Brownson, William Henry Nicholson,
Calvin Nathaniel Payne, John Hahn Dilks, Hascal Ledger Taylor,
William Henry Conley, Thomas Benton Riter, Clark Isaac Hayes,
Gershom Hyde, James Henry Caldwell, George Lawrence Benton, George
Hill Graham, Elisha Gilbert Patterson, Benjamin Bakewell Campbell,
Delos Olcott Wickham, Joseph Henry Simmonds, Lewis Henry Smith,
desire to form a partnership association, pursuant to the provisions
of an act of the General Assembly of the Commonwealth of
Pennsylvania, entitled, “An Act, authorising the formation of
partnership association in which the capital subscribed shall alone
be responsible for the debts of the association except under certain
circumstances,” approved the second day of June, A.D. 1874, and the
several supplements thereto for the purpose of conducting a legal
business or occupation, within the United States or elsewhere, whose
principal office or place of business shall be established and
maintained within the state of Pennsylvania, by subscribing and
contributing capital thereto, which capital shall alone be liable
for the debts of such association, and to that end sign and
acknowledge the following statement:
Full names of the persons desiring to form such association are:
Byron David Benson, Robert Emmet Hopkins, Andrew Worton Perrin,
Alanson Ashford Sumner, David Boyd Stewart, David McKelvy, Samuel
Queen Brown, Adam Clark Hawkins, Willis Booth Benedict, Marcus
Brownson, William Henry Nicholson, Calvin Nathaniel Payne, John Hahn
Dilks, Hascal Ledger Taylor, William Henry Conley, Thomas Benton
Riter, Clark Isaac Hayes, Gershom Clark Hyde, James Henry Caldwell,
George Lawrence Benton, George Hill Graham, Elisha Gilbert
Patterson, Benjamin Bakewell Campbell, Delos Olcott Wickham, Joseph
Henry Simmonds, Lewis Henry Smith.
The amount of capital of said association subscribed for by each is
as follows, to wit:
Said Byron David Benson has subscribed for $100,300 of the capital
of said association; the said Robert Emmet Hopkins has subscribed
for $72,400 of the capital of said association; said Andrew Worton
Perrin has subscribed for $24,700 of the capital of said
association; said David Boyd Stewart has subscribed for $16,800 of
the capital of said association; said David McKelvy has subscribed
for $72,500 of the capital of said association; said Samuel Queen
Brown has subscribed for $25,000 of the capital of said association;
said Adam Clark Hawkins has subscribed for $6,000 of the capital of
said association; said Willis Booth Benedict has subscribed for
$5,000 of the capital of said association; said Marcus Brownson has
subscribed for $10,000 of the capital of said association; said
William Henry Nicholson has subscribed for $5,000 of the capital of
said association; said Calvin Nathaniel Payne has subscribed for
$5,000 of the capital of said association; said John Hahn Dilks has
subscribed $82,300 of the capital of said association; said Hascal
Ledger Taylor has subscribed for $50,000 of the capital of said
association; said William Henry Conley has subscribed for $2,500 of
the capital of said association; said Thomas Benton Riter has
subscribed for $2,500 of the capital of said association; said Clark
Isaac Hayes has subscribed for $10,000 of the capital of said
association; said Gershom Clark Hyde has subscribed for $1,000 of
the capital of said association; said James Henry Caldwell has
subscribed for $2,500 of the capital of said association; said
George Lawrence Benton has subscribed for $1,000 of the capital of
said association; said George Hill Graham has subscribed for $1,000
of the capital of said association; said Elisha Gilbert Patterson
has subscribed for $5,000 of the capital of said association; said
Benjamin Bakewell Campbell has subscribed for $10,000 of the capital
of said association; said Delos Olcott Wickham has subscribed for
$2,500 of the capital of said association; said Joseph Henry
Simmonds has subscribed for $1,000 of the capital of said
association; said Lewis Henry Smith has subscribed for $1,000 of the
capital of said association.
_Second._—The total amount of the capital of the said association is
$625,000, and said capital shall be paid at the times and in the
manner following, to wit: Twenty-five per cent. thereof on the
second day of December, A.D. 1878; twenty-five per cent. thereof on
the second day of January, A.D. 1879; twenty-five per cent. thereof
on the first day of February, A.D. 1879, and the balance of
twenty-five per cent. thereof the third day of March, A.D. 1879. The
whole of said capital shall be paid in lawful money to the treasurer
of said association at the principal office or place of business of
said association at Titusville, Pennsylvania.
_Third._—The character of the business to be conducted by said
association is the production, shipping, refining, storing,
insuring, buying and selling of petroleum and its products, and the
acquisitions, manufacture and management of such property, real,
personal and mixed, as may be deemed necessary or advisable to use
in such business or in connection therewith. The location of the
business to be conducted by said association is at the city of
Titusville, in the county of Crawford, and state of Pennsylvania,
where the principal office or place of business of said association
is established and shall be maintained.
_Fourth._—The name of the said association is the Tidewater Pipe
Company (Limited).
_Fifth._—The contemplated duration of said association is twenty
years from the date of this statement.
_Sixth._—The names of the officers of said association selected in
conformity with the provisions of said act are as follows:
The managers of said association so elected are: Byron David Benson,
Hascal Ledger Taylor, Alanson Ashford Sumner, Robert Emmet Hopkins,
and John Hahn Dilks, of whom said Byron David Benson is so selected
chairman of said association; said Robert Emmet Hopkins is so
selected treasurer of said association; and said Alanson Ashford
Sumner is so selected secretary of said association.
_In Witness Whereof_, the persons named in this statement have
hereunto severally signed their names, this thirteenth day of
November, _Anno Domini_ one thousand eight hundred and
seventy-eight:
ELISHA GILBERT PATTERSON, BYRON DAVID BENSON, MARCUS BROWNSON,
HASCAL LEDGER TAYLOR, GEORGE LAWRENCE BENTON, ALANSON ASHFORD
SUMNER, DELOS OLCOTT WICKHAM, DAVID MCKELVY, ADAM CLARK HAWKINS,
DAVID BOYD STEWART, JOHN HAHN DILKS, GEORGE HILL GRAHAM, WILLIAM
HENRY NICHOLSON, JOSEPH HENRY SIMMONDS, GERSHOM CLARK HYDE, LEWIS
HENRY SMITH, WILLIS BOOTH BENEDICT, BENJAMIN BAKEWELL CAMPBELL,
WILLIAM HENRY CONLEY, CALVIN NATHANIEL PAYNE, THOMAS BENTON RITER,
JAMES HENRY CALDWELL, CLARK ISAAC HAYES, ANDREW NORTON PERRIN,
SAMUEL QUEEN BROWN, ROBERT EMMET HOPKINS.
NUMBER 38 (See page 2015)
TESTIMONY OF HENRY M. FLAGLER IN REGARD TO THE TIDEWATER CONTEST
[Proceedings in Relation to Trusts, House of Representatives, 1888.
Report Number 3,112, page 783.]
_Q._ Now you can make your statement.
_A._ I want to say this: The Tidewater Pipe Line was the first line
built to the seaboard, and it had a connection with the Reading
Railroad, by which the railroad and the line jointly undertook to do
business. We had several discussions of pipe-lines of the future
with the representatives of the Tidewater Pipe Line, and would have
had no difficulty whatever in making satisfactory arrangements with
them, which would have removed all unnecessary competition, but the
New York Central, the Erie road, and the Pennsylvania Central said
to us: “Gentlemen, we don’t want you to make any alliance of any
formal nature with the Tidewater Pipe Line.” They added: “We will
protect you in the matter of rates as against any competition
furnished by the Reading and Tidewater Pipe Line.” I replied to
that: “I have never seen a contest begun of this kind but what there
was an end to it. Now, we can make a satisfactory arrangement with
the Tidewater Pipe Line and avoid all this contest. It is not
necessary for you to throw away any money. We are not seekers after
low rates. We have done our business by you, and are willing to
continue, but only upon one single, solitary condition: we would
prefer not to have this contest; it is better that the Tidewater and
Reading Railroad should be recognised.” The reply was: “We never
will recognise them as carriers of oil.”
_Q._ That was the reply of these three trunk lines?
_A._ Yes, sir. I said: “Gentlemen, the other thing is of a great
deal more importance than the rates. The rates are short-lived
affairs.” Now, I will make this explanation in justice to ourselves,
in reply to the remark you made of our contest with the Tidewater
Line. We had no contest. It was simply a contest of the
transportation lines, and we, like fools, allowed ourselves, instead
of making arrangements with the Tidewater Line, to say to the trunk
lines: “Very well, then, we will stick to you and leave you to fight
out this battle.” They fought it for a year or two, and you know how
it ended.
_Q._ Three or four years, was it not?
_A._ I thought it was two years.
_Q._ Then I understand you to say that all that struggle, and the
low rate that the trunk line charged at the time the competition
with the Tidewater and Reading came into existence, was brought
about by the trunk lines themselves?
_A._ It was a struggle on the part of the trunk lines to hold the
entire oil business, and they avowed it to me not once, but many
times, that it was their firm intention never to recognise the
Tidewater to the seaboard.
_Q._ And during that struggle they actually carried it at fifteen
cents a barrel?
_A._ I should have said twenty or twenty-five cents. I knew it was a
ridiculously low rate.
NUMBER 39A (See page 2024)
AGREEMENT BETWEEN STANDARD AND TIDEWATER REFINERIES
[From manuscript presented to the Industrial Commission by Lewis
Emery, Jr.]
This agreement, made and entered into the ninth day of October, A.D.
1883, by and between the Standard Oil Company, a corporation of
Ohio, the Standard Oil Company of New York, a corporation of New
York, and the Standard Oil Company of New Jersey, a corporation of
New Jersey, who collectively constitute the party of the first part,
and the Ocean Oil Company, a corporation of New Jersey, the Chester
Oil Company, a corporation of Pennsylvania, and Ayres, Lombard and
Company, a corporation of New York, who collectively constitute the
party of the second part.
_Witnesseth_: That in consideration of the mutual covenants and
agreements hereby made and entered into, the said parties do hereby
covenant and agree to and with each other as follows:
_First._—That for the purpose of this contract the business of
refining petroleum is defined to mean the distillation of crude
petroleum within the United States, without regard to where the
crude is obtained; the quantity of crude petroleum received at each
refinery, except for export in its crude state, shall be regarded as
the quantity refined by it.
_Second._—That in said business the refineries named in schedule “A”
and schedule “B” (which schedules are hereto attached and made a
part of this agreement) shall respectively be entitled to have and
do the following percentage or proportionate part of the aggregate
business of all refineries named in both schedules, viz.: The
refineries named in Schedule “A,” eighty-eight and one-half (88½)
per cent. thereof, and the refineries named in Schedule “B” eleven
and one-half (11½) per cent. thereof.
_Third._—The refineries named in Schedule “A” and the refineries
named in Schedule “B” shall respectively do as nearly as practicable
their said proportion or percentage of said business; and is agreed
that,
_A._—If in any calendar month the refineries named in Schedule “A”
shall receive more than their said percentage of the said aggregate
of crude petroleum received except for export in its crude state,
the party of the first part hereto will pay to the party of the
second part hereto, twenty (20) cents per barrel on the quantity so
received in excess of their said percentage.
_B._—If in any calendar month the refineries named in Schedule “B”
shall receive more than their said percentage of the said aggregate
of crude petroleum received except for export in its crude state,
the party of the second part hereto will pay to the party of the
first part hereto twenty (20) cents per barrel on the quantity so
received in excess of this said percentage.
_C._—If in any year the refineries named in Schedule “A” shall
neglect or refuse to do eighty (80) per cent. of their said
percentage of said business, then the party of the first part shall
return and repay the party of the second part the sums received
under the provisions of this paragraph in excess of the sums paid
under the same provisions during the same year.
_D._—If in any year the refineries named in Schedule “B” shall
neglect or refuse to do eighty (80) per cent. of their said
percentage of said business, then the party of the second part shall
return and repay to the party of the first part the sums received
under the provisions of this paragraph in excess of the sums paid
under the same provisions during the same year.
_Fourth._—Each party hereto shall make to the other daily reports
showing all crude petroleum received at the refineries named in said
schedule, and when, where and from whom received, and all crude
petroleum exported therefrom, and when, where and to whom delivered.
The reports of the party of the first part shall show the crude
received at and exported from refineries named in Schedule “A,” and
the reports of the party of the second part shall show the crude
received at and exported from refineries named in Schedule “B.” The
correctness of such reports shall, if required of either party, be
verified by the party making them.
_Fifth._—A settlement shall be made, on or before the fifteenth day
of each month, of all business done under this agreement during the
preceding month, and payments shall then be made of all such sums as
under the terms hereof shall be found payable by either party to the
other.
_Sixth._—All refineries now owned or controlled by those owning or
controlling a majority of the refineries embraced in Schedule “A”
are or shall be included in Schedule “A,” and all refineries which
may hereafter be acquired or controlled in the same interest shall,
as acquired or controlled, be added to said Schedule “A,” and by
such addition be included in the terms of this agreement. All
refineries now owned or controlled by those owning or controlling a
majority of the refineries embraced in Schedule “B,” and all
refineries which may hereafter be acquired or controlled in the same
interest shall, as acquired or controlled, be added to said Schedule
“B,” and by such addition be included in the terms of the agreement.
_Seventh._—It is understood that forty-two gallons constitute a
barrel.
_Eighth._—A year, whenever used in this contract, is understood to
mean a calendar year.
_Ninth._—This agreement shall take effect on the first day of
October, 1883, and remain in force for fifteen (15) years from said
date.
_Provided_, however, and it is agreed that it shall not remain in
force longer than a certain other agreement of even date herewith
between the National Transit Company and the United Pipe Lines of
the first part, and the Tidewater Pipe Company, Limited, of the
second part, shall remain in force, and that a termination of said
other agreements shall at the same time terminate this one.
_In Witness Whereof_, the said parties have caused their common and
corporate seals to be hereto attached and to be attested by the
signature of their proper officers the day and year first aforesaid.
Standard Oil Company, by
O. H. PAYNE, _Vice-President_.
[S. O. C., Cleveland] Attest: W. P. THOMPSON, _Secretary_.
Standard Oil Company of New York, by
WILLIAM ROCKEFELLER, _President_.
[S. O. C., New York] Attest: GEORGE H. VILAS, _Secretary_.
Standard Oil Company of New Jersey, by
J. A. MCGEE, _President_.
[S. O. C., New Jersey] Attest: GEO. H. VILAS, _Secretary_.
NUMBER 39B (See page 2024)
AGREEMENT BETWEEN STANDARD AND TIDEWATER PIPE LINES
[From manuscript presented to the Industrial Commission by Lewis
Emery, Jr.]
This agreement, entered into the ninth day of October, A.D. 1883, by
and between the National Transit Company and the United Pipe Lines,
each being a corporation of the state of Pennsylvania, parties of
the first part, and the Tidewater Pipe Company, Limited, a limited
partnership association formed under the laws of the state of
Pennsylvania, party of the second part.
_Witnesseth_: That in consideration of the mutual covenants and
agreements hereby made and entered into, the said parties do hereby
covenant and agree to and with each other as follows:
_First._—That for the purposes of this contract the business
hereinafter referred to is divided into departments, one known as
the “Gathering Department,” one known as the “Transporting
Department,” one known as the “Interior Export Department,” and one
known as the “Seaboard Export Department.”
All crude petroleum received directly or indirectly from wells
located in the state of New York or state of Pennsylvania, and into
the system of pipes and tanks now owned or controlled, or which may
hereafter be owned or controlled by any party hereto, either
directly or indirectly, shall constitute gathering, and the business
of so receiving crude petroleum is the business of said gathering
department. All deliveries from local lines of pipe of crude
petroleum gathered as aforesaid, to or for any of the refineries
then embraced in Schedule “A” or Schedule “B” (which schedules are
hereto attached and made part of this agreement), and also all
deliveries of crude petroleum from any of the trunk lines of pipe
now owned or controlled, or which may hereafter be owned or
controlled, by any party hereto, either directly or indirectly, and
the getting of such crude petroleum to the point of delivery shall
constitute transporting, and the business of so getting and
delivering crude petroleum is the business of said transporting
department, except, and it is agreed, that whatever petroleum
gathered as aforesaid shall be delivered to or for any party hereto,
or to or for any refinery or refining company then embraced in
either of said schedules, for export in its crude state, whether the
same shall be delivered from a local line of pipe or a trunk line of
pipe, shall not be included in transporting, nor in the business of
said transporting department.
All petroleum gathered as aforesaid and delivered from local lines
of pipe for export in its crude state (other than deliveries to
trunk lines of pipe of such petroleum for export in its crude state)
by or for any party hereto or by or for any refinery or refining
company then embraced in either of said schedules, shall constitute
interior exporting and the business of receiving and exporting such
petroleum in its crude state shall be the business of said interior
export department.
All petroleum gathered as aforesaid and delivered from trunk lines
of pipe for export in its crude state by or for any party hereto or
by or for any refinery or refining company then embraced in either
of said schedules shall constitute seaboard exporting, and the
business of receiving and exporting such petroleum in its crude
state shall be the business of said seaboard export department.
All pipes used for gathering and delivering at points in the
oil-producing regions are herein called local lines.
All lines of pipe used for transporting beyond the oil-producing
regions are herein called trunk lines.
_Second._—That in each said department of the business the
respective parties hereto shall be entitled to do the following
percentage or proportionate part of the aggregate business done by
all parties hereto then in said department, viz.: The said parties
of the first part eighty-eight and one-half (88½) per centum
thereof, and the said party of the second part eleven and one-half
(11½) per centum thereof.
_Third._—Each party hereto shall do as nearly as practicable its
said proportion or percentage of said business. And it is agreed
that:
_A._—If in any calendar month either party shall gather more than
its said percentage of said aggregate of crude petroleum gathered,
as gathering is herein defined, it shall pay to the other party on
the quantity gathered in excess of its said percentage an amount per
barrel equal to three-fourths of the then current full rate per
barrel charged for collecting and delivering crude petroleum in the
oil-producing regions—commonly called local pipage;
_Provided_, however, and it is hereby agreed that this clause shall
not be applicable to crude petroleum gathered as aforesaid prior to
September 1, 1884.
_And provided, further_, That the excess over its said percentage
gathered prior to September 1, 1884, by either party shall on demand
of the other be delivered to the other party at some point or points
in the oil-producing regions convenient to both the party receiving
and the party delivering (the means and places to be mutually agreed
upon) when and as often as the said excess amounts to ten thousand
(10,000) barrels, upon legal orders or certificates with storage and
assessments thereon paid to date of delivery being presented
therefor, or upon the payment of the then market price of United
Pipe Line certificates for a like quantity. The party receiving
shall pay the party delivering the same a gathering charge of ten
(10) cents per barrel upon all petroleum so delivered.
_B._—If in any calendar month either the parties of the first part
or the party of the second part shall transport and deliver more
than their or its said percentage of the said aggregate of crude
petroleum transported, as transporting is herein defined, they or it
shall pay to the other party twenty-five (25) cents per barrel upon
the quantity transported and delivered in excess of their or its
said percentage.
_Provided_, That the amount payable under this clause shall not
exceed the amount it would cost to bring said excess from the mouth
of a local pipe in the oil-producing regions to either the port of
New York or the port of Philadelphia at the then current rate of
transportation by any route or method not owned or controlled
directly or indirectly by any party hereto.
_C._—If in any calendar month either party shall do more than its
said percentage of business in either the exterior export department
or the seaboard export department, it shall pay to the other party
twenty-five (25) cents per barrel upon the quantity so exported in
excess of its said percentage.
_Provided, however_, That the amount per barrel payable under this
clause shall not exceed the amount per barrel which would be payable
under Clause B and its proviso at the same time for excess in the
transporting department.
_D._—If in any year either party shall neglect or refuse to do
eighty (80) per centum of its said proportion or percentage in any
department of said business, then the party so doing less than
eighty (80) per centum of its said proportion shall return or repay
to the other party the sums received in that department under the
provisions of this paragraph in excess of the sums paid in the same
department under the same provisions during the same year.
_Fourth._—Each party shall make to the other daily reports showing:
1st. All crude petroleum gathered, as gathering is herein defined.
2nd. All crude petroleum delivered from local lines other than
deliveries to trunk lines, stating when, where and to whom
delivered.
3rd. All crude petroleum delivered from local lines to trunk lines,
stating when, where and to which line delivered.
4th. All crude petroleum delivered from trunk lines, stating when,
where and to whom delivered.
5th. All crude petroleum exported in the crude state, stating when,
where and from whom received, so as to distinguish between receipts
from local lines and receipts from trunk lines, and when, where and
to whom delivered for export. The correctness of such reports shall,
if required by either party, be verified by the party making them.
_Fifth._—On all deliveries of crude petroleum from local lines made
by said parties of the first part or either of them, other than such
deliveries as constitute transporting, as transporting is
hereinbefore defined, the parties of the first part will account for
and pay to the party of the second part eleven and one-half (11½)
per centum of the then current full rate of local pipage, first
deducting from such full rate ten (10) cents per barrel for the work
of gathering and delivering such petroleum.
On all deliveries of crude petroleum from local lines made by said
party of the second part other than such deliveries as constitute
transporting as hereinbefore defined, the party of the second part
will account for and pay to the parties of the first part
eighty-eight and one-half (88½) per centum of the then current full
rate of local pipage, first deducting from such full rate ten (10)
cents per barrel for the work of gathering and delivering such
petroleum.
_Sixth._—It is agreed that in case of excess of deliveries over the
quantity gathered, as gathering is herein before defined, by all the
parties hereto, the stocks in custody of the respective parties
shall to the extent of such excess be diminished in the ratio of
eighty-eight and one-half (88½) per centum thereof from the stocks
in custody of said parties of the first part, and eleven and
one-half (11½) per centum thereof from the stocks in custody of said
party of the second part; and to this end it is agreed that whenever
and as often as under the working of this agreement the depletion of
the stocks in the custody of either of the respective parties shall
amount to ten thousand (10,000) barrels in excess of such party’s
percentage of depletion, then the other party shall and will on
demand deliver, and the party whose stocks are so depleted will when
tendered receive, said ten thousand (10,000) barrels at some point
or points in the oil-producing regions convenient to both the party
receiving and the party delivering (the means and place to be
mutually agreed upon), upon legal orders or certificates with
storage and assessments thereon paid to date of delivery being
presented therefor, or upon the payment of the then market price of
United Pipe Line certificates for a like quantity. The party
receiving shall pay to the party delivering a gathering charge of
ten (10) cents per barrel upon all petroleum gathered.
_Seventh._—A settlement shall be made on or before the fifteenth day
of each month of all business done under this agreement during the
preceding month, and payment shall then be made of all such sums as
under the terms hereof shall be found payable by either party to the
other.
_Eighth._—If in any year the profits of the party of the second part
added to the profits of the several refineries then embraced in
Schedule “B” shall in the aggregate amount to less than five hundred
thousand (500,000) dollars (excluding from the calculations all
profits realised and losses sustained from speculation and the value
of property destroyed by fire), then the said party of the second
part shall have the right within three months from the time the
profits of such year shall have been ascertained to cancel this
agreement.
_Provided, however_, That the said right shall not exist or shall
not be exercised under the following circumstances, to wit:
1st. If the average of such profits during the said year and all
previous years from the beginning of this agreement shall equal five
hundred thousand (500,000) dollars per year.
2nd. If the said parties of the first part or either of them shall
contribute to the said party of the second part such sums of money
as together with the said profits for the said year will make the
average profit five hundred thousand (500,000) dollars per year.
_And provided, further_, That in exercising the right of
cancellation the said party of the second part must give to one or
both of said parties of the first part three (3) months’ written
notice of said cancellation, which notice must be accompanied by a
statement of the said profits of the party of the second part, and
of said refineries then embraced in Schedule “B,” and any
contributions made as aforesaid must be made within the said three
(3) months.
The party receiving said notice shall have the right to verify the
statement by an examination of the books of said party of the second
part, and books of said refineries.
_Ninth._—All refineries now owned or controlled by those owning or
controlling a majority of the refineries embraced in Schedule “A”
are or shall be included in Schedule “A”; and all refineries which
may hereafter be acquired or controlled in the same interest shall,
as acquired or controlled, be added to said Schedule “A,” and by
such addition be included in the terms of this agreement.
All refineries now owned or controlled by those owning or
controlling a majority of the refineries embraced in Schedule “B”
are or shall be included in Schedule “B”; and all refineries which
may hereafter be acquired or controlled in the same interest shall,
as acquired or controlled, be added to said Schedule “B,” and by
such addition be included in the terms of this agreement.
_Tenth._—It is agreed that any business done in either the interior
export department or the seaboard export department by any of the
refineries or refining companies then embraced in Schedule “A” shall
be treated for the purpose of this agreement as if done by the
parties of the first part; and that any business done in either of
said export departments by any of the refineries or refining
companies then embraced in Schedule “B” shall be treated for the
purposes of this agreement as if done by the party of the second
part.
_Eleventh._—It is understood that forty-two (42) gallons constitute
a barrel.
_Twelfth._—A year, whenever used in this contract, is understood to
mean a calendar year.
_Thirteenth._—This agreement shall take effect as of the first day
of October, 1883, and unless sooner cancelled, as provided in the
eighth paragraph, shall remain in force for fifteen (15) years from
said first day of October, 1883.
_In Witness Whereof_, the said parties of the first part have caused
their common and corporate seals to be hereto attached and to be
attested by the signatures of their proper officers; and the said
party of the second part has caused the same to be signed in its
name and on its behalf by two of its managers, the day and year
first aforesaid.
NATIONAL TRANSIT COMPANY,
[Nat. Tran. Co. Seal.] (Signed by) BENJAMIN BREWSTER, _Vice-President_.
Attest: JOHN BUSHNELL, _Secretary_.
UNITED PIPE LINES,
[U. P. L. Seal.] (Signed by) J. J. VANDERGRIFT, _President_.
Attest: H. D. HANCOCK, _Secretary_.
SCHEDULE OF REFINERIES REFERRED TO IN THE ATTACHED AGREEMENT
SCHEDULE “A”
Atlas Refining Co. Works at Buffalo, N. Y.
Acme Oil Co. of Pennsylvania Works at Titusville, Pa.
Acme Oil Co. of New York Works at Olean, N. Y.
Atlantic Refining Co. Works at Philadelphia, Pa.
American Lubricating Oil Co. Works at Cleveland, Ohio.
Baltimore United Oil Co. Works at Canton, Md.
Bush Denslow Mfg. Co. Works at South Brooklyn, N. Y.
Camden Consolidated Oil Co. Works at Parkersburg, W. Va.
Camden Consolidated Oil Co. Works at Canton, Md.
Central Refining Co., Limited Works on Newtown Creek, L. I.
Empire Refining Co., Limited Works on Newtown Creek, L. I.
Eclipse Lubricating Co., Limited Works at Franklin, Pa.
Eclipse Lubricating Co., Limited Works at Olean, N. Y.
Eagle Oil Co. Works at Communipaw, N. J.
Galena Oil Works, Limited Works at Franklin, Pa.
Imperial Refining Co. Works at Oil City, Pa.
Pratt Mfg. Co. Works at Bushwick Creek, L. I.
Jenny & Son, S. Works at Wallabout Land.
Donald & Co., James Works at Newtown Creek, L. I.
Portland Kerosene Co. Works at Portland, Me.
Paine, Ablett & Co., Limited Works at Smith’s Ferry.
Paine, Ablett & Co., Limited Works at Freedom, Pa.
Sone Fleming Mfg. Co., Limited Works at Newtown Creek, L. I.
Standard Oil Co. of New York Works at Newtown Creek, L. I.
Standard Oil Co. of New York Works at Hunter’s Point, L. I.
Standard Oil Co. of New Jersey Works at Bayonne, N. J.
Standard Oil Co. of Pennsylvania Works at Pittsburg, Pa.
Standard Oil Co. of Ohio Works at Cleveland, Ohio.
Union Refining Co., Limited Works at Oil City, Pa.
Vacuum Oil Co. Works at Rochester, N. Y.
SCHEDULE “B”
Chester Oil Co. Works at Chester, Pa.
Ocean Oil Co. Works at Bayonne, N. J.
Seaboard Oil Co. Works at Bayonne, N. J.
Solar Oil Co. Works at Buffalo, N. Y.
NUMBER 40 (See page 2028)
TWO AGREEMENTS OF EVEN DATE, AUGUST 22, 1884, BETWEEN THE PENNSYLVANIA
RAILROAD COMPANY AND THE NATIONAL TRANSIT COMPANY
[Report of the Industrial Commission, 1900. Volume I, pages
663–666.]
Memorandum of a traffic agreement, made this twenty-second day of
August, 1884, between the Pennsylvania Railroad Company, hereinafter
designated the railroad company, and the National Transit Company,
hereinafter designated the transit company, _Witnesseth_:
That for consideration mutually interchanged, the parties hereto
agree, each with the other, as follows:
_First._—The transit company owns an extended system of local pipes
in the Oil Regions of Pennsylvania and New York, which are grouped
into a separate division, known as the United Pipe Lines Division of
the National Transit Company. This division will be hereinafter
designated as the Transit Company’s Local Division.
The business of this division is to collect oil from producer, store
it in tanks, and deliver it, as may be desired, to any through
carrier of petroleum, which will transport the same to where it is
to be refined or otherwise disposed of.
The transit company also own certain through or trunk line pipes,
extending from several points of connection with the aforesaid local
pipe division to various refining and terminal points.
With these latter pipes, which will be hereinafter entitled the
Transit Company’s Trunk Line Division, it competes in the through
carriage of petroleum with all other through carriers, whether pipe
or rail.
The business of its local division is therefore entirely distinct
from the business of its through trunk line division.
It undertakes and agrees that its local division will deliver into
cars furnished by the railroad company at any of its regular
delivery points and under its regular delivery rules whatever
petroleum the owners thereof may desire to have so delivered, and as
the railroad may furnish cars to transport, and will make no
discrimination in its local charges for carriage, storage, and other
services, or in the use of any of its local facilities, against such
oil, but will at all times treat it in the said respects as
favourably as it at the same time treats any other petroleum which
may be delivered to its own trunk line division or to any other
through carriers.
_Second._—The transit company agrees that all petroleum brought to
the Atlantic seaboard by all existing carriers, whether rail or
pipe, now engaged in transporting such property, or which may
hereafter engage in such transportation in conjunction with the
transit company’s pipe-lines, shall be ascertained monthly, and so
much of it as shall have been shipped in the refined state shall be
reduced to its equivalent in crude oil by considering that one and
three-tenths (1–3/10) gallons of crude are required to make one (1)
gallon of refined oil. It further undertakes and agrees that if of
the total so transported the railroad company shall not have moved
in its cars twenty-six (26) per centum thereof, the transit company
shall cause to be delivered to cars furnished by the railroad
company at Milton, Pa., such quantity of crude petroleum as shall,
when added to the amount which has been actually transported by the
railroad company to the seaboard in said month, make the total
transported by the railroad company in said month equal to said
twenty-six (26) per centum.
The railroad company agrees to furnish the needful cars and
facilities, and promptly transport the oil which the transit company
agrees in this contract to deliver to it at Milton:
_Provided_, That if during any month the railroad company is not
able to assign from its oil equipments a sufficient number of cars
to the traffic of the transit company to move the proportion of oil
herein provided to be delivered at Milton, then during that month
the transit company shall only be required to so deliver to the
railroad company such quantity of oil as the railroad company shall
be able to transport, and shall not be required to make up any
deficiency that may occur during said month.
Efforts shall be made by the transit company to deliver so much
during each month as will probably be necessary to make the total
carried by the railroad company equal to said percentage.
Shortages, if not due to short supply of cars, and such excesses as
may be found to have occurred in any month, shall be adjusted in the
following month, or as soon afterwards as shall be possible.
_Third._—It is agreed that the proportion of petroleum which the
transit company is to deliver under the second section of this
agreement shall be considered as petroleum transported from
Coalgrove, Pa., via Milton, Pa., to the Atlantic seaboard, and that
the railroad company shall be entitled to one-half of the current
through rates thereon.
It is agreed that whenever the through rates shall be so low that
the railroad company shall suspend the movement of oil by its cars,
at other points than Milton, the transit company shall during such
suspension not be bound to deliver to the railroad company any oil
at Milton.
_Fourth._—All joint rates for the joint transportation of oil from
any delivery point of the local pipe division aforesaid to any
refining or terminal point shall be fixed by the railroad company,
subject to the advice and concurrence of the transit company.
It is agreed that said joint through rates shall be uniform to all
parties. The railroad company stipulates that it will make no
discrimination whatever, either in rates or facilities, against the
transit company or against the oil which the said transit company
herein covenants to deliver to it.
It is agreed that the joint through rates to Philadelphia shall
always be five cents less per barrel on crude oil, or its refined
equivalent, than shall be currently charged to New York harbour.
It is agreed that the joint through rates, which shall be so fixed
from time to time, shall be as low as shall be currently made
between same and similar points by rival carriers of petroleum, and
shall not be higher than an approximate mileage proportion of rates
current on petroleum produced south of Oil City, nor than rates from
Olean and similar points.
It is also agreed that rates on refined oil and other products of
crude oil shall be fixed by the railroad company upon the following
basis, viz.:
From railroad stations in the Oil Regions to which oil is delivered
by local pipes the rate to any point east thereof on a barrel of
refined oil or other products shall be one and three-tenths (1–3/10)
times the current rate on a barrel of crude oil to the same point.
From Pittsburg the rate to any point east thereof on a barrel of
refined oil or other products shall be one and three-tenths (1–3/10)
the rate currently charged on crude oil to any such eastern point
from rail points south of Oil City:
_Provided_, That one and three-tenths times the charges for moving a
barrel of crude oil by rail or through pipe from the local pipe to
Pittsburg shall first be deducted therefrom.
From Cleveland and Buffalo the net rate on a barrel of refined oil
or other products to any point east thereof shall be not less than
is currently charged to the same point from Pittsburg.
_Fifth._—Whenever the term barrel is used herein, unless otherwise
specified, it means forty-five gallons of crude petroleum; and
whenever the term oil is used herein, unless otherwise specified, it
means crude petroleum.
_Sixth._—The transit company hereby agrees that it will not make any
more favourable terms with any other rail line connecting with any
of its pipes than the terms which under this agreement are given to
the railroad company; or if for any reason it should desire to do
so, it hereby agrees to modify this contract so as to give the said
“more favourable terms” to the railroad company.
_Seventh._—All existing contracts between the parties hereto shall
be deemed to have been accomplished, and shall become void and of no
effect upon the day this contract goes into operation.
_Eighth._—This contract shall take effect as of the first day of
August, 1884, and shall continue until terminated under the
provisions hereof. It may be terminated after August 1, 1889, by
either party hereto giving ninety days’ written notice to the other
of a desire that it shall end, at the expiration of which notice it
shall cease and determine.
_In Witness Whereof_, the parties hereto have executed this
agreement under their corporate seals the day and date above
written.
THE PENNSYLVANIA RAILROAD COMPANY,
[L.S.] By FRANK THOMSON, _Second Vice-President_.
Attest: JOHN C. SIMS, JR., _Secretary_.
THE NATIONAL TRANSIT COMPANY,
[L.S.] By C. A. GRISCOM, _President_.
Attest: JOHN BUSHNELL, _Secretary_.
* * * * *
Memorandum of agreement, made this twenty-second day of August,
1884, between the Pennsylvania Railroad Company, hereinafter
designated the railroad company, and the National Transit Company,
hereinafter designated the transit company.
_Witnesseth_: That for considerations mutually interchanged the
parties hereto hereby agree with each other as follows:
_Whereas_, The parties hereto have made an agreement of even date
herewith, in which, among other things, it is stipulated that under
certain circumstances the transit company shall deliver certain
crude petroleum into cars furnished by the railroad company at
Milton, Pa.; and
_Whereas_, It has been proposed that the railroad company shall
contract with the transit company to the effect that the transit
company shall transport through its pipe-lines the aforesaid crude
oil, which, under the other contract aforesaid, it has undertaken to
deliver into the cars of the railroad company at Milton.
_Now, therefore_, this agreement witnesseth:
_First._—The railroad company agrees that instead of delivering said
crude oil to said cars at Milton, the transit company shall
transport the same through its pipes to destination, and the transit
company undertakes and agrees to do such transportation. It is
mutually agreed that the compensation to the transit company for
doing said work shall be as follows:
Whenever the through rate for transporting a barrel of crude
petroleum from Olean to Philadelphia shall be forty cents, the
transit company shall receive eight cents per barrel as such
compensation for so much of said oil as under the provisions hereof
shall be considered as Philadelphia oil.
For each five cents of increase or diminution in said rates from
Olean to Philadelphia the said compensation on Philadelphia oil
shall be increased or diminished one cent per barrel.
_Provided, however_, That the transit company shall not be obliged
to accept less than six cents per barrel, and shall not receive more
than ten cents per barrel on such Philadelphia oil.
It is agreed that the said compensation on the oil, which under the
provisions hereof is to be deemed New York oil, shall be one cent
per barrel greater than it currently shall be on Philadelphia oil.
Whenever, and from time to time, as the said joint through rates
shall be so low that the said minimum compensation to the transit
company of six cents per barrel shall be as much or more than the
railroad company’s share of said joint through rates, this contract
may, at the option of either party hereto, be suspended during all
or any part of the time such low rates shall prevail. During such
suspension the aforesaid other contract shall alone remain in force;
but whenever, and from time to time, as said joint through rates
shall again be high enough to make the said minimum compensation,
under said sliding scale, less than the said share of said joint
through rates, this contract shall again resume its force and
effect.
_Second._—The transit company agrees to account for, and pay to the
railroad company, on or before the twentieth of each month, the
latter’s share of the joint rates on joint business _via_ Milton (as
provided in said other contract) during the next preceding month,
first retaining, however, the proportion of such share which it is
hereinbefore agreed the transit company is to have for its services
in pumping said oil to the seaboard.
It is agreed that all such joint business shall be considered as
having transported from Coalgrove _via_ Milton, Pa., to the Atlantic
seaboard, and that it shall be considered as having gone either to
Baltimore, Philadelphia, or New York, or partly to each. The
proportion thereof which has constructively gone to New York shall
be determined upon the following basis:
The total amount of oil transported in any month by the railroad
company to New York shall be compared with fifty (50) per centum of
the total oil which the railroad company is entitled to carry in
said month under the aforesaid other agreement. If the amount which
has been in such month carried by cars to New York shall be less
than fifty (50) per centum, then the difference shall be considered
as having been moved by the pipe to New York, at New York rates, and
shall be accounted for accordingly. The remainder of the oil _via_
Milton shall be accounted for at Philadelphia rates.
This contract shall commence and terminate simultaneously with said
other contract.
Witness the corporate seals of said parties duly attested the day
and date above written.
THE PENNSYLVANIA RAILROAD COMPANY,
[L.S.] By FRANK THOMSON, _President_.
Attest: JOHN C. SIMS, _Secretary_.
THE NATIONAL TRANSIT COMPANY,
[L.S.] By C. A. GRISCOM, _President_.
Attest: JOHN BUSHNELL, _Secretary_.
NUMBER 41 (See page 2060)
TABLE SHOWING PRICES OF OIL AT COMPETITIVE AND NON-COMPETITIVE POINTS IN
1892
[Trust Investigation of Ohio Senate, 1898. Appendix, pages 43–44.]
───────────┬─────────────────────────────────────────┬────────────────────
TERRITORIES│ │
AND STATES.│ PRIME WHITE OIL. │ WATER-WHITE OIL.
───────────┼────────────────────┬────────────────────┼────────────────────
〃 │Non-competitive per │ Competitive per │Non-competitive per
│ gallon. │ gallon. │ gallon.
───────────┼────────┬─────┬─────┼────────┬─────┬─────┼────────┬─────┬─────
│ │ │ │ │ │ │ │ │
〃 │ │ │ │ │ │ │ │ │
│ │ │ │ │ │ │ │ │
│Barrels.│Case.│Bulk.│Barrels.│Case.│Bulk.│Barrels.│Case.│Bulk.
───────────┼────────┼─────┼─────┼────────┼─────┼─────┼────────┼─────┼─────
Arizona │ │ │ │ │ │ │ │ 31 │
Arkansas │ 14 │ │ 13 │ 8 │ │ 7½│ 16 │ │ 17
Alabama │ 13 │ │ 8½│ 8¼│ │ 6½│ 17 │ │ 12
California │ │ │ 16 │ 13 │ │ 12½│ │ 26½│
Colorado │ │ 26 │ 21 │ 10 │ 15 │ 7 │ │ 31 │ 25
Florida │ 13½│ 16 │ 12 │ │ │ │ 17 │ 18½│
Georgia │ 14 │ │ 9½│ 9½│ │ 6½│ 17 │ │ 14
Idaho │ 22½│ 29 │ │ │ │ │ 22½│ 30 │ 17
Illinois │ 10 │ │ 8 │ 7½│ │ 5½│ 15 │ │
Indiana │ │ │ │ 6¼│ │ 5 │ 12½│ │
Iowa │ 9½│ │ 8 │ │ │ 7 │ 12 │ │
Kansas │ 10½│ │ 9½│ 8½│ │ │ 16½│ │
Kentucky │ 9½│ │ 8¾│ 7 │ │ 6½│ 12 │ │
Louisiana │ 12 │ │ 10 │ 7¼│ │ 7 │ 16 │ │ 14
Michigan │ 8½│ │ 6¾│ 6¾│ │ 3½│ 8½│ │ 7
Minnesota │ │ │ 9 │ 7½│ │ 5 │ 13 │ │ 11
Mississippi│ 13½│ │ │ 7¼│ │ │ 15½│ │
Missouri │ 12 │ │ │ 6 │ │ 5½│ 17 │ │
Montana │ │ │ 20 │ │ │ 13 │ 21 │ 33 │ 25
Nebraska │ 18 │ │ │ 7½│ │ │ 27 │ │
Nevada │ │ 37½│ │ │ │ │ │ │
New Mexico │ │ 31 │ 26 │ │ │ │ │ 32 │ 28
North │ │ │ │ │ │ │ │ │
Dakota │ 15½│ │ │ 12½│ │ │ 18 │ │ 14
Oregon │ │ 21 │ 14 │ │ 19 │ 13 │ │ 24 │
Oklahoma │ │ │ 15 │ 9½│ │ │ │ │ 17
South │ │ │ │ │ │ │ │ │
Carolina │ 12½│ │ │ 8 │ │ │ 13½│ │
South │ │ │ │ │ │ │ │ │
Dakota │ 11½│ │ │ │ │ 8 │ │ │ 12
Tennessee │ 11½│ │ 8½│ 7¾│ │ 6 │ 17 │ │
Texas │ 25 │ 27½│ 19 │ 8 │ 14 │ 9 │ 30 │ 33½│ 24
Utah │ 23 │ 28 │ 25 │ 13 │ │ │ │ │
Washington │ 16 │ 20½│ 15 │ │ │ │ │ 25½│
Wisconsin │ 9 │ │ │ 7½│ │ 6 │ 15¼│ │
Wyoming │ 20 │ 25 │ 15 │ │ │ │ 21 │ 35 │ 29
───────────┴────────┴─────┴─────┴────────┴─────┴─────┴────────┴─────┴─────
───────────┬────────────────────┬───────────────────────────────────────
TERRITORIES│ │
AND STATES.│ WATER-WHITE OIL. │ PER GALLON.
───────────┼────────────────────┼───────────────────────────────────────
〃 │ Competitive prices │
│ per gallon. │ 〃
───────────┼────────┬─────┬─────┼────────┬───────┬───────────┬──────────
│ │ │ │ │ │ │Difference
〃 │ │ │ │ │ │ │ per tank
│ │ │ │ │ │ │car 6,000
│Barrels.│Case.│Bulk.│Highest.│Lowest.│Difference.│ gallons.
───────────┼────────┼─────┼─────┼────────┼───────┼───────────┼──────────
Arizona │ │ │ │ 31 │ │ │
Arkansas │ │ │ │ 17 │ 7½│ 9½│ $570
Alabama │ 10¾│ │ │ 17 │ 6½│ 10½│ 630
California │ 13 │ 17½│ 11½│ 26½│ 11½│ 15 │ 900
Colorado │ │ │ │ 31 │ 7 │ 24 │ 1,440
Florida │ │ │ │ 18½│ 12 │ 6½│ 390
Georgia │ │ │ │ 17 │ 6½│ 10½│ 630
Idaho │ │ │ │ 30 │ 17 │ 13 │ 780
Illinois │ 7¾│ │ 3½│ 15 │ 5½│ 9½│ 570
Indiana │ 6½│ │ │ 12½│ 5 │ 7½│ 450
Iowa │ 10½│ │ 8 │ 12 │ 7 │ 5 │ 300
Kansas │ 9½│ │ │ 16½│ 8½│ 8 │ 480
Kentucky │ 8½│ │ │ 12 │ 6½│ 5½│ 330
Louisiana │ 7¾│ │ 7½│ 16 │ 7 │ 9 │ 540
Michigan │ 7½│ │ 3⅖│ 8½│ 3½│ 5 │ 300
Minnesota │ 8 │ │ 5½│ 13 │ 5 │ 8 │ 480
Mississippi│ 9½│ │ │ 15½│ 7¼│ 8¼│ 435
Missouri │ 7¾│ │ 5½│ 17 │ 5½│ 11½│ 690
Montana │ │ │ │ 33 │ 13 │ 20 │ 1,200
Nebraska │ 8½│ │ │ 27 │ 7½│ 19½│ 1,170
Nevada │ │ │ │ 37½│ │ │
New Mexico │ │ │ │ 32 │ 26 │ 6 │ 360
North │ │ │ │ │ │ │
Dakota │ 12¼│ │ 11¼│ 18 │ 11¼│ 6¾│ 405
Oregon │ │ 23 │ │ 24 │ 13 │ 11 │ 660
Oklahoma │ │ │ │ 17 │ 9½│ 7½│ 450
South │ │ │ │ │ │ │
Carolina │ 9 │ │ │ 13½│ 8 │ 5½│ 330
South │ │ │ │ │ │ │
Dakota │ │ │ 8 │ 12 │ 8 │ 4 │ 240
Tennessee │ 8½│ │ │ 17 │ 6 │ 11 │ 660
Texas │ 12 │ 16½│ 8 │ 33½│ 8 │ 25½│ 1,530
Utah │ │ │ │ 28 │ 13 │ 15 │ 900
Washington │ │ │ │ 25½│ 15 │ 10½│ 630
Wisconsin │ 7½│ │ 6 │ 15¼│ 6 │ 9¼│ 555
Wyoming │ 8 │ 16 │ 15 │ 35 │ 8 │ 27 │ 1,620
───────────┴────────┴─────┴─────┴────────┴───────┴───────────┴──────────
PRIME WHITE OIL
The table shows that this grade of oil ranges in price as follows:
In barrels 6 to 25 cents per gallon
In cases 14 to 37½ cents per gallon
In bulk 3½ to 25 cents per gallon
WATER-WHITE OIL
This table also shows that this grade of oil ranges in price as follows:
In barrels 6½ to 30 cents per gallon
In cases 16 to 35 cents per gallon
In bulk 3½ to 29 cents per gallon
A comparison of these two grades of oil shows:
A difference of 24 cents per gallon on barrelled oil
A difference of 21 cents per gallon on case oil
A difference of 25½ cents per gallon on bulk oil
NUMBER 42 (See page 2069)
STANDARD OIL COMPANY’S PETITION FOR RELIEF AND INJUNCTION
[In the case of the Standard Oil Company _vs._ William C. Scofield
_et al._, in the Court of Common Pleas, Cuyahoga County, Ohio,
1880.]
The said plaintiff, the Standard Oil Company, now comes and says
that on the twentieth day of July, A.D. 1876, it was and still is a
corporation organised and existing under and by virtue of the laws
of the state of Ohio, and that at the same time the said defendants,
William C. Scofield, Charles W. Scofield, Daniel Shurmer and John
Teagle, were and still are partners doing business in the firm name
of Scofield, Shurmer and Teagle, and the said plaintiff complains of
the said defendants, and says: That on the said twentieth day of
July, A.D. 1876, the said plaintiff and the said defendants as such
partners were each separately engaged in the business of refining
and dealing in crude petroleum and its products, said plaintiff
having a number of refining establishments at Cleveland, Ohio, and
the said defendants owning and operating one refinery only, also
located at Cleveland, Ohio, on the line of the Atlantic and Great
Western Railroad, and while so engaged and on the said twentieth day
of July, A.D. 1876, the said plaintiff and the said defendants as
such partners entered into a joint arrangement in writing in and by
which it was, amongst other things, agreed between the said
plaintiff and the said defendants individually and as such partners
that the said defendants would continue their then business in the
firm name of Scofield, Shurmer and Teagle of buying, refining and
selling crude petroleum and its products as theretofore carried on
by them, for a period of ten years from July 20, A.D. 1876, and
furnish for the conducting of said business their refinery aforesaid
with all tanks, fixtures, buildings, erections, tools, and all
mechanical appliances then or theretofore used by them in their said
business, together with the land on which the same are situated, and
also within five days from the date of said agreement furnish for
the use of said joint business adventure the sum of ten thousand
dollars in cash to be used continuously in said business until July
20, A.D. 1886. That the said William C. Scofield, Charles W.
Scofield, Daniel Shurmer and John Teagle, in and by said agreement
for conducting said joint adventure, further covenanted and agreed
with the plaintiff to devote all their time and personal attention
necessary to conduct the said business for the period aforesaid, and
that during the existence of said adventure they would not nor would
either of them as a firm or as individuals directly or indirectly
engage or be concerned in any business connected with petroleum or
any of its products in Cuyahoga County or elsewhere, except in
connection with the parties of the first part under this agreement,
nor would they or either of them enter into any new business which
would interfere with the time necessary to be devoted to the full
and faithful conduct of the business of said adventure.
That the said William C. Scofield, Charles W. Scofield, Daniel
Shurmer and John Teagle, in and by said agreement for conducting
said joint adventure, further covenanted and agreed with said
plaintiff that the amount of crude petroleum to be distilled by them
in the business of said adventure should not exceed annually
eighty-five thousand barrels of forty-two gallons each in any year,
but the same should be distributed as nearly as practicable in equal
quantities of 42,500 barrels of forty-two gallons each, each and
every six months from the twentieth day of July, A.D. 1876, but the
said 42,500 barrels might be run in a less period than six months.
That in and by said agreement for conducting the business of said
joint adventure it was stipulated and agreed by both parties,
amongst other things, that from the net profits of the business of
said joint adventure the said defendants should first be entitled to
retain and be paid the sum of $35,000 per annum while the said
agreement was in force and operation, and in the case the net
profits should not amount to $35,000 for any year that said
agreement for conducting said joint adventure was in force and
operation, then at the expiration of any such year the plaintiff
should on demand pay to the said defendants a sum of money
sufficient to make that amount, viz., $35,000 for any year that said
agreement should be in force and operation. That all net profits
over the amount of $35,000 so stipulated to belong to said
defendants annually should belong and be paid to said plaintiff
until the plaintiff should receive therefrom as much as said
defendants had received from the net profits under the provisions of
said agreement, and all net profits in excess of $70,000 annually
should be divided equally between the parties thereto.
That in consideration thereof and in and by said agreement for
conducting said joint adventure, the said plaintiff stipulated and
agreed with the said defendants, amongst other things, that on or
before the twenty-fifth day of July, A.D. 1876, it would furnish to
the said defendants for them to use in the business of said joint
adventure the sum of $10,000 in cash, which sum was so paid in as
agreed and still remains in the business.
That the said plaintiff would receive, dock, and sell in the city of
New York all oil and the products of petroleum consigned to it for
sale at New York by said firm of Scofield, Shurmer and Teagle at
actual cost of brokerage and handling without commissions.
That the said plaintiff would and did in said agreement guarantee to
the said defendants that their share of the net profits arising from
the business of said joint adventure should for ten years from July
20, A.D. 1876, to July 20, A.D. 1886, amount to the sum of $35,000
annually, during the operation of this contract, as hereinbefore
stated. The plaintiff further says that between July 20, 1876, and
the present time, the said defendants have repeatedly violated their
said agreement in this, to wit: that every year since the making of
said agreement the said defendants have distilled over 85,000
barrels of crude petroleum; that during the year from July 20, 1876,
to July 20, 1877, they distilled 89,983.34–42 barrels; that during
the year from July 20, 1877, to July 20, 1878, they distilled
87,754.4–42 barrels; that during the year from July 20, 1878, to
July 20, 1879, they distilled 100,246.25–42 barrels, and from July
20, 1879, to July 20, 1880, they distilled 90,082.34–42 barrels.
That up to the present time the defendants have distilled more than
by the terms of their said agreement they have a right to distil up
to January 20, 1881, and have purchased large quantities of crude
petroleum and are distilling portions thereof, and threaten to
distil the balance without regarding their said contract. That the
crude petroleum so as aforesaid distilled by the defendants has not
by them been distributed as nearly as practicable in equal
quantities of 42,500 barrels of forty-two gallons each, each and
every six months as they agreed to do, but in violation of their
said agreement they distilled from July 20, 1876, to January, 1,
1877, 43,509.36–42 barrels; from January 1, 1877, to July 20, 1877,
46,473.40–42 barrels; from July 20, 1877, to January 1, 1878,
50,416.12–42 barrels; from January 1, 1878, to July 20, 1878,
37,337.34–42 barrels; from July 20, 1878, to January 1, 1879,
56,974.15–42 barrels; from January 1, 1879, to July 20, 1879,
43,272.10–42 barrels; from July 20, 1879, to January 1, 1880,
57,499.35–42 barrels; that on or about the twentieth day of July,
1879, the plaintiff having discovered that the said defendants had
in violation of said agreement distilled about 22,984 barrels of oil
more than they were entitled to by the terms of said agreement, the
plaintiff objected and complained to the defendants in regard
thereto, and thereupon the defendants admitted the violation of the
contract in that respect, and it was agreed between the parties that
the defendants would and should during the then coming year diminish
their manufacture sufficiently to bring the entire amount of
manufacture under said contract within the terms of said agreement.
That during the then coming year from July 20, 1879, to July 20,
1880, the said defendants did not diminish their distillation below
the 85,000 barrels as they had agreed to do, but from July 20, 1879,
to January 1, 1880, they distilled 57,499.35–42 barrels, and from
January 1, 1880, to July 20, 1880, they distilled 32,582.41–42
barrels, making a total of 90,082.34–42 barrels for the year, thus
increasing their distillation over the 85,000 barrels 5,082 barrels,
instead of diminishing it as they had agreed to do.
That the defendants threaten to and have informed the plaintiff that
they will hereafter wholly disregard said contract and continue to
distil crude petroleum without regard to quantity.
The plaintiff further says that since the making of said agreement
and within the past year the said Daniel Shurmer and John Teagle
have in violation of their said contract engaged and been connected
in constructing a refinery at Buffalo, New York, for the purpose of
distilling crude petroleum with others than the plaintiff under said
agreement and are now so engaged.
That within the past year the said Daniel Shurmer and John Teagle
and each of them have invested money to the amount of $10,000, and
are now engaged and connected in constructing refineries for the
purpose of distilling crude petroleum and its products with others
in no way connected with the plaintiff or under said agreement, but
intending thereby to establish and prosecute with others the same
business as that contemplated and conducted under said agreement,
and thereby establishing and conducting a rival business to the
business of said adventure and tending to involve the plaintiff in
loss by reason of its guarantee that the profits of said adventure
should amount to the sum of $35,000 annually to defendants, and have
during the past year been at said Buffalo and other places giving
the said business their time and personal attention, and have done
so at times when their time and personal attention was needed and
was requisite to properly conduct the business of said adventure
under said agreement at Cleveland.
The plaintiff further says that because of the said failures and
refusals of the defendants to carry out their said agreement it has
already sustained great damage and will sustain further damage if
the said defendants are permitted to continue their said violation
of said agreement. That the said plaintiff has no adequate remedy
therefor at law for the reason that the damages arising therefrom
are so remote and difficult of ascertainment, and constantly
recurring would necessitate a multiplicity of suits and would
involve the plaintiff in the increased hazards of losses arising
from such increased manufacture and deprive it of all the benefits
of said contract.
The plaintiff therefore prays that the said William C. Scofield,
Charles W. Scofield, Daniel Shurmer and John Teagle may by proper
process be made defendants herein and compelled to answer this
petition; that a preliminary injunction and restraining order be
granted restraining the said William C. Scofield, Charles W.
Scofield, Daniel Shurmer and John Teagle, and each of them
individually and as partners in the name of Scofield, Shurmer and
Teagle, until the further order of the court, from distilling at
their said works at Cleveland, Ohio, more than 85,000 barrels of
crude petroleum of forty-two gallons each in every year, and also
from distilling more than 42,500 barrels of crude petroleum of
forty-two gallons each, each and every six months, and also from
distilling any more crude petroleum until the expiration of six
months from and after July 20, 1880, and also from directly or
indirectly engaging in or being concerned in any business connected
with petroleum or any of its products, except in connection with the
plaintiff under their said agreement, and that on the final hearing
of this case the said defendants may in like manner be restrained
and enjoined from doing any of said acts until the expiration of
said agreement, and for such other and further relief in the
premises as equity can give.
M. R. KEITH,
R. P. RANNEY,
_Attorneys for Plaintiff_.
NUMBER 43 (See page 2070)
ANSWER OF WILLIAM C. SCOFIELD _ET AL._
[In the case of the Standard Oil Company _vs._ William C. Scofield
_et al._, in the Court of Common Pleas, Cuyahoga County, Ohio,
1880.]
That the so-called agreement is and at all times has been utterly
void and of no effect, as being by its terms in restraint of trade
and against public policy.
These defendants further say that they deny that through any action
of theirs said plaintiff has sustained or will sustain any damage
whatever, but these defendants say that their business of distilling
oil has been carried on at a large profit, and that the same is now
attended with large profits, and the price of refined oil is now so
high, and there is such a large margin between the price of crude
oil and refined, that the manufacture and sale of refined oil is
attended with large profit; that it is impossible to supply the
demand of the public for oil if the business and refineries of both
plaintiff and defendant are carried on and run to their full
capacity, and if the business of defendants were stopped as prayed
for by plaintiff it would result in a still higher price for refined
oil and the establishment of more perfect monopoly in the
manufacture and sale of the same by plaintiff.
These defendants further say that said plaintiff has constantly and
persistently violated the terms of said so-called written agreement
in that it has intentionally failed to give and has withheld from
the defendants the benefits of the advantages therein agreed to be
given, and that it has not given to defendants the benefits of its
contracts relating to freight on crude and refined oil, but these
defendants have been constantly required to pay more and larger
freights than said plaintiff, and that said plaintiff has not
allowed to defendants the same rebate that it has received with
different carriers; and, further, that said plaintiff has recently
constructed a pipe-line to the Oil Regions of Pennsylvania through
which its oil has been pumped to Cleveland at an expense of about
twelve cents a barrel, but has charged defendants for pumping their
oil through the same pipe twenty cents per barrel.
The defendants further say that at the time when said writing was
signed said plaintiff was endeavouring by contracts with divers
persons to establish a monopoly in the manufacture of refined oil in
the state of Ohio and in the United States, and that, for the
purpose of monopolising the trade in refined oil and enhancing the
price thereof, and maintaining an unnaturally high price, said
plaintiff entered into said so-called agreement under the form of a
joint arrangement or adventure, and for no other purpose, and
contributed to the capital of said so-called adventure the sum of
$10,000, whereas those defendants contributed thereto the sum of
$73,000 and their time and attention, and their refinery had the
capacity for refining 180,000 barrels of crude oil per year, as
plaintiff well knew, and said plaintiff thereby, and by said other
contracts made with the same design, succeeded in creating a
substantial monopoly and averting competition and maintaining an
unnaturally high price for refined oil, and that said so-called
agreement is therefore in restraint of trade and against public
policy, and void.
These defendants further say that defendants have from time to time
paid to plaintiff their full share of the profits of said so-called
adventure, and at no time has plaintiff been required to pay any sum
whatever to defendants, but has realised large profits from said
business, and on the fourth day of March, 1880, with full knowledge
of how much oil in excess of 85,000 barrels per year had been
manufactured by defendants, demanded of said defendants that they
should pay to plaintiff the entire profits upon said excess, and
claimed that its monopoly was so perfect that it would have sold
said excess if defendants had not, and defendants did pay to
plaintiff the one-half of the profits on said excess.
NUMBER 44 (See page 2071)
AFFIDAVIT OF JOHN D. ROCKEFELLER
[In the case of the Standard Oil Company _vs._ William C. Scofield
_et al._, in the Court of Common Pleas, Cuyahoga County, Ohio,
1880.]
John D. Rockefeller being duly sworn, says that for about eighteen
years past he has been engaged in the business of refining crude
petroleum; that from about the year 1863 to 1870 he was engaged as a
member of firms in such refining, and from January, 1870, he has
been and still is engaged in such refining business as president of
said plaintiff, the Standard Oil Company; that during said time he
has given the business personal attention and has thereby become
familiar with the general business of refining crude petroleum, with
the amount of crude petroleum produced, with the amount of crude
petroleum refined, so far as the same can be ascertained, and
especially with the business of the Standard Oil Company.
Affiant says the said Standard Oil Company owns and operates its
refineries at Cleveland, Ohio, and its refinery at Bayonne, New
Jersey; that it has no other refineries nor any interest in any
other refineries, nor does the Standard Oil Company operate or
control in the United States any other refineries of crude
petroleum; that there are in Ohio, West Virginia, Pennsylvania, New
York, and New Jersey a large number of refineries of crude petroleum
that are not owned or controlled by said Standard Oil Company, and
in which the said Standard Oil Company has no interest whatever,
directly or indirectly, which are now and for years past have been
refining crude petroleum and selling it in the open market; that the
amount of crude petroleum refined by the said Standard Oil Company
does not exceed thirty-three per cent. of the total amount refined
in the United States.
Affiant further says that the capacity of all the refineries in the
United States is more than sufficient to supply the markets of the
world, and in the judgment of affiant if all the refineries were run
to their full capacity they would refine at least twice as much oil
as the markets of the world require; that this difference between
the capacity of refineries and the demands of the market has existed
for at least seven years past, and during that period the refineries
of the Standard Oil Company have not been run to their full
capacity, and in the judgment of affiant not to exceed one-half of
their capacity.
Affiant further says that during all the period of time that he has
been engaged in the business of refining oil he has been familiar
with the price of crude oil and with the price of refined oil and
with the profits to be derived therefrom, and from such experience
he states that the average price of refined oil and the average
profits to the manufacturer per gallon on same since 1876 have been
much less than the average profit for several years previous to
1876; that said Standard Oil Company has no means now and never has
had any of influencing the price of refined oil, save by the sale of
its product in the open market.
Affiant further says that the Standard Oil Company has not nor did
it ever have any interest in any oil property or any control over
the production of crude petroleum; that it does not own any oil
wells or land producing oil, and never did; nor has it any control
over the price of crude petroleum, but relies upon obtaining its
supplies, as all others do, by purchase in the open market and at
the prices paid by others at the same time; that the said Standard
Oil Company is not now nor has it ever been a stockholder in any
railroad, pipe-line, or other common carrier for the transportation
of oil, but within the year past it has for its own convenience
constructed, and owns and is now operating, a pipe-line from
Cleveland to the western line of the state of Pennsylvania for the
purpose of bringing oil to its refineries at Cleveland; that said
pipe-line is now insufficient to supply the demands of the Standard
Oil Company for crude oil for its own refineries, and for that
reason it has been and is now compelled to bring crude oil to
Cleveland in cars to supply its wants.
That from the deponent’s experience in business he knows it to be
true that a large manufacturer always has an advantage in cheapness
of manufacture over a small manufacturer; that all the advantages
derived by the Standard Oil Company are legitimate business
advantages, due to the very large volume of supplies which it
purchases, its long continuance in the business, the experience it
has thereby acquired, the knowledge of all the avenues of trade, the
skill of experienced employees, the possession and use of all the
latest and most valuable mechanical improvements, appliances and
processes for the distillation of crude oil, and in the manufacture
of its own barrels, glue, etc., etc., by reason of which it is
enabled to put the oil on the market at a cost of manufacture much
less than by others not having equal advantages. These advantages,
by reason of which the Standard Oil Company is enabled to refine oil
cheaper than smaller manufacturers, are not exclusive to the
Standard Oil Company, but are open to every person doing business
under similar circumstances. That this state of facts has been
detrimental to smaller refineries and has prevented them from making
as much profit as they desired, and in some cases compelled them to
suspend refining, and this constitutes the only foundation for the
oft-repeated expressions “crushed out,” “squeezed out,” and
“bulldozing.”
Affiant says he has examined the answer of the defendants, Shurmer
and Teagle, and his attention has been called to various statements
contained in it. In regard to the statement made therein that “if
the business of the defendants were stopped as prayed for by
plaintiff, it would result in a still higher price for refined oil
and the establishment of a more perfect monopoly in the manufacture
and sale of the same by plaintiff.” The same is untrue, as there is
not, never has been, and never can be a monopoly in the manufacture
of refined oil, nor has the limitation in said agreement as to
quantity to be manufactured affected, nor will the stoppage by the
defendants of their manufacture, as prayed for in plaintiff’s
petition, in the least affect the price of refined oil, for the
reason that leaving out the entire capacity of the refinery of
defendants there would still remain a large excess of capacity for
supplying all the demands of the public, and hence there would be no
opportunity for advancing the price, nor would it tend to create a
monopoly of the business by the plaintiff.
Affiant further says that it is not true that the said plaintiff has
at any time or in any manner violated the terms of said agreement as
alleged in said answer or in any other manner. That it is not true
that plaintiff has intentionally or otherwise withheld from the
defendants the benefit of the advantages agreed upon in said
contract to be given them, nor is it true that the plaintiff has not
given to defendants the benefit of its contracts relating to freight
on crude and refined oil, but the plaintiff has given to the
defendants privileges not required by the agreement. That it is not
true that the defendants have ever been required to pay larger rates
of freight than were paid by the plaintiff when the defendants made
any shipments of oil in accordance with the terms of the contract;
nor is it true that the plaintiff has not allowed to defendants the
same rebates that it has received from different carriers upon any
shipments of oil made in accordance with the terms of the contract.
That it is true that the plaintiff has recently constructed a
pipe-line from Cleveland to the western line of the state of
Pennsylvania, through which its oil has been pumped to Cleveland
since the spring of 1880, but it is not true that it is the owner of
the said pipe-line from the western line of the state of
Pennsylvania to the Oil Regions. That it is true that to promote the
interest of the defendants, the plaintiff has furnished to
defendants crude oil through said pipe-line and charged them twenty
cents per barrel for the transportation of same; but it is not true
that said pipe-line was constructed for the purpose of transporting
oil for others than the plaintiff, nor is it true that under the
terms of said agreement the defendants are entitled to the
transportation of oil through said pipe-line, nor is it true that
the charge of twenty cents per barrel is an unreasonable price for
transporting oil through said pipe-line from the Oil Regions to
Cleveland; but affiant avers it to be true that during the time it
so furnished the oil through the pipe-line at twenty cents per
barrel, of forty-two gallons each, the railroads were charging
freight at the rate of from thirty-five to fifty cents per barrel,
of forty-five gallons each.
Plaintiff continued to deliver defendants through the pipe-line, and
at twenty cents per barrel, until they had received all they were
entitled to manufacture under the contract dated July 20, 1876.
Affiant says that it is not true that “at the time when said
agreement was signed, said plaintiff was endeavouring by contracts
with divers persons to establish a monopoly in the manufacture of
refined oil in the state of Ohio and in the United States.” Affiant
avers that it has made but one other contract with other persons
like the one made with defendants, and that was a contract made at
the same date, viz., July 20, 1876, with the Pioneer Oil Company of
the City of Cleveland, of which the defendants had full knowledge.
Affiant further says that he was present and participated in the
negotiations which resulted in the formation of the contract with
these defendants, and that it is not true that said contract was
entered into for the purpose of monopolising the trade in refined
oil or for the purpose of enhancing the price thereof and
maintaining an unnaturally high price for the same; and affiant says
that it is not true that plaintiff by said contract, and by the said
other contract made with the same design, succeeded in creating a
substantial monopoly and averting competition, and maintaining an
unnaturally high price for refined oil; but said contract was made,
as is therein stated, for the purpose of equalising the business of
manufacturing oil and giving to each of said contracting parties
their due proportion thereof, and that the amount of 85,000 barrels
per annum to which the distillation of defendants is by said
contract limited is, as agreed, a relative proportion to their full
capacity, as is the amount distilled by plaintiff per annum since
said contract was entered into to its total capacity for refining
oil; and it is not true that said agreement is in restraint of trade
and against public policy, as alleged in the said answer of
defendants, Shurmer and Teagle. Affiant says that on or about the
first day of October, 1879, it came to his knowledge that the
defendants had, in violation of said agreement, distilled about
22,984 barrels of oil more than they were entitled to by the terms
of said agreement, and thereupon he had an interview with
defendants, W. C. Scofield and John Teagle, who admitted the
defendants had distilled in excess of the quantity stipulated in the
contract, and agreed to reduce the quantity distilled during the
year following, July 20, 1879, by the amount they had already
distilled in excess up to that date, but requested they might be
allowed to distribute said reduction equally over each six months of
the year instead of wholly in either the first or last six months of
the year following July 20, 1879, to which request affiant assented.
Affiant says that it is not true that “the plaintiff, on the fourth
day of March, 1880, with full knowledge of how much oil in excess of
85,000 barrels per year had been manufactured by defendants and
plaintiff, demanded of said defendants that they should pay to
plaintiff the entire profits upon said excess,” other than as is
hereinafter stated; and it is not true that plaintiff, at the time
it demanded said profits, claimed that it had any monopoly, or that
its monopoly was so perfect that it would have sold said excess if
defendants had not, or that it was entitled to said profits in
consequence of any monopoly; but affiant says that it did claim the
profits upon the oil sold in excess of said 85,000 barrels, because
defendants had broken their agreement with said plaintiff, and the
profits on such excess the plaintiff at that time was willing to
accept as compensation for such breach of said contract.
Affiant says that he does not know what contracts for the sale of
oil defendants may have made, or what contracts for the manufacture
or for the construction of barrels they may have entered into, or
what obligations they may be under to their customers; but he says
that for a long time past the defendants have had notice that
plaintiff would insist upon the performance by them of their
obligations under their said contract, and that if they have entered
into contracts for the sale of oil as alleged by them and entered
into other obligations, they have done so with the full knowledge
that they were thereby violating and continuing the violation of
said agreement of July 20, 1876.
I have read the affidavit of H. L. Taylor, filed in this case
October 18, 1880, in which he says “that he has been for some six or
eight years last past acquainted with Mr. Rockefeller, Mr. Flagler,
Mr. Payne, and others; that he has had conversations with some of
these parties with regard to the control by the Standard Oil Company
of the distilling and refining business in the state of Ohio and in
the United States, and that he has heard them say in substance that
the Standard Oil Company intended to wipe out all the refineries in
the country except theirs, and to control the entire refining
business in the United States.” Affiant says that he has been
acquainted with H. L. Taylor for several years past, that all the
foregoing statements so far as they relate to him are false, and
that he never made to said Taylor or to any person in his hearing
any such statement, nor statements in substance to that effect.
Affiant further says that he never in company with said Taylor
visited any of the cities or places mentioned in his affidavit for
the purpose of inspecting or examining refineries, though he may
have met said Taylor incidentally at various places, but that he
never showed him refineries that were formerly under the control of
others and running independently and stated that the same had passed
under the control of the Standard Oil Company, nor did anybody else
make such statements to Taylor in his hearing.
Affiant says that it has not come to pass, as sworn to by said
Taylor, that said Standard Oil Company has “wiped out” the refining
business of the United States or that it to-day controls it, but
affiant believes that at the time said Taylor made his affidavit he
knew there were very many refineries running independently of and in
no way connected with the Standard Oil Company, and that said Taylor
was himself then interested in the profits of a large refining
business represented by a number of refiners who were large
competitors of the Standard Oil Company.
With respect to the assertion of said Taylor that “in many instances
to his knowledge the Standard Oil Company has bought refineries and
taken them down,” affiant says that several years ago when the
business was very much scattered, in several instances and for
greater economy in manufacturing, the Standard Oil Company
dismantled refineries unfavourably located and utilised the
construction, machinery, and appliances of the same to increase its
manufactory at Cleveland.
It is true that in many cases persons who had been unsuccessfully
engaged in refining, but had experience, were to some extent
employed by the Standard Oil Company in its business of refining,
but that with respect to the averment in said Taylor’s affidavit
that “in other cases said company employed men who had refineries,
at large salaries and at the same time gave them no absolute
employment,” the same is untrue. But it is true that it has
restricted its employees from entering the business of refining and
distilling oil except under said company’s direction.
But none of these things were done by the plaintiff for the purpose
of creating and maintaining a monopoly of the business of refining,
but were done for the purpose of conducting its business more
efficiently.
And affiant says that it is not true, as sworn to by said Taylor,
that the Standard Oil Company during a large portion of the time
that he refers to, to wit, six or eight years past, or for any
length of time, has substantially controlled the transportation of
oil; that it is not true that said Standard Oil Company ever had, or
that it now has, any contract with any lines of transportation in
which it was stipulated that it should have a lower rate of freight
than other shippers undertaking the same obligations and furnishing
equal terminal facilities; that in all the contracts ever had with
the railroads, the railroad companies have reserved the right to
charge others the same rate of freight as that paid by the Standard
Oil Company; and affiant further says that even those contracts with
the railroad companies which gave the Standard Oil Company a
commission for facilities furnished have long been abrogated and
abandoned.
Affiant says that with respect to the statement in said Taylor’s
affidavit that “other language has been used to him—said Taylor—by
the officers of said Standard Oil Company to the effect that the
said company intended to have all the refineries and aimed at having
entire control of the oil market,” the same, so far as it related to
him, is wholly untrue.
Affiant says that it is not true that the plaintiff got control of
the refineries of the firm of Logan Brothers of Philadelphia, Octave
Oil Company, Easterly and Davis, and Bennett, Warner and Company of
Titusville, Pennsylvania; R. S. Waring and Citizens’ Oil Works of
Pittsburg, or of either of them. The statement of H. L. Taylor that
“the principal way by which these independent refineries came under
the control of the Standard Oil Company was from the fact that said
company had such rates of transportation that the small companies
could not compete with it, and when said company had such in its
power it would make such arrangements with parties engaged in these
refineries as would prevent them from thereafter competing with the
Standard Oil Company,” is false in its facts and its inferences.
Affiant has already correctly stated the facts as to the purchase of
refineries by the Standard Oil Company of Cleveland, what led to
such purchases, and that persons engaged in such refineries were in
some cases employed by said company; and any statement or inference
to the effect that by illegal means or unfair influences the
plaintiff “squeezed out” or “crushed out” small refiners and
prevented them from again entering into the business of refining, is
untrue.
Affiant further responding to the affidavit of said Taylor, says
that with reference to the statement therein contained that “the
effect of the control of the refining business by the Standard Oil
Company upon the oil market is to largely increase the price to
consumers beyond what they ought to pay,” the same is untrue, and he
avers again that since the date of the contract with defendants the
average price to consumers of refined oil has been lower than for
years previous.
As to the allegation of said Taylor that “if the business was
distributed among the independent refineries it would furnish
employment to a much larger number of persons than at present, and
the interests of the country would be decidedly promoted by having
the refining business in the hands of competent parties,” in so far
as the same implies that there are not independent competing
refineries outside of the works of said plaintiff, the same is
untrue, and that it is a fact that a larger number of persons are
now employed in connection with the business of refining oil than
ever before.
Affiant says that with reference to the language used by the said
Heisel in his affidavit that he, Heisel, was not afraid, to which
Mr. Rockefeller replied, “You may not be afraid to have your head
cut off, but your body will suffer,” “and that this was said by
affiant prior to the time that he sold his interest in the refining
business to Bishop and was said for the purpose of inducing affiant
to sell out to the Standard Oil Company,” that affiant has no
recollection of ever using any such language to said Heisel, and so
far as said statement implies threats or inducements held out to
said Heisel to procure the control of the works of Bishop and Heisel
by the Standard Oil Company, the same is wholly false in spirit and
effect.
Affiant says respecting the statement in said Heisel’s affidavit,
that “the effect resulting from the control by this one company—the
Standard Oil Company—of the entire refining business in Cleveland
has been to largely increase the price of refined oil to consumers,
to lessen its production, to reduce the number of hands employed in
the refining business, and to reduce the price paid labourers for
their work, and thereby to largely injure the public,” the same, so
far as it alleges that there is a control by the Standard Oil
Company of the entire refining business, is false; and that so far
as it undertakes to state consequences of said alleged control by
the Standard Oil Company, it is also false.
I have read the affidavit of Mrs. B. filed in this case on October
18, 1880. Said affidavit is incorrect, erroneous and in many
respects false.
The first interview that I ever had with Mrs. B. was at her house,
when she sent for Mr. Flagler and myself to consult with her in
reference to selling out her establishment to one of her employees.
This occurred during the year 1876. She stated to us the terms of an
offer that she had received from the said employee, and expressed an
earnest desire to dispose of the business and to be free from its
perplexities and annoyances, and evinced a disposition to accept the
offer, and we advised her to accept providing the payments were made
secure. I did not see her again until the fall of 1878, more than
two years later. Then at her urgent request I met her at her house,
at which time she made reference to the conversation she had had
with Mr. Jennings, and desired me to pursue negotiations with her
with reference to the sale of her property, which I positively
declined, stating to her that I knew nothing about her business or
the mechanical appliances used in the same, and that I could not
pursue any negotiations with her with reference to the same, but
that if, after reflection, she yet desired to do so, some of our
people familiar with the lubricating oil business would take up the
question with her. She was very desirous to begin negotiations, but
I declined to negotiate and advised her not to take any hasty
action, as from her own statements there was no such change in the
condition of the business as to discourage the expectation that she
could do as well in the future as she had in the past. When she
responded expressing her fears about the future of the business,
stating that she could not get cars to transport sufficient oil, and
other similar remarks, I stated to her that though we were using our
cars and required them in our own business, yet we would loan her
any number she required or do anything else in reason to assist her,
and I saw no reason why she could not prosecute her business just as
successfully in the future as in the past. This is the last
interview I had with her.
Affiant thinks it is true that Mrs. B. stated in the course of the
conversation in substance that “the B. Oil Company was entirely in
the power of the Standard Oil Company, and that all she could do
would be to appeal to affiant’s honour as a gentleman and to his
sympathy to do with her the best that he could do.” To the statement
that she was in the power of the Standard Oil Company, affiant made
a positive denial, and stated to her there was no foundation for the
fears she expressed, and in this connection made the offer to her to
furnish her with cars. He cannot remember what was said by Mrs. B.
at this interview in relation to an agreement upon the part of the
Standard Oil Company not to touch the lubricating branch of the
trade. It is true that the Standard Oil Company had a contract with
the B. Oil Company, made early in 1873, terminable on sixty days’
notice by either party, in reference to carbon oil only—which
contract had been voluntarily assumed by the B. Oil Company—and it
was entirely optional with the said B. Oil Company to discontinue
said contract upon a notice of sixty days and thereby relieve itself
from its obligations if it so desired; but said contract was
continued in full force and effect up to the time of the sale by
Mrs. B. of her interest in said B. Oil Company; but the Standard Oil
Company had no contract with B. Oil Company by which it “agreed not
to touch the lubricating branch of the trade,” nor did it have any
contract with the said B. Oil Company having reference in any
particular to the lubricating oil business, nor did affiant have any
such contract. While affiant declined to enter into a negotiation
with the said Mrs. B., it may be true that during the interview
alluded to he said to her that in case a sale were made she could
retain whatever stock in the B. Oil Company she desired. As a result
of the negotiations, in which affiant took no part, the construction
and good-will of the B. Oil Company was purchased for sixty thousand
dollars, which was at least twenty thousand dollars in excess of its
value, and largely in excess of the value placed upon it by Mrs. B.
in the interview above referred to between Mr. Flagler and affiant
with her in 1876. In addition to the construction and good-will
which was purchased for the sum of sixty thousand dollars, there was
purchased of the B. Oil Company its entire stock of oils on hand at
the full market value, and the sum paid for same amounted to
$19,144.49, making an aggregate of $79,144.49, and did not include
any other assets of the company, such as cash, accounts receivable
and accrued dividends.
With respect to the allegation in said affidavit that “Mrs. B.,
seeing that the property had to go, asked that she might, according
to the understanding with the president of the company, retain
fifteen thousand dollars of her stock,” so far as said statement
implies that she was parting with her property under any duress,
restraint, or undue influence, or was forced thereto by any acts of
the Standard Oil Company, the same is absolutely false; and it is
also false that she ever had any understanding with the president of
the Standard Oil Company that she should retain fifteen thousand
dollars of the stock of the B. Oil Company, nor was there any
reference to that subject save as is hereinbefore stated; and if the
said Mrs. B. refers to this affiant in that connection wherein she
says that “to this request the reply was, ‘No outsider can have any
interest in this concern’ and ‘that said Standard Oil Company had
dallied as long as it would over this matter, that it must be
settled up that day or go, and insisted upon her signing the bond
above referred to,’” the same is also false; nor has he any
knowledge that during said negotiation any such language was ever
used, or that the negotiations were ever carried on or closed in any
such spirit.
Affiant says that it is not true that he made any promises that he
did not keep in the letter and spirit; and it is not true that he
was instrumental to any degree in her being obliged to sell the
property much below its true value; and he avers that she was not
obliged to sell out, and that such sale was a voluntary one upon her
part and for a sum far in excess of its value, and that the
construction which was purchased of her could be replaced for a sum
not exceeding twenty thousand dollars.
On Saturday, the ninth day of November, 1878, the negotiations were
closed and payments made to Mrs. B. Affiant had no knowledge of
dissatisfaction upon her part until the receipt of a letter dated
Monday, November 11, which reached him on the 12th, and on November
13 the reply thereto was made, copy of which is as follows:
November 13, 1878.
_Dear Madam_: I have held your note of 11th inst., received
yesterday, until to-day, as I wished to thoroughly review every
point connected with the negotiation for the purchase of the
stock of the B. Oil Company, to satisfy myself as to whether I
had unwittingly done anything whereby you would have any right
to feel injured. It is true that in the interview I had with you
I suggested that if you desired to do so you could retain an
interest in the business of the B. Oil Company by keeping some
number of its shares, and I then understood you to say that if
you sold out you wished to go entirely out of the business. That
being my understanding, our arrangements were made in case you
concluded to make the sale, that precluded any other interests
being represented, and therefore when you did make the inquiry
as to your taking some of the stock our answer was given in
accordance with the facts noted above, but not at all in the
spirit in which you refer to the refusal in your note. In regard
to the reference that you make as to my permitting the business
of the B. Oil Company to _be taken_ from you, I say that in
this, as in all else that you have written in your letter of
11th inst., you do me most grievous wrong. It was of but little
moment to the interests represented by me whether the business
of the B. Oil Company was purchased or not. I believe that it
was for your interest to make the sale, and am entirely candid
in this statement, and beg to call your attention to the time,
some two years ago, when you consulted Mr. Flagler and myself as
to selling out your interests to Mr. Rose, at which time you
were desirous of selling at _considerably less price_, and upon
time, than you have now received in cash, and which sale you
would have been glad to have closed if you could have obtained
satisfactory security for the deferred payments. As to the price
paid for the property, it is certainly three times greater than
the cost at which we could now construct equal or better
facilities; but wishing to take a liberal view of it, I urged
the proposal of paying the sixty thousand dollars, which was
thought much too high by some of our parties. I believe that if
you would reconsider what you have written in your letter, to
which this is a reply, you must admit having done me great
injustice, and I am satisfied to await upon your innate sense of
right for such admission. However, in view of what seems your
present feelings, I now offer to restore to you the purchase
made by us, you simply returning the amount of money which we
have invested and leaving us as though no purchase had been
made. Should you not desire to accept this proposal, I offer to
you one hundred, two hundred, or three hundred shares of the
stock at the same price that we paid for the same with, this
addition that if we keep the property we are under engagement to
pay into the treasury of the B. Oil Company an amount which,
added to the amount already paid, would make a total of
$100,000, and thereby make the shares one hundred dollars each.
That you may not be compelled to hastily come to conclusion, I
will leave open for three days these propositions for your
acceptance or declination, and in the meantime, believe me,
Yours very truly,
JOHN D. ROCKEFELLER.
To which letter no reply was ever received, and since which time
affiant has had no communication with Mrs. B. upon any subject.
Affiant says that he has had his attention called to the affidavit
of Daniel Shurmer, filed in this case October 18, 1880, and to the
language as follows: “That the Standard Oil Company had already
squeezed out one refining concern with which he was connected,
whereby he had lost over twenty thousand dollars.” Affiant says that
the same is false, as nothing of the kind ever occurred.
Affiant says that he conducted most of the negotiations which led to
the making of the contract with defendants, and that at no time
previous or during the same were any threats made by him or any
officer of the Standard Oil Company or agent to his knowledge to the
effect that the firm of Scofield, Shurmer and Teagle would be ruined
if they did not make such a contract, and no promises were made by
him nor anybody else in behalf of said Standard Oil Company to said
Shurmer or any of the defendants, that if said contract was signed
the Standard Oil Company and defendants would control and monopolise
the whole refining business in Cleveland; nor is it true, as alleged
by said Shurmer, that he was reluctant to enter into said agreement,
but, so far as affiant knows, the said Shurmer was anxious to make
the arrangement, believing it to be a profitable one for the
defendants. That some time in the year 1872, when the refining
business of the City of Cleveland was in the hands of a number of
small refineries and was unproductive of profit, it was deemed
advisable by many of the persons engaged therein, for the sake of
economy, to concentrate the business and associate their joint
capital therein. The state of the business was such at that time
that it could not be retained profitably at the City of Cleveland by
reason of the fact that points nearer the Oil Regions were enjoying
privileges not shared by refiners at Cleveland, and could produce
refined oil at a much less rate than could be made at this point.
That it was a well-understood fact at that time among refiners that
some arrangement would have to be made to economise and concentrate
the business or ruinous losses would not only occur to the refiners
themselves, but ultimately Cleveland as a point of refining oil
would have to be abandoned. At that time those most prominently
engaged in the business here consulted together, and as a result
thereof several of the refiners conveyed to the plaintiff their
refineries and had the option in pay therefor to take stock in the
Standard Oil Company at par or to take cash. That at this time the
Standard Oil Company, by reason of its facilities and large cash
capital, was agreed upon as the one best adapted to concentrate the
business, and for no other reason whatsoever. That said Standard Oil
Company had no agency in creating this state of things which made
that change in the refining business necessary at that time, but the
same was the natural result of the trade; nor did it in the
negotiations which followed use any undue or unfair means, but in
all cases, to the general satisfaction of those whose refineries
were acquired, the full value thereof either in stock or cash was
paid, as the parties preferred.
Since that time the Standard Oil Company, by diligent and faithful
attention to its business, by the exercise of the most rigid
economy, by promptly taking advantage of all legitimate business
opportunities, has acquired large and valuable property at Cleveland
with a capacity to refine oil largely in excess of any local
refinery, but he denies that from 1872 to the present time, by any
conclusion, conspiracy, or undue means from first to last, the
present standing and capacity of the Standard Oil Company has been
acquired, or that it seeks to maintain its hold upon business
through any purpose to create or maintain a monopoly.
JOHN D. ROCKEFELLER.
NUMBER 45 (See page 2072)
FINDINGS OF FACT
[Transcript of record, Supreme Court of the United States, October
term, 1886. Number 1,290. The Lake Shore and Michigan Southern
Railway Company, plaintiff in error, _vs._ Scofield, Shurmer and
Teagle, in error to the Supreme Court of the state of Ohio, pages
14–21.]
This cause came on to be heard upon the pleadings, exhibits, and
testimony, and was argued by counsel; in consideration whereof the
plaintiffs, having moved for a reservation to the Supreme Court, the
judges are unanimously of opinion that important and difficult
questions exist in the case, making it proper that the same should
be reserved to the Supreme Court for decision, which questions
embrace the following propositions:
1st. Is this a case upon the face of the petition and under the laws
of the state in which the court ought to interfere by injunction?
2nd. Whether such remedy by injunction will apply as well to the
case of shipments over the defendants’ road alone, as to cases of
through shipments over such road and connecting roads?
3rd. What are the duties and obligations of common carriers at
common law as distinguished from the statutory provisions of this
and other states and countries?
4th. Are the defendants at common law obliged to carry freight at
the same price for all parties or members of the public, without
regard to quantity or circumstances connected with the
transportation?
5th. May the defendant, as a common carrier and a corporation
organised for that purpose, contract with a party controlling 90/100
or more of all the freight of a particular class, at a given city or
point, to carry the same for less than general tariff rates, in
consideration that it shall receive all the freight thus controlled
by such party?
6th. May the defendant, as a common carrier, in consideration of
receiving all the freight of such party, that the quantity shall not
be diminished, and that terminal facilities as to loading,
unloading, and delivering the freight shall be furnished different
from regular or usual freight and with less expense and risk to the
carrier, contract to carry such freight, with such convenience and
benefits, for less than general tariff rates to the public?
7th. May the defendant, as common carrier, transport over its road
large quantities of oil, amounting to many full car-loads per day,
for a less price per car-load than it charges the public generally
per barrel or for single car-loads or less, provided all persons are
charged like prices for like quantities?
8th. May defendant, as common carrier, make any distinction in
prices for carrying like freight on the ground of quantity and
covenants to continue the same if thereby it can make a greater
profit than to charge the same prices for quantities small and
great? Is defendant, under all circumstances, obliged to charge the
same prices per ton or other quantity, for the same distance, to all
persons tendering freight of the same class, or may it, in good
faith and without intention to injure other producers or patrons,
contract to carry for one party at a less price than general rates
if thereby it can secure a large and profitable business which would
otherwise be diverted from it, in whole or part?
8½. Should decree be rendered for plaintiffs; and, if so, to what
extent should it be enforced—only within the bounds of the state or
to all parts of the country within or without the state, to all
points reached by defendant and connecting lines?
9th. Was section 3373 of the Revised Statutes intended to apply to
cases like the present, and under it is there any authority for the
injunction relief prayed for in this action?
10th. Whether upon such shipments so made by the defendant’s cars by
the barrel, either in car-load lots or in less amounts, the
plaintiffs are, either by common law or by the Ohio statutes on the
subjects, entitled to have their said products carried at the same
rate of charge between like points of shipment as are allowed to
said Standard Oil Company or other shippers, either to points on its
line or branches of said road beyond?
11th. Whether the defendant, as a common carrier, may exact from the
plaintiffs upon such shipments in barrels any amount greater than
the amount charged to said Standard Oil Company upon shipment of
like amounts by such tank-cars so long as the plaintiffs offer to
ship by their own tank-cars on substantially like terms?
12th. Whether, if such defendant can be required to give to said
plaintiffs equal rates of freight upon its shipments with those
allowed said Standard Oil Company to points upon its line and
branches, it can be required to give as low a rate to terminal
points as the rate it receives for its proportion of the service to
such points, on shipments to points beyond, and on its connecting
lines on a through rate fixed by it, and such connecting line or
lines for the through shipment?
13th. Whether the fact of the existence of such arrangement, and the
fact of the said Standard Oil Company being a shipper in amounts
larger than the plaintiffs, is any justification for the making of
such charges to the plaintiffs in excess of such charges made to
said Standard Oil Company? And in order that the same may be legally
presented to said Supreme Court, the District Court do find the
facts as follows:
1st. The court find the plaintiffs are, and since 1875 have been,
partners, carrying on, in a large way, at Cleveland, Ohio, where
this refinery is situated, the business of refining petroleum and
selling the refined product mainly throughout the territory west and
northwest of Cleveland, and extending throughout the Western and
Northwestern states, this business being one in which they have
invested a large amount of capital, and in which they have
established a large and profitable trade throughout such territory,
which constitutes the natural market for the sale of such products
manufactured at Cleveland, the cost of plaintiffs’ refining being
about $70,000, with a refining capacity of about 150,000 barrels per
year.
2nd. That the defendant is a consolidated railroad company, owning
and operating a railroad extending from Buffalo, in the state of New
York, to Chicago, in the state of Illinois, and passing through
parts of the states of New York, Pennsylvania, Ohio, Indiana,
Michigan, and Illinois, and also owning and operating branches from
Toledo, in the state of Ohio, to Detroit, in the state of Michigan,
and also from White Pigeon, in the state of Michigan, to Grand
Rapids, in the state of Michigan.
3rd. That said railroad, so far as the same is constructed and
operated in the state of Ohio, extends from the Easterly line of
Ashtabula County to the Westerly line of Williams County; that it is
a corporation engaged as common carrier in the business of
transporting persons and property for hire and reward over its said
line of road and branches.
4th. That it crosses and connects with other lines of railroads at
Toledo, Coldwater, and Chicago, over which it can and does forward
passengers and freight to their destination and consignment points
as requested and directed; that it holds itself out as ready to make
and does make the rates to points reached by connecting roads; that
defendant, as such common carrier, has been accustomed to receive
for transportation property over its line and branches to points
beyond the termini of the same by delivering the same at such
termini to connecting roads for carriage to the points of
consignment.
5th. That the rates for such through freights are fixed by agreement
between the different companies owning the lines over which such
freights are carried, and not by the defendant alone, and are
charged by like agreement, from time to time.
6th. That what are termed local rates, being for property received
and delivered at points on the line of defendant’s road, are fixed
exclusively by the defendant.
7th. That some of the towns and cities on the main line and branches
of the defendant’s road can only be reached by shippers from
Cleveland over its said road and branches; and all of them, as well
as the towns on most of its connecting branches, can be most
directly reached by means of its line from Cleveland.
8th. That the defendant is sufficiently supplied with cars and
engines and appliances for transportation necessary to enable it, in
the ordinary course of its business, to receive and carry for the
plaintiffs such products from Cleveland to such markets.
9th. That for a period of time extending back beyond the time when
plaintiffs commenced the manufacture of oil in the City of
Cleveland, the defendant has published for the benefit of the
public, tariff rates for local and through freights, which have been
frequently changed, and including rates for the carriage of oil in
barrels.
10th. The plaintiffs commenced and established their present
business in Cleveland in the spring or summer of 1875, and
subsequently, in July, 1876, became engaged in the same by
arrangement with the Standard Oil Company to the partial extent of
their own manufacturing establishment.
10½. That during the time in the petition named the Standard Oil
Company, the plaintiffs’ principal competitor in business, has also
been and still is engaged in a like business with them, it having at
Cleveland a large refinery from which it sells like products in same
markets; that the refineries of both are situate on the line of
railroads other than that of the defendant, but having like
connection with it; that each has switch tracks extending to their
refineries from the main lines of its roads on which they are
situate, by means of which shipments from them are made, the course
of business in making shipments by defendant’s road by the car-load
(which is the manner in which nearly all the business is done) being
for the defendant, on request of either, to furnish its cars, which
are switched from its connecting track by the road on which the
refineries are situate to the refineries, then loaded by the
shippers, and by said road drawn out and placed on the defendant’s
tracks for shipment by its road. By some traffic arrangement between
the roads a switching charge per car for such service is charged by
the local road against the defendant, which is by it at its
discretion charged against the shippers with its general freight
charge. Upon shipments in less than car-load lots delivery is made
to the defendant’s freight depot.
11th. That the Standard Oil Company was then, and ever since has
been, engaged in the same business at Cleveland and elsewhere, and
did then and ever since has manufactured and shipped more than
ninety one-hundredths of all the illuminating oil and products of
petroleum manufactured and shipped at and from the City of
Cleveland.