“The Great Oil Octopus.”

Maoriland Worker, Volume 2, Issue 39, 1 December 1911, Page 5

“The Great Oil Octopus.”

By London "Truth's" Investigator,

(Copyright. All Rights Reserved.)

x*X dollar in those days (1871) looked ag large i&s a cart wheel." —John D. Rockefeller, in "Random Reminiscences." ■ '

CHAPTER 111. iTHE RAILROADS AND THE PIPE LINES. The contract between the railroads and the South Improvement Company was signed, and armed with this deadly weapon, Mr. Rockefeller went around to all the rival refineries in Cleveland, and explained to their respective proprietors, gently but firmly, that they ,were as good as dead men in the oil trade, and that the only way they oould avoid utter ruin was to turn over their refineries to the South Improvement Company either for stock or cash at the latter's valuation. It seems scarcely credible, but it is an historical fact that no less than 20 out of the five-and- twenty Cleveland refiners — who, by the way, were approached one by one and under pledge, of secrecy—as Soon as they learnt that they were thus morally dead, proceeded at once to order their coffins. That is, they sold up as requested. The Cleveland refiners fell at Mr. Rockefeller's feet through sheer fright, and thus in less than three months' time the Standard Dil group absorbed twenty other refineries and increased its capacity from 1500 barrels a day to 10,000 barrels— from one-tenth to one-fifth the total capacity, of the United States. Of course, the murder was soon out, and the Oil Regions, which were interested in oil wells as distinct from refining, which was the Standard's business, were aflame with indignation. A Petroleum Producers' Union-was formed in opposition. Mass meetings were tield and Congress was petitioned. The Pennsylvania Legislature repealed the charter of the South Improvement Company, and on March 25 the peccant railroads signed a contract with the Petroleum Producers' Union, of which tho first and chief clause provided: That all arrangements for the transportation of oil after this date shall be upon a basis of perfect equality to shippers, producers, and refiners, and that no rebates, drawbacks, or other armangenients of any character shall be made or allowed that will give any party the slightest difference in rates or discrimination of any character whatever. On April 4 General McClellan (Atlantic and Great Western), Horace P. Clark (Lake Shore and Michigan Southern), Thomas A. Scott (Pennsylvania), and W. H. Vanderbilt (New York Central) all sent emphatic messages to the Petroleum Producers' Union, declaring that their roads had no understanding of any nature in regard to freights with the Standard Oil Company. On April 8 John D. Rockefeller telegraphed to the Petroleum Producers' Union: "In answer to your 'telegram, thi3 company holds no contract with the railroad companies or any of them or with the South Improvement Company." Yet novt know from a contract thoughtlessly exhibited by EL M. Flagler seven years later to a Commission of the Ohio State Legislature—a contract between fitils company and the railroads —-that a rate had been fixed "From April 1 until tho middle of November, 1872, about teeven months, 1.25d015." Now, the corresponding rate openly published and recorded in the contract between .■the roads and the Petroleum Producers' Union just quoted, which was signed March 20, was l.SOdols. A rebate of 16 2-3 per cent! Mr. Rockefeller ihad it all the time, in spite of his own β-ssertione and those of the railroad officials to the contrary. Mr, Rockefeller's Indiscretion. Mr. Rockefeller has committed very few indiscretions in his lifetime, but he cLid achieve one at tliis early date in his career. He talked under the smart of his rebuff, and so did others of his colleagues in the late South Improvement Company. He was reported in the : *'Oil City Derrick" to have said to a prominent man of Oil City that the South Improvement Company could /work under the charter of the Standard Oil Company, and to have added that in less than two months his auditor would be glad to join him. One of his Colleagues simply said: "The business HOW will be don© by the Standard Oil Company. . . * Wβ mean to show tlhe world that the South Improvement Company was organised for business, .and mean* business, in spite of oppo-

Story of the Development, Methods, Men, and ' 4 Results of-" Standard Oil. ,1

sition." This went the round of the American press a few days after the repeal of the charter, and since then to the present day the indiscreetly tittered threat has been stealthily fulfilled to th© letter. The South Improvement Company wa3 formally dissolved in order to calm the popular indignation, but the same men continued to operate through the Standard Oil Company of Cleveland, and,'as we have seen, to receive similar rebates, which enabled them to build up the Standard Oil Trust. On May 3, 1910—to bring the matter well down to date by a concrete instance —the United States Court of Appeal confirmed a decree of the> Circuit Court of the Western District of New York State, fining the Standard On Company 20,000dolsr (£4000) "for Accepting concessions from the published rate of the Pennsylvania, Now York Central, and Rutland Raliroads in violation of Inter-State Commercial Law." But the fine, of course, is an ineffective fleabite, and is only worth quoting to show tliat the iniqtiitous conspiracy of injustice and robbery entered into by the railroads and the Standard Oil Trust in 1872 still continues to baffle justice in America and to outrage the moral sense of the civilised world. .' The "Terminal Facilities " Weapon. A noteworthy development of the conspiracy between the Standard Oil Company and the railroads was what became known as Standard control of the railroad "terminal facilities." By terminal facilities is understood the unloading, storing, and handling of oil at the railroad tenninii, chiefly in the vicinity of New York harbour. The railroads handed, over the .entire control and management of their oil yards and wharves to this one favoured oil company, authorising it to collect the oil-yard charges from its rivals, and to handle its rivals' oil consignments according to its own goodwill and pleasure. Fancy one of our British railway companies putting all its railway sidings in London under the control of a single firm of Newcastle coal merchants and allowing this firm to load or unload, forward or delay the consignment of rival firms according to its ovs-u convenience or good pleasure! Fancy the outcry that would be raised against this privileged firm when it became known that the only check upon its dealing unjustly with its rivals was that, whatever charges it elected to make for loading, unloading, and storage at the railway company's sidings, such charges were to be uniform in all cases! This last proviso was a mere mockery. The only authority appointed to see that no advantage was given to one competitor over another was the arch-competitor—the Standard Oil Company. The companies eht-ering into this special conspiracy were the Erie, the New York Central and Hudson River, the Baltimore and Ohio, and the Pennsylvania railroads at the Atlantic seabord. -'I have before mc as I write copies of the contracts made by all these railroads, excepting the Pennsylvania, with the Standard Oil Company, and they make astounding reading. This matter of the "terminal facilities" very naturally received attention in the United States Government prosecution' of the Standard Oil Company of New Jersey, in the State of Missouri, when the Court found that the company wa* identical with the Standard Oil Trust, whieli had previously been ordered by the Court to be dissolved as an illegal conspiracy in restraint of trade. The effect of the decision has been suspended by an appeal to the Supreme Gourfe. of the United States, which would have been "decided last spring had it not been for the death of Judge Brewer .the presiding judge. The appeal is expected to be decided under his tardily - appointed successor, Judge Hughes. Something Best Forgotten. In the meantime, the finding of the Missouri Circuit Court, before whieH. the case was argued is that of "guilty." When Mr. Rockefeller had, with the greatest difficulty, been haled before this court and asked to explain these contracts on oath, all he could urge in his favour was that "the Standard interests were handling very large quantities of oil, 'and were the natural parties to have control of the warehousing, receiving and shipping of oil." Crossexamination could extract very little from him. He could not even say when the Standard Oil interests got posses-

sion of the terminals, nor how' long they, retained them. He admitted that the Standard levied terminal charges on, the oil of independents, but .did not know the amount- He relapsed, in short, into that painfully afflicting condition of amnesia which seems to be constitutional • with Standard Oil officials when subjected to tho rude shock of public examination. But, luckily, the written, letter of the contracts is now to hand to supplement this lamentable want of memory. Take, for instance, that with the Erie Company, dated . April 17, 1874, in Sectori 7 of which the Standard agrees to pay 5 cents a barrel to the Erie Railroad for the use of its yards, and . further agrees "to make the charges uniform to all parties who use the yards or for whom services are performed therein, and always as low as any other oil yard, affording proper facilities for the transfer! storage, preparation, and shipment of the oil at any terminus of any railway or other line .competing with the Erie Railway at or adjacent to the port of New Yoi%". There is something like humour in the phrase "as low as any other oil yard." Eyery "other oil yard" was similarly controlled "by the Standard. One of its directors, Mr. 3'abez A. Bostwick, stated on oath before the Hepburn Committee on October 16, 1579, that the Standard at that time controlled, the terminals of the Erie and the : New York Central Railroads, and that the New York Central had no other oil terminals at New York harbour except those controlled by the .Standard. At the time he was testifying he had charge of the New York Central yards, and declined to answer as to his relation with- the Standard Oil Company in the connection. The usual atmosphere of mystery! It is dissipated, however, at the present date, for we have now the text of the contract between the New York Central and the Standard before us, signed January 1, 1876} and referring to a previous contract of July 22, 1875. The Claim to Superiority. . One more point and I have done with the "terminal facilities." Section 8 of the Erie contract provides that the Standard Oil Company shall assume the collection of freights and. charges on all oil received at the yard, and render accounts weekly. "This provision," observes the. "Brief for the United States," given to the Attorney-General in the Missouri casej "gave the Standard Company the power to collect the Erie's freight charges for transportation of competitors' oil, thereby giving the Standard the great advantage of knowledge of all competitive shipments and of the rates of freight, and enabling it to compel those parties to pay the full rate, while the Standard could obtain any rate it might arrange for with the railroad companies, arid it will be shown tlxat the Standard had rebates from all of thorn." In the light of all this, what becomes of the Standard Oil claim to superior business acumen and cleverness? Under the conditions shown,: a mere schoolboy could outstrip and iiiin ■ the most seasoned merchant in the race for commercial success. The claim to superior business methods is an absolutely unfounded one, and might as well be urged by a burglar who can make a fortune in a night; but, then, his avocation is not, usually referred to as "business." By this time the pumping of crude oil from the wells through pipe lines had. commenced, first for short distances to collecting points on the rail.roads, but later for long distances, largely superseding the railroads. The Standard's pipe lines, called the United Pipe Lines, were under the management of the late Mr. Daniel O'Day, the big Irishman mentioned in the first chapter. At first the railroads and the Standard pipe lines worked together to harass and delay the "independent" shipper and refiner. Here is evidence of how the Standard Oil Company's secret agreements with the railroads made it the interest of the latter to decrease the shipments of independent oil by refusing to furnish adequate cars and by delaying delivery. In 1878 Mr. W. H. Nicholson, the representative of Mr. Olilen, a New York shipper of petroleum, appeared before an investigation ordered by the Secretary of Internal Affairs of tho State of Pennsylvania, and gave evidence upon oath that he began to have a, difficulty in getting cars in May of that year. One day, he stated, Mr. Ohlen telegraphed to the officials of the Erie road to know if he could get 100 cars to run east. The reply came' back, "Yes." About noon Mr. Nicholson saw Mr. O'Day, the manager of the United Pipe Lines (Standard Oil property), in which his oil was and told him he was waiting to have his cars loaded. Mr. O'Day at once said he could not load the- cars. "But I have an. order from the Erie officials giving mc the cars," Mr. Nioholaou objected. "That makes

no difference," O'Day replied; "I cannot load cuvs except, upon an order from Pratt.' , Nor would ho do it, The cars were not loaded for Mr. Nicholson, though at the time he had 10,000 barrels of oil in the United Pipe Lines and an order for 100 pars from the officials of the Erie, in his' hand.. "Pratt," of course, was the late Mr. Charles Pratt, whose refinery was at this time merged in the Standard combine, and whose name is memorialised in thia country by the well-known "Pratt* s motor spirit." *" •(To be continued.)