"The Great Oil Octopus."

Maoriland Worker, Volume 2, Issue 2, 8 December 1911, Page 5

"The Great Oil Octopus."

Story of the Development, Methods, SWlen, and Results of " Standard Oil." By London "Truth's" investigator. (Copyright. All Rig Jits Reserved.) ."

CHAPTER 111. THE RAILROADS AND THE PIPE LINES. (Continued.) Railroads Boycott Standard Rivals. High-handed proceedings of this sort by the Pennyslvania Railroad gradually created such a hubbub that the State of Pennsylvania instituted a suit against it. This is the evidence given by Mr. B. B. Campbell, President of the Producers' Union., on the occasion : — .. I never, heardof a.scarcity of ears ui*r til the early part of June, 1878. I came to Parker (a- town in Pennsylvania) * about 5 o'clock in the evening, and found the citizens, in a state of terrible •excitement. The Pipe Lines would not run oil unless it was sold; the only shippers we had in Parker of any account, viz., the agents of the Standard Oil Company, would not buy oil, stating that they could not get cars ,* hundreds" of wells were• stopped, to their great' injury; thousands more, whose owners were afraid to stop 'them, for fear of damage by salt water," were pumping the oil on the ground. . . On Saturday morning, I spoke very plainly to Mr. Shii.m (vice-px-esidexit of the Allegheny Valley Railroad Company, controlled by the Pennsylvania), telling him that the idea of a scarcity of cars on daily shipments of less than 30,000, barrels a day was such an absurd,' barefaced pretence that he could not expect .men of ordinary iiitellige.uce't»Jacceptit"J*as the preceding fall ('arigliopj,'; autumn), when business required,.' the : ' railroads, could: carry day .after day from" 50,000 to 60,000 barrels of oil. . . . I requested him to be tn©.'^velV-jcVe^eQmmTini'cating , r to the Pemisylvania' Railroad officials J my ; views oil the '; subject,; telling him' that I was convinced that, unless "im- j mediate relief was furnished and cars j afforded, there would be an outbreak in_the Oil Regions. ... On the next Monday I returned to Parker After J passing Redbank, where the'low-gi-ade ! road, the connecting link between Valley Road and the Philadelphia and Erie Road meets the Valley Road —between that point and Parker —the express train was delayed for over half an hoar in passing through hundreds of empty oil cars!" The Refiners' Association. In August, 1872, Mr. Rockefeller, as the result of much plotting and planning, succeeded in persuading at out four-fifths of the refining interest in the United States to go into a National Refiners' Association, with himself as president, the object being to checkmate the Petroleum Producers' Union, which liad just exposed the South Improvement Company. This refiners' association was to operate on what was known as the "Pittsburg plan"—socalled from the place where the scheihe was first organised—according to which all the refiners were subject to a central board. They were to refine only such an amount as the board allowed, not to undei'sell prices fixed by the board, and' to leave their buying of crude oil and arrangements for trans-' poxtation entirely in the .hands of the board. In the, aggregate, thej' would thus form a company, presided over by one central board; their participation in this company would be expressed in terms of stock, and each stockholder would receive dividends whether his plant operated or not. It was, in short, the germ of a "Trust," with Mr. Rockefeller as trustee. : . The refiners had put their heads into the lion's mouth with a vengeance. The Petroleum Producers' Union was up in arms at once to protect the price of crude, and made an heroic attempt to do so by restricting output. They also set up a producers' selling agency to cut out the Refiners' Association by refusing to sell it oil except at their own price. They were no match-in generalship, however, for Mr. Rockefeller, especially when aided, as he was, by the hand of Nature. Nature was .unkind enough to send the producers ."gushers" with floods of oil when they wanted it least, and they found restriction, of the output practically impossible. At the same time, most of the producers were badly in want of ready cash, and the Refiners' Association had the longer purse. At the psychological moment Mr.' Rockefeller struck the judicious blow of offering to throw in his lot with the producers and buy crude only from the Producers' Selling Agency (and that at 4.75d015. a barrel, a clear dollar over the then current market price), if the producers on their part would undertake to maintain the price and sell to no one outside the Refiners' Association. The coup succeeded, and, halftempted, half-constrained by cash necessities, the producers were ill-advised

enough to trust their enemy and sign what was known as "The Treaty of f Txtusyille" ion the lines proposed. They at once received an order from Mr. Rockefeller for 200,000 barrels of crude ■ at 3125d015., not quite as good a price as that first mentioned, but which, under the circumstances, they were glad to accept. The'"treaty" was signed on December 19, 1872. Tlie producers had shipped about 50,000 of the barrels ordered by Mr. Rockefeller, when, on January 14, 1873, they were suddenly, electrified to hear that that gentleman -refused * to" take" any ifoore ■- of -the* contract oil When taken to task Mr. Rockefeller urged in his. clefeiioe the pitiful plea . that the producers had^ not kept their part of the contract by limiting the supply of oil. It was true that the Producers' Union .-was pledged by its own iiiteriiai|'orgaiHsatipn; to lixliit the supply of crude, but ho such stipulation appeared in te contract signed by it with the, Refiuers! Association. It was its own"' domestic-' arrangement. Had the matter been taken to court it' is difficult to see how an alleged verbal understanding could have prevailed against a written contract. But no such-step was taken. The Producers' .Union collapsed in utter demoralisation, and -never made another -united effort : for the next' five years. The Refiners'/ As'spcia/tibn also found itself unable' to keep, up the internal discipline it • had imposed upon itself. It was, dissolved in 1873, and Mr. • Rockefeller was left' sole master of the situation. He had outgenerailed everybody. In 1874* the > Erie; Central and Pennsylvairia Railroads entered into a combination with certain of the pipe lines, to the effect that equal rates should be charged by both the railroads and the pipe lines' in the combination. The railroads were to starve out the independent pipe linfes by refusing them the advantages given to the. United Pipe Lines. Bqtli railway freights and pipeage rates wjere to-be raised simultaneously, and :oh. such a schedule that henceforth the cost of transport would be equal to- all refiners, on crude and refined, from all points! This coiribinatioh was announced curtly by a private circular'sent out by James H. Rutter, freight agent of the New York Centi*al, containing the paragraph: You will observe that under this system the rate is even and fair to all parities, l preventing one locality takingadvantage of its neighbour by reason cf some alleged or real 'facility it may possess. Oil refiners and'shippers have asked the roads from time to time to ! make all rates even, and they would be satisfied,: This scheme does • it, and we trust will work satisfactorily, to .all. . The refiners, and shippers referred to as complacently as if they, .formed the bulk bfpthej refining and shipping in.-. ; terest course, .Mr. Rockefeller and his frieiids, ; assumed for the nonce, as in the cafse of the South Improvement Company, to be "the trade." Trt'e Rutter Circular. This astounding, circular, commonly • l'eferre^'"to 'iin-American Trust history as the Rutter circular, introduces us to the second species of unjust discrimination enjoyed by Mr. Rockefeller, and, perhaps —of late years, at any rate— with an even more disastrous effect than thai: of the secret rebate —namely, the "discriminatory rate." In some cases the discriminatory rate was secret, in others published. The Rutter circular projected the idea into a sort of quasirpublicity as an ostensibly fair one. The brief for the Government in the pending appeal by the Standard Oil Company ' of New Jersey against the Missouri judgment characterises these discriminatery rates as follows : — The testimony in this case will show that in the open published rates, as well as in secret and unfiled rates, there j was radical discriminatioii against the independent shipping points and in favour of the Standard shipping points. . . ... It is impossible that without connivance' with the Standard Oil Company the railroads of this country* should have uniformly made a syste?n of rates whereby with scarcely an exception tha independent shipping points were., discriminated against in favour of the Standard shipping points. .... It is "a well-known fact that this group of defendants is the most influent'".il in financial circles in the United Hates. This influence has undoubtedly been •used to obtain these preferential rates, because it could not be possible, that it merely happened in the ordinary course of business " that practically every Standard shipping point would be favoured With ' advantageous rates as against competitors- !

This contention Has, of course, been already sustained by the finding of the Missouri Circuit Court, as it is sustained by the oommonsense of anyone who takes the trouble to go through the schedules of rate charges made by the railroads recently-brought to light. The Standard Oil Ccihpany's main refinery is at Whiting, '"in Indiana; a trifle to the south-east ',6i "Chicago/ To take a few instances, the.rate from Whiting to 'Chattanooga, a distance 6f 849 miles', by the route actually used on the road, was fixed by the raihoad at 25.9 cents per hundred gallons, while the rate fx*om Pittsbiu*g —an independent refining centre —to-Chattanooga) a dista'nee of only 651 miles, wa3 as much as 47 cents per hundited. In other words, tho •Standard Oil Company paid*2l cents a hundred less for shipping 200 miles further. This difference. amounts to over I_\ cents per gallon, which is in itself a large profit/on oil. Tlie discrimination against Cleveland and Toledo —two other independent - shipping centres — on shipments?', to Chattanooga was equally great.'; Again, take the destin"ation of in the State of Alabama. Th% open rate from PittsBurg, a distance, of. 794 miles, was 51.5 cents; from Waiting, a distance of 820 miles, it was 2J3.5 cents, a'difference of 22 cents. Siniilarly there was an equal discrimination against Cleveland and Toledo on shipments,*, to 'Birmingham. And so on to the'exid of tho'jchapter of conspiracy all over the States.