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diff --git a/78460-0.txt b/78460-0.txt new file mode 100644 index 0000000..8a863aa --- /dev/null +++ b/78460-0.txt @@ -0,0 +1,5516 @@ +*** START OF THE PROJECT GUTENBERG EBOOK 78460 *** + + + + + THE GREAT OIL OCTOPUS + + + + + THE + GREAT OIL OCTOPUS + + BY + “TRUTH’S” INVESTIGATOR + + T. FISHER UNWIN + LONDON: ADELPHI TERRACE + LEIPSIC: INSELSTRASSE 20 + 1911 + + + (_All rights reserved._) + + + + + PREFACE + + +The appearance in _Truth_ of the articles which form the greater +portion of this volume has been followed by a wish expressed in many +quarters that they might be republished in a more permanent and +convenient form. The suggestion has been adopted. The articles have +been carefully revised, some additional matter has been inserted, and +it is hoped that they will form a useful contribution to contemporary +social and commercial history. The late Mr. Henry D. Lloyd and Miss +Ida M. Tarbell have each published exhaustive investigations of the +Standard Oil Trust’s proceedings in the United States, and further +information is available in the records of the Missouri litigation, +and--in regard to the flash-point scandal--in British Blue-books. +Hitherto, however, there has been lacking a complete conspectus of all +the many branches of this worldwide subject. One or other tentacle +of the Octopus has been described in detail, but in this volume an +attempt is made for the first time briefly to describe them all. It +has been necessary to exclude any reference to many other commercial +enterprises--such as “Amalgamated Coppers”--in which the heads of the +Oil Trust individually figure in order to concentrate attention on +that combination in the oil trade which first brought them together, +which set the example to so many imitators in America and Europe, +and exhibits most clearly their business methods and morals in two +hemispheres. + + + + + CONTENTS + + + CHAP. PAGE + + I. THE MEN AND THE MONOPOLY 9 + + II. THE SECRET REBATE 25 + + III. THE RAILROADS AND THE PIPE LINES 43 + + IV. THE BIRTH OF THE TRUST 63 + + V. BRIBERY: THE ARCHBOLD LETTERS 75 + + VI. ARSON AND ESPIONAGE 89 + + VII. THE “BOGUS INDEPENDENTS” 105 + + VIII. THE STANDARD’S “INVENTIONS” 123 + + IX. THE TRUST IN AMERICA AND ASIA 137 + + X. RUSSIA, GALICIA, AND ROUMANIA 155 + + XI. THE TRUST IN GERMANY, SWEDEN, AND FRANCE 171 + + XII. THE TRUST’S “TIED HOUSES” IN ENGLAND 189 + + XIII. THE FLASH-POINT SCANDAL 207 + + XIV. THE ROCKEFELLERS AND THE HOME OFFICE 217 + + XV. THE LUBRICATING OIL TRADE 237 + + INDEX 251 + + + + + THE MEN AND THE MONOPOLY + + + “The oil business belongs to us.” + + JOHN D. ROCKEFELLER _to an independent refiner_. + + + + + THE GREAT OIL OCTOPUS + + CHAPTER I + + THE MEN AND THE MONOPOLY + + +There has lately arisen at Queen Anne’s Gate, on the site of a fine +Victorian mansion demolished to make room for it, a gigantic palace, +steel-framed in the up-to-date style, clad in Portland stone, towering +seven stories high above the neighbouring buildings, looking down +upon Buckingham Palace on the one side of the park, and standing on +pretty nearly equal terms with the Government Offices and the Houses +of Parliament on the other. I was interested to learn that it has been +erected for the accommodation of the Anglo-American Oil Company, which +is the English branch of the famous Standard Oil Trust of the United +States. There were even people who suggested that in view of the action +of the United States Government against the Standard Oil Trust, still +pending in the American Courts, and the influence of Mr. Roosevelt with +his “trust-busting” aspirations, it may possibly be in contemplation +to transfer the headquarters of the petroleum empire from the present +offices of the Standard Oil Trust in Broadway, New York, to Queen +Anne’s Gate, Westminster. As Constantine transferred the capital of +the Cæsars from Rome to Byzantium, so these seers picture Mr. John D. +Rockefeller removing his seat of government eastward from New York to +London. + +Time alone can test the value of this prophecy. Sufficient unto the day +is the evil thereof. The new Aladdin’s Palace that has sprung up in +Birdcage Walk is an eloquent manifestation of the growing wealth and +influence of the Great Oil Octopus in this country. That is a cogent +reason why the public throughout the United Kingdom should understand +without loss of time what this Trust is, and what reason there is for +men to be afraid of it. Echoes reach us of the iniquities charged +against Mr. Rockefeller and his colleagues in America, they circulate +vaguely about the country but make little impression. On the other +hand, strenuous efforts to convey a contrary impression have been +made with considerable skill. The Trust includes in its scientific +organisation an efficient Press department, and fights with the pen as +well as with other weapons. I have therefore made it my business to +undertake an exhaustive investigation of the history of the Trust and +its operations, not in America alone, but in Europe and Asia. There +is no great secret about the subject. But the materials are scattered +and difficult of access. A good deal of new light has been thrown +upon the history of the concern and its ramifications in the United +Kingdom and other countries in the course of the great action of the +United States Government against the Trust in the State of Missouri, +referred to a moment ago. In the Standard Oil Trust we have exhibited +the highest perfection yet achieved by a ring of capitalists in the art +of exploiting a great industry. The machinery that has been created for +this purpose is a masterpiece of human ingenuity. The methods by which +it has been employed seem to express the last word in craft, subtlety, +and unscrupulousness, as employed for the purpose of amassing wealth. +The Trust is consequently quite a fascinating subject for inquiry and +reflection, apart from the direct interest which we every one of us +have in its operations. + +The indictment against the Standard, put briefly, is that its +founder, Mr. John D. Rockefeller, organised in 1870 a combination of +American oil refiners, who then controlled less than 10 per cent. of +the refining business, and that he secured from the United States +railroads secret rebates on the carriage of their oil, and even larger +rebates on oil carried for their competitors. The result was that it +became the interest of the railroads to discourage the shipments of oil +by refiners outside the Trust. Armed with this weapon of the secret +rebate, the Standard Oil Trust was able to undersell its competitors +and to force them to sell out at heavy loss. In ten years it had +obtained by those methods the control of 90 per cent. of the American +oil refining business, and being almost the sole buyer, it was able +to dictate prices to the oil producers at the wells. It has since +maintained its monopoly by elaborate espionage of its competitors’ +business, by running ostensibly “independent” oil companies to take +advantage of the anti-Trust feeling, and by obtaining up to the present +day unfair railway discriminations in place of the secret rebate. It +maintains an expensive staff of lobbyists at the Legislative Chambers +of many lands, and it has constantly adopted the methods of bribery +(direct and indirect) in dealing with politicians and publicists. It +has always aimed, not at fair business competition, but at absolute +monopoly. + +The principal figures in this great combination deserve a passing +word of introduction. There is first its founder, its creator, Mr. +John D. Rockefeller, who was born on a farm in New York State in +1839. His father, who was of Scottish extraction, moved to Ohio, and +in 1855 John Davison Rockefeller went into the town of Cleveland to +earn his living as a junior clerk at four dollars a week. He was +clever, industrious, steady and frugal, and he went into the produce +commission business with a young Englishman named M. B. Clark. In +1862 he met another Englishman, Samuel Andrews, who was a mechanical +genius, and had devised improved processes in the infant oil-refining +industry. They joined forces; Andrews looked after the refining and +Rockefeller attended to the pushing of the business, the buying and +selling. The firm grew and extended at first by legitimate, and then by +illegitimate, methods, and now Mr. Rockefeller has convinced himself +in his retirement that he has been the agent of Providence, and that +his business career entitles him to moralise to Sunday schools and +Bible classes. “I hope you young men are all careful. I believe it +is a religious duty to get all the money you can; get it fairly, +religiously, and honestly--and give away all you can.” So spoke Mr. +Rockefeller to his son’s Bible class in New York on March 27, 1897, +and it gives a complete picture of his life. The combination of Jekyll +and Hyde is well brought out in Miss Ida M. Tarbell’s “History of +the Standard Oil Company,” the ablest investigation ever made of the +American activities of this combination. Miss Tarbell says:-- + + Mr. Rockefeller was “good.” There was no more faithful Baptist in + Cleveland than he. Every enterprise of that Church he had supported + liberally from his youth. He gave to its poor. He visited its sick. + He was simple and frugal in his habits. He never went to the theatre, + never drank wine. He gave much time to the training of his children, + seeking to develop in them his own habits of economy and charity. Yet + he was willing to strain every nerve to obtain for himself special + and unjust privileges from the railroads which were bound to ruin + every man in the oil business not sharing them with him. Religious + emotions and sentiments of charity, propriety, and self-denial seem + to have taken the place in him of notions of justice and regard for + the rights of others. + +In a character sketch of Mr. Rockefeller which she contributed to +_McClure’s Magazine_ in January, 1905, Miss Tarbell tells this story:-- + + Even in his own Church men say, “He’s a good Baptist, but look out + how you trade with him.” “I have been in business with John D. + Rockefeller for thirty-five years,” one of the ablest and richest + and earliest of Mr. Rockefeller’s colleagues once told me in a moment + of forgetfulness, “and he would do me out of a dollar to-day; that + is,” he added, with a sudden reversion to the school of cant in which + he had been trained--“that is, if he could do it honestly.” + +In this picture Mr. Wm. Rockefeller hardly counts. The next figure in +the gallery of oils is that of the late Mr. Henry H. Rogers, who died +a few months ago--the “Iron Man” of the Standard directorate. Writing +in Chapter III. of “Frenzied Finance” in _Everybody’s Magazine_ for +August, 1904, Mr. T. W. Lawson, who knew him well, thus described Mr. +Rogers:-- + + Whenever the bricks, cabbages, or aged eggs were being presented + to “Standard Oil,” always was Henry H. Rogers’s towering form and + defiant eye in the foreground where they flew thickest. Whenever + Labour howled its anathemas at “Standard Oil” and the Rockefellers + and other stout-hearted generals and captains of this band of merry + moneymakers would begin to discuss conciliation and retreat, it was + always Henry H. Rogers who fired at his associates his now famous + panacea for all opposition, “We’ll see Standard Oil in hell before we + will allow any body of men on earth to dictate how we shall conduct + our business.” + +In another passage in “Frenzied Finance” Mr. Lawson wrote of him:-- + + Rogers is a marvellously able man, and one of the best fellows + living. He is considerate, kindly, generous, helpful, and everything + a man should be to his friends. But when it comes to business--his + kind of business--when he turns away from his better self and goes + aboard his private brig and hoists the Jolly Roger, God help you!... + He is a relentless, ravenous creature, as pitiless as a shark, + knowing no law of God or man in the execution of his purpose. + +Now that Mr. Rogers is dead, the active figure in the Trust is Mr. John +Dustin Archbold, who was originally a bitter opponent of the Standard +and its rebates. Since he joined its circle Mr. Archbold has figured in +two sensational episodes. He was one of the defendants in the charge of +conspiring to blow up a rival refinery at Buffalo, and escaped through +the judge withdrawing his case from the jury. He was the writer of the +famous letters to politicians which Mr. Randolph Hearst disclosed in +the Presidential campaign of 1908. + +Of the rest of these men it is necessary to say less. They were very +diverse in their character. One of them, Henry M. Flagler, was the +pioneer of the vast hotels which line the Florida coast and make it a +winter resort for rich Americans. William T. Wardwell, the treasurer +of the Standard Oil Company, was an ardent teetotaler, and more than +once ran as Prohibitionist candidate for the Presidency before his +connection with Standard Oil was so notorious. Many of them were Scotch +Presbyterians, but the late Mr. Daniel O’Day, the man who faced fierce +obloquy as the manager of the Standard’s pipe-line monopoly, was an +Irish Catholic, who died a year or two ago, leaving several millions +behind him. The younger generation is growing old now, and sons of both +John and William Rockefeller have entered the business, carrying on the +traditions of the greatest combine on earth. + +We will now proceed to trace the ramifications of the vast organisation +which these men have built up and control all over the world. The full +list of the subsidiary companies is so long that it is impossible +and unnecessary to print all the names. But a selection of them will +indicate the vastness and variety of the Rockefeller interests. They +are taken from the Report of the United States Government Commissioner +of Corporations on the Petroleum Industry (Part I., Table 8, p. 84), +supplemented by one or two other unimpeachable sources of information. +The central company of this joint-stock octopus is now the Standard +Oil Company of New Jersey, which holds large blocks of stock in the +other companies. It has a capital of $100,000,000 of common stock +and $10,000,000 of preferred stock. Among its directors are John +D. Rockefeller, William Rockefeller, Henry M. Flagler, John Dustin +Archbold, Wesley H. Tilford, Frank Q. Barstow, Charles M. Pratt, +Edward T. Bedford, Walter Jennings, James A. Moffet, C. W. Harkness, +John D. Rockefeller, jun., Oliver H. Payne, and A. C. Bedford. This +Company controls nine companies which are principally engaged in +refining oils:-- + + Capital. + Dols. + Atlantic Refining Company, Pennsylvania 5,000,000 + Solar Refining Company, Ohio 500,000 + Standard Oil Company of California 25,000,000 + Standard Oil Company of Kansas 1,000,000 + Standard Oil Company of Indiana 1,000,000 + Standard Oil Company of New York 15,000,000 + Security Oil Company, Texas 3,000,000 + Standard Oil Company of Ohio 3,500,000 + Corsicana Refining Company partnership + +Then comes a group of lubricating oil companies:-- + + Dols. + Vacuum Oil Company, N.Y. 2,500,000 + Borne, Scrymser & Co., N.J. 200,000 + Chesebrough Manufacturing Company, N.Y. 500,000 + Galena Signal Oil Company, Penn. 10,000,000 + Swan and Finch Company, N.Y. 1,000,000 + +It will surprise many readers on this side to find in this list the +name of the Chesebrough Company, which lights the London sky with the +magic word “Vaseline,” but for years that article has paid its tribute +to the Standard Oil Trust. This story was told by Mr. John D. Archbold +in evidence in the proceedings by the United States Government against +the Trust in the State of Missouri, where much evidence, to which we +shall hereafter have to refer, was taken. Mr. Archbold then stated +that the Standard Oil Trust acquired 2,549 shares in the Chesebrough +Manufacturing Company, which was a little more than a majority of the +stock. Mr. Chesebrough and the other minority stockholders continued to +carry on the business in the old name until the present day. Vaseline, +of course, is a product of petroleum. With regard to the Galena Signal +Oil Company, which manufactures railway lubricating and signal oils, +it is stated by the United States Commissioner of Corporations in his +Report (Part II. p. x.) that American Railway officials are compelled +to purchase the Galena products at higher prices than their competitors +ask, because of the influence of the Standard Oil interests as large +consignors, or their power in financial circles, exerted on the railway +boards. The Vacuum Oil Company, which also appears in this list, became +a Standard corporation as long ago as 1879, and it was the company +concerned in the sensational prosecution of several Standard Oil men +at Buffalo for the alleged conspiracy to blow up a rival refinery. Its +speciality is the compounding of lubricating oils. + +The list of companies next includes three crude oil-producing companies +and thirteen pipe line companies. Next comes the Union Tank Line +Company, of New Jersey, capital $3,500,000, which owns and operates +railway tank cars. Sixteen natural gas companies follow, and then six +American Marketing companies, of which the Waters-Pierce Oil Company, +of Missouri, has had, perhaps, the most remarkable modern history. Next +we come to the following foreign marketing companies, the first two of +which are duly recorded in the files at Somerset House:-- + + Capital. + Anglo-American Oil Company (London) £1,000,000 + Vacuum Oil Company, Ltd. (London) £55,000 + American Petroleum Company (Holland) Fl.7,850,000 + Amerikanische Petroleum Company (Germany) M.200,000 + Deutsche-Amerikanische Company (Germany) M.30,000,000 + Danish Petroleum Company Not stated + Konigsberger-Handels Company (Germany) M.2,300,000 + Mannheim-Bremen Company (Germany) M.3,000,000 + Korff Refinery Company (Bremen) M.1,500,000 + Stettin-Amerikanische Company (Germany) Not stated + Roumanian-American Petroleum Company Lei.12,500,000 + Société ci-devant H. Reith et Cie. (Belgium) Fr.1,650,000 + Italian American Petroleum Company Not stated + Vacuum Oil Company (Austria) Kr.10,000,000 + International Oil Company (Japan) Yen.12,000,000 + Imperial Oil Company (Canada) Not stated + Colonial Oil Company (Africa and Australasia) $250,000 + +But even this long list does not complete the companies in this +combination. It does not include many businesses which have been +bought by the Standard and are now run as parts of one or other of the +companies given. For example, the Devoe Manufacturing Company, which +manufactures all the tin cases in which oil and petrol are shipped, is +now absorbed in the Standard Oil Company of New York. Then there is +the Oswego Manufacturing Company, manufacturers of wood packing-cases +and barrels; the American Wick Manufacturing Company, which made lamp +wicks; and Thompson, Bedford & Co., who had a large European trade in +lubricating oils before their absorption. In addition, there should +be added a number of Vacuum Oil companies which have been established +abroad, in Copenhagen, Genoa, Paris, Hamburg, Moscow, Stockholm, +Bombay, Kobe, and Cape Town. + + + + + THE SECRET REBATE + + + “Mr. Rockefeller is the victim of a money-passion which blinds him to + every other consideration in life, which is stronger than his sense + of justice, his humanity, his affections, his joy in life, which is + the one tyrannous insatiable force of his being.” + + IDA M. TARBELL _in_ “_McClure’s Magazine_.” + + + + + CHAPTER II + + THE SECRET REBATE + + +How has this vast combination been built up? There are those who will +tell you that it has been accomplished because John D. Rockefeller +was thrifty; there are others who are persuaded by the Standard’s +Press Bureau to believe that it is due to the Standard’s economies in +production and improvements in transport. Neither of these agreeable +theories can explain the mystery, because most of these improvements +were invented and first adopted by others, and Mr. Rockefeller’s +savings would not have enabled him to get control of 80 per cent. of +the American oil refining business in ten years. The truth is that the +secret rebate trick is the foundation of this great monopoly, and this +it is now proposed to prove from official sources. + +The introduction of the secret railway rebate or discrimination may +or may not have been due to Mr. John D. Rockefeller’s inventive +genius--it is not absolutely proved to have been so--but the Report of +the United States Government Commissioner of Corporations (Mr. J. R. +Garfield) on the Transport of Petroleum, dated May 2, 1906, shows that +at any rate the Standard Oil Company made the practice so much its own +that it may fairly be regarded as its special system. On page 1 of the +report this is made perfectly clear:-- + + The general result of the investigation has been to disclose + the existence of numerous and flagrant discriminations by the + railroads in behalf of the Standard Oil Company and its affiliated + corporations. With comparatively few exceptions, mainly of other + large concerns in California, the Standard has been the sole + beneficiary of such discriminations. In almost every section of the + country that Company has been found to enjoy some unfair advantages + over its competitors, and some of these discriminations affect + enormous areas. + + Not only has this resulted in great direct pecuniary advantage in + transportation cost to the Standard, but it has had the far more + important effect of _giving that Company practically unassailable + monopolistic control of the oil market_ throughout large sections of + the country. + +Of course, it was just as iniquitous for an American railroad company, +with its Government charter, to discriminate in favour of a large +customer as it would be for an English one, or for a Government +Department, say the Post Office, to sell stamps to a favoured few +under their face value. The very secrecy with which the discrimination +was invariably surrounded both by the railroads that granted it and +the consignors who received it proves clearly that its illegality +and injustice were recognised on both sides. It was only gradually +that the matter of these secret rebates leaked out, about a couple of +years before Mr. Rockefeller consolidated all his refining interests +into the Standard Oil Company, of Cleveland, Ohio, where much of the +oil-refining business was then carried on. This was in June, 1870. The +capital of the new concern was $1,000,000, the parties interested in +it at that date being John D. Rockefeller, Henry M. Flagler, Samuel +Andrews, Stephen V. Harkness, and William Rockefeller. Before this time +Rockefeller’s striking success, which was at first attributed mainly +to his extraordinary capacity for bargaining and borrowing, had not +only attracted the attention of other Cleveland refiners, but raised +their suspicion. They argued that they bought crude oil pretty nearly +as cheaply as he, refined it as economically, and sold it at the same +price. Yet they could not make money at anything like the same rate. +There was only one explanation of it; he must be getting cheaper rates +of transport from the railroads. + +The matter was tested, and found to be so. Mr. Alexander, of the +well-known refining firm of Alexander, Scofield & Co., Cleveland, +stated on oath before the Committee of Commerce of the United States +House of Representatives in April, 1872, that in 1868 or 1869 he went +to the Erie Railroad management and said: “You are giving others better +rates than you are us. We cannot compete if you do that.” The railroad +agent, Mr. Alexander further testified, did not attempt to deny the +allegation, but simply agreed to give Mr. Alexander a rebate also. This +was 15 cents (7½d.) a barrel on the regular published rate of 40 +cents (1s. 8d.) on all oil brought to Cleveland from the wells. A crude +oil shipper, W. H. Doane, made a similar complaint, without mentioning +names; and the complaint was stopped by a 10 cents (5d.) reduction +per barrel. The method of granting these rebates was significant. The +full published rate was paid as usual by the shipper, then at the end +of each month, on forwarding vouchers for the amount of oil shipped, +he received in cash from the railroad company his 15 cents or 10 +cents rebate per barrel, as the case might be. This, I take it, was a +precaution to conceal the granting of the rebate by keeping documentary +evidence on hand that each shipper had duly paid the same fixed rate. + +Later on, in 1880, General J. H. Devereux, who had granted secret +rebates as vice-president of the Lake Shore Railroad in 1868, offered +a defence of his conduct by means of an affidavit which he made in the +case of the Standard Oil Company _v._ William C. Scofield et al. in +the Court of Common Pleas, Cuyahoga County, Ohio, November 13, 1880. +This affidavit states that “such rates and arrangements were made +by the Pennsylvania Railroad that it was publicly proclaimed in the +public print in Oil City, Titusville, and other places, that Cleveland +was to be wiped out as a refining centre as with a sponge;” that the +Cleveland refiners, some twenty-five in number, expressed their fears +to him that they would have to give up their business in Cleveland; +but that the Standard Oil Company made him a definite proposal to +guarantee the Lake Shore Railroad a consignment of sixty carloads a day +in return for a rebate of 10 cents on the 42 cents per barrel rate; +and that, as this proposal “offered to the railroad company a larger +measure of profit than would or could ensue from any business to be +carried under the old arrangements,” it was accepted by him. This was +a pretty open confession. One might be permitted to think that, as the +Lake Shore Railroad’s profit and immunity from competition was thus +secured, it would have been in a position to extend the reduced rate +to the other refiners also, and thus carry out its duty as a “common” +carrier. But it is obvious that it was the essence of its agreement +with the Standard Oil Company to give that firm an advantage over +its competitors. The cloven hoof is apparent in the excuse tacked on +at the end of the affidavit that “this arrangement was at all times +open to any and all parties who would secure or guarantee a like +amount of traffic.” It was certainly not open in the sense of being +published; it was only avowed by the affidavit in 1880, when the unjust +discrimination had worked long enough to set the Standard Oil Company +definitely ahead of all competition. + +It is one of the Standard Oil Company’s most usual contentions that it +has reduced the price of illuminating oil to the consumer. Any one who +takes the trouble to study the matter from the beginning will see that +the Company’s primary object, on which it concentrated all its early +efforts, has always been _to raise the price for the consumer_. By 1870 +the general competition among oilmen, together with the vast additional +supplies of oil discovered, had brought prices down enormously since +the time oil was first struck in 1859. Whereas Mr. Rockefeller had +received on an average 58¾ cents (2s. 5½d.) a gallon for the +oil he exported in 1865, the year he went into business, in 1870 he +received only 26⅜ cents (1s. 1¼d.). It was proved beyond doubt +by competent testimony during the Missouri suit of the United States +_v._ the Standard Oil Company of New Jersey that a wholesale price of +1 cent (½d.) a gallon allows an excellent margin of profit for an +oil refiner. But in 1870 everybody in the American oil trade simply +despised an “honest livelihood.” They were “out for the dollars,” to +use Mr. H. H. Rogers’s expressive indication of his own intentions +before the Industrial Commission in 1899. When Mr. J. J. Vandergrift, +one of the Standard Oil directors, was questioned under oath as to what +they meant to do, he replied, “Simply to hold up the price of oil--to +get all we can for it.” And Mr. Rogers declared to the Industrial +Commission in 1875 that “oil to yield a fair profit should be sold for +_25 cents_ per gallon!” + +Prices being “ruinously low” from the oilman’s point of view, Mr. +Rockefeller and his friends came forward with a scheme, in January, +1872, for the purpose of holding them up. They had originated the +idea among themselves of the industrial “trust,” and the date is +consequently a momentous one in the world’s commercial history. +This, the first of all industrial trusts, was originally floated by +taking over the charter of an existing company, the South Improvement +Company, a name which had no earthly connection with that company’s +object, but was an excellent one for Mr. Rockefeller’s purpose, as +his object had to be strictly concealed in order to be workable. This +object, as may be gathered from the text of the contract secretly +signed by the Company and the railroads on January 18, 1872, was to +destroy the business of all others than itself who engaged at any +time in the refining trade. The railroads were to carry the South +Improvement Company’s products for such lower rates than those of +other firms as would inevitably cause the latter to come a financial +cropper. The consideration held out to the railroads for this service +was an all-round rise in freight rates of about 100 per cent. and the +abolition of competition among themselves by fixing the proportion of +oil freight each road was to get, or to be paid for whether it got it +or not. The discrimination in favour of the South Improvement Company +was to be effected by a secret return to it of from 25 to 50 per cent. +of _all the money paid to the roads for oil freight either by itself or +by any firm or company in the trade_. How this iniquitous idea could +ever have been developed, much less acted upon, it is difficult to +imagine from a bald recital of the facts. But the railroads, I find +from evidence before the Hepburn Committee in 1879, either believed, +or affected to believe, that the South Improvement Company represented +practically the whole oil trade, _was_ the oil trade in fact; other +firms were, or were to be regarded as, merely unrecognised, unqualified +practitioners, who carried on their avocation at their own risk and +peril, and whom society could not take into account in making its +arrangements. + +Whatever the genesis of the idea, there could be no doubt as to its +efficacy in disposing of a trade rival when reduced to practice. +Suppose a competitor consigns as much freight as yourself, with a 50 +per cent. rebate to you and a 50 per cent. drawback paid to you as an +involuntary bounty by the competitor, you can regard a 100 per cent. +rise in freight rates with equanimity, for it leaves your expenditure +under this head exactly what it was before, to say nothing of the +bounty, while your competitor pays exactly twice as much as he used to +do. While in this position he can be reduced to a state of hopeless +impotence by price-cutting, which can be effected at relatively small +expense. On the supposition that the competitor’s consignments bulk +larger than yours, the bounty received from them becomes larger, till a +point is arrived at when your own shipments cost you nothing at all, +and you are in the enviable position not only of carrying on business +without working expenses, but of being paid handsomely by your rivals +for doing so. Something like this _reductio ad absurdum_ in trading +must have been actually approached in the case now under consideration, +for as a matter of fact the South Improvement Company did not control +one-tenth of the refining business of the United States when its +contract was signed by and with the railroads on January 18, 1872. +Mr. W. G. Warden, of Philadelphia, secretary of the South Improvement +Company, admitted to the Congressional Investigating Committee which +sat in March and April following that the aggregate refining business +of the United States amounted to from 45,000 to 50,000 barrels daily +capacity, while the stockholders of the South Improvement Company when +formed owned a combined capacity of not over 4,600 barrels--less than +one-tenth. This they increased, as we shall see, _in three months +time_, to a capacity of one-fifth. + +The stockholders in the South Improvement Company held shares as +follows:-- + + Wm. Frew, W. P. Logan, and J. P. Logan, of Philadelphia, 10 shares + each; Chas. Lockhart and Richard S. Waring, of Pittsburg, 10 + shares each; W. G. Warden, of Philadelphia, and O. F. Waring, of + Pittsburg, 475 shares each; Peter H. Watson, of Ashtabula, Ohio, + 100 shares; H. M. Flagler, O. H. Payne, John D. Rockefeller and Wm. + Rockefeller, of Cleveland, and J. A. Bostwick, of New York, 180 + shares each; total, 2,000 shares of $100 dollars each, of which the + Standard Oil interests held 900. The contract was signed on behalf + of the Company by P. H. Watson, president, and on behalf of the + railroads as follows: Pennsylvania, J. Edgar Thompson, president; New + York Central, Wm. H. Vanderbilt, vice-president; Erie, Jay Gould, + president; Atlantic and Great Western, General Geo. B. McClellan. + +How completely the railroads were got to play the game of Mr. +Rockefeller and his friends is made still more evident by two other +clauses of the contract. The first is Section 8 of Art. 2, by which the +railroads contracted to send each day to the South Improvement Company +manifests on waybills of all petroleum shipped over the roads, which +manifests + + shall state the name of the consignor, the place of shipment, the + kind and actual quantity of the article shipped, the name of the + consignee, and the place of destination, with the rate and gross + amount of freight and charges. + +This, of course, gave the South Improvement Company a full knowledge of +everybody else’s business--just what Mr. Rockefeller strove after from +beginning to end of his career--and also ensured the due payment of the +drawbacks by the roads. The other provision I refer to was contained +in Art. 4, whereby each railroad was bound to co-operate + + _as far as it legally might_ to maintain the business of the South + Improvement Company against loss or injury by competition, to the + end that it may keep up a remunerative and so a full and regular + business, and to that end shall lower or raise the gross rates of + transportation over its railroads and connections, as far as it + legally may, for such times and to such extent as may be necessary + to overcome such competition, the rebates and drawbacks to be varied + _pari passu_ with the gross rates. + +This makes it clear that Art. 3, providing that + + rebates hereintofore provided may be made to any other party who + shall furnish an equal amount of transportation and who shall possess + and use works, means, and facilities for carrying on and promoting + the petroleum trade equal to those possessed and used by the South + Improvement Company, + +is a mere blind. The South Improvement Company was to be maintained at +all costs and against all comers by whatever juggling with the rates +should become necessary for the purpose. + +It was admitted by members of the South Improvement Company, who +appeared before the Investigating Committee appointed by Congress in +March, 1872, that the discrimination would have turned over to the +Company fully $6,000,000 (£1,200,000) annually on the carrying trade, +while the railroads expected to make about $1,500,000 (£300,000) +more than on the previously existing rates. The Company would thus +make four times as good a bargain as the railroads. It is difficult +to see how shrewd business men like the railroad directors could be +led into a bargain in which they were so obviously bested. Another +point the railroad directors had to consider in the interest of their +shareholders was this. The avowed object of the South Improvement +Company was to restrict the output of refined oil in order to raise its +price. The interest of the railroads was obviously that the prices of +oil should be kept low, so that the refiners would be compelled to ship +the largest possible quantity. The interests of the shippers and of the +railroads which received the shipments were thus diametrically opposed. +The former wanted smaller consignments at higher prices, and the +latter larger consignments at no matter what price. How the railroad +officials could be induced to sign a contract binding them to help in +the diminution of their own freights it is difficult to see. + +Mr. Frank Rockefeller, brother of John D. Rockefeller, testified before +a Congressional Committee on July 7, 1876, that it was his impression +at the time that the rebates went into a pool and were divided up +between the Standard Oil Company and the railroad officials. He +mentioned four of the latter by name, and two of them instantly sent +a denial to the Press. Mr. Frank Rockefeller’s evidence--omitting +the portion in which he mentions names--is reproduced in the late +Mr. George Rice’s well-known pamphlet on the Standard Oil Railway +Discriminations (p. 25), as follows:-- + + By the Chairman: + + _Q._ What do you mean by the pool--a pool amongst the railroads or + amongst the oil men? + + _A._ I don’t give this as a positive fact, but as I understand + the arrangement, the New York Central, the Erie, the Atlantic and + Great Western, the Pennsylvania Railroad, the Cleveland, Columbus + and Cincinnati, and the Baltimore and Ohio roads have a pool--are + combined for the purpose of shipping oil, and oil only--and in this + pool the Baltimore and Ohio gets a certain number of barrels to go + over its road, the Lake Shore so many to go over its road, and the + Pennsylvania Company so many to go over its road, from different + points in the country, and on the oil that is shipped over these + roads by the pool and the Standard Oil Company there is a rebate or a + drawback from the shipment of so much, which is put into this pool, + over whichever road the oil may go, and that rebate is divided up + between the Standard Oil Company and the railroad officials. + + _Q._ The railroad officials, do you say? + + _A._ So I understand it. I don’t say that of my own knowledge. + + _Q._ Then it does not go to the railroads themselves? + + _A._ No, sir. + + _Q._ But to the railroad officials? + + _A._ To the railroad officials. + +There the matter was left by the Committee of Congress, and there it +must be left perforce. If the allegation is true, it would explain how +the railroad directors could be induced to sign such a bad bargain +for the railroads, and if false, it can presumably be refuted by an +exhibition of the railroad accounts. + + + + + THE RAILROADS AND THE PIPE LINES + + + “A dollar in those days (1871) looked as large as a cart wheel.” + + JOHN D. ROCKEFELLER _in_ “_Random Reminiscences_.” + + + + + CHAPTER III + + THE 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 +round 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 could 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 +twenty out of these 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 Oil group absorbed twenty +other refineries and increased its capacity from 1,500 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 held and +Congress was petitioned. The Pennsylvania Legislature repealed the +charter of the South Improvement Company, and on March 25th the peccant +railroads signed a contract with the Petroleum Producers’ Union, of +which the 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 all shippers, producers, + and refiners, and that no rebates, drawbacks, or other arrangements + 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 4th General McClellan (Atlantic and Great Western), Horace +F. 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 8th John D. Rockefeller +telegraphed to the Petroleum Producers’ Union: “In answer to your +telegram, this Company holds no contract with the railroad companies +or any of them or with the South Improvement Company.” Yet we now know +from a contract thoughtlessly exhibited by H. M. Flagler seven years +later to a Commission of the Ohio State Legislature--a contract between +his Company and the railroads--that a rate had been fixed “From April +1st until the middle of November, 1872, about seven months, $1.25.” 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 25th, was $1.50. A rebate of 16⅔ per cent.! Mr. +Rockefeller had it all the time, in spite of his own assertions and +those of the railroad officials to the contrary. + +Mr. Rockefeller has committed very few indiscretions in his lifetime, +but he did achieve one at this 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 _now_ will be done by the Standard Oil Company.... We mean to +show the world that the South Improvement Company was organised for +business, and means business, in spite of opposition.” 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 uttered threat has +been stealthily fulfilled to the letter. The South Improvement Company +was 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 Oil Company +$20,000 (£4,000) “for accepting concessions from the published rate +of the Pennsylvania, New York Central, and Rutland Railroads in +violation of Inter-State Commercial Law.” But the fine, of course, is +an ineffective flea-bite, and is only worth quoting to show that the +iniquitous 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. + +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 +termini, 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 own 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 entering 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 seaboard. I have before +me 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 was identical with the Standard Oil Trust, which +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 Court 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, this spring or +early summer. In the meantime, the finding of the Missouri Circuit +Court, before which 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.” Cross-examination +could extract very little from him. He could not even say when the +Standard Oil interests got possession 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 the 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 Section 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 York.” There is +something like humour in the phrase “as low as any other oil yard.” +Every “other oil yard” was similarly controlled by the Standard. One +of its directors, Mr. Jabez A. Bostwick, stated on oath before the +Hepburn Committee on October 16, 1879, 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 that 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. + +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 case, “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, and it will be +shown that the Standard had rebates from all of them.” 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 ruin 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 railroads, 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 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. Ohlen, a New York shipper of +petroleum, appeared before an investigation ordered by the Secretary of +Internal Affairs of the 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 +stored, 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 me the cars,” Mr. Nicholson objected. “That +makes no difference,” O’Day replied; “I cannot load cars except upon +an order from Pratt.” Nor would he 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 cars 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 this country by the well-known “Pratt’s +motor spirit.” + +High-handed proceedings of this sort by the Pennsylvania 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 heard of a scarcity of cars until the early part of June, + 1878. I came to Parker (a town in Pennsylvania) about five 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. Shinn + (Vice-President 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 + intelligence to accept it, as the preceding fall (_anglice_, 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 the vehicle + of communicating to the Pennsylvania Railroad officials my views on + the subject, telling him that I was convinced that, unless immediate + relief was furnished and cars afforded, there would be an outbreak + in the Oil Regions.... On the next Monday I returned to Parker. + After passing Redbank, where the low-grade road, the connecting-link + between the 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 hour in passing through _hundreds of empty + oil cars_!” + +In August, 1872, Mr. Rockefeller, as the result of much plotting and +planning, succeeded in persuading about 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 had just exposed the South +Improvement Company. This refiners’ association was to operate on what +was known as the “Pittsburg Plan”--so called from the place where the +scheme was first organised--according to which all the refineries were +subject to a central board. They were to refine only such an amount as +the board allowed, not to undersell prices fixed by the board, and to +leave their buying of crude oil and the arrangements for transportation +entirely in the hands of the board. In the aggregate they 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 effort 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 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 $4.75 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, half +tempted, half constrained by cash necessities, the producers were +ill-advised enough to trust their enemy and sign what was known as “The +Treaty of Titusville” on the lines proposed. They at once received +an order from Mr. Rockefeller for 200,000 barrels of crude at $3.25, +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. The 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 more of the contract oil_! + +When taken to task Mr. Rockefeller urged in his defence 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 internal organisation to limit the supply of crude, +but no such stipulation appeared in the contract signed by it with +the Refiners’ 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’ Association also found itself unable to keep up +the internal discipline it had imposed upon itself. It dissolved in +June, 1873, and Mr. Rockefeller was left sole master of the situation. +He had outgeneralled everybody. + +In 1874 the Erie, Central, and Pennsylvania 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 lines by refusing them the advantages given to the United Pipe +Lines. Both railway freights and pipage rates were to be raised +simultaneously, and on such a schedule that henceforth the cost of +transport would be equal to all refiners, on crude and refined, from +all points! This combination was announced curtly by a private circular +sent out by James H. Rutter, freight agent of the New York Central, +containing the paragraph: + + You will observe that under this system the rate is even and fair + to all parties, preventing one locality taking advantage of its + neighbour by reason of 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 of the refining and shipping interest were, of course, Mr. +Rockefeller and his friends, assumed for the nonce, as in the case of +the South Improvement Company, to be “the trade.” + +This astounding circular, commonly referred to in 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 +that 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 quasi-publicity 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 discriminatory 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 was radical + discrimination 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 system of rates whereby + with scarcely an exception the 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 + influential in financial circles in the United States. 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 common sense +of any one who takes the trouble to go through the schedules of rate +charges made by the railroads recently brought to light. The Standard +Oil Company’s main refinery is at Whiting, in Indiana, a trifle to the +south-east of Chicago. To take a few instances, the rate from Whiting +to Chattanooga, a distance of 849 miles, by the route actually used on +the road, was fixed by the railroad at 25.9 cents per hundred gallons, +while the rate from Pittsburg--an independent refining centre--to +Chattanooga, a distance of only 651 miles, was as much as 47 cents +per hundred. In other words, the Standard Oil Company paid 21 cents a +hundred less for shipping 200 miles further. This difference amounts to +over 1¼ cents per gallon, which is in itself a large profit on oil. +The discrimination against Cleveland and Toledo--two other independent +shipping centres--on shipments to Chattanooga was equally great. Again, +take the destination of Birmingham, in the State of Alabama. The open +rate from Pittsburg, a distance of 794 miles, was 51.5 cents; from +Whiting, a distance of 820 miles, it was 29.5 cents, a difference of 22 +cents. Similarly there was an equal discrimination against Cleveland +and Toledo on shipments to Birmingham. And so on to the end of the +chapter of conspiracy all over the States. + + + + + THE BIRTH OF THE TRUST + + + “The American Beauty rose can be produced in its splendour and + fragrance only by sacrificing the early buds which grow up around it.” + + J. D. ROCKEFELLER, Jun., + _to the students of Brown University_. + + + + + CHAPTER IV + + THE BIRTH OF THE TRUST + + +The arrangements which have now been described were the foundation +on which the Standard Oil Trust was built. Some time in the summer +of 1874, when he had become sure that the so-called “equalisation” +scheme would be worked in his favour by the railroads and leading +pipe lines simultaneously, Mr. Rockefeller conferred at Saratoga +with two of his old friends of the South Improvement Company--W. G. +Warden, of Philadelphia, and Charles Lockhart, of Pittsburg--both big +refiners, and agreed with them to form an oil refiners’ Trust, which +was to work with absolute secrecy, and gradually acquire control of +all the refineries in America. The instrument by which this large +order was to be put through was, of course, the secret rebate and +the new “equalisation,” or, less euphemistically, discrimination. +Secrecy was to be maintained by each firm as it came in carrying on +business ostensibly as before under its old style and title, staff, +and management, but its actual business was to be directed solely by +the central board of the Trust, presided over by Mr. Rockefeller, +which would control all operations of buying, transport, and selling. +The refineries had to become the absolute property, however, of the +Standard Oil Company, their late proprietors taking stock of that +Company in exchange. We know this from an account of the Saratoga +meeting given at a later period by Charles Lockhart, of Pittsburg, to +Miss Ida M. Tarbell. + +In March, 1875, something leaked out as to the constitution of the +Trust, which was then spoken of as the Central Association. It +gradually roped in most of the refining firms in America, the process +being effected by one sensational collapse after another under the +influence of the discrimination and the rebate. An exception was the +huge refinery of Charles Pratt and Co., of New York, of which the +famous H. H. Rogers was one of the most considerable assets. This firm +sold itself more or less voluntarily to the Standard Oil for stock at +265. The absorption of the “Creek” refineries, _i.e._, those in the +Oil Regions, was conducted by the scarcely less famous J. D. Archbold, +who appeared in Titusville as the representative of a Standard Oil +offshoot, since known to fame as the Acme Oil Company. Between 1875 +and 1879 Mr. Archbold won his spurs in the Standard by buying out, +dismantling, or shutting down nearly every refinery on the “Creek.” The +history of this collapse makes pitiful reading, and I need not enter +into it beyond giving a specimen or two extracted from contemporary +records. + +In 1888 Mr. A. H. Tack, a partner of the Citizens’ Oil Refining Company +of Pittsburg, after explaining on oath before the House Committee on +Manufactures how his splendidly organised business gradually became +non-paying under the Standard Oil influence, added:-- + + In 1874 I went to see Rockefeller if we could make arrangements with + him by which we could run a portion of our works. It was a very brief + interview. He said there was no hope for us all. He remarked this--I + cannot give the exact quotation--“There is no hope for us,” and + probably he said, “There is no hope for any of us”; but he says, “The + weakest must go first.” And we went! + +The case of Scofield, Shurmer and Teagle, a Cleveland refinery, is +evidence of the demoralisation of the times. At first the firm showed +fight, and in 1876 brought a suit against the Lake Shore and Michigan +Southern and the New York Central and Hudson River railroads for +“unlawful and unjust discrimination, partialities, and preferences made +and practised ... in favour of the Standard Oil Company, enabling the +said Standard Oil Company to obtain, to a great extent, the monopoly +of the oil and naphtha trade of Cleveland.” But Mr. Rockefeller +persuaded them to drop their suit and obtain bigger profits than +they were making by becoming his fellow-conspirators. They signed a +contract, consequently, with him for ten years, the firm putting in a +plant worth $73,000 and its entire time, and Mr. Rockefeller putting +in $10,000--and his railway discriminations! The firm was guaranteed +$35,000 a year net profit--about 50 per cent. on capital; profits over +$35,000 went to Mr. Rockefeller up to $70,000--about 100 per cent.; any +further profits were to be divided. + +The enormous dimensions of the profits contemplated in this case--and +no doubt afterwards reaped--would presumably have excited suspicion +very quickly among Scofield, Shurmer and Teagle’s acquaintances who +had seen them in their struggling days had not Mr. Rockefeller been an +adept in joining secrecy to fraud as the basis of his operations. To +quote Miss Tarbell (i. p. 66):-- + + According to the testimony of one of the firm given a few years later + on the witness-stand in Cleveland the contract was signed at night + at Mr. Rockefeller’s house on Euclid Avenue in Cleveland, where he + told the gentlemen that they must not even tell their wives about the + new arrangement, that if they made money they must conceal it--they + were not to drive fast horses, “put on style,” or do anything to + let people suspect there were unusual profits in oil refining. That + would invite competition. They were told that all accounts were to be + kept secret. Fictitious names were to be used in corresponding, and + a special box at the post-office was employed for these fictitious + characters. In fact, smugglers and housebreakers never surrounded + their operations with more mystery. + +“Smuggling,” “housebreaking,” “burglary” are all terms that have been +used to designate Mr. Rockefeller’s methods, though much has been made +of his mild demeanour and gentle persuasiveness in dealing with his +rivals. To my mind his persuasiveness is on a par with that of the bold +highwayman sung of in the “Pickwick Papers”:-- + + But Dick put a couple of balls in his nob + And perwailed on him to stop. + +The Standard Oil Trust has been repeatedly and publicly charged in +America with using in the pursuits of its ends or the defence of its +interests such weapons as perjury, bribery, open violence, and arson. +They concern, of course, individual members of the combination rather +than the whole combination, and we begin with that part of the case +which concerns Mr. J. D. Rockefeller personally. + +In 1888 the mystery surrounding the ramifications of the Standard ring +caused the Senate of New York State to order an “Investigation Relative +to Trusts,” and before the Commission entrusted with this investigation +Mr. Rockefeller appeared and was questioned as to the _initium +malorum_--the South Improvement Company. I quote from the official +report of this investigation:-- + + _Q._ There was such a company? + + _A._ I have heard of such a company. + + _Q._ Were you not in it? + + _A._ I was not. + +As pointed out in my former articles, Mr. J. D. Rockefeller was a +director with 180 shares in the concern, and the fact is now absolutely +beyond dispute. The statement above was made on February 28th, and on +April 30th following Mr. Rockefeller appeared before a Committee of the +House of Representatives at Washington, and the following colloquy took +place:-- + + _Q._ I want the names particularly of gentlemen who either now or + in the past have been interested with you gentlemen who were in the + South Improvement Company? + + _A._ I think they were O. T. Waring, W. P. Logan, John Logan, W. + G. Warden, O. H. Payne, H. M. Flagler, William Rockefeller, J. A. + Bostwick, and--_myself_. + +A direct contradiction of his own words within the space of two months! +Again, questioned as to railway rates by the New York Senate Committee, +Mr. Rockefeller was asked if there had been any arrangements by which +the Trust or the companies controlled by it got transportation at any +cheaper rates than were allowed to the general public, and his answer +was:-- + + No, we have had no better rates than our neighbours. But, if I may + be allowed, we have found repeated instances where other parties had + secured lower rates than we had. + +The Committee, however, was not satisfied, and returned to the charge +later on in the day, and Mr. Rockefeller, after much wriggling and +evasion, practically admitted the contrary:-- + + _Q._ Has not some company or companies embraced within this Trust + enjoyed from railroads more favourable freight rates than those rates + accorded to refineries not in the Trust? + + _A._ I do not recall anything of that kind. + + _Q._ You have heard of such things? + + _A._ I have heard much in the papers about it. + + _Q._ Was there not such an allegation as that in the litigation + or controversy recently disposed of by the Interstate Commerce + Commission, Mr. Rice’s suit; was not there a charge in Mr. Rice’s + petition that companies embraced within your Trust enjoyed from + railroad companies more favourable freight rates? + + _A._ I think Mr. Rice made such a claim. Yes, sir. + + _Q._ Did not the Commission find the claim true? + + _A._ I think the return of the Commission is a matter of record. I + could not give it. + + _Q._ You don’t know it; you haven’t seen that they did so find? + + _A._ It is a matter of record. + + _Q._ Haven’t you read that the Interstate Commerce Commission did + find that charge to be true? + + _A._ No, sir; I don’t think I could say that. I read that they made a + decision, but I am really unable to say what that decision was. + + _Q._ You did not feel interested enough in the litigation to see what + the decision was? + + _A._ I felt an interest in the litigation. I don’t mean to say I did + not feel an interest in it. + + _Q._ Do you mean to say that you don’t know what the decision was? + + _A._ I don’t say that. I know that the Interstate Commerce Commission + had made a decision. The decision is quite a comprehensive one, but + it is questionable whether it could be said that that decision in all + its features results as I understand you to claim. + + _Q._ You don’t so understand it? Will you say, as a matter of fact, + that it is not so? + + _A._ I stated in my testimony this morning that I had known of + instances where companies altogether outside of the Trust had enjoyed + more favourable freights than companies in this Trust, and I am not + able to state that there may not have been arrangements for freight + on the part of companies within this Trust as favourable as, or more + favourable than, other freight arrangements; but, in reply to that, + nothing peculiar in respect to the companies in this association. I + suppose they make the best freight arrangements they can. + +A commission, known, from the name of its chairman, as the Hepburn +Commission, was appointed by Congress in 1879 to investigate the New +York railroads, and a number of Standard Oil officials, notably Messrs. +H. H. Rogers, J. D. Archbold, Jabez A. Bostwick, and W. T. Sheide, +were summoned before it. Though not so sweeping in their denials as +Mr. Rockefeller, all of them avoided the truth. Their testimony, in +fact, was so evasive that the Hepburn Commission, in making its report, +characterised the Company as “a mysterious organisation whose business +and transactions are of such a character that its members decline +giving a history or description of it lest this testimony be used to +convict them of a crime.” The reason that the witnesses themselves +gave for their evasion was--as might be expected--a different one from +that assigned by the Commission. They stated that the investigations +were an interference with their rights as private citizens, and that +the Government had no business to inquire into their methods. This +is a very interesting plea, for it throws a light on the general +spirit of insubordination to all law and order consistently evinced by +the Standard Oil Trust throughout its whole career whenever law and +order were found to be in opposition to its progress. This constant +opposition to the public authority, whether manifested by open contempt +of Court when under examination, or by secret bribery to avert or +compass legislation, or by secret acts known to be contrary to law, has +been such as to merit for the Standard Oil conspirators the appellation +of the anarchists of commercial life. Opposition to the law, denial of +the law, refusal to be subject to the law, and attempted corruption of +the officers of the law, indelibly marks their business policy. + +Direct lying, however, was employed on occasion when Standard witnesses +were under the necessity of answering questions categorically. Henry +M. Flagler, for instance, swore in 1880 in the Court of Common Pleas +(Standard Oil Company _v._ W. C. Scofield _et al._) that the Standard +Oil Company neither owned, operated, nor controlled refineries +elsewhere than at Cleveland, Ohio, and Bayonne, N.J., whereas before +the Investigation Relative to Trusts, New York Senate, 1888, he +testified that in 1874 the Standard Oil Company _purchased_ the +refineries of Lockhart, Frew & Co., of Pittsburg; Warden, Frew & Co., +of Philadelphia; and Chas. Pratt & Co., of New York. Mr. Rockefeller +also swore falsely in the Scofield case in 1880, in the same sense +as Mr. Henry M. Flagler. The purchase and consequent control of +the Pittsburg, Philadelphia, and New York refineries mentioned was +absolutely secret at the time, and seemingly not likely to be found out. + + + + + BRIBERY: THE ARCHBOLD LETTERS + + + “Solid as a prison, towering as a steeple, its cold and forbidding + façade seems to rebuke the heedless levity of the passing crowd, + and frown on the frivolity of the stray sunbeams which in the late + afternoon play around its impassive cornices. The building is No. 26, + Broadway, New York City, home of the Standard Oil.” + + T. W. LAWSON _in_ “_Frenzied Finance_.” + + + + + CHAPTER V + + BRIBERY: THE ARCHBOLD LETTERS + + +The Standard Oil people have undoubtedly practised bribery throughout +a long series of years and on the most comprehensive scale, and that +not merely to avert a temporary danger or get themselves out of an +unexpected scrape, but as a matter of ordinary business routine. +They bribed high and low, in season and out of season. How real the +evil is was revealed in a dramatic manner in the famous Standard +Oil letters which Mr. Randolph Hearst read during the American +Presidential campaign of 1908. The genuineness of these letters was +never questioned, although the persons implicated made some feeble +attempts to put a less invidious explanation upon them. It was stated +that one of the Standard Oil Company’s letter-books had been stolen, +and the _Times_ editorially remarked that there had been “nothing +approaching the disclosures in sensational rapidity of action in the +history of the American Presidential elections.” The principal figure +in these epistles of corruption is Mr. J. D. Archbold. The first letter +was addressed to Mr. J. B. Foraker, Senator for Ohio, and one of the +leading members of the Republican party. It was as follows:-- + + 26, BROADWAY, NEW YORK, + _March 9, 1900_. + + MY DEAR SENATOR,--I have your favour of last night with inclosure, + which latter, with letter from Mr. Elliott commenting on same, I + beg to send you herewith. Perhaps it would be better to make a + demonstration against the whole Bill, but certainly the ninth clause, + to which Mr. Elliott refers, should be stricken out, and the same is + true of House Bill No. 500, also introduced by Mr. Price, in relation + to foreign corporations, in which the same objectionable clause + occurs. Am glad to hear that you think that the situation is fairly + well in hand. + + Very truly yours, + JNO. D. ARCHBOLD. + + Hon. J. B. Foraker, Washington, D.C. + + [The Mr. Elliott referred to was M. F. Elliott, general counsel for + the Standard Oil Company.] + +Here are some more letters of this series:-- + + 26, BROADWAY, NEW YORK, + _March 26, 1900_. + + Hon. J. B. Foraker, 1500, Sixteenth Street, Washington, D.C. + + DEAR SENATOR,--In accordance with our understanding, now beg to + enclose you certificate of deposit to your favour for $15,000. Kindly + acknowledge receipt and oblige. + + Yours very truly, + JNO. D. ARCHBOLD. + + + 26, BROADWAY, NEW YORK, + _April 17, 1900_. + + MY DEAR SENATOR,--I enclose you certificate of deposit to your favour + of $14,500. We are really at a loss in the matter, but I send this, + and will be glad to have a very frank talk with you when opportunity + offers, if you so desire. I need scarcely again express our great + gratification over the favourable outcome of affairs. + + Very truly yours, + JNO. D. ARCHBOLD. + + Hon. J. B. Foraker, 1500, Sixteenth Street, Washington, D.C. + + + _January 27, 1902._ + + MY DEAR SENATOR,--Responding to your favour of the 25th, it gives me + pleasure to hand you herewith certificate of deposit for $50,000 in + accordance with our understanding. Your letter states the conditions + correctly, and I trust the transaction will be successfully + consummated. + + Very truly yours, + JOHN D. ARCHBOLD. + + Hon. J. B. Foraker, Washington, D.C. + + + 26, BROADWAY, + _February 25, 1902_. + + MY DEAR SENATOR,--I venture to write you a word regarding the Bill + introduced by Senator Jones, of Arkansas, known as “S. 649,” intended + to amend the Act to protect trade and commerce against unlawful + restraints and monopolies, introduced by him December 4th. It really + seems as though this Bill was very unnecessarily severe and even + vicious. + + Is it not much better to test the application of the Sherman Act + before resorting to a measure of this kind? I hope you will feel so + about it, and I will be greatly pleased to have a word from you on + the subject. The Bill, I believe, is still in committee. + + With kind regards, I am, very truly yours, + JOHN D. ARCHBOLD. + + Hon. J. B. Foraker, Washington, D.C. + +Senator Foraker, when these letters were published, explained that +the 50,000 dollars was sent to him in order to carry out the purchase +of an Ohio newspaper, and that when the deal fell through he returned +the money. The American public received this explanation coldly, and +the Republican party managers forced Mr. Foraker to retire from the +campaign in order to try and get rid of so embarrassing an association. +It will be noted that while these large sums were being sent to the +Senator he was being asked to oppose anti-trust legislation in the +interests of the Standard. + +But even the Bench itself was not secure from the influence of Mr. +Archbold. “Th’ Supreem Court is full of Standard Ile,” says Mr. Dooley, +the American humorist, and two other letters addressed by Mr. Archbold +to Senator Foraker show how that consummation has been reached:-- + + 26, BROADWAY, + _December 18, 1902_. + + MY DEAR SENATOR,--You, of course, know of Judge Burket’s candidacy + for re-election to the Supreme Court Bench of Ohio. We understand + that his re-election to the position would be in the line of usage + as followed in such cases in Ohio, and we feel very strongly that + his eminent qualifications and great integrity entitle him to this + further recognition. + + We most earnestly hope that you agree with this view, and will favour + and aid his re-election. Mr. Rogers joins me most heartily in this + expression to you. + + With kind regards, I am, very sincerely yours, + JOHN D. ARCHBOLD. + + + 26, BROADWAY, + _March 20, 1903_. + + MY DEAR SENATOR,--We are surprised beyond measure to learn that + Smith W. Bennett, brother-in-law of F. S. Monnett, recently + Attorney-General of Ohio, is in the race for the Attorney-Generalship + of Ohio on the Republican ticket. + + Bennett was associated with Monnett in the case against us in Ohio, + and I would like to tell you something of our experiences and + impressions of the man gained in that case. If you know him at all, I + am sure you will agree that his candidacy ought not to be seriously + considered from any point of view. + + I would esteem it a favour to have a line from you on the subject. + + JNO. D. ARCHBOLD. + +Mr. F. S. Monnett, whose brother-in-law is attacked here, was one +of the public officials whom the Standard Oil Trust failed to +bribe--a most inconvenient record in Mr. Archbold’s eyes. He was +Attorney-General for the State of Ohio, and his activity in enforcing +the anti-Trust law of that State against the Standard earned him this +denunciation. Mr. Monnett described his personal experiences in the +matter to a representative of the Press in July, 1899, when on a visit +to London:-- + + It happened in this way: Mr. Chas. B. Squires is a well-known + business man in Cleveland, president of the Manhattan Insurance + Company, and in no way connected with the Standard. Owing to my + fighting the Insurance Trust in Ohio I saw a good deal of him. One + day a man called on Squires, saying that he represented Frank + Rockefeller (brother of J. D.) and Charles V. Haskell, both Standard + Oil men. This man asked Squires whether the Attorney-General could + be “reached.” Squires replied (according to his story to me) that if + anybody could “reach” him he could. This representative mentioned + the Trust names, and showed Squires a telegram stating that he had + authority to “reach” the Attorney-General, and that there would be + a liberal reward for him if things were dickered. The man offered + Squires $100,000. Squires said that would amount to nothing at all; + that he would not attempt such a job for less than $500,000. Finally + he was authorised to offer $400,000 (£80,000) to the Attorney-General + if he would let the case stand adjourned over his term of office + [this was the prosecution of the Standard by the State of Ohio as an + illegal Trust], and $100,000 was for Squires and the go-between. I + was at Washington, and got a telegram from Squires, “Do nothing till + I see you.” When I did see him he made this proposition.... This is + not the first case of the kind during this litigation, for one of my + predecessors, Mr. Watson, was offered $100,000 in much the same way. + It is, moreover, quite in accordance with the general policy of the + Trust. + +In fact, in that year--1899--the Annual Report of Mr. Monnett to the +Governor of the State of Ohio contains detailed charges of _six_ +deliberate attempts to bribe Mr. David K. Watson, his predecessor in +office, to withdraw suits entered against the Standard Oil Company of +Ohio. Mr. Watson, however, was not to be bribed; neither was he to +be intimidated, though Senator Marcus A. Hanna, the personal friend +and financier of President McKinley, and one of the most influential +Republican politicians in America, wrote to him stating that he had +always considered him “in the line of political promotion,” and then +went on to intimate that unless the suit against the Standard was +withdrawn Watson would be the object of vengeance by the Corporation +and its friends for ever after. As if to clinch his threat and +argument, Hanna wrote, “_You have been in politics long enough to know +that no man in public office owes the public anything._” This last +phrase remained a potent weapon in the hands of Mr. Hanna’s enemies +till the day of his death. + +But the Hearst letters show that Judge Burket was not the only judicial +candidate Mr. Archbold favoured. The following letters were written by +him to the Hon. W. A. Stone, Governor of Pennsylvania:-- + + 26, BROADWAY, + _December 5, 1902_. + + MY DEAR GOVERNOR,--I am sure you will pardon any seeming presumption + on my part in writing you on a subject in which, both personally and + on behalf of my Company, I am greatly interested. It is to urge the + appointment, if at all consistent, of Judge Morrison, of McKeen, to + the Supreme Court Bench, vice Mitchell, deceased. Judge Morrison’s + character for ability and integrity needs no word at my hands, but + aside from these great considerations his familiarity with all that + pertains to the great industries of oil and gas in the important + relation they bear to the interests of the Western part of the State + make him especially desirable as a member of the Court from that + section. + + Hoping that it may prove possible for you to favourably consider + Judge Morrison’s appointment. + + I am, with very high regard, sincerely yours, + JNO. D. ARCHBOLD. + + Hon. Wm. A. Stone, Harrisburg, Pa. + + + 26, BROADWAY, + _September 5, 1900_. + + Hon. Wm. A. Stone, Harrisburg, Pa. + + MY DEAR GOVERNOR,--Will you permit me to say that if it seems + consistent for you to appoint Judge John Henderson, of Meadville, + Pa., to the vacancy on the Supreme Bench caused by the death of Judge + Green, it will be a matter of intense personal satisfaction to me. + I am sure I need not occupy your time with any argument as to Judge + Henderson’s fitness, either as to character or legal qualification. + + With high regard, I am, very truly yours, + JNO. D. ARCHBOLD. + +Both Judge Morrison and Judge Henderson were appointed to the Supreme +Court of Pennsylvania, and the former’s familiarity with “oil and gas” +no doubt proved acceptable to Mr. Archbold. We shall see hereafter that +Mr. Archbold himself and other Standard Oil magnates had good reason to +appreciate in the famous Buffalo refinery prosecution the advantage of +having on the Bench a judge who was familiar with “oil and gas.” + +These strange letters did not disdain other rising members of the Bar. +Here is a telegram and three letters addressed to the Hon. J. P. Elkin, +Attorney-General of Pennsylvania--the officer whose duty it is to act +as public prosecutor in his State in enforcing anti-Trust legislation. +Mr. Elkin’s merits have since raised him also to the Bench of the +Supreme Court of Pennsylvania:-- + + Telegram. + + _March 15, 1900._ + + Hon. John P. Elkin, Indiana, Pa. + + Telegram received. Will do as requested. + + JNO. D. ARCHBOLD. + + + 26, BROADWAY, + _March 15, 1900_. + + Hon. John P. Elkin, Indiana, Pa. + + Personal. + + MY DEAR GENERAL,--In accordance with your telegraphic request of + to-day, I beg to enclose you certificate of deposit to your favour + for $5,000, in fulfilment of our understandings. + + Very truly yours, + JNO. D. ARCHBOLD. + + + 26, BROADWAY, + _February 5, 1900_. + + MY DEAR GENERAL,--In accordance with the request in your telegram + of to-day, I now beg to enclose you certificate of deposit to your + favour for $10,000, kind acknowledgment of which will oblige. + + Yours very truly, + JNO. D. ARCHBOLD. + + To Hon. John P. Elkin, Indiana, Pa. + + + 26, BROADWAY, + _May 9, 1901_. + + MY DEAR GENERAL,--I enclose copy of a measure pending--I am not sure + whether in the House or Senate--being an Act to amend an existing + Statute, as stated. For reasons which seem to us potent, we would + greatly like to have this proposed amendment killed. Won’t you kindly + tell me about it and advise me what you think the chances are? + + Very truly yours, + JNO. D. ARCHBOLD. + + To the Hon. John P. Elkin, Attorney-General, + Harrisburg, Pa. + +This is the sort of campaign the Standard Oil Trust has been carrying +on in American Legislatures. How would the British people like it to be +extended to the House of Commons? + +Of course, in such a campaign of corruption the Press is not +overlooked. Here are three interesting letters which show how public +opinion may be manufactured by that process:-- + + 26, BROADWAY, + _October 10, 1902_. + + Mr. H. H. Edmonds, Baltimore, Md. + + DEAR SIR,--Responding to your favour of the 9th, it gives me pleasure + to enclose you herewith certificate of deposit to your favour for + $3,000, covering a year’s subscription to the _Manufacturers’ + Record_.--Truly yours, + + JNO. D. ARCHBOLD. + + + 26, BROADWAY, + _January 17, 1899_. + + Hon. W. A. Magee, _Pittsburg Times_, Pittsburg, Pa. + + DEAR SIR,--As per understanding, herewith enclosed find certificate + of deposit to your order for $1,250, the receipt of which kindly + acknowledge.--Truly yours, + + JNO. D. ARCHBOLD. + + + 26, BROADWAY, + _December 18, 1901_. + + Mr. Thomas P. Grasty, care of Buck & Pratt, Room 1,203, 27, William + Street, City. + + DEAR MR. GRASTY,--I have your favour of yesterday, and beg to return + you herewith the telegram from Mr. Edmonds to you. We are willing to + continue the subscription of $5,000 to the _Southern Farm Magazine_ + for another year, payments to be made the same as they have been this + year. We do not doubt but that the influence of your publications + throughout the South is of the most helpful character. + + With good wishes, I am, very truly yours, + + JNO. D. ARCHBOLD. + +These sums are called “subscriptions,” but their real character appears +from the case of the _Southern Farm Magazine_, the price of which is +50 cents a year. Mr. Archbold was therefore “subscribing” for 10,000 +years! We have only to remember that the anti-Trust feeling is very +strong in Texas and the other Southern States to realise why the +Standard Oil Trust was extending its patronage to the remote posterity +of Mr. Thomas P. Grasty, that publicist of such a “helpful” character. + + + + + ARSON AND ESPIONAGE + + + “The Oil Trust is evangelical at one end and explosive at the other.” + + HENRY D. LLOYD _in_ “_Wealth against Commonwealth_.” + + + + + CHAPTER VI + + ARSON AND ESPIONAGE + + +It will be necessary to return to the subject of bribery when we +come to the marketing business of the Trust. We will now pass to a +few examples of the resort to open violence for the attainment of +the Trust’s ends. The Tidewater Pipe Line was started by Lombard, +Ayres & Co., New York refiners, and others, on the publication of the +Rutter circular; and Mr. Rockefeller offered at first to buy them +out--pipes, refineries, and all--but refused finally to give the price +of $15,000,000 they asked. The Standard’s next move was the purchase of +a certain minority of the shares in the Tidewater Company. On January +17, 1883, the Standard stockholders held a hugger-mugger meeting at +the Tidewater office in Titusville, without notifying the stockholders +generally, voted the turning over of the control to Standard Oil +interests, and took possession of the office in the name of that +Company. The president of the Tidewater, however, who had been absent +in New York, met this attempt by another equally determined. He carried +the office by surprise, barricaded it, and kept forcible possession +till a suit could be brought to declare the meeting void, which +was legally accomplished. Previously to this all sorts of material +obstacles had been put in the way of the Tidewater pipe getting to the +sea; the railroads constantly opposed the Company’s obtaining a right +of way, and mysterious individuals--obviously representing Standard +interests--constantly cropped up along the proposed route, acquiring +exclusive rights over strips of land running at right angles to the +proposed right of way, some of these tiny ribbons of land being forty +miles long. Finally, the Tidewater Pipe Line became a Standard Oil +tentacle. + +In the case of the United States Pipe Line--organised by the +independent oil producers and not to be confused with the United Pipe +Lines, which were always a Rockefeller organisation--it has been +clearly shown that the Standard Oil Company’s representatives have +resorted to similar means of obstruction. Physical force was used on +several occasions, a notable instance being that of the crossing of the +Delaware River at Hancock under the Erie Railroad bridge in 1893. Erie +interests as such were in no wise affected by the crossing, and the +president of the Erie road, after a conference with Mr. Emery, manager +of the United States Pipe Line, had informed him that there would be +no objection to going under the bridge, and even sent his own engineer +to Hancock to make arrangements for the exact location of the pipe. +When the connection from both sides of the river was about to be made, +however, the railroad company ran up two engines and “wrecking cars,” +with about seventy-five men, and placed inflammable material over the +ends of the pipe lines, so that on any attempt to connect they would +be so heated that connection would become impossible. The spot was +beleaguered by the hostile forces of the railroad and the pipe line +company for three months, when the latter abandoned the route and set +its pipes seventy miles back to a place called Athens, Pa. The case for +the United States Government in the Missouri prosecution says:-- + + The obstruction came in part directly from the agents of the Standard + Oil Company and partly from the railroads, but there is every reason + to believe that the railroads were acting in the interests of the + Standard Oil Company, as their own interests would scarcely be + injured by the pipe line, and as they had (so far as the evidence + shows) never opposed the construction of pipe lines by the Standard + Oil Company. + +I select another case from the year 1895, when the United States +Pipe Line was getting in through the State of New Jersey to New York +harbour. The account of it may be best given in the words of the United +States Attorney-General’s brief in the Missouri case:-- + + When the Delaware, Lackawanna, and Western Railroad was reached at + Washington, N.J., serious opposition was again encountered. The + pipe line company bought the fee simple title to land at a point + where there was a culvert in the railroad and placed a pipe through + this culvert, and put a force of men in charge. The next day two + locomotives, a wrecker, and 150 men attempted by force to eject + the employees of the pipe line from their position and to tear up + the pipes. A hand-to-hand fight ensued, and finally an agreement + was reached by which the matter was taken into Court. Mr. Emery + testifies that some of the same men who opposed the passage of the + pipe under the tracks of the Erie Railroad at Hancock, N.Y., some two + years before, were also among the representatives of the Delaware, + Lackawanna, and Western Railroad in the trouble at Washington, N.J. + After a delay of six months the lower Court decided in favour of the + right of the pipe line to cross the tracks. + +In 1879 the owners of the Vacuum Oil Works, of Rochester, N.Y., Messrs. +H. B. and C. M. Everest, father and son, made over a three-fourths +interest in their concern, which manufactured a patent lubricating +oil, to the Standard Oil Company, the Everests remaining managers on a +salary, and also being co-directors along with Messrs. H. H. Rogers, +J. D. Archbold, and Ambrose McGregor, of the Standard Oil Trust, of +which the Vacuum Oil Company was now run as a subsidiary. The following +year three of the employees, Wilson, Matthews, and Miller, having got +some money together, thought that they would like to start refining on +their own account, and did so, setting up the Buffalo Lubricating Oil +Company in the town of Buffalo. C. M. Everest warned them he would do +all in his power to injure their concern. He tried especially, by an +offer of $20,000, to get Miller, who was the most practical refiner +of the three, to break his contract with his two new partners, and on +June 7, 1881, H. B. Everest took Miller to the office of his lawyer, +Mr. Geo. Truesdale, in order to come to an arrangement with him. Mr. +Truesdale afterwards testified as follows in regard to this interview +(Proceedings in Relation to Trusts, House of Representatives, 1888, +Report No. 3,112, p. 864):-- + + I told him (Miller) that I did not know the exact terms of his + contract, but if he had entered into a contract and violated it + I presumed there would be a liability for damages as well as a + liability for the debts of the Buffalo party. Mr. Miller and Everest + both talked on the subject, and Mr. Everest says, “I think there are + other ways for Miller to get out of it.” I told him I saw no way + except either to back out or to sell out; no other honourable way. + Mr. Everest says, substantially, I think, in these words: “Suppose + he should arrange the machinery so it would bust up, or smash up, + what would the consequences be?”--something to that effect. “Well,” + I says, “in my opinion, if it is negligently, carelessly done, not + purposely done, he would be only civilly liable for damages caused + by his negligence; but if it was wilfully done, there would be a + further criminal liability for malicious injury to the property of + the parties--the company.” Mr. Everest said he thought there wouldn’t + be anything only civil liability, and said that would--he referred + to the fact that I had been police justice, had some experience in + criminal law--and he said that he would like to have me look up the + law carefully on that point, and that they would see me again. + +Shortly afterwards Miller blew up a still in the Buffalo works twice +over by overheating, but did no further damage beyond spoiling the +175 barrels of oil contained in the still. He absconded, was kept +in idleness, or semi-idleness, by the Vacuum Company at a salary of +$1,500 a year, and the latter company proceeded to harass the Buffalo +Lubricating Oil Company out of existence by taking one vexatious +action after another against it on the ground of infringement of +patents. These were all decided in favour of the Buffalo Company by +the Courts except in one case, for a purely technical infringement +it was condemned to pay 6 cents (3d.) damages. Finally, the Buffalo +Company turned on its adversary and took an action against the Vacuum +Oil Company directors, H. H. Rogers, J. D. Archbold, A. McGregor, and +the two Everests for criminal conspiracy, instituting at the same time +civil suits for damages. The trial, at which Mr. J. D. Rockefeller +and all the forces of the Standard Oil were mustered, aided by the +most eminent counsel in the States, came off at Buffalo on May 2, +1886, and Messrs. Rogers, Archbold, and McGregor escaped owing to +the judge withdrawing the case from the jury, because, although they +were directors of the Vacuum Oil Company, it could not be proved that +they had advised Miller to cause an explosion. The two Everests were +condemned. By various means the Standard contrived to stay execution of +the sentence until May, 1888, two years later; the statute provided a +penalty of one year’s imprisonment or $250 fine, or both. Great efforts +were made to obtain a mitigation of the sentence. A petition signed +by forty “leading citizens” of Rochester was handed in to the judge, +praying him, on account of the “untarnished fidelity and integrity” +of the convicted men, to make the penalty as light as the Court was +authorised by law to fix. In the result the two Everests were each +fined $250 for the criminal offence, and the Vacuum Oil Company settled +the civil suits for $85,000 (£17,000). This is the case on which the +late Mr. Henry D. Lloyd (whose work, “Wealth against Commonwealth,” +was the first to expose the Standard’s misdeeds), based the caustic +comment: “The Standard Oil Trust is evangelical at one end and +explosive at the other.” + +It was remarked in a previous chapter that the unfair advantages +conceded to Mr. Rockefeller by the conspiring railroads afford a +sufficient answer to the Standard Oil Trust’s contention that the +secret of its success lies in its superior business ability. But there +is no need to deny a high level of business ability to Mr. Rockefeller +and his associates. The Standard Oil people have always enjoyed this +legitimate advantage of knowing exactly what they intend doing. +Granting, however, that the Standard people are the keenest of business +men, it is equally certain that they have pushed their keenness to the +point where it has become mere unscrupulous cunning and chicanery. This +is conspicuously shown in the history of the Trust in its character of +salesmen. + +Every local agent for the sale of Standard oil is required to furnish +reports to the statistical department of the Standard Oil Trust at +26, Broadway, New York, of all the transactions entered into by every +dealer in his district. His business, in short, is to know everybody +else’s business and to report it. This is done by filling up printed +forms showing in parallel columns against every retailer’s name in the +district, be he shopkeeper or pedlar, the description and brand of +goods he buys and sells, how the goods have been transported, their +price, and the name and address of the wholesale dealer who supplied +them. The agent is stimulated in every way by reproof and reward to +obtain the most intimate and apparently trifling details bearing upon +the above points, and, as is well known in the United States, is +generally converted by the system into a mere spy, who will not stick +at bribery or any other dirty trick so long as he can give his chiefs +the desired information. The United States Government agents found +that the Standard’s “statistical department” was presided over by a +man named Christian Dredger--a name which, allied to the occupation, +certainly reminds one of “the man with the muck-rake.” The knowledge +that a local grocer or pedlar is buying elsewhere than from the +Standard is no sooner received by mail or telegraph at the statistical +department than a Standard agent is told off to swoop down upon the +“irregular trader,” and either by threats of underselling and ruining +his business in case he persists to offer the “independent” oil, or +by promising him a secret rebate on published prices, secures his +submission. If the agent can persuade the retailer to countermand his +order from the independent, so much the better. + +These accusations are proved beyond question by extant collections of +hundreds of letters and numerous telegrams received by independent +retailers, and by a superabundance of sworn testimony from all parts +of the States. Just to show how the thing works, here is a typical +letter received by a retailer who has been caught ordering oil from an +independent, and has been “persuaded” to countermand the order:-- + + DES MOINES, IOWA, + _January 14, 1891_. + + John Fowler, Hampton, Iowa. + + DEAR SIR,--Our Marshallstown manager, Mr. Ruth, has explained the + circumstances regarding the purchase and subsequent countermand of + a car of oil from our competitors. He desires to have us express + to you our promise that we will stand all expense, provided there + should be any trouble growing out of the countermand of this car. We + cheerfully promise to do this; we have the best legal advice which + can be obtained in Iowa bearing on the points in this case. An order + can be countermanded either before or after the goods have been + shipped, and, in fact, can be countermanded even if the goods have + already arrived and are at the depôt [_anglice_, railway station]. + A firm is absolutely obliged to accept a countermand. The fact that + the order has been signed does not make any difference. We want you + to absolutely refuse under any circumstances to accept the car of + oil. We are standing back of you in this matter, and will protect you + in every way, and would kindly ask you to keep this letter strictly + confidential. + + Yours truly, + E. P. PRATT. + +Another typical example of Standard methods is revealed in the +following letter addressed to the Independent Oil Company, of +Mansfield, Ohio, by one of its customers:-- + + TIFFIN, OHIO, + _January 24, 1898_. + + DEAR SIRS,--I am sorry to say that a Standard Oil man from your city + followed that oil car and oil to my place, and told me that he would + not let me make a dollar on that oil, and was dogging me around for + two days to buy that oil, and made all kinds of threats, and talked + to my people of the house while I was out, and persuaded me to sell, + and I was in a stew what I should do, but I yielded, and I have been + very sorry for it since. I thought I would hate to see the bottom + knocked out of the prices, but that is why I did it--the only reason. + The oil was all right. I now see the mistake, and that is of getting + a carload. Two carloads coming in here inside of a week is more than + the other company will stand.... + + Yours truly, + H. A. EIRICK. + +Chess, Carley & Co., the Standard marketing agents at Louisville, +Kentucky, are big offenders in this respect. The late Mr. George Rice, +of Marietta, Ohio, a well-known independent, offered a grocer named +Armstrong, in Clarksville, Tennessee, his oil at a lower price than +Chess, Carley & Co. would sell to him at. Armstrong mentioned the offer +to the latter, and “was scared almost out of his boots,” wrote Rice’s +agent. + + Carley told him, continues the agent, “he would break him up if he + bought oil of any one else; that the Standard Company had authorised + him to spend $10,000 to break up any concern that bought oil from any + one else; that he (Carley) would put all his drummers in the field to + hunt up Armstrong’s customers, and sell his customers groceries at 5 + per cent. below Armstrong’s prices, and turn all Armstrong’s trade + over to Moore, Bremaker & Co., and settle with Moore, Bremaker & Co. + for their losses in helping to break Armstrong up, every thirty days.” + +The Waters-Pierce Oil Company, the Standard’s Texas and Mexico branch, +are equally bad, and their methods are denounced by their customers in +similar language to that already quoted. The retailers speak of their +threats, their “cutting to kill”; they complain that the Standard +agents “nose” about their premises, ask impudent questions, and +generally make trade disgusting and humiliating. + +The system naturally results in bribing employees, not only of the +railroads, but of the independents themselves in order to gain +information. The bribes seem to have been generally small in amount, +but to have yielded wonderful results. For instance, in 1893, a negro +boy who was induced by the Atlantic Refining Company of Philadelphia +(Standard Oil subsidiary), to supply regular details of the business +of the Lewis Emery Oil Company, his employers, was only paid $90 (£18) +for supplying information as to the firm’s daily shipments for about +six months and also for smuggling his company’s price-book to the +Standard managers to be copied out! Most of the old legends about a man +“selling his soul to the devil” make Mephistopheles do something very +substantial as his part of the bargain. But the Standard Oil Trust is +capable of giving his Satanic Majesty many wrinkles in “labour-saving” +methods, and breaks down the moral sense of the rising generation +on much more economic principles. E. M. Wilhoit, Standard agent at +Topeka, Kansas, from 1891 to 1898, testified in the Missouri trial that +his agency was allowed $8 (£1 12s. 6d.) a month for paying railroad +employees for information of competitive shipments, Mr. E. P. Pratt, +the manager of the Kansas City branch of the Consolidated Tank Line +Company, forwarding this $8 from Kansas City by his personal cheque. +Mr. G. W. Mayer, who succeeded Pratt, reduced this amount to $6 (25s.) +a month. The cheques came in blank envelopes without any letter, and +the instructions as to what should be done with the money were given +verbally. The clerks of five different railways were called upon once +a week for this information, which was generally written on a small +slip of paper and handed to the drayman who took oil to the railroad. +I select this case almost at random as a typical one from an ocean of +similar evidence. From the tempter’s point of view it certainly seems a +very cheap line of damnation. + + + + + THE “BOGUS INDEPENDENTS” + + + “The very rich are just like all the rest of us; and if they get + pleasure from the possession of money it comes from their ability to + do things which give satisfaction to some one besides themselves.” + + JOHN D. ROCKEFELLER _in_ “_Random Reminiscences_.” + + + + + CHAPTER VII + + THE “BOGUS INDEPENDENTS.” + + +The constant policy of the Standard throughout its whole career +has been superabundantly proved to be to cut prices where there is +competition, and where there is none to raise them to the utmost point +that customers will go to. The Standard has found that this practice +has always caused a deal of talk whenever it has been recognised, and +the Standard hates talk. It has made a good try to keep the talk down +by spreading the idea about that it is the Standard’s competitors who +always begin the price-cutting, and, on finding it difficult to get +this idea to go down with the public, it one fine day hit upon the +expedient of putting “bogus independent” companies and pedlars in +the field as stalking-horses to bear the odium of the price-cutting. +Occasionally, especially in the case of the pedlars, who do a big +business in America, it has involved a deal of stagey “business” of +all sorts to keep this deception up, a fact that makes the perusal +of the evidence on this matter very entertaining and at times even +amusing reading. But a very serious purpose and a very serious effect +ran through the whole proceedings for years, which was, in general, to +throw dust in the eyes of the public as to the game consistently played +by the Standard, namely, to kill competition and extract the highest +possible amount out of the pockets of its customers. There are two +British companies which were alleged by the United States Government +counsel in the Missouri litigation to be Standard Oil tentacles. Their +whole history is so characteristic of Standard Oil tactics that it +merits close and immediate attention. They are the General Industrials +Development Syndicate, Limited, registered at Somerset House in 1899, +and the London Commercial Trading and Investment Company, Limited, +registered in 1903. As these were two companies which Mr. J. D. +Archbold, in the Missouri proceedings, swore he had never heard of, +their history throws a valuable light on how the Standard does its +business. Taking the General Industrials first, we are brought back +to an American company, the Manhattan Oil Company, of Ohio, which was +organised by Commodore E. C. Benedict and Mr. A. N. Brady, of New York, +in 1890. They laid a pipe line from the Lima oil-fields to Chicago in +order to supply crude oil to the People’s Gas Light and Coke Company +of that city, in which they were interested, at a more reasonable rate +than the Standard would supply it. The Manhattan Company also had a +large number of tank cars and a refinery in Galatea, Ohio. Evidence +was given before the Inter-State Commerce Commission that independent +Cleveland refiners were met in the Lima oil field by this Manhattan +Oil Company, which cut off their supplies by paying “premiums” to oil +well-owners in certain districts to send it their oil. The Manhattan +Company professed to be independent, but its proceedings induced the +really independent refiner to suspect that it had become a Standard +auxiliary. + +When the United States Government started the proceedings in the +Missouri courts a part of the truth came to light. Evidence was then +given by Mr. A. N. Brady that in 1899 he sold the entire stock of the +Manhattan Oil Company for $615,000 to an English company, this General +Industrials Development Syndicate, Limited, which also took over a +mortgage of $800,000. But Mr. Brady wanted to ensure that his gas +plants in Chicago should have a supply of gas-oil, and he testified +that part of the terms of his contract for the sale of the Manhattan +stock to the English company was that the Standard Oil Company of +Indiana (one of the branches of the Trust) should supply him with +gas-oil. + +It was sufficiently remarkable that this unknown English company should +be able to secure a favourable contract for Brady’s gas-oil from the +Standard, but still more remarkable incidents followed. Immediately +after the purchase of the stock of the Manhattan that company’s +refinery at Galatea, Ohio, was bought by the Solar Refining Company +of Ohio (admittedly a Standard company); the Union Tank Line Company +(another Standard company) bought all the Manhattan’s tank cars, and +the Ohio Oil Company (a Standard tentacle which is in the oil-well +business) bought the Manhattan Company’s wells. After this division +of its property the Manhattan Oil Company continued as a pipe-line +company, posing as an independent oil company and offering these +“premiums.” Then came the delicate question as to who owned it! Here is +an extract from Mr. Archbold’s cross-examination:-- + + _Q._ Do you know the General Industrials Development Syndicate, + Limited, of London? + + _A._ I do not. + + _Q._ Of London, England? + + _A._ I do not. + + _Q._ You know nothing about it? + + _A._ I do not. + + _Q._ Is it owned or controlled, directly or indirectly, by any + company of the Standard Oil combination? + + _A._ Not to my knowledge. + + _Q._ You would be apt to know it, wouldn’t you, if it was? + + _A._ I think I would. + + _Q._ Do you know the firm of Budd, Johnson and Jecks, London, + solicitors? + + _A._ I don’t know them. + + _Q._ Did you ever hear of them? + + _A._ I may have heard of them in connection with this inquiry. + + _Q._ Do you know Mr. Maxwell? + + _A._ I do not. + + _Q._ Connected with the firm. Mr. Maxwell or Mr. Herbert Johnson? + + _A._ I do not know either of them. + + _Q._ Did you ever hear of them? + + _A._ I may, in connection with this firm. I don’t even recall the + names now. + +Mr. Kellogg, counsel for the United States Government, pointed out +that the New York books of the Anglo-American Oil Company Ltd., of +London, showed that the Company between 1899 and 1906 loaned over +£540,000 to Mr. James McDonald, who was then its managing director, +and he suggested that it was to provide the money to enable the +General Industrials Development Syndicate to buy the Manhattan and +yet conceal that the Standard were the purchasers. Mr. Archbold +was in his best _non mi ricordo_ vein. Although he was a director +of the Anglo-American Oil Company up to 1907 he could not tell for +what purpose that large sum of money was lent to Mr. McDonald by the +Company. Neither the auditor nor the comptroller of the Standard Oil +Company in New York could tell why their London branch did this, and +Mr. Archbold did not even know whether the loan had been repaid! He was +still more pointedly questioned about the matter:-- + + _Q._ Isn’t it a fact, Mr. Archbold, that the Standard Oil Company, or + some of its companies, indirectly owns the Industrials Development + Syndicate, Limited, and organised it? + + _A._ Not to my knowledge. + + _Q._ You keep pretty close track of companies starting business in + competition with you in this country, don’t you? + + _A._ We do. + + _Q._ You seem to be able to produce a list here of every concern + engaged in the oil business in the country, didn’t you? + + _A._ As nearly as we can keep track of it; yes. + + _Q._ Is this General Industrials Development Syndicate, Limited, + engaged in the oil business anywhere else? + + _A._ I do not know. + + _Q._ You never investigated it? + + _A._ I never heard of their being in any place else. They may. I + never have heard of it. + + _Q._ And yet it bought the Manhattan Company and then caused the + Manhattan to sell you the refineries, the producing wells, the cars, + and continued doing business with you, and you never looked into the + Development Company.... You never investigated to find out who the + English company was? + + _A._ No, not beyond that. + +The last question of counsel is a sufficient commentary in itself +on Mr. Archbold’s pretended ignorance of the General Industrials +Development Syndicate, but further light will be thrown presently upon +the relations of this London company with the Standard group. In the +meantime, it will be convenient to consider, at the same time, the +second of these English companies, the London Commercial Trading and +Investment Company. Evidence was given in the Missouri prosecution +by Mr. H. Bayne, the son of a well-known New York banker, that all +the stock of the Security Oil Company of Texas, another professedly +independent concern, had been acquired by this London company. Texas +has a very rigid anti-Trust law, and therefore there was an additional +reason for caution in allowing the real purchasers to become known. +Mr. Archbold was as discreet as ever. Mr. Kellogg put it to him that +cheques drawn by the Anglo-American Oil Company to the order of the +National Provincial Bank of England in London were by that bank turned +over to the Bank of England, and that cheques were then drawn on +that bank to solicitors to pay for the Security Oil Company’s stock. +Now, although Mr. Archbold had been for many years a director of the +Anglo-American Oil Company, he could neither confirm nor deny this +remarkable story. He had never heard of such a transaction, and when +asked whether the Standard directly or indirectly owned or controlled +the London Commercial Trading Company he could only reply, “Not to my +knowledge.” + +It is time, in considering this painful case of “loss of memory,” to +turn to the records of these two companies in the Registry of Joint +Stock Companies at Somerset House. They present singular features +of resemblance; in fact, save for the disparity in age, they might +be twins. Both companies have as solicitors and large original +shareholders the members of the firm of Budd, Johnson and Jecks, +of 24, Austin Friars, E.C., whose names Mr. Archbold was unable to +recall. Both companies have the same offices--27, Walbrook; the same +secretary--Mr. J. Morgan Richards Francis; and the same auditor. Both +companies have adopted the idea of issuing share warrants to bearer +for the whole of their capital, by which device they avoid returning +any subsequent list of shareholders to Somerset House. Both companies +hit upon the idea of having but one director, and both were fortunate +enough to select for that onerous task the same gentleman--Mr. Horace +Maxwell Johnson, barrister-at-law, of Hickwells, Chailey, Sussex. +But these strange coincidences do not end here. The first list of +shareholders in each case contains some remarkable resemblances. In +the case of the General Industrials Development Syndicate it was as +follows:-- + + Shares. + Henry Hassall, 32, Dartmouth Park Road 1 + E. G. Flower, Elm Villa, Elm Road, Sidcup 1 + Robert Cave, 26, Beversbrook Road, Tufnell Park 1 + Sydney Lowenthal, 59, Sidney Street, South Kensington 1 + Francis Glover Sharpe, 16, Foyle Road, Westcombe Park 1 + Ernest Luff Smith, 73, Ramsden Road, Balham 1 + Horace Maxwell Johnson, 1, Dr. Johnson’s Buildings, barrister 1 + John Wreford Budd, ⎫ + Murray Johnson, ⎬ all of 24, Austin Friars, + Herbert Walter Johnson ⎪ solicitors, jointly 399,993 + Arthur Statham Jecks ⎭ + ------- + 400,000 + +Turning to the London Commercial Trading Company, we find the following +names:-- + + Shares. + Henry Hassall, 5, Florence Road, Finsbury Park 1 + E. G. Flower, 279, High Road, Lee 1 + Robert Cave, 26, Beversbrook Park, Tufnell Park 1 + F. G. Sharpe, 27, Walbrook 1 + E. Luff Smith, 73, Ramsden Road, Balham 1 + John Rayner, 8, Woodside Villas, Ewell Road, Surbiton 1 + G. Dudley Colclough, 47, Inverness Terrace 1 + John Wreford Budd, ⎫ + Murray Johnson, ⎬ of 24, Austin Friars, jointly, 722,502 + Herbert Walter Johnson ⎪ + Arthur Statham Jecks ⎭ + ------- + 722,509 + + (On February 23, 1904, 2,493 more shares were allotted to Messrs. + Budd, Johnson and Jecks, making up the total capital of £725,000.) + +It must be understood, of course, that the appearance of the names of +English lawyers in these lists neither conveys any reflection of any +kind upon them nor identifies them in any way with the operations of +the Standard Oil Trust in the United States or elsewhere. Messrs. Budd, +Johnson and Jecks are a well-known and highly respected firm; and it +must be assumed that they only appear in these transactions between the +companies in their professional capacity. + +We find, therefore, that out of the original shareholders in the +General Industrials, nine appeared in the list of the London Commercial +four years afterwards. A tenth, Mr. Horace Maxwell Johnson, the +managing director, appeared on October 2, 1903 (Mr. E. G. Flower’s +share was transferred to him). In both cases almost the entire assets +of the Company are represented in the balance-sheet by shares of +foreign companies. In the case of the General Industrials, out of its +£100,526 assets £94,613 represented such shares, while in the case of +the London Commercial this item represents £718,685 out of total assets +of £734,979. + +There is only one difference in the history of these companies. While +the London Commercial has increased its original capital of £110,000 +to £725,000, the General Industrials has reduced its capital. It +consisted at first of 400,000 £1 shares, but in June, 1901, the capital +was reduced to £230,000 by the repayment of 8s. 6d. on each share. On +December 13, 1905, the capital was further reduced to £120,000 by the +repayment of a further 5s. 6d. on each share, and on August 10, 1906, +this was further reduced to £100,000 by refunding a further 1s. per +share. This world is full of strange coincidences, but it is distinctly +worth noting that the capital of the Manhattan Oil Company showed a +synchronous tendency to fall. From an exhibit put in by Mr. Kellogg in +the Missouri case it appeared that the capital of the Manhattan Oil +Company was reduced from $2,000,000 (£400,000) to $500,000 (£100,000) +on May 23, 1902, and to $150,000 (£30,000) on October 23, 1905. + +Mr. Brady testified that when Mr. Herbert Johnson, of London, came +to him in New York he said the General Industrials were “in the oil +business, but wished to purchase a going company, with wells, and land, +and cars, and pipe lines.” + + _Q._ And refineries? + + _A._ Refineries. + + _Q._ Now if he wished to purchase a going business, why did they sell + their wells and tank cars and refineries? + + Mr. Milburn (Standard Oil counsel): Does Mr. Brady know that? + + _Q._ Do you know? + + _A._ No, I do not know that they did. + +One other remarkable feature about this General Industrials Company may +be mentioned. Mr. Brady produced at this trial the following cable that +he received:-- + + August 31, 1899, London. To A. N. Brady, 54, Wall Street, + N.Y.--Syndicate accepts options. John H. Cuthbert, its agent, + will call on you to arrange details and payment. He has full + authority.--JOHNSON. + +This was signed by Mr. Herbert W. Johnson, the London solicitor, who, +with the assistance of several other solicitors, a barrister, and an +accountant, was going into the oil business on this large scale. But, +to use a once-famous American political phrase, Mr. John H. Cuthbert +was “the nigger in the wood-pile.” It is his presence that finally +“gives away” the carefully hidden origin of the General Industrials. +When Mr. J. D. Archbold was first questioned about Mr. Cuthbert he was +as forgetful as ever:-- + + Who was Mr. Cuthbert? Do you know him? + + _A._ I knew a Mr. Cuthbert. + + _Q._ In 1899 he was in the employ of the Standard Oil Company, wasn’t + he--John H. Cuthbert? + + _A._ I do not recall that he was. + + _Q._ He had been in your employ, hadn’t he, in some of your companies? + + _A._ I do not recall that he had been. + + _Q._ Do you know him? + + _A._ I did know him. + + _Q._ Where was his place of business? + + _A._ My recollection would be that he was employed with the Tide + Water Oil Company. + + _Q._ Didn’t he use to be employed by one of the Standard Oil + companies? + + _A._ He may have been earlier, away back. I do not remember + distinctly. I am inclined to think that he was--in the earlier + years--employed by one of our companies. + +After the luncheon adjournment on the same day, however, Mr. Archbold’s +memory somewhat improved:-- + + _Q._ Isn’t it a fact that Mr. John H. Cuthbert was the Standard’s + representative in the Tide Water Company as director? + + _A._ He went there not specially as our representative, but left our + employ and went to them, because I imagine they offered him greater + inducement in the way of salary. I know of no other reason. + + _Q._ Is it not a matter of fact that he solely represented the + Standard Oil Company as a director in the Tide Water Company? + + _A._ I think he was there as a servant of the business. + +The truth about Mr. John H. Cuthbert’s position in relation to the +Standard Oil Trust is clearly shown by the following extract from +the Report of the United States Commissioner of Corporations on the +Petroleum Industry (Part I. page 54):-- + + About the same time (1881) Standard interests succeeded in acquiring + a minority interest in the Tide Water Company’s stock. This move, + coupled with the continual hostility of the railroads, led to a + virtual surrender of the Tide Water interests, and an agreement was + reached in 1883 by which they substantially became, and have since + remained, _a part of the Standard Oil system_. + +To sum up the history of this General Industrials Development +Syndicate, we have an American oil company sold to a London company +with no list of shareholders, with a managing director who is a +barrister, after an examination and valuation of the property by a +Standard Oil employee. We find as one of the terms of the deal that the +Standard Oil Company--who, according to Mr. Archbold, had no interest +in this transaction--should guarantee a supply of crude oil at a low +rate for ten years to the vendors’ Chicago gas company. Then we find +all the assets of the Manhattan Company transferred to various Standard +Oil companies, except the pipe lines, and these pipe lines used for the +purpose of collecting oil for Standard companies, and paying premiums +to producers to prevent them supplying oil to independent refineries +which the Standard desires to kill. All this, taken with the evasive +and obviously untruthful answers of Mr. Archbold, can lead to but one +conclusion as to the real origin of the General Industrials. When the +facts are considered with regard to the parallel case of the London +Commercial Trading Company, that conclusion is strengthened still more. + + + + + THE STANDARD’S “INVENTIONS” + + + “From controlling the production and sale of oils, it was but a + natural progression to rise to the control of legislatures, judges, + and the executives of the State and Federal Governments. Members, + or servants, of this modern industrial _Camorra_ have been Cabinet + ministers of the Supreme Administration in Washington. They have had + Presidents of the Republic at their beck and call.” + + _Investors’ Review_, 1897. + + + + + CHAPTER VIII + + THE STANDARD’S “INVENTIONS” + + +The Standard achieved other ends by its system of creating bogus +competitors, besides avoiding public odium. It was enabled by their +operation to carry on a competitive warfare cheaply. The “bogus +independents” bought oil from the genuine independents, and proceeded +to retail it at the wholesale price. As the genuine independents then +came down a peg or two in their retail price to meet this competition, +and lowered their _wholesale_ price correspondingly, the bogus concerns +bought more at the new wholesale level, and then retailed it at that, +and so _ad infinitum_--or, rather, _ad infimum_--till the bottom +was reached, without their losing a cent in the process. Meantime +the Standard virtuously kept its prices up to its own customers in +that particular district, and protested against the ruin that was +being brought upon the trade by underselling. Thus the function of +the “bogus independent,” whether company or pedlar, was not to make +money for the Standard, but to kill off its competitors. It was an +instrument of assassination pure and simple. And just as a particularly +diabolical murderer arranges the time and manner of his victim’s death, +so that it shall seem to be self-inflicted, so the Standard arranged +by the working of these bogus concerns that the genuinely independent +firms outside its own charmed circle should seem to the public to be +perishing as the result of their own “cut-throat competition.” It was a +subtle game, and played with devilish cunning and persistency for many +years before it was definitely shown up in its true light. And it was +helped by the fact that many of the bogus concerns worked in this way +had once been genuinely independent concerns which the Standard had +secretly bought up. + +Charles E. Farrell testified as a Government witness at the Missouri +trial--and no attempt was made to rebut his evidence--that he had been +a tank-wagon driver for the Standard Oil Company until events took +place as follows: About March, 1899, he was approached at his home +at night by the Standard’s agent at Troy, N.Y., who told him that +McMillan, the Standard’s manager at Albany, had some important work +for him to do which must be kept entirely secret even from Farrell’s +own family. At his instance Farrell met McMillan and Mason, the +Standard manager at Binghamton, N.Y., who told him that the Standard +had competition at Oneonta, N.Y., from the Tiona Oil Company, which had +got the bulk of the trade, and that they wanted to get it back, and +for that purpose to set the storekeepers fighting with one another. +He was directed to go to the Tiona Oil Company at Binghamton, N.Y., +and buy twenty-five barrels of oil, and have it shipped to Worcester, +as the Tiona would not sell him oil to sell at Oneonta, where it was +already doing business. He was then to reship it from Worcester to +Oneonta, where he was to peddle it about, putting the sign “Tiona +Oil” on his wagon, at 8 cents (4d.) a gallon, the same price he had +to pay the Tiona for it at Binghamton. Strict secrecy was enjoined as +to whom he was working for. Farrell carried out the manœuvre till the +merchants cut against one another down to 2 cents a gallon retail, and +one even put out a sign: “Free oil; come and get your cans filled.” +Later Farrell could not succeed in getting any more Tiona oil; then the +Standard supplied him with its own oil, cautioning him not to sell too +much of it, but only to bell the low price about. Farrell was suspected +at last by the Tiona people of being sent by the Standard, but, acting +on instructions, denied it through thick and thin. + +This nefarious game went on for six months, during which time Farrell +carried on his correspondence with Mason at Binghamton by addressing +the letters to a man named George Craven at a certain post-office box +in Albany, and Craven forwarded them to Mason. Most of the letters sent +by Mason in reply were on plain paper and unsigned, but not all. In one +which is signed, and which was exhibited in court, Mason says:-- + + I have your various letters.... Our salesman who visits Oneonta knows + nothing whatever of who you are, nor does any one except those you + saw in our office, and under no circumstances whatever do we want + any one to get the slightest hint that we are in any way concerned + in this matter. The Tiona people are denying that they have anything + to do with it, and claiming that we started you there. Of course, we + are denying this, and you must be very cautious, and not allow any + one to try to pump you.... You are doing first-rate and carrying out + the plan excellently, and very much to my satisfaction.... As soon as + you have read this, set a match to it and burn it up.... Don’t tear + it up, for some person might get hold of the pieces of paper and put + them together, but if you burn it with a match, then it is out of the + way wholly.... + +A further advance in Farrell’s commercial education and moral +edification took place six months after the Oneonta episode. The poor +fellow, selected no doubt for his blind fidelity, was told by his +employer at Albany, McMillan, that a man called Starks at Troy, who +had formerly been buying oil from the Standard, was then buying from +Dauchy, an independent wholesale dealer, and that he must buy oil from +Dauchy too, and cart it round after Starks’s wagon and sell it at the +wholesale price of 8 cents. In this way Farrell got about half of +Starks’s trade away from him, when the latter repented of his ways and +recommenced buying from the Standard. On the prodigal’s return Farrell +was called off. I select a peddling case of this sort to justify my +assertion that no low trick is too dirty or mean for the Standard’s +agents; to use a Transatlantic expression, they would take its candy +from a two-year-old kid. + +The idea of the “bogus independent” worked as a system is a most +ingenious one, and could hardly have been invented by minds of any +ordinary calibre. Here, however, the inventive genius of the Trust +seems to end. It has been argued on behalf of the Trust that its +commercial success has been in part due to the various new technical +processes and other improvements which it has introduced--to the +benefit alike of the trade and the consumer. For this theory there +is no visible foundation, though it constitutes the staple material +of the ordinary Standard Oil apologist. Long articles have appeared +in American and English magazines, illustrated by pictures of the +Standard’s wonderful processes, and filled with majestic figures of +the pipe lines, and tank steamers, and tank cars that it owns. The +impression is adroitly left that the Rockefellers found a world of +crude oil and made their millions by showing ignorant and backward +competitors how to turn it into kerosene, lubricants, vaseline, and +petroleum wax. The truth about this imaginative literature is gradually +leaking out. + +Pipe lines for oil transport are described as if they were a Standard +invention. As a fact, as early as 1862 a company was incorporated +in Pennsylvania for carrying oil in pipes or tubes from any point +on Oil Creek to its mouth or to any station on the Philadelphia and +Erie Railroad--the first record we have of the idea, which thus +suggested itself within a reasonably short time after oil was first +struck--namely, in 1859. Now, as we have seen, Mr. Rockefeller +only went into the oil trade as his sole business in 1865, though +he put money into it as early as 1862. Three short pipe lines were +working in 1863 (Tarbell, vol. i. p. 17), and they were first made an +undoubted success by a man named Samuel van Syckel, who completely +revolutionised the oil business in 1864, the year before Mr. +Rockefeller definitely took to it, by first pumping oil from the wells +to the railroad through a 2-inch pipe at the rate of eighty barrels an +hour. + +The tank car has also been claimed as a Standard invention. Wooden +oil tanks were first built (Tarbell, vol. i. p. 12) by a young Iowa +school teacher almost immediately after oil was first struck, and +they continued to be built by him for about ten years, when, finding +that iron tanks were bound to supersede him, he retired from that +business. Wooden and iron tanks, whether stationary or set on cars, +were consequently a very natural development to meet the necessities of +the oil-carrying trade, and, as far as I can make out, were probably +running in 1869. Tank ships were an English invention, and their +adoption for the Suez Canal was strongly opposed by the Standard in +1891. + +Lubricating oil, also claimed as a Standard invention, is due to Mr. +Joshua Merrill, a chemist, of the Downer Works. In 1869 he discovered +a process for deodorising petroleum, and thus rendering it fit for +lubricating purposes. He patented his process, and by it increased the +sale of the Downer Works’ lubricating oil by several hundred per cent. +in a single year (Tarbell, vol. i. p. 22). + +A whole batch of these shadowy claims was disposed of once and for +all by Mr. J. D. Archbold’s admissions under cross-examination in +the Missouri case. Here is the official record of evidence on these +points:-- + + _Q._ The Standard Oil Company did not discover the process at all, + did it? + + _A._ Oh, no. + + _Q._ The process of making paraffin wax was in existence as early as + thirty years ago, wasn’t it? + + _A._ Oh, it has been in existence a long time from the coal shales. + + _Q._ Now, in the matter of a great many of these by-products, the + independent refineries, so called, have done the same as you have, + haven’t they? + + _A._ Oh, they have, undoubtedly. + + _Q._ Take many of those that you testified to the other day--for + instance, cylinder oil. The earliest manufacturers of cylinder oil + were at Binghamton, N. Y., were they not--a Mr. Brill? + + _A._ There was a very early concern there--a small concern. + + _Q._ And he is still in business, isn’t he, in Philadelphia? + + _A._ I don’t know. + + _Q._ Leonard and Ellis were very early manufacturers of cylinder oil; + isn’t that true? + + _A._ They were--yes. + + _Q._ Then lubricating oil--it was made from the petroleum stock + before 1870, wasn’t it? + + _A._ It was to an extent--yes. + + _Q._ Spindle oil, I think, is one thing you testified about the + other day. Wasn’t that first introduced by the Downer Manufacturing + Company, of Boston? + + _A._ I think it likely. I do not know definitely. It probably was. + + _Q._ Wool oil--wasn’t that sold or manufactured by Paine, Ablett & + Co., long before the Standard Oil Company combination or interests + got hold of it? + + _A._ It may have been. I could not say. + + _Q._ Was not vaseline made as early as 1860 by chemists in + Cincinnati, Ohio, from petroleum products? + + _A._ If it was I never heard of it. I did not know of it. + +Such being the Standard Oil people’s methods of dealing with their +neighbours, how have their neighbours dealt with them? The plain answer +to this is that their neighbours have simply “howled for their blood” +for the past thirty-nine years, since the time, in fact, when the +beginnings of the great conspiracy came to light in the detection of +the South Improvement Company scheme in 1872. Since then the Standard +Oil concern has had to face one public prosecution after another and +to witness a long series of hostile demonstrations on the part of the +public and of public inquiries directed by the Legislature that would +have shamed any concern capable of ordinary decent feeling out of +existence long ago. In 1879 the Standard Oil Trust was indicted for +fraudulent conspiracy in Pennsylvania at the suit of the Petroleum +Producers’ Union, who were thick-headed and weak-kneed enough to +accept a settlement out of court. In 1887 the Standard Oil Company +of Ohio was prosecuted by the State Attorney-General--Mr. David K. +Watson--for belonging to the Standard Oil Trust, an illegal combination +in restraint of trade, and in 1892 judgment was rendered prohibiting +it from being a party to any such Trust agreement. Ostensibly the +liquidation of the Standard Oil Trust followed; in reality it pursued +the even tenor of its way. In 1898 the Standard Oil Company of Ohio +was again prosecuted by the State Attorney-General, this time Mr. +Frank S. Monnett, for failing to obey the 1892 judgment, and the suit, +or series of suits, was prolonged by every device on the part of the +Standard till his term of office came to an end in January, 1900. His +successor, John M. Sheets, suppressed the suits, but matters had been +made so hot for the Standard Oil Trust that it took advantage of the +lax company law existing in the State of New Jersey to change its style +and title (including all its subsidiaries) into that of the Standard +Oil Company of New Jersey. As such it carries on its old conspiracy +against public law and the common weal just as before. In 1907 it was +again prosecuted in the person of one of its subsidiaries, the Standard +Oil Company of Indiana, for the same old charges of unjust and illegal +railway discriminations, and condemned on August 3, 1907, to pay a fine +of $29,240,000 (£5,848,000). This fine was set aside on appeal on the +ground that it had been assessed on the capital of the Standard Oil +Company of New Jersey instead of on that of the Standard Oil Company of +Indiana. On November 15, 1906, the prosecution, already more than once +referred to, of the Standard Oil Company of New Jersey by the United +States Government was commenced in the Eastern Judicial District of +Missouri Circuit Court. The Company was convicted of conspiracy; it +appealed, and the appeal was fixed for hearing in the Supreme Court +of the United States during the October term of 1909. It was further +postponed, however by the death of Judge Brewer, of the Supreme Court, +and is now expected to be decided in a few weeks. + + + + + THE TRUST IN AMERICA AND ASIA + + + “I know of nothing more despicable and pathetic than a man who + devotes all the waking hours of the day to making money for money’s + sake.” + + JOHN D. ROCKEFELLER _in_ “_Random Reminiscences_.” + + + + + CHAPTER IX + + THE TRUST IN AMERICA AND ASIA + + +Hitherto we have been dealing with the history of the Standard Oil +Trust on its native heath, the United States of America. It is now time +to pass in brief review some of its operations in foreign countries. +It appears in many lands, this Protean conspirator, and always in some +new guise. Here it is the pioneer and prophet of native oil; there +it is the importer of vast floods of foreign oil. Itself protected +by a heavy tariff in the United States, it poses in other lands as +the chief of the apostles of free trade. It demands alike freedom to +enter foreign oil-fields as a prospector and foreign oil markets as a +retailer. In one country it is the advocate of high prices; in another +it is the ruthless undercutter of its competitors. Always preferring +secrecy to daylight, its underground agitations embrace the Press, +the politicians, and the public. It is not always easy at first to +discover who is behind a Standard oil agitation, but I shall give a few +clues which may assist the student of oleaginous origins. + +Turning first to Mexico, we find that the Standard’s operations there +have been conducted under the name of the Waters-Pierce Oil Company +of Missouri, which is now after many years of falsehood admitted +to be a tentacle of the Trust. The history of the re-entry of the +Waters-Pierce Company to the State of Texas is a good example of the +Standard’s methods. There sits in the United States Senate one Joseph +Bailey, a Democrat of the deepest dye. A lawyer, an orator, one of +those pure-souled patriots who denounce in public the trusts and +monopolies, Senator Bailey was exactly the man the Standard wanted. +The full facts are given by Miss Ida M. Tarbell in an article in the +_American Magazine_ for January, 1908. The Texas Legislature passed +a sweeping anti-Trust law; under it the Waters-Pierce Company was +prosecuted from court to court until finally in March, 1900, the United +States Supreme Court sustained the decisions of the Texas courts, and +the Company was ordered to close up its business and get out. At this +point Senator (then Congressman) Bailey appeared, and for a fee of +$3,300 (charged on the Company’s books to “profit and loss”) succeeded +in obtaining from the Democratic Attorney-General of Texas two months’ +grace. The Waters-Pierce Company finally transferred itself to a new +Company of the same name, which took over the entire business of the +original company, and Mr. Henry Clay Pierce, the manager, applied for a +charter for the new one. He swore that it was in no way connected with +the Standard Oil Trust, and that he owned 3,996 out of 4,000 shares. +Largely through the influence of Congressman Bailey the new charter was +granted. Four weeks later Bailey, who was always regarded as a poor +man, was able to buy the splendid Grape Vine Ranch at Dallas, Texas, of +6,000 acres--a singular coincidence, to say the least. + +The new Waters-Pierce Oil Company went on trading until in the Missouri +proceedings in 1906 Mr. Henry Clay Pierce, the managing director, was +at last forced on to the witness-stand. He there admitted that he +only owned 1,250 shares of the new Waters-Pierce Company, and that +the Standard owned 2,750. He admitted quite frankly that in order to +evade the anti-Trust law of the State of Texas the Standard’s 2,750 +shares stood on the books in his name from May, 1900, to September, +1904. During this period the dividends were sent to Mr. Bayne, of the +Seaboard National Bank of New York--a gentleman whose name my readers +will recall as appearing in connection with the Standard’s carefully +concealed ownership of the Security Oil Company of Texas. In June, +1904, Mr. H. C. Pierce was asked to transfer these 2,750 shares to Mr. +Van Buren, who happens, oddly enough, to be the son-in-law of Mr. J. D. +Archbold, whose name has appeared so often in previous chapters. + +During all this time that the Waters-Pierce Oil Company was posing +as an “independent” business it was carrying on a very large and +profitable trade in the adjoining Republic of Mexico. Although there +are large natural deposits of petroleum in Mexico, the Waters-Pierce +Company preferred to import crude oil from Texas and Oklahoma, refine +it in Mexico, and sell it at a price which returned a profit of 600 +per cent. on the invested capital. But the Mexican Government desired +to develop the natural resources of the Republic, and as they were +quite tired of the high prices of the Standard, which had a monopoly, +they granted large oil concessions to the Pearson interests, which are +headed by Lord Cowdray. The Pearson firm had executed large railway, +waterworks, and harbour contracts for the Mexican Government, and +they developed the petroleum resources of Mexico so rapidly that the +Standard, which was hampered by a duty of $4½ a barrel on all the +crude oil they imported, soon began to feel the pinch. + +Then ensued the rate-war which lasted so many months in Mexico, but +which is reported to be now compromised. The Waters-Pierce Company +built a refinery in Mexico, and spent large sums in buying Mexican oil +lands. They cut prices so heavily that they sold oil under cost, but +the natural advantages of the Pearson interests were so great as to +render them impregnable, and the Eagle Oil Company was successfully +launched on the London market by Lord Cowdray’s firm to carry out +extensive developments on the oil-bearing lands they own. During the +bitter contest there was plenty of evidence of the existence of the +Standard’s Press bureau, the head of which gets the liberal salary +of $12,500 a year. Articles appeared in London financial newspapers +predicting the imminent ruin of the Pearson interests, and obviously +intended to stop the English investor from backing their flotations. +According to a statement recently published in the United States, +a more subtle campaign seems to have been carried out against +President Diaz, who favours the Pearson interests. Many officials +of the Government, including a son of President Diaz, have become +shareholders of the Pearson local oil company, being naturally desirous +of developing their national resources and of fighting this American +monopoly. Now under the title of “Barbarous Mexico,” an ostensibly +humanitarian campaign was opened in newspapers and magazines of the +United States of America against the alleged harsh treatment of the +Yaqui Indians by the Mexican Government. In the _Cosmopolitan Magazine_ +of March, 1910, it was categorically asserted by Mr. Alfred H. Lewis, +one of the foremost American magazine writers, that this campaign had +been inspired by the Oil Trust. They were determined to be revenged on +President Diaz, and therefore they induced a number of well-meaning +Americans--who haven’t time to put down the public lynching of +negroes in the United States--to plead the cause of the unfortunate +semi-enslaved Yaqui Indians. I cannot prove this charge, but Mr. Lewis +says it is believed by Americans resident in Texas and Mexico. From +the nature of the case this allegation is difficult to substantiate, +but for the present purpose it is a sufficiently significant fact +that a writer of Mr. Lewis’s reputation should believe that such a +Machiavellian scheme is possible. That the Standard will stick at +nothing appears from the fact that when Lord Cowdray visited New York +in June, 1910, he was shadowed by their detectives. The Standard Oil +Trust issued a formal denial of this charge, but Lord Cowdray repeated +it and reaffirmed it in the _Daily Mail_. + +Turning next to Canada, we find that the British flag has been no +protection against the Standard’s invasion. Here, too, railway +discrimination was the principal weapon employed, and this was aided by +the legislation which the Standard obtained at Ottawa permitting them +to ship their oil along the international waterways and the Canadian +canals in bulk steamers to Canadian ports, where it was easy to +transfer it to tank cars. In 1898 the late Mr. Henry D. Lloyd, author +of “Wealth Against Commonwealth,” wrote as follows to the present +writer with regard to these discriminations:-- + + My information came direct from the attorney of one of the principal + Canadian refiners. This refiner carried on his business with my book + at his elbow, and he told his attorney that precisely the things that + I had exposed in that book were there and then being done to him. + The discrimination was managed by some manipulation of the rates + with regard to shipments in barrels. The Oil Trust had barrelling + works of its own at certain points, from which it received rates at + discriminations that killed the profits of the home refiners who + did not have these central stations. The refiner I speak of was + prosperous, liked the business, and would have continued in it but + for this railroad discrimination. He made every possible effort by + appeals to the railroad people in Canada to remedy the wrong, but + found them as determined to favour the American Trust as railroads in + the United States. + +Finally the Standard clinched the matter by purchasing a Canadian +refinery, which it runs as the Imperial Oil Company, a nice patriotic +sort of name which no doubt appeals to the Canadian public. With this +refinery and the railroad discriminations they are as powerful in +Canada as they are in the United States. + +When one turns to the Far East it is surprising to discover that the +Standard has not had things all its own way. It does a huge business +in China and Manchuria in case-oil, but it has there had to fight, +first, Russian oil shipped in bulk, and, when that fell off, the +competition of the Dutch East Indies. Several of these islands are +very rich in petroleum, and, in my opinion, its failure to secure a +footing there was the Standard’s first great defeat. The story is told +with commendable bluntness and candour by Mr. Robinson, British Consul +at Amsterdam, in his annual report for the year 1897 (Foreign Office +Consular Reports, No. 2,054). He says:-- + + At present a very important question has been raised by the attempt + of the well-known American monopolist undertaking, the Standard + Oil Company, to acquire a footing in the Dutch East Indies by the + purchase of the shares of the Moeara Enim Company, an important + concession in Sumatra. An extraordinary general meeting of the latter + company was to have been held in the last days of February for the + purpose of ratifying the agreement with the Standard Oil Company, but + the Dutch Government has interfered by the categorical declaration + that no concession will be granted to a company under the control of + the American monster monopoly, and the meeting has naturally been + postponed. It remains to be seen whether the financial power of the + Standard Oil Company can be effectively resisted by such steps, but + the Government seems quite determined to use all possible means to + this end, and the course which it has adopted will certainly be a + popular one, threatened as Netherland India is by an “imperium in + imperio” of this description. The agitation against the Standard + Oil Company’s monopoly, in so far as this inflicts on this country + all the dangers and disasters caused by an exclusive supply of + low-flashing oil, is a constantly increasing one. + +The result was that the Moeara Enim Company were unable to sell, and +the Standard has never been able to get into the Dutch Indies. Worse +still, the Moeara Enim and two other Dutch petroleum companies were +absorbed by the Royal Dutch Petroleum Company, and this in its turn +became in 1907 allied with the Shell Transport and Trading Company of +London, of which Sir Marcus Samuel is the head. + +Briefly, the present position is that two new companies have been +created, in which the Royal Dutch and the Shell Company hold all the +shares. The Bataafsche Petroleum Maatschappij is a Dutch company with +a capital of 80,000,000 florins, which carries on all the pumping +and refining operations of the combine in the Far East, while a new +English company, the Anglo-Saxon Petroleum Company, with a capital +of £4,000,000, owns all the petroleum fields in which they operate, +and also the very large fleet of tank steamers formerly owned by the +Shell Company, in which their products are carried. They send into +London alone 80,000 tons of petroleum spirit annually through the +Asiatic Petroleum Company, their marketing agents. Last year the same +combination sent 10,000,000 gallons of this motor spirit into the +United States, supplying firms who were competitors of the Standard +Oil Trust. In 1909 the Royal Dutch-Shell combine took over the +business of many of their agents. For this purpose the Shell Company +provided additional capital amounting to £440,000, the Royal Dutch +put up £660,000, and the Asiatic Petroleum Company £200,000, making +an additional outlay of £1,300,000 for one branch of their business. +A large Roumanian oil company, the Astra, has been secured, and the +Shanghai-Langkat Company, which operates refineries in Borneo, has also +been bought out since the amalgamation of 1907. That amalgamation +has apparently been profitable to those engaged in it, for the Shell +Company’s dividend, which had been only 5 per cent. per annum between +1903 and 1906, rose to 15 per cent. in 1907, 20 per cent. in 1908, and +22½ per cent. in 1909. + +Now the awkward part of this chain of events so far as the Standard +is concerned is that the whole petroleum world has been turned upside +down by the motor engine. In 1897 Mr. Paul Babcock, director of the +Standard, told the Select Committee on Petroleum that they had in New +York tanks full of naphtha which they could not sell. Mr. Bergheim, a +well-known Galician oil producer, told a City meeting the other day +that he could recall the day when his firm gave the naphtha to any one +who would take it away. Then the Standard with its control of the tank +installations and the selling agencies for reaching the consumer of +illuminating oil (or kerosene) was the master of the world. Now the +consumption of kerosene is threatened by electricity among the rich +and slot-gas meters among the poor, and it is the despised naphtha (or +benzine) which is in demand. Motor-cars, motor-cycles, motor-omnibuses, +motor-lorries, aeroplanes, all these engines are demanding petrol, +and it is the good fortune of the Shell combine that its crude oil +provides a larger percentage of benzine than the Standard’s American. +While huge quantities of benzine, for which there is an increasing +demand, are being sent to Europe by the Shell combine, the Standard +is left with its monopoly of kerosene, for which the demand is +decreasing. At the same time, the Sumatra and Borneo crude produces a +very profitable percentage of petroleum wax, for which there is also +an increasing demand, and there is a big market for the residue all +over the Far East as fuel oil. This is the real secret of the recent +“oil war,” which has broken out chiefly because the Standard finds +its supremacy challenged by wealthy and vigorous competitors, and is +trying to use its vast accumulated profits in a “rate-cutting” war. The +latest news in this connection was the intelligence that the Standard +is attempting to repair its initial failure of thirteen years ago by +obtaining petroliferous areas in Java and Sumatra. It proposes to do +this through the medium of the Holland-American Petroleum Company of +Amsterdam, which being nominally a Dutch company can legally acquire +this property. Whether the Dutch Government which took so strong a +stand against the Standard’s invasion in 1897 will consent to be fooled +by such an obvious device as this remains to be seen. But the fact +that the scheme has been initiated indicates the desperate straits to +which the Standard is reduced for benzine. + +This is not the first time the Standard has come into collision with +the Shell. In September, 1904, the _New York Herald_ published an +interview with Mr. W. H. Libby, the foreign marketing agent of the +Standard in New York. This was a long “puff” of the Standard, and +contained the allegations that in the “rate-cutting” which had then +been going on the Shell Company had been reduced to serious financial +straits, and were selling oil falsely branded. As these allegations +were entirely false, the Shell Company brought an action against the +_New York Herald_ in the English Courts for libel, which ended in 1905 +in a complete victory for the victims of Standard Oil calumny. Mr. J. +Eldon Bankes, K.C. (now Mr. Justice Bankes) stated on behalf of the +defendants that they had made inquiries into the matter and found that +the statements could not be substantiated, and therefore withdrew, +apologised, and paid the plaintiff’s costs as between solicitor and +client. As we proceed we shall find other points at which the Standard +and the Shell have collided, but the vital factor in the present oil +situation is the Sumatran benzine, which the Rockefellers failed to +secure in 1897. + +Passing to India, the Standard had to fight for years with the Russian +oil exported in bulk through the Suez Canal, and is now pressed hard +by the Burma Oil Company, an undertaking mainly under Scotch control, +which has until recently had a monopoly of the Burma oil output. As +there is a tariff on American oil in India from which Burmese oil +is exempt, it was obviously to the interest of the Standard--which +thoroughly believes in tariffs at home--to get behind that obstacle +by being able to refine Burma oil and vend it in India. There is +another reason, and that is the large percentage of petroleum wax +which the Burma crude contains. There is a large and increasing demand +all over the world for wax, which is used for candles, chewing-gum, +the water-proofing of fabrics without rubber, and for many other +commercial purposes. In its desire to get a footing in this promising +field the Standard Oil Trust applied to the Indian Government for +an oil-prospecting licence in Burma, and was much grieved when the +Indian Government refused it. We come across that same Mr. W. H. Libby +flitting about India. In November, 1902, the Calcutta correspondent of +the _Financial News_ reports that this gentleman was trying to induce +the Bengal Chamber of Commerce to support his little scheme against the +Indian Government. The correspondent gives us a pretty picture of Mr. +Libby’s virtuous protestations:-- + + The representative of the Standard Oil Company seems to wish the + Bengal Chamber of Commerce to believe that the motives of his + Company were not wholly mercenary--that, on the other hand, they + were philanthropic, inasmuch as he says that “it was the intention + of the Standard Oil Company to encourage as many Burmese natives + as possible to enter the producing business, by aiding them in the + employment of modern machinery and modern methods, by providing them + with an immediate cash market for their crude oil, and by loans, + if necessary, at very moderate rates of interest, to the end that + production might be stimulated and an important industry created. The + Standard hoped to derive its own profits by economies in refining, + by materially improving the quality and value of the manufactured + products, and by distributing the said products in India and other + Oriental markets, where aggressive efforts might largely increase + existing consumption.” + +We know, of course, that the Standard has always been willing to +encourage other people to undertake the risks of oil-well sinking, +but the idea of stimulating this speculative business for the benefit +of the natives of a semi-barbarous country is novel as well as +captivating. When Mr. Libby’s campaign failed in India he came to +London, and his claims were pressed on the India Office by the United +States Ambassador in London, the Hon. Joseph Choate. As the Ambassador +had often appeared for the Standard when at the American Bar, and as +he had himself once stated that he was a shareholder in the Trust, we +may be sure that his advocacy of the Standard’s schemes in Burma did +not lack either zeal or ability. But it failed, and the Trust cannot +get into Burma. The imports of all classes of oils from Burma into +Madras Presidency during 1909–10 amounted to £317,868, as compared with +£212,982 in 1908–9. In the same period the imports of American oils +decreased from £241,128 to £189,362. + + + + + RUSSIA, GALICIA, AND ROUMANIA + + + “One of our greatest helpers has been the State Department in + Washington. Our ambassadors and ministers and consuls have aided to + push our way into new markets to the utmost corners of the world.” + + JOHN D. ROCKEFELLER _in_ “_Random Reminiscences_.” + + + + + CHAPTER X + + RUSSIA, GALICIA, AND ROUMANIA + + +Passing next to Russia, there is no doubt that in the past this was +a far more dangerous competitor of the Standard than it now is. The +Baku output was at first so tremendous that it seriously disarranged +the Standard’s calculations, and when first Russian shipowners and +afterwards Sir Marcus Samuel proposed in 1891 to ship Russian oil in +bulk in tank steamers to the Far East, a perfect panic seized the +Standard. Immediately one of those bogus agitations, in which it +excels, broke out with great virulence. Not only was the shipping +community thrilled by the supposed dangers to other vessels of +conveying oil in bulk through the Suez Canal, but the British nation +was once more warned of the dark and malevolent designs of Russia +against “our highway to India.” Nothing could be more amusing than +this waving of the Union Jack over the designs of the Standard Oil +Trust, but we shall see the same “patriotic” imposture reappear in +the flash-point agitation a few years later. The Standard was at this +time supplying its Far Eastern markets with “case-oil,” packed in tin +cans, which was, of course, a more expensive method of transit than +the large tanks of the bulk-oil steamers, and the agitation against +the new scheme was carried to the Foreign Office. The story is told +(without unduly emphasising the Standard’s share in it) in Mr. J. D. +Henry’s well-known work, “Thirty-five Years of Oil Transport” (Chaps +V. and VI.). Messrs. Russell and Arnholz, solicitors, wrote to the +Foreign Office, urging the Government to use their influence through +the British directors of the Suez Canal Company to prevent the transit +of bulk oil. Lord Salisbury asked them for whom they were acting, and +received this very significant reply:-- + + In view of the opposing commercial interests engaged, and the fact + that the true promoters of bulk transit have not yet declared + themselves, we respectfully submit that without pleading the + privilege of our profession it would be imprudent on our part to + permit our clients to disclose their names. + +In the reply which the British directors of the Suez Canal Company +forwarded to Lord Salisbury, this coyness on the part of the Standard +was thus commented on:-- + + They decline to give your lordship any clue for the present as to + the names of their clients, but an expression in their letter of + November 10th, which describes the passage of petroleum in bulk + as a disturbance of the regular and safe case trade, leads to the + inference that they are pleading the cause of parties engaged in + sending petroleum through the canal packed in cases, and whose + interests they appear to think may be damaged by facilities being + given for the more economical conveyance of petroleum by these tank + ships. + +The Foreign Office then informed Messrs. Russell and Arnholz that +Her Majesty’s Government could not take action in the direction +they desired without full information as to what British interest +they represented in the matter. As the Foreign Office thus declined +to become a Rockefeller catspaw, somebody organised a memorial by +merchants and tinplate manufacturers in Wales, where the Standard still +buys most of the material for its cans, and another by shipowners who +at that time were being chartered to carry case-oil to the East for +the Standard. Finally, Sir Frederick Abel and Mr. (now Sir) Boverton +Redwood prepared a report for those British shipowners who were hostile +to the bulk carriage of oil through the Canal. Sir Frederick Abel was +a chemist who constantly gave evidence on behalf of the Standard Oil +Trust when it needed an expert, and Mr. Boverton Redwood had been +from 1870 till just before this period (1889) the salaried chemist +of the Petroleum Association, a trade body whose members vended the +Rockefeller oils. Mr. Redwood was subsequently for a considerable +period regularly employed to test oil cargoes on behalf of the +Anglo-American Oil Company, and he gave evidence against raising the +flash-point of lamp oil before the Petroleum Committee of 1896. His +presence on the scene is sufficient to satisfy anybody in the oil trade +as to what was the real origin of this benevolent agitation against +tank steamers. While this gentleman was still in Egypt Sir Marcus +Samuel artfully published in the _Times_ an extract from a paper Mr. +Redwood read to the Institution of Civil Engineers, in which he said:-- + + The tank storage of kerosene oil has undoubtedly a great advantage + over barrel or case storage in the event of fire. + +Mr. Redwood was thus rather neatly cornered, for he had to admit in his +report that this statement was still true. So he had to lay the chief +stress on the danger of burning oil escaping on to the water--which the +experience of nearly twenty years has proved to be a very trifling +risk. The directors of the Suez Canal Company took a very accurate +measure of this report when they replied:-- + + Without entering into the question whether the work of Sir F. Abel + and Mr. Boverton Redwood is not merely a criticism of our regulations + _bearing too exclusively the impression of the anxiety of parties + interested in the present mode of transporting petroleum to the + East_, we, &c. + +After this the agitation fizzled out, and the transport of oil in +bulk still continues. The subject was referred to at the Institution +of Civil Engineers in February, 1894, when Mr. (now Sir) Fortescue +Flannery invited Mr. Boverton Redwood to state how his prophecies on +the carriage of bulk oil through the Canal had been fulfilled. Mr. +Redwood replied thus (_Proceedings Inst. C.E._, vol. cxvi. p. 250):-- + + He could only say that if, _as appeared to be the case_, the + transport of petroleum through the canal had been going on with + entire absence of anything approaching to an accident, he was very + glad to hear it. He did not know, however, that that was to be taken + as absolute proof that no risk existed. Time alone, and a longer time + than had as yet elapsed, would demonstrate that. + +Nearly twenty years have now elapsed; the Standard Oil Trust itself has +tank steamers which convey oil through the Canal, and Mr. Henry in his +work shows that between 1892 and 1906 2,000,000 tons of oil were thus +transported. + + * * * * * + +With the collapse of its artfully engineered agitation on this subject +the Standard next turned its energies to diplomacy. It devoted great +arts to Ludwig and Manuel Nobel, the millionaires who had grown rich +out of the “gushers” of Baku, and cherished dreams of becoming the +Rockefellers of Russia. The Standard’s emissaries played on their +vanity and induced the Nobels to form the Russian Refiners’ Union, +which 80 per cent. of the trade had entered in 1894. The idea was +that the Russian export output should be limited to an amount agreed +with the Standard, and that Nobel Brothers were to be the sole agents +in Europe. Each refiner was to send out a certain quantity of oil +according to the capacity of his refinery. At the same time there were +certain distributing firms in Europe which had been dealing chiefly in +Russian oils, and as Nobel Brothers did not require them, the good, +kind Standard agreed to buy them up. It is in this way that the Italian +Petroleum Company, the Bremen-American Company, and Reith & Co. of +Antwerp (all mentioned in my list of foreign marketing companies) +came under the control of the Standard. At the same time they acquired +the Kerosene Company, which had a great storage installation close to +the Anglo-American plant at Purfleet. The Trust continued to run these +businesses in their old names, and it was some time before the truth +began to leak out. Production in Baku was at that time so tremendous +that before the three years during which the union was to last had +expired, the Russian refiners were quite tired of it. Then the pleasing +result was realised that, with the exception of Nobels, none of them +had any selling organisation in Europe, and that the Standard had so +perfected its control of the kerosene trade that people who wanted +Russian oil could only get American. The first firm to take action were +the Paris Rothschilds, who are the owners of the Caspian and Black Sea +Company at Baku, and next to the Nobels the largest refiners in Russia. +They established in 1898 in this country at vast expense a new selling +organisation called the Anglo-Caucasian Oil Company, afterwards merged +in the Consolidated Petroleum Company, and a vigorous contest took +place for their share of the English kerosene trade. + +The Russian oil trade has always been a commercial switchback. At +the time just mentioned the Rothschilds and Nobels were exporting +largely to Europe, and the Mantascheffs were sending large quantities +of Russian oil to the Far East. Then came the Baku riots of 1905, +when murder and incendiarism stalked through the oil-fields and the +production fell off tremendously. It was a stroke of luck for the +Standard, for it crippled their (at that time) strongest rival. Since +that day the exports of petroleum from Baku have not been large, most +of the reduced output being consumed in Russia, where oil fuel is used +far more extensively than it is here. Then early last year came the +Maikop “boom,” a vast number of French and English companies being +floated to work oil on the borders of the Black Sea. The majority of +them will never produce a barrel of oil, but the good properties will +soon be pumping oil, and their product is bound to have its effect on +the European market. Hence no doubt the Standard’s second reason for +embarking on the recent oil war--the desire to stifle these infant +companies at their birth, when they are still subject to the diseases +of inexperience, experimental work, and bad management. + +Passing next to Austria, we find the Standard operating in the Galician +oil-field, the production of which has risen from 214,800 tons in 1895 +to 1,734,235 tons in 1908. The story is told in the Foreign Office +Report on Austria-Hungary for 1908 (No. 4,355 Consular Reports). There +was an enormous production in 1908, but the State railways could not +use the raw oil in its locomotives until the benzine was extracted. +This is our Consul’s narrative (p. 15):-- + + The Producers’ Association, however, had not the capital to build the + necessary works for this process or the new reservoirs required, and + at this stage the Standard Oil Company of America saw an opportunity + to extend its influence in Austria. The American company entered into + negotiations with the association and offered to erect the factory + for extracting the benzine, and further to build the new reservoirs + and lease them to the producers, who would, in return, have to supply + raw oil to the Standard Oil Company’s representatives in Austria at + a special price. An arrangement on these lines, which would have + given the American Combine a predominating influence in the Austrian + oil industry, was on the point of being signed when the Austrian + Government intervened in June, 1909, to prevent it by undertaking to + carry out the necessary works itself on much easier terms for the + producers.... + + By this arrangement the Standard Oil Company has been entirely + excluded from the business of supplying the State railways with + oil; but the Austrian Government has gone further in its desire + to protect the Austrian oil industry from the competition of the + American Trust, which is represented here by an affiliated company + [_i.e._, the Vacuum Oil Company, of Austria, a branch of the Vacuum + Oil Company, of Rochester, N.Y.], and has introduced a Bill in + the Reichsrat containing various provisions aimed directly at the + Standard Oil Company. Thus a concession will in future be necessary + for carrying on the business of storing, handling, and refining + raw oil, and the provincial authorities are able to refuse this at + their discretion. Further, the distribution of petroleum by means + of tank carts is only to be allowed by permission of the Ministry of + Commerce. The tank carts were recently introduced into Austria by the + representatives of the American Trust, but met with great opposition + on the part of the trade because they rendered the middleman + superfluous, and there is little doubt that the Ministry will not + give the permission required. + +The _Times_ Vienna correspondent on September 14, 1910, reported +further developments of this war against the Standard. It appears +that there is also operating in Galicia a certain Limanova Petroleum +Company, which, though registered as an Austrian company, has about +£500,000 of French capital invested in it. It has been working “in some +sort of unconfessed relationship with the Vacuum Oil Company,” and the +_Times_ correspondent tells us how the Rockefellers have been forced to +swallow their favourite medicine. He writes:-- + + The object of the Standard Oil and its affiliated companies in + Austria (as in other countries) is to obtain control of the Galician + oil-fields, which are worked chiefly by a large number of Austrian + producers and refiners organised in a loose ring or trust. The + tactics of selling oil at or below cost price currently employed by + the Standard Oil Company to kill its competitors or to bring them to + their knees appear to have been employed both by the Vacuum and the + Limanova Companies. + + Some months ago the Austrian Government intervened to protect the + Austrian producers and refiners, and applied to the Limanova Company + in particular methods of administrative chicanery and railway + discrimination strikingly similar to those which made the name of the + Standard Oil Company a byword in the United States. The tactics of + the Austrian authorities are as indefensible, or as defensible, as + are those of the Standard Oil Company. + +The Standard did not enjoy railroad discriminations applied to itself, +and it not only made unavailing representations to the Austrian +Government through the United States Minister at Vienna, but, acting +through the French shareholders in the Limanova Company, they induced +the French Minister to remonstrate with Austria. + + These representations having produced little effect, the French + Government is now stated to be about to adopt measures of + retaliation, and to impose a prohibitive tariff upon Austrian + petroleum imported into France. + +In order to help the Standard Oil Trust to crush out the Galician +oil industry, the French consumer was to pay more for the petroleum +products, ozokerit, &c., that he buys from Austria. But this scheme has +failed, for on November 9, 1910, it was announced in the _Neue Freie +Press_ (quoted here by the _Financial Times_) that the Limanova Company +had surrendered. It has agreed to give up all business transactions +with the Vacuum Company, not to sell directly or indirectly to them +either crude oil or the products of petroleum, and not to make use of +the selling agency of the Vacuum Oil Company for the sale of its own +products. It has further agreed not to undersell the other Galician +refiners, and the Austrian Government has therefore cancelled the +discriminations referred to which it employed against the Limanova +Company. Deserted thus by its French ally, the Vacuum Company has to +rely on itself, and it is announced that the United States Government +has sent a special envoy to Vienna to discuss with the American +Ambassador, among other things, the differences between the Austrian +Government and the Vacuum Oil Company. It looks as though the Austrian +Government is going to win in its struggle with this unscrupulous +monopoly, and that the Vacuum Oil Company will have to climb down. + +In the neighbouring country of Roumania the Standard has waged a bitter +war for the control of the oil industry. The output of oil in Roumania +has been increasing very largely--it trebled in quantity between 1895 +and 1900 and as it has a high flash-point the Standard wanted to get +control of the field in order to supply its Italian and Mediterranean +market. When its agents appeared first on the scene, Roumania had one +large refining company--the Steana Romana--which dealt with about +two-thirds of the native crude oil. The wells were all, or nearly +all, in the hands of small proprietors who were unable to sink them +deep enough, and whose ability to market their oil was hampered by +the high railway rates and deficiency of tank cars. The Standard came +forward with a proposal to build a pipe line from the fields to its +proposed refinery, but fortunately for Roumania its statesmen had heard +of the Standard’s American record, and they refused to allow it to +thus obtain entire control of the national output. It was allowed to +build a refinery, and it bought certain oil-wells from the owners, but +the pipe-line project was decisively ruled out. Strange conversions +went on at Bucharest when the Standard’s lobbyists put in their fine +work. Politicians and newspapers which had opposed the Standard were +converted from the error of their ways in the manner with which Mr. +Archbold has made us familiar, but the Standard was unable to secure +any special privileges. By this time the Deutsche Bank, which controls +the Steana Romana, had taken an active interest in the matter, and +formed some sort of alliance through the European Petroleum Union with +the Shell-Royal-Dutch combine, and the Rothschilds, the Mantascheffs, +and Gukasoffs of Baku. The terms of this alliance are unknown, but +very keen rivalry has been going on in the Roumanian oil-field, and +only last year the Shell-Royal-Dutch party purchased a large Roumanian +oil company, the Astra, which is now valued at £1,200,000. In the +spring of 1907 the Standard came to a “selling arrangement” with +the European Petroleum Union, and this was followed by a similar +arrangement with the Asiatic Petroleum Company, whose capital is +equally held by the Shell Company, the Royal Dutch, and the Paris +Rothschilds. Just how far the European Petroleum Union is involved +in the “rate-war” which has broken out between its twin the Asiatic +and the Standard is unknown, but as the Deutsche Bank is largely +interested in Galician oil-fields where such a bitter fight has been +going on with the Standard for some months, it is probable that the +whole combination must ultimately be involved if the “oil war” lasts +much longer. Sir M. Samuel has stated that the Bataafsche Petroleum +Maatschappij and the Anglo-Saxon Petroleum Company, Ltd., distributed +in dividends in 1909 £1,500,000, and that the profits for 1910 will not +be lower, so that apparently that contest has not seriously affected +the Shell-Royal-Dutch combine. + + + + + THE TRUST IN GERMANY, SWEDEN, AND FRANCE + + + “We are always short of men to do the things we want to do--young men + who are honest and therefore loyal, men to whom work is a pleasure; + above all, men who have no price but our price. To such men we can + afford to give the only things they have not got--power and money.” + + H. H. ROGERS _to T. W. Lawson in_ “_Frenzied Finance_.” + + + + + CHAPTER XI + + THE TRUST IN GERMANY, SWEDEN, AND FRANCE + + +In Germany the Standard was artful enough to strengthen its position +by acquiring existing oil companies and retaining certain prominent +German oil merchants as shareholders, thus breaking to some extent the +force of the natural outcry against itself as an alien corporation. +In the case of its English companies, very few shares are held by +anybody resident in England, and even these are mostly Americans, but +in Germany they are more cautious. There has been a great controversy +as to the adoption of tank railway wagons and tank installations on the +Prussian State railways. It is obvious that these methods will cheapen +the transit of oil, but it is also obvious that they will play into the +hands of the Standard, which with its vast capital is able to establish +extensive installations of this kind, and to prevent its smaller +competitors from reaching the market. + +Public opinion is the more suspicious of these gentlemen because of +the remarkable revelations made last year with reference to their +branch--not included in the list given in Chapter I.--which is called +the German Vacuum Oil Company. The disclosure in question is so +thoroughly in keeping with what is already known of the doings of +the Standard in other parts of the world that it fully bears out the +opinion already expressed, that the great octopus is always one and the +same in its methods irrespective of time and country. It goes all the +lengths it is permitted to go. It has gone, as will be seen, pretty far +in Germany, though the State railway system renders rebates impossible +there, and as Germany is so close to our own doors the lesson is one we +may well take home to ourselves. + +In the early autumn of 1909 Mr. F. Hildebrandt, the editor of the +_Hamburger Fremdenblatt_, whose attention had been called to the +doings of the German Vacuum Oil Company, and who had been led to +investigate the matter, published a vigorous attack on that Company in +his columns. We of course know that the Vacuum Oil Company, Ltd., is +in England merely a tentacle fixed on the body of John Bull through +which suction is applied from 26, Broadway, New York. But the Hamburg +Chamber of Commerce were in blissful ignorance until quite recently +that the German Vacuum Oil Company was only the particular limb of +the monster that had settled down on Germany. It reported not so long +ago to the Friedrichsort Torpedo Works at Kiel that the Vacuum was +a German company, though it might have learnt differently if it had +taken the trouble to look into the Handelregister, or German public +registry of commercial companies. There it would have found among the +names of the chief shareholders Messrs. J. D. Archbold, C. M. Pratt, +and C. M. Everest, the well-known Standard men who were registered as +the original directors of the Vacuum Oil Company of Rochester, N.Y, the +Company whose connection with the Buffalo arson prosecution has been +explained in Chapter VI. Their connection with the Vacuum Oil Company, +Ltd., of London will be explained in a later chapter. Two other +shareholders of the German Vacuum Oil Company, J. C. Moffet and C. E. +Bedford, also belong to the Standard. + +The main allegation put forward in the _Fremdenblatt_ by Mr. +Hildebrandt was that the German Vacuum Oil Company was selling +precisely the same quality of lubricating oil under various fancy +names and at different prices, according to differently imagined +utilities to its German customers, and securing preference being +given to its goods by bribing engineers and foremen right and left to +advise their employers in their favour. The simple change of a label +seemed to have such a marvellous effect on the intrinsic quality of +the Vacuum lubricator that in some cases it justified a rise of 25 +per cent. in price, and even higher. The “Etna” brand of lubricating +oil, for instance, was a poor thing that sold at 41 marks per 100 +kilos for ordinary smearings, but when an important firm gave an order +for a superior article such as the “Gas Engine E” or “Viscolite” oil +they received the same old “Etna” oil duly labelled “Gas Engine E” or +“Viscolite” at the correspondingly superior price of 56 marks and 62 +marks respectively. Acting on this denunciation, the Public Prosecutor +intervened, ordered an inquiry, and summoned Mr. Hildebrandt to +produce his evidence, but not before Dr. Oscar Ruperti, a director of +the Vacuum in Hamburg, had taken a personal action for libel against +Mr. Hildebrandt, who in his turn had taken an action against Mr. E. +L. Quarles, the American manager of the Vacuum in Hamburg, and Dr. +Pölchau, who was both legal counsel and brother-in-law to Dr. Ruperti. +These personal actions appear to be still pending, but the action +instituted by the Public Prosecutor was carried as far as a judgment, +of which the following is a translation:-- + + Record Number: F. IV., 360/10. + + + JUDGMENT. + + On the motion of the Public Prosecutor, the accused, Edward Louis + Quarles, is discharged with reference to the accusation of fraudulent + practice, on the ground of insufficient proof. The costs of the + action are charged to the State. + + + GROUNDS. + + The preliminary inquiry was opened against the accused on his + appearing suspect at Hamburg and elsewhere-- + + 1. Of having in the years 1906–08, in conspiracy with the merchant + E. O. Wader, now absent, defrauded the State Electrical Works at + Kiel of 2,826 marks 5 pfennigs by delivering to the works, instead + of the brand “Vacuoline,” which was ordered, at the price of 75 + marks per 100 kilos, the description “Fusoline,” which only cost 44 + marks per 100 kilos, under the brand of “Vacuoline.” + + 2. Of having, since the year 1905, defrauded numerous customers + of the German Vacuum Oil Company by representing in the Company’s + price-list that the descriptions of oil “Gas Engine E and F” and + “Gas Engine I and Heavy” are a more valuable article than the + descriptions “Etna” and “Fusoline,” quoted in the price-list at + 44 marks per 100 kilos, whereas the two latter descriptions are + identical with the two former respectively. + + As to the charge of fraudulent conspiracy to the detriment of the + Kiel Electrical Works, it has not been proved that the accused + Quarles bears the responsibility of changing the cheaper brand + “Fusoline” into the dearer brand “Vacuoline.” The order to effect + this change in the branding was given at a time when the accused + Quarles had not as yet a seat upon the board of the German Vacuum + Oil Company, and had nothing to do with the Hamburg branch. At the + end of 1906 or the beginning of 1907 the accused had, of course, + learnt of the changes being made in the brandings from the then + manager of the Hamburg branch, Earnshaw. But at that time also the + accused had nothing to do with the Hamburg branch office, and was not + called upon to prevent what was in his view an incorrect rebranding. + Also, he had nothing to do himself with the changing of the brand. + It has not been proved that after the accused had taken a seat upon + the board of the German Vacuum Oil Company that the rebranding of + “Fusoline” as “Vacuoline” was still carried out with the knowledge + and consent of the accused. + + As to the rebranding of the cheaper descriptions of oil “Etna” and + “Fusoline” as “Gas Engine E and F” and “Gas Engine I and Heavy” + respectively, the preliminary inquiry has tended to show that “Gas + Engine I and Heavy” consist of different components to the other + brands, and are consequently not identical with them. + + The brands “Etna” and “Gas Engine E” are, of course, identical, + as is “Fusoline” and “Gas Engine F.” But a fraudulent method of + trading could only be found to exist in the different branding if + it were established that these like descriptions were delivered + under different brandings and different prices to one and the same + customer. It has not been possible to establish that. The accused + also cannot rebut the allegation that he gave it as his opinion that + the differentiation in prices was justified by the different way in + which the two oils were used, the higher running expenses for “Gas + Engine E and F,” and greater risk encountered by the users of these + two brands. + + Hamburg, May 30, 1910. + + The Landgericht, Second Criminal Chamber, + (_Signed_) GOSLICH, LOHMEYER, SICK. + + For the correctness of the copy: + + Hamburg, July 9, 1910. + + The Chancery of Public Prosecution, + (_Signed_) Voss, Chancery Clerk. + +It will be seen at once that the judgment exculpates Mr. Quarles +personally, but obviously inculpates the German Vacuum Oil Company, by +assuming that the practices alleged had taken place, though there was +not evidence to connect Mr. Quarles with them. + +Mr. Hildebrandt makes great capital, in a pamphlet he has published, +out of the regular Standard Oil practice of bribery, with which the +German public seems to have been quite unfamiliar, but in which their +education must now have been pretty well completed, to judge from +the mass of evidence adduced in the Hildebrandt book. Some of it is +entertaining enough and edifying enough for British consumption, +particularly as it relates to a cousin-German of one of our own +Standard Oil subsidiaries. Here is the text of an affidavit made by +Mr. Hans Schnell, who had formerly been a representative of the German +Vacuum Oil Company:-- + + I, the undersigned, hereby declare and am ready to testify on oath + that from September 15, 1906, to March 31, 1908, I was in the employ + of the German Vacuum Oil Company of Hamburg, as representative for + the Dresden branch, and later for Lower Silesia, on a fixed salary of + 200 marks a month and also confidential expenditure and commission. + This commission I had for the most part to pay over to machine-men, + partly in cash, partly in goods, in order to bring off new business, + and in some cases to maintain business relations heretofore + existing. I was told by Mr. Naerger, the correspondent for Breslau, + in the branch office in that city of the German Vacuum Oil Company + of Hamburg, the names of the firms whose machine-men were to receive + bribes from me. Also Mr. A. S. Mié, of Dresden, director of the + Vacuum Oil Company, told me in a way that could not be misunderstood + that I was to expend these commissions in this way, and that if I had + paid over no bribes in money or goods to the machine-men of the firms + I had to call on I would have had scarcely any new orders, and would + have lost the old business connection. + + Dresden, November 4, 1909. + + (_Signed_) HANS SCHNELL. + + The above signature of Mr. Hans Schnell, Wilhelmruh, near Berlin, + merchant, was done in my presence, and I hereby officially certify + that it is genuine. + + Dresden, November 5, 1909. + + (_Signed_) HORST VON MUELLER-BERNECK, + Royal Saxon Notary, Dresden. + +In further illustration of Mr. Mié’s efforts, Herr F. Hildebrandt +publishes a photographed bill of expenses incurred by that gentleman in +establishing and keeping up the German Vacuum Oil Company’s business +connections, and no doubt incidentally of establishing a reputation for +himself among engineers and machine-men generally of being a thoroughly +jolly fellow. This document will, perhaps, help us to understand why so +many working engineers select the Vacuum oils, when no chemical test +known to science will indicate any superiority. Its translation is as +follows:-- + + M. + Evening with Mr. Pampel and Obersteiger Hohner 42 + Evening with Mr. Mié 28 + [NOTE.--We had invited these gentlemen, and threw + about a good deal of money in order to + accomplish something. Besides the M. 28 + entered here I added M. 48 out of my own + pocket, which I have had entered in my + own account.--(_Signed_) MIÉ.] + Cash, Mr. Müller, foreman 100 + Cash, Mr. Plaintz, engineer, of Gustav Toelle 50 + Foreman of S. Wolle 5 + Cigars for foreman Müller 12.50 + Cigars for foreman Hortenbach 6.25 + Carriage and beer--call on Hortenbach 10.30 + Wine, dinner, cigars, &c., with Hortenbach 35.20 + Cash, Mr. Hortenbach 20.00 + ------ + Total M. 309.25 + +Mr. Hortenbach seems to have taken a good deal of lubricating. +Apparently his machinery remained immovable under the influence of +wine, dinner, and cigars, and it became necessary to put twenty marks +in the slot in order to make him work. + +How Mr. Hildebrandt got hold of this bill, or petty-cash ticket, +he does not say, but he evidently takes a sinister view of the +junketing disclosed, and regards the money spent upon it as so much +“Schmiergeld,” to use the appropriate word employed by Mr. Schnell +in his affidavit. The only English translation for “Schmiergeld” is +“bribe”--no doubt a very frigid and colourless word. “Smearing-money” +would be more descriptive and picturesque as well as literal, though +for absolute neatness of expression joined to pregnancy of meaning the +Italian circumlocution for the ugly word “bribe” of “oglio di palma,” +or palm-oil, beats the German. “Lubricating oil” seems an apt English +equivalent. + + * * * * * + +Mr. Hildebrandt also publishes a letter on this subject from one of the +Vacuum Oil Company representatives, which seems to have attracted some +attention in Kiel:-- + + KIEL, _November 12, 1903_. + + The German Vacuum Oil Company, Hamburg. + + I beg to acknowledge receipt of yours of the 10th of this month, the + contents of which I note. With reference to my expenditure as your + representative, I gave the Flensburg Shipbuilding Company last month + alone some 190 marks for gratuities and introductions to the three + foremen. Then I gave 50 marks to the head man at the Kiel Electrical + Works. As to the smaller expenses incurred as your representative, I + cannot remember them now, but they will be found in my memoranda of + extra expenses. + + Yours truly, + HUGO COHR. + +The Vacuum Oil people have always liked to be on good terms with the +engineer, the actual mechanic who has to see to the application of the +lubricating oils to the machinery, and whose opinion on their merits +is naturally deferred to by his employers. Mr. Heinrich Gremmler, a +director of the German Vacuum Oil Company, and manager of the Berlin +branch, wrote, under date June 20, 1908, by way of instruction to one +of his agents, in one of the letters photographed by Mr. Hildebrandt: +“Try and get at what you want through the foremen--that is, by indirect +means. There is no need at all for me to tell you on what spot you may +put your hand upon success.” Mr. Hildebrandt took all this up in a very +unkind spirit towards the German Vacuum Oil Company, and spoke of it as +bribery, whereupon Mr. Gremmler called upon him, he says, and denied +indignantly that the Company practised bribery. In fact, the Company +published a document in its defence against this charge signed by Dr. +Ruperti, one of its directors, in which, while it did not go so far as +to state that it never practised bribery, it declared, at any rate, +that “it was incorrect to say that the German Vacuum Oil Company had +introduced the gross practice of bribery into German trade as a system, +and that it had succeeded by means of bribes in obtaining permanently +higher prices for its oils.” The studious moderation of this defence +strikes me as remarkable. The Company, however, also took occasion to +state that it never put any employee into its selling business except +on a contract containing this passage:-- + + You pledge yourself in dealing with the employees of our customers + most carefully to abstain from any transaction that has even the + appearance of corrupt influence. Any action contrary to this + regulation is a special reason for instant dismissal. + +But Mr. Hildebrandt unkindly suggests that this is only another way of +saying “Don’t nail his ears to the pump.” He also says that after the +publication of the Hugo Cohr letter in Kiel, the Vacuum Oil Company was +struck from the list of those invited to tender for the supply of oils +to the municipality. The British public and the proprietors of British +engineering works must form their own judgment in the matter, but they +will at any rate see that, for one reason or another, the Vacuum Oil +people have conceived a deep affection for the German working man. + +These revelations are the more interesting because there are similar +stories from other countries where the Vacuum methods have been +introduced. The _Morgenblad_, of Stockholm (quoted in the English +shipping organ _Fairplay_ of July 22, 1909), gives an account of the +methods of the Vacuum Oil Company, of Sweden, another of the Everest +group. The Stockholm newspaper states that the Civil Commission +appointed to inquire into the buying of naval stores has in its +possession several letters from the Vacuum Oil Company of Sweden to +engineers in the Swedish Navy. These letters contain advice to enable +the engineers to prove to their superior officers, who possess less +knowledge of the subject, that other lubricating oils are inferior to +those vended by the Vacuum Company. One letter runs: “It is very easy +to do this by only tightening the nuts a little, and the bearings will +soon become hot.” + +The sensation created by the publication of these letters caused the +Chancery of Justice, the highest judicial authority in Sweden, to order +the Chief of the Criminal Police in Stockholm (Mr. Lars Stendahl), who +is also an officer of the Municipal Treasury, to hold a general inquiry +with plenipotentiary authority as to the summoning of witnesses. This +was on May 18, 1909, and on June 5th following the King of Sweden +confirmed this Commission, and added two other Commissioners, Messrs. +J. Th. Akerström and Fr. S. Eriksson. In the beginning of September, +1909, Mr. Stendahl’s report was issued, which proves by an abundance +of sensational and at times amusing evidence that the so-called Swedish +Vacuum Oil Company is identical with that of Rochester, U.S.A., that it +has evaded Swedish taxation, fraudulently rebranded cheaper as dearer +oils, and by a very curiously concealed system of bribery induced +engineers of the Royal Navy to diminish the effectiveness of their +service. + +In the result the Company lost all its Government contracts, but +escaped further proceedings, as Swedish commercial law in its previous +innocence of the “real smart” methods now introduced to backward old +Europe by the Standard Oil apostles, had utterly failed to provide +penalties to meet the case. From Norway, in September, came the news +that the last independent refinery had been acquired by the Standard, +that much public indignation had been aroused among the hardy Norsemen, +and that steps were being taken with the support of the Government to +build at once an independent refinery. + +In France, where there is a heavy duty on refined petroleum, the +Standard has established a refinery, which has given it a monopoly of +the benzine trade. The latest news last September was that the French +Government has been induced to reduce the import duty on Dutch East +Indian benzine from £1 to 10s., and this has enabled the Royal Dutch +combine to start a refinery in France for the purpose of competing +with the Standard. As I have explained, the Sumatran and Borneo crude +provides a higher percentage of benzine than the Standard’s American +crude, and there is no doubt this move will prove a very awkward one +for the latter. + + + + + THE TRUST’S “TIED HOUSES” IN ENGLAND + + + “According as you put something into the Church or the Sunday-school + work the greater will be your dividends of salvation.” + + JOHN D. ROCKEFELLER _in a Sunday-school address_. + + + + + CHAPTER XII + + THE TRUST’S “TIED HOUSES” IN ENGLAND + + +I have reserved until the end of my survey the examination of the +Standard Oil Trust’s operations in Great Britain, because, as they have +not been investigated so closely here as they have been by various +Legislative Committees in the United States, there is less official +testimony to proceed upon. Many of the Trust’s intrigues and agitations +here can only be understood by remembering what has been proved by +direct testimony to have taken place in similar circumstances in the +United States. In this way our preceding examination of the secret +rebate, the bribery, the underselling, and all the other machinery of +the Trust in its native home, will help us to understand a few things +which are still obscure here. + +During the time when the Trust was growing up in America, the British +consumer and the British oil-dealer were alike blissfully unconscious +of what was in store for them. For the first English news of the +Trust we must turn to the evidence provided by Mr. (now Sir) Boverton +Redwood, the distinguished chemist, whose subsequent appearances at +so many public inquiries as a Standard Oil witness have been fitly +rewarded by his selection as Petroleum Adviser to the Home Office! + +This takes us back to the years 1877–8, when Mr. Boverton Redwood +was the Secretary of the Petroleum Association, and visited America +at their request to induce the American refiners to adopt the Abel +(closed) tester in standardising their oil, and also to complain of +certain impurities which were appearing in their consignments. With +regard to the first, Mr. Redwood’s report to his association shows that +he conducted experiments with the Petroleum Committee of the New York +Produce Exchange which satisfied them with the Abel tester, and we +read that Mr. Paul Babcock took great interest in these experiments. +Mr. Babcock was then a director of the Devoe Manufacturing Company, +about this time bought by the Trust, and twenty years later he and +Mr. Boverton Redwood met in London, both giving evidence before the +Commons’ Petroleum Committee against raising the flash-point of +kerosene. Mr. Redwood met in 1877 a number of other persons whose +names will be familiar to readers of my narrative. He, for example, +visited the refinery of Messrs. Charles Pratt & Co., through the +kindness of Mr. H. H. Rogers, and when he left New York he carried +letters of introduction from Mr. Wm. Rockefeller, Vice-President +of the Standard Oil Company, to Colonel Payne, its Treasurer, in +Cleveland, Ohio. Indeed, Mr. Redwood’s tour seems to have been in the +main a Standard Oil excursion, for in Philadelphia he visited Messrs. +Warden and Frew (who were in the Trust), at Pittsburg he saw Mr. +Charles Lockhart, of Lockhart and Frew (another Trust firm), and then +at Cleveland he was taken over the Standard Oil works by Mr. Samuel +Andrews (John D. Rockefeller’s first partner). When he returned Mr. +Redwood was the bearer of a letter from Mr. Wm. Rockefeller, dated +December 19, 1877, couched in the best Standard Oil vein:-- + + It is our desire to furnish at all times refined oil that will + be acceptable to the trade of all countries. It is our wish and + intention that our products shall always reach the highest excellence. + +Whatever their wish might be, the prospect of making more money proved +too strong for these philanthropists, and complaints continued from +the English traders as to the bad quality of the oil sent here. In +1879 and again in 1884 Mr. F. W. Lockwood, a saponaceous Standard +Oil expert, was sent here to gammon the Petroleum Association with +some cock-and-bull story. The second visit is referred to by Mr. +Boverton Redwood in a report to the Petroleum Association, published +in the _Grocer_ of May 3, 1884. In it he explained that Mr. Lockwood +attributed the complaints about the oil to the use of damp-clogged +or hard lamp-wicks. This great discovery was too much even for Mr. +Redwood, who has never been a harsh critic of the Standard Oil Trust +methods. He thus reported:-- + + In conclusion, I desire to record as strongly as possible my + individual opinion that in their own interest the American refiners + should forthwith institute such arrangements as will ensure + the future maintenance of a satisfactory standard of quality. + Considerable injury to the petroleum trade results from the + distribution of such oil as is the subject of this report, consumers + in many cases relinquishing the use of petroleum oil in favour of + some other sort of light. Moreover, the American refiners should + bear in mind that even now they have not a monopoly of the supply of + mineral burning oil in this country, and they will find it necessary + to pay much greater attention than heretofore to the quality of the + oil they manufacture. + +As an impartial testimony to the then quality of the Standard’s +illuminating oils and the wonderful processes of manufacture which +their Press Bureau now tells us they invented, I should give that +document a high place. But to do them justice, the American refiners +were not above taking a hint from other manufacturers. A gentleman +with long experience in the oil trade once told me how Mr. H. H. +Rogers about this time came to England. Up in the North there was a +manufacturer of lubricating oils who had by his own ingenuity and skill +developed some excellent ideas. He used to blend American oils, and Mr. +Rogers asked one of the importers who dealt in their goods to introduce +him. They went over the works together, and the proud owner showed them +all his special processes and his little inventions and blends. Rogers +was a practical refiner, he kept his eyes open, and after he returned +to America the Standard’s first lubricating oil branch, the Thompson +and Bedford Company, of New York, began to export here some of the +specialities which the North countryman had made. As brain-pickers the +Standard men have no equal. + +The first appearance of the Standard in this country was rather sudden. +There came here an American gentleman named Frank E. Bliss, who had +been connected with the business of Charles Pratt & Co. Nobody knew +what his London business was, but one day there appeared in the +_Financial News_ the brief record of the registration at Somerset House +on April 27, 1888, of the Anglo-American Oil Company, Limited. It had +a capital of £500,000 in £20 shares. The first list of signatories +contained several clerks and agents, but it also bore the name of +Frank E. Bliss, and that told those who were in the trade what was +coming. The first list of directors subsequently filed at Somerset +House included such sound, reliable Standard Oil names as H. H. Rogers, +J. D. Archbold, W. H. Libby, J. G. Gregory, and Wesley H. Tilford, +all of 26, Broadway, New York, and Frank E. Bliss, of London. The +precise significance of the word “Anglo” in its title becomes clearer +when it is stated that the articles of association provided that the +directors’ meetings should be held in London, but that if a majority +of the directors so decided they might be held in New York or any +other part of the United States of America. As there was only one +director resident in England, it is not hard to guess where most of +the directors’ meetings took place. This also helps us to appreciate +the amount of truth in Mr. J. D. Archbold’s Missouri evidence that he +did not know why the Anglo-American Oil Company made loans amounting +to £500,000 to its managing director, Mr. James A. Macdonald. Mr. +Archbold was a director of the “Anglo” from the outset until somewhere +between July, 1907, and July, 1908. In 1893 its capital was increased +to £520,000, and at this time Mr. John D. Rockefeller’s name first +appears on the share list as the owner of 6,867 shares out of a total +of 26,000. In July, 1899, the share list of the Anglo-American Oil +Company contained the names set out below. As will be seen, many of +them have appeared in the course of my story, and the list contains a +great deal of “American” and very little “Anglo.” Where no address is +given below, the return at Somerset House has “26, Broadway, New York,” +which is the central address of the Standard:-- + + AMERICAN SHAREHOLDERS. + + Shares. + H. M. Flagler and J. D. Archbold 10,239 + John D. Rockefeller 6,867 + C. W. Harkness, 611, Fifth Avenue, N.Y. 1,542 + Mrs. Mary Pratt, Chas. M. Pratt, and Fred B. Pratt 1,336 + Oliver H. Payne, 2, West Fifty-seventh Street, N.Y. 1,068 + H. M. Flagler (separately) 748 + H. H. Rogers 503 + Laman V. Harkness, Greenwich, Conn. 349 + W. L. Harkness, 10, West Forty-third Street, N.Y. 347 + Wm. Rockefeller 347 + Chas. Lockhart, Pittsburg 320 + John D. Archbold 213 + W. Everitt Macy 199 + Mrs. Esther Jennings, 48, Park Avenue, N.Y. 146 + Miss A. B. Jennings, 48, Park Avenue, N.Y. 63 + Oliver Jennings 63 + Walter Jennings 64 + Mrs. Mary B. Jennings, Fairfield, Conn. 53 + Mrs. Elmira D. Brewster 53 + George S. Brewster 53 + F. F. Brewster, Newhaven, Conn. 53 + R. Stanton Brewster 53 + J. M. Constable, draper 82 + H. Melville Hanna, Cleveland, Ohio 80 + Wesley H. Tilford 80 + C. F. Heye 98 + J. S. Kennedy 80 + Ed. T. Bedford 66 + Ambrose M. McGregor 53 + Louis H. Severance 142 + C. M. Chapin 26 + H. C. Folger, jun. 26 + W. H. Macy, jun. 13 + W. T. Wardwell (treasurer of the Standard Oil Trust) 21 + Daniel O’Day, banker, N.Y. 47 + Hugh J. Jewett, Morristown, New Jersey 32 + J. H. Alexander, Elizabeth, New Jersey 18 + Mrs. Emma B. Auchinloss, 17, West Forty-ninth Street, N.Y. 63 + L. S. Thompson, Redbank, New Jersey 29 + W. P. Thompson, Redbank, New Jersey 34 + Mrs. Mary E. Thompson 37 + Mrs. Eliz. T. Preston, 1,228, Wood Avenue, Colorado Springs 26 + Mrs. Helen James 63 + Mrs. Salome Jones, Boston, Mass. 29 + Joseph Seep, banker, Oil City, Penn. 26 + C. F. Akerman 1 + A. J. Pouch 1 + T. C. Bushnell 1 + Livingston Roe 1 + + LONDON SHAREHOLDERS. + + Frank E. Bliss 1 + James Macdonald 1 + J. H. Usmar 1 + W. A. Hawkins 1 + +There have been various changes in the share list, and on June 30, +1910, the following were the principal shareholders:-- + + Shares. + Standard Oil Company of New Jersey 49,993 + Trustees Standard Oil Trust 1 + Frederick D. Asche 1 + J. H. Usmar, 22, Billiter Street, E.C., merchant 1 + Francis Edward Powell, 22, Billiter Street, merchant 1 + Thomas H. Hawkins, secretary, 22, Billiter Street 1 + James Hamilton, 22, Billiter Street, merchant 1 + William E. Bemis, 26, Broadway, New York 1 + ------ + 50,000 + +The capital of the Company was at that date £1,000,000 in £20 shares. +It is worthy of notice that in 1907–8, at a period when Mr. Roosevelt +and his party were out after the Trusts, Mr. Archbold, Mr. Rogers, and +nearly all the American directors of the Anglo-American resigned. In +June last the directors were Mr. J. H. Usmar, Mr. Thomas H. Hawkins, +Mr. F. E. Powell, Mr. William P. McKendrick, of 22, Billiter Street, +E.C. (the London address of the Anglo-American Oil Company, until +it moved last autumn to St. James’s Park), and Mr. F. D. Asche, of +26, Broadway, New York. Mr. Fred D. Asche is a clerk in the export +department of the Standard in New York. Thus, while in 1889 there were +five directors resident in New York and one in London, in 1910 there +were four directors resident in London and one in New York--a somewhat +significant reversal of the ratio. Mr. Jas. A. Macdonald, the gentleman +already mentioned, ceased to be managing director in 1906, when his one +share was transferred to the Standard Oil Company of New Jersey. + +The advent of the Anglo-American Oil Company was the beginning of +troubled times in the English petroleum trade. Mr. Rockefeller’s motto, +“Pay nobody a profit,” was put into force, and the Trust began to buy +out or to starve out the various groups of middlemen who had hitherto +been vending their oils to the English consumer. Some evidence on that +point was given to the Select Committee on Petroleum in 1897 by Mr. W. +J. Leonard, of Carless, Capel and Leonard, Pharos Oil Works, Hackney +Wick. Mr. Leonard stated that London was then the only “free market” +for other oil than Standard, since, although there were independent +dealers in Liverpool, they had for several years a “selling agreement” +with the Anglo-American Oil Company. Then came these answers:-- + + The Chairman: I want to know what there is to prevent you importing + oil into Liverpool in competition with the Anglo-American Oil Company? + + _A._ If we did this of course the Anglo-American Oil Company would + at once put down their price, _so that we should have to sell + at a ruinous loss, and we cannot afford to compete with them; I + mean, we are all afraid of them_. If we sent oil to Liverpool the + Anglo-American price, instead of being nearly ¾d. a gallon more + than the price in London, would probably be something like ¾d. a + gallon less than the price in London. That would be the immediate + effect. + + _Q._ Yes, but is there not a regular importation, and an increasing + importation, of Russian oil? + + _A._ No, it is not an increasing importation; it is not, certainly. + Of course the Anglo-American Company are getting the whole business + practically (Report and Evidence, 1897, Q. 4,834). + +This is how an “independent” oil merchant talked of the colossal power +of the Standard Oil Trust at that date, and their influence extended +even to the smallest transactions. When a great proportion of oil was +still imported in barrels, at least one London firm did a very good +business buying up the empty oil barrels from the hawkers and small +dealers, who used to collect them at the consumer’s premises. The +barrels were well made, and the Standard gladly bought the empties to +use again. But it found somebody else was making a living. This would +never do. At once the Standard began to offer small inducements to +the hawkers, and the barrels went to them direct, so that the small +factor’s business was killed. + +Very interesting evidence was given by Mr. W. T. Rigby, Secretary of +the Liverpool Oil Dealers’ Association, who was called in support of +the Standard’s opposition to the raising of the flash-point. He said +the members of his association objected to the Anglo-American Company +supplying so small a quantity as five gallons to small shops which had +formerly been supplied by the small wholesaler. He went on:-- + + In the first instance, when the Anglo-American put their tanks on the + ground they gave us their word that no less a quantity than twenty + gallons would be delivered, but when they found that the retail + dealers of Liverpool would not embrace the new system of tank-wagon + delivery, but preferred to take it in the old style of barrels, they, + in the words of their Liverpool manager, were forced to administer + a stab in our backs--this is, go really behind us and secure that + trade which legitimately belonged to the Liverpool chandler doing a + small wholesale business, and that is why they [his association] are + objecting to the delivery of anything less than ten gallons of oil + (Report and Evidence, 1897, Q. 6,052). + +But some of the wholesalers, especially where in the provinces they had +built up a good business which it would be difficult for the Standard +to capture, were allowed to remain as “tied houses” in the trade. +Some evidence was with difficulty extracted by the Lord Advocate and +Mr. M‘Killop, M.P., at the same committee from Mr. Geo. Base, a large +“independent” oil dealer of Norwich, who had come up to give evidence +in support of the Standard’s views against raising the flash-point:-- + + Mr. M‘Killop, M.P.: Have you any freedom to use any class of oil you + like?--We prefer American oil. In fact, we have dealt in nothing else. + + Have you a general freedom to use Russian oil, for example, if you + choose?--We don’t like Russian oil. + + Are you bound to any particular dealer? Are you bound to use American + oil?--_Yes, that is so._ That is largely because of choice. + + You are under contract?--Yes. + + You are not allowed to sell any other?--Yes, that is so. + + Mr. Ure, M.P.: What do you mean by contract?--I mean I have an + arrangement at present in distributing American oil. + + Do you mean that you have a binding agreement with the Standard Oil + Company to sell nothing but their oil for a specified period?--No, + not for a specified period. + + For an indefinite period?--There is no period specified whatever. + + Do you mean that you have a signed agreement to this effect, “signed, + sealed, and delivered”?--If it is a binding agreement, it does not + matter whether it is signed or not. + + Is that a common type of agreement with the American Company and its + customers?--I don’t know. + + Does it specify any price?--No. + + Does it preclude you from dealing in the oil of any other + company?--_Well, yes, it does to a certain extent._ + + What happens supposing you have oil from any other company?--That + I can hardly say, but I am perfectly at liberty to determine the + agreement at any time I choose. + + Do you mean that breach of the agreement would not entail a claim for + damages?--No. + + Then what “consideration” do you get for entering into such + agreement?--The consideration is the larger volume of business. + + But you can without an agreement deal in it?--Yes. + + Why? You go into this agreement, and can give me no reasons for it. + Is it in writing?--In print. + + So that a great number of people enter into the same kind of + agreement, apparently?--No, I think not. Of course, I have no + personal knowledge (Report and Evidence, 1897, Q. 3,475 _et seq._). + +We have only to read the evidence of Mr. Leonard and Mr. Rigby, and the +American evidence already given, to understand why these “tied houses” +exist. + +In one portion of the United Kingdom the Standard has never been +able to obtain complete control. Scotland is the earliest home of +the mineral oil industry, and patriotism and caution alike induced +the Scottish users of burning oils to prefer the high-flash oil +which the Scottish oil companies refine to the dangerous low-flash +petroleum imported by the Standard. Although the cheapness of the +latter’s product has made considerable inroads on the former’s trade +in kerosene the Standard has never been able to kill it, and it has +of late made various proposals to the Scottish companies to take over +their whole output of kerosene and to distribute it by the tank system. +The Scottish oil companies (who do a barrel-oil trade) are unwilling +to supply the Standard with all their output, for they know that the +Standard would by the tank distribution system kill the middlemen. Then +when it had made itself the sole channel by which kerosene could reach +the scattered Scotch consumers, it might decline to buy any more Scotch +oil and simply force its own oil on the purchaser. The Standard people +are now attempting to push their own oils by the tank distribution +system on Scotland, but are meeting with strong opposition. + +But the strength of the Scottish companies is not patriotic so much +as economic. They refine their oil from the shale, a soft, greasy, +slate-like stone. Now so long as kerosene was the only thing the +refiner troubled about, the Americans had the advantage because Nature +had done half the work of distillation for them in her own laboratory, +and instead of mining a stone, they got petroleum as a liquid. But +the bottom is falling out of the kerosene trade, as I have already +explained, and the Scottish companies are recouping themselves on +their by-products. At the time of writing burning oils (kerosene) +and lubricants are lower than they have ever been, and it is certain +that no profit is being made out of them in Scotland. But the Scotch +shale in distillation yields sulphate of ammonia, which is in good +demand as a fertiliser, and is not obtainable from either American or +Russian crude. Naphtha is also selling at a fairly good price owing to +the development of the motor industry--in fact, the Standard has been +buying large quantities of it from certain Scotch companies. In the +past the Scotch refiners have been greatly assisted by the considerable +percentage of paraffin wax which their crude yields, but in the last +three or four years they have lost some of this advantage owing to +the increased output of paraffin wax in Galicia. The Boryslav and +Tustanovitch fields in that country produce an oil which yields from 1 +to 7 per cent. of paraffin wax, and the production of paraffin wax has +shot up very suddenly--which is no doubt one reason why the Standard +has been fighting so hard in Galicia. The net result is that the Scotch +companies have a hard struggle to maintain themselves against the +Standard monopolist tactics, but that on the whole they hold their own. + + + + + THE FLASH-POINT SCANDAL + + + “The flash-point of 73 deg. was badly founded, because it is the + flash-point of a substance which is being burned at temperatures + commonly above 73 deg., and, therefore, you are dealing in every lamp + so used with an oil beneath your flame which is in a condition of + danger.” + + PROFESSOR ATTFIELD, F.R.S., + _Select Committee on Petroleum, 1896 Report_. + + + + + CHAPTER XIII + + THE FLASH-POINT SCANDAL + + +It is now time to devote a little attention to one of the Standard’s +great triumphs in this country--the staving off until this present day +of the legislative raising of the flash-point of petroleum. I desire +to make this explanation short and simple. The flash-point is the +temperature at which an oil will give off vapour, which, mixed with +air, is explosive. In other words, it is the point at which a flame +brought close to its surface will cause it to explode--the explosion +being, of course, small in a 2-in. deep test-cup, but serious when +a lamp or a barrel is in question. The test depends on the presence +of vapour. It is obvious, therefore, that any test-cup which allows +the vapour to escape before the flame can be applied is useless. The +advocates of safe oil have always demanded a test-cup which would +retain the vapour, and the petroleum traders in Europe and America +have always pushed some kind of cup which would allow as much as +possible of the vapour to escape. + +The story of the juggle with the flash-point begins in 1868, before +the Standard Oil Trust was born, and for its initial stage it is only +fair to admit that it can have no responsibility. The Fire Protection +Committee of 1867 recommended that the flash-point should be 110 deg. +Fahr. The Petroleum Association--which was then an independent body of +importers of American oil--asked for a flash-point of 100 deg., and the +Home Secretary called in the “three chemists”--Dr. Lethaby, Professor +Attfield, and Professor (afterwards Sir Frederick) Abel--to advise as +to the flash-point and the method of determining it. + +The three chemists recommended that 100 deg. should be conceded +provided it was ascertained by a test-cup which they recommended. That +tester, called “the three chemists’ cup,” gave results which it is now +admitted were identical, within 3 deg. of those shown by the present +Abel tester. What followed is succinctly narrated by Mr. Ure, K.C., +M.P. (now the Lord Advocate), in his draft report presented to the +Petroleum Committee (1898 Report, p. xxxvi):-- + + The Report [of the three chemists] was accepted by the Home Office + and the standard and test were embodied in the Notices of Motion and + Orders of the Day for the 8th of June, 1868. A week later it will + be found from the Notices of Motion and Orders of the Day that the + test prescribed by the three chemists, and accepted by the Government + on the 8th of June, had undergone a very material change. In the + interval the Petroleum Association approached the Government and + requested that the three chemists’ test be modified. The Government + remitted to Sir Frederick Abel to consider the question thus raised. + He was comparatively new to the subject of flash-point investigation. + Dr. Lethaby and Dr. Attfield had for years devoted special + attention to it. Both were in London at the time, and available for + consultation. Neither was consulted or even apprised of the proposed + change. + + Sir Frederick Abel was enjoined by the Government not to give way on + any point affecting the efficiency of the test. He did give way; and + in the result a test was prescribed which he himself subsequently + described as “untrustworthy,” “open to manipulation,” and “not of + such a nature as uniformly to ensure reliable and satisfactory + results.” _Why Dr. Lethaby and Dr. Attfield were not consulted has + not been explained to your Committee._ It is certain that if they had + been consulted, the change could never have been made. Whenever it + came to his knowledge Dr. Attfield at once informed the Government + that the test was far less stringent than that prescribed by the + three chemists, that it would be a fertile source of disputes, and + that the public would not be protected. + +That 100 deg. flash-point, with the inaccurate tester of the Petroleum +Association, went into the Act of 1868, and the mischief was done. But +the most extraordinary and audacious chapter in this strange story +took place ten years later when the disputes and blunders which Dr. +Attfield had foretold had occurred. Sir Frederick Abel then devised the +Abel (close) tester, which is an efficient one; but he showed that an +oil flashed in that tester at a point 27 deg. lower than that at which +it flashed in the Petroleum Association cup legalised in 1867. + +In 1879 the new Act legalised Sir Frederick Abel’s tester and then +fixed the flash-point at what was called the “equivalent” of the old +100 deg.--in other words, it reduced the flash-point by 27 deg., the +amount of the inaccuracy of the old tester. The effect, of course, was +to perpetuate the blunder of the 1867 Act in another way. It is as +though a man, finding that his watch lost 27 minutes in a day, bought a +new and accurate timekeeper and then purposely put it back 27 minutes. + +The history of this bureaucratic juggle was effectively summarised by +Mr. Ure in the House of Commons, March 15, 1899:-- + + In 1862 there was a correct flash-point (100 deg.) fixed, and no + tester for ascertaining it. + + In 1868 there was a correct flash-point (100 deg.) and an incorrect + tester for ascertaining it. + + In 1879 there was a correct means (the Abel tester) of finding out an + incorrect flash-point (73 deg.). + + Now we demand a correct flash-point (100 deg.) and a correct means of + finding it out. + +To this day all petroleum which flashes at 73 deg. Fahr. in the Abel +tester is subject to no restrictions of any kind, and lamp accidents +and oil fires have carried off hundreds of lives since 1879. Lord +Kelvin, surely a high authority, said to the Select Committee in 1906:-- + + It seems to me that the logical outcome of Sir Frederick Abel’s work + ought to have been to declare that the 100 deg. test in force in the + 1871 Act must be fulfilled by a proper close test. I cannot think how + Sir Frederick Abel dropped from 100 deg. to 73 deg. + +Professor Silvanus P. Thompson, in his “Life of Lord Kelvin” (vol. ii. +p. 962), tells us:-- + + Lord Kelvin felt strongly on this question. In 1868 an open test-cup + was legalised which in practice proved to be erroneous to an average + extent of 27 degrees. In other words, oil which was actually giving + off explosive vapour at 73 Fahr. did not flash in this open cup + until it reached 100 deg. The number of fires due to paraffin lamps + increased owing to the introduction of cheap low-flash oils. In spite + of this, in 1879, when a new and more efficient test was adopted, the + flash-point was by a scandalous manœuvre reduced to 73 deg. + +It is interesting to recall that in the experiments which Sir +Frederick Abel made during the period when the Abel tester and the +difference between its results and those of the 1868 tester were under +investigation, he was assisted by Mr. Boverton Redwood, the chemist of +the Petroleum Association. But the delicate operation of substituting a +lower flash-point when the tester was made more accurate seems to have +been carried out mainly by the assistance of the then Chief Inspector +of Explosives, the late Colonel V. Majendie, a soldier and a gentleman, +who was no match for the adroit and suave agents of the petroleum +trade. It was perhaps not unfitting that the administration of the laws +relating to Mr. Rockefeller’s low-flash petroleum should have been +placed under the Explosives Department of the Home Office, but it had +this disadvantage, that Colonel Majendie, well acquainted with military +explosives, knew nothing about petroleum. He once declared at the +Imperial Institute in my hearing that he had learned all he knew about +petroleum from Mr. Redwood. How completely he was guided by his mentor +in this matter appears from a memorandum of July 18, 1878, in which he +gives his reasons for supporting the reduction of the flash-point from +100 deg. to 73 deg. In it he wrote:-- + + The figure is one to which the Petroleum Association, _the body + really interested_, are prepared to assent, and although the Scottish + Mineral Oil Association desire a higher flashing-point, it is really + a matter in which they have very little concern, except in so far as + the adoption of a higher flashing-point will tend to injure their + trade rivals (the Petroleum Association). I think, therefore, that + as the matter cannot be usefully carried further, the Abel test of 73 + deg. Fahr. flashing-point should be accepted. + +Mr. Redwood was at this period the paid secretary of the Petroleum +Association, and had returned only six months before from his American +trip. Sir Vivian Majendie seems never to have been able to consider +the public; in his view it was all a trade squabble between the rival +oil traders. I ought to explain here, by the way, that the Scottish +refiners have always kept their oil up to a flash-point of 100 (Abel), +their reason being that they desired to maintain a perfectly safe +standard. They have always complained of the invasion of this 73 deg. +American petroleum, not on ordinary commercial grounds, but because +they held that its dangerous and explosive character was prejudicing +the public mind against all classes of burning oils, and neutralising +their own efforts to give the public confidence in them. + + + + + THE ROCKEFELLERS AND THE HOME OFFICE + + + “You have been in politics long enough to know that no man in public + office owes the public anything.” + + SENATOR MARK HANNA _to the Ohio Attorney-General_. + + + + + CHAPTER XIV + + THE ROCKEFELLERS AND THE HOME OFFICE + + +Naturally the juggle by which the low flash-point was thus stereotyped +in the Act of 1879 had its effects. The number of petroleum accidents +began to increase, and so Sir. V. Majendie was sent to visit 242 places +in England and the Continent and then to America. In both these series +of visits he was accompanied by Mr. Boverton Redwood, Secretary of the +Petroleum Association, “who was good enough to accompany me and render +me great assistance,” as Sir Vivian put it. I have no means of knowing +whether Mr. Redwood was able to obtain the same letters of introduction +from Mr. Wm. Rockefeller which he had secured in 1877, but I do know +that there was one subject the pair did _not_ inquire into. It appears +in Colonel Majendie’s examination before the Select Committee on +Petroleum by Captain Hope (Report and Evidence, 1894, Q. 206–212):-- + + _Q._ Are you aware that in Scotland, where Scotch oil has been mostly + in use, there have hitherto been very few fires or lamp accidents? + + _A._ No, I have no statistics of lamp accidents. I have only a + general knowledge derived from newspapers and from those who have + given to the subject a larger study. + + _Q._ When you were making your inquiries in America did you go into + the question of the frequency of lamp accidents? + + _A._ _Not lamp accidents, I think, at all._ + +While this surprising omission was occurring lamp accidents continued +to go up. In London they rose from 45 in 1873 to 271 in 1890. In that +year the twin brethren, Sir. F. Abel and Mr. Redwood, were directed +by the Home Office to make an inquiry into the subject, and they +discovered that it was all due to bad lamps. This ingenious theory +set every one--Press, coroners, County Council, Home Office--in full +cry after a lovely red-herring, and diverted attention for several +years from the Standard’s explosive oil. When Mr. Lockwood came over +in 1877 it was the bad wicks; now, in 1890, it was the bad lamps. +The objections to attempting to secure immunity from petroleum lamp +accidents by any lamp law are these:-- + + 1. Nobody has yet guaranteed any absolutely safe lamp. + + 2. Nobody can guarantee that a safe lamp will remain safe in wear, + or can compel its owners to buy a new one when it is in bad repair. + + 3. In both Scotland and America, where petroleum is produced and + refined, the remedy has been sought, not in a lamp law, but in + raising the flash-point. + +While the British officials were chasing the lamp-law will o’ th’ wisp +Mr. Rockefeller was sending over here petroleum oil which could not +be sold in most of the States of the Union, and the number of lamp +accidents here was still rising. In London they rose from 271 in 1890 +to 473 in 1895. By this time an inquiry could not be avoided; the +Select Committee to which I have referred began to sit, and between +1894 and 1898 to take evidence and report. + +The evidence before that Committee in support of the Standard Oil +Trust’s contention was extensive and peculiar. There was Sir Frederick +Abel, who admitted to the Committee that as chemist to the War Office +he had recommended the adoption of 100 deg. or 105 deg. oil for use +in barrack-rooms. Yet he was prepared to maintain that 73 deg. was +sufficiently high for a lamp in a crowded tenement house, where +obviously the chances of accident are far greater than in the strictly +regulated and disciplined barrack-room. Then there was Mr. Boverton +Redwood, and he too declared that the flash-point of 73 deg. was +sufficiently high for public safety. The most remarkable thing about +his evidence was the damaging admissions he was compelled to make, +which gave away his whole case. Here are two:-- + + In my opinion a considerable proportion of the lamp accidents which + occur would not happen if only oil of 120 deg. or even 100 deg. Abel + test were used (Q. 1,824, 1896 Blue Book). + + Undoubtedly in a sense the higher the flashing-point the safer the + oil, and from that point of view oil of 100 deg. flashing-point must + be safer than oil of 73 deg. flashing-point (Q. 1,893). + +Another very entertaining Standard Oil witness was Professor C. F. +Chandler, of New York, who explained that he had been coming to Europe +for a holiday, and was asked by the Standard Oil Trust to give evidence +against raising the flash-point. He gave that evidence, and was +confronted with this passage in a report he made to the New York State +Board of Health in 1871:-- + + There is a strong inducement to turn the heavier portions of the + naphtha into the kerosene tank so as to get for it the price of + kerosene. It is therefore the cupidity of the refiner that leads him + to run as much benzine as possible into the kerosene, regardless of + the frightful consequences of the frequent explosions. + +As this was exactly what the Standard was doing, this was rather +awkward for the Professor, but he cynically explained that it was “a +reckless statement” made when he was a “reformer.” He admitted that he +had never withdrawn it publicly until that very date in 1896, but he +went on to swallow it whole. + +But the prize witness on that side was Mr. Paul Babcock, whom we saw +in 1877, and who as one of the American directors of the Trust came to +tell the Select Committee that the 73 deg. oil--the brands known to +the trade as “Tea Rose” and “Royal Daylight”--were as safe as the 105 +deg. oil--the brand known as “White Rose.” Thereupon Mr. Ure, M.P., +produced a little folding card just then issued by the Anglo-American +Oil Company, Limited, a copy of which lies before me as I write. On the +front page of this little Rockefeller tract--which, I grieve to say, is +not now in circulation, so that mine has become a “rare edition”--there +are two big orange-coloured barrels, and the words “White Rose American +Lamp Oil.” Inside there is an artless panegyric on “White Rose,” of +which we are told:-- + + Its fire test is so high as to make it the safest petroleum lamp oil + in the world. Explosion is guarded against and families can burn + White Rose Oil with the same assurance of safety as they can gas ... + a really safe and reliable illuminant, &c. + +Of course, all this clearly proved that the Anglo-American Oil Company, +whatever it might say at Westminster, did not believe in Billiter +Street that 73 deg. oil was as safe as “White Rose.” But Mr. Paul +Babcock was a cool hand. He turned the card over carefully, and then +remarked that it was “merely advertising bunkum,” and that it was +issued by the Anglo-American Oil Company, “_who no doubt bought the oil +of us_.” This was fairly cool in view of the fact that the Standard +owns all the shares in the Anglo-American, but it is even cooler when +we examine the orange-coloured barrel in the picture. The barrel bears +at its head a label, “Kings County Oil Works, Sone and Fleming Mfg. +Co., Limited, New York.” Now Mr. Paul Babcock was himself general +manager to that very Sone and Fleming Company, in addition to being a +director of the Standard, which, since 1877, had controlled it. That +incident is a fair specimen of the Standard’s evidence at this inquiry. + +On the other side evidence was given by Lord Kelvin (the greatest +scientific man of his day), Sir Henry Roscoe, Professor Ramsay, +Professor Attfield, Dr. Stevenson Macadam, Professor D. Mendeleef (who +represented the Russian Government and the Russian petroleum industry), +and Dr. Hermann Kast (of Karlsruhe), all denouncing the 73 deg. +flash-point and advocating its being raised. Sir Henry Roscoe said:-- + + I think that Americans send over so much mixed oil of the character + of this “Tea Rose” oil _only because our flash-point is so low_. + +Lord Kelvin told the Select Committee:-- + + I am clearly of opinion that in order to avoid accidents the + flash-point must be raised, and that no construction of lamp will + meet the difficulty. + +The Select Committee at last reported in favour of raising the +flash-point, and an agitation started by the _Star_ newspaper in +support of this course received the adhesion of a large number of +newspapers, coroners, and of the London County Council. At the same +time the Standard Oil Trust started its own characteristic agitations. +Petition forms were sent to every oil retailer with requests to obtain +signatures in opposition to raising the flash-point. And according to +the statement of Mr. Jasper Tully, M.P., in the House, some of these +men in Ireland were threatened that they would get no more oil if this +was not done. The result was that M.P.s were bombarded with petitions +from their constituencies, and Standard Oil agents filled the lobbies. +A well-known Standard Oil “expert” contributed anonymously a long +article to the _Times_, in which it was represented that the safe-oil +agitation was due to a desire to secure “protection” for the Scottish +trade. It is amusing to recall that one of the strongest supporters of +this theory was the Right Hon. Jesse Collings, who in four short years +was to become an ardent convert to the theory of “Protection,” not only +for Scotch oil, but for everything else. + +While the Standard was playing up to free-trade opinion in this way, +it was working the “patriotic” dodge in a very nicely got-up anonymous +pamphlet sent to every M.P. In this it was shown that the effect +of raising the flash-point would be to stop our cousins across the +Atlantic from sending us oil, and to play into the hands of Russia, +which had always been hostile to us. The old Russian bogey was still +alive in the days before the Russo-Japanese War, and this waving of the +Union Jack no doubt affected some soft-headed M.P.s. + +There is a characteristic story which relates that somebody, on hearing +that the site had been acquired for the new palace now completed in +Queen Anne’s Gate, rang up one of the heads of the “Anglo” on the +telephone. “You are making a mistake,” said he; “you ought to be near +the City.” “Oh! the City doesn’t matter,” replied the Standard voice on +the telephone; “what we want to be near is the House of Commons.” There +the policy of the Standard Oil Trust is crystallised in a sentence. The +Trust is the most gigantic lobbyist in the world. No other association +of private capitalists maintains such an espionage system; no other +body of that kind has its lobbyists at so many centres of government. +In most of the American State Legislatures the Standard Oil lobbyist is +as well known as the Speaker. At Washington, at Ottawa, in the House +of Commons, in Berlin, in Bucharest, to name but a few capitals, you +will find the representatives of the Rockefellers. Their proceedings +and those of the rivals who sought to checkmate them elicited a severe +rebuke from that cautious journal the _Spectator_ on the occasion of +the debate upon the Flash-point Bill. Writing on March 25, 1899, my +contemporary observed:-- + + The decision as to the proper flash-point for mineral oils really + involved a possible monopoly of the supply of safe oils, a monopoly + worth many millions, and the signs of excited personal and pecuniary + interest in the lobbies were noticed by many observant members of + Parliament. + +It declared that the practice of “lobbying” tended to “grow into a +peculiarly subtle and dangerous form of corruption”:-- + + It has so grown both in America and France, and it may grow here. + What with the tendency to create monopolies, the incessant variations + of the tariff in some great States, and the masses of capital at + the disposal of individuals or companies, the profits and losses + consequent on a new law may amount to millions, and among the owners + or expectants of those millions there may be some of the most + unscrupulous of mankind. They have paid secret commissions all their + lives, especially for “information,” and they do not see why they + should not pay them to induce hostile legislators not to vote against + them. + +The end of this combined attack was that when the Flash-point Bill came +up for second reading in March, 1899, it was rejected, on the pledge of +Mr. Collings, then representing the Home Office, that the Government +would deal with the whole subject of the storage of petroleum and of +lamp accidents. Since that date nothing has been done, and although all +the members of the Liberal Cabinet who were in the House of Commons +in 1899 voted for the Flash-point Bill, they have never found time +or courage to tackle the Standard Oil monopoly in explosive oil. As +Lord Kelvin’s biographer, Professor Silvanus P. Thompson, says in the +chapter already quoted: “The scandal of the free sale of dangerous +low-flash oil continues.” + +No doubt Ministers have been hampered by the obstruction of the Home +Office bureaucracy. Before even the Select Committee had reported, the +late Dr. Dupre, chemical adviser to the Home Office, said at Sutton (in +November, 1897):-- + + If people thought they would get legislation on the subject to raise + the flash-point they would be very much mistaken, for legislation + would not so upset the trade. What was wanted was education and + better lamps. + +We have seen how Colonel Majendie was constantly sitting at the feet of +Mr. Boverton Redwood on this question, and his influence was steadily +against the flash-point being raised. His successor, the late Captain +Thomson, followed the same tradition, and actually published with Mr. +Redwood a “Handbook on Petroleum.” This volume, which is ostensibly +a guide to local petroleum inspectors in carrying out their duties, +branches off into a defence of the 73 deg. flash-point, and contains +all the old Standard Oil tags. One of its points is that more people +are killed by falling downstairs than by lamp accidents--I only cite +that absurdity to show the boldness which the Home Office staff have +shown in their determination to obstruct the recommendation of the +Petroleum Committee. The final climax has been the appointment of Sir +Boverton Redwood as Home Office Adviser on Petroleum. Nobody questions +for an instant the great scientific abilities of Sir Boverton Redwood, +or his thorough acquaintance with the petroleum industry, but he has +taken too long and too active a part in opposing the raising of the +flash-point for his advice to be a safe guide on the question. It would +be exactly like appointing Mr. Pretyman to advise the Inland Revenue on +the drafting and circulating of Form IV. + +The Home Office has made another attempt to divert public attention +from the flash-point of kerosene by appointing a departmental committee +to consider the storage and transit of petroleum spirit, which body has +just published its report and evidence. The fact is, of course, that +this is a difficult and complicated subject, affecting large numbers +of small oil and spirit dealers, on which it will be almost impossible +to come to an agreement. The raising of the flash-point of kerosene is +a simple, clear issue, which can be done by a Bill of one clause, and +the only people who will really be affected by it will be the Standard +Oil Trust. At the same time the Oil Trust, with its vast capital, does +not greatly object to restrictions on the storage and transit of either +oil or spirit, because these mean capital expenditure which it can +easily defray, and they will at the same time hamper all its smaller +competitors. Now in a time of congestion of Parliamentary business, +when it is admittedly difficult to drive even a wheelbarrow through the +House, the Home Office bureaucracy deliberately selects the long and +complicated subject for its activity, and ignores the simple one. Why? + +It is instructive to note that during the years that have elapsed since +the Flash-point Bill was rejected in 1899, half the Standard’s argument +against raising the flash-point has been killed by itself. It asserted +that it could not take out that proportion of naphtha which made its +73 deg. oil so explosive and dangerous without adding to the cost to +the consumer. Since then there has arisen the demand for benzine or +petrol for the motor industry, and the Standard finds that it _can_ +take out that naphtha. Accordingly a friend of mine who has studied +this subject as a chemist tells me that whereas the “Tea Rose” oil used +to have a flash-point nearly down to the legal minimum of 73 deg., +samples recently tested have a flash-point of 78 deg. or 79 deg. The +Trust have made their oil to that extent safer to suit themselves, and +it is notable that side by side with this the number of petroleum lamp +accidents has been falling. What is now wanted is that they shall be +forced by Parliament to make it safer still. As Lord Kelvin said to +the Select Committee in 1896:-- + + The principle of safety is that oil should never in a lamp reach the + temperature of the close test flash-point. I advise the Committee to + fix a flash-point which shall be higher than oil is likely to reach + under ordinary conditions of ordinary use. + +One of the achievements of the Home Office during the controversy was +the cooking of a list of legal flash-points in American States by +which it was sought to discredit the statement that this country is a +dumping-ground for American low-flash oils that the Rockefellers cannot +sell at home. Although Mr. Jesse Collings has denied that statement +in the House of Commons it is perfectly true. A conclusive proof of +its truth is furnished by that interview with Mr. W. H. Libby, the +Standard’s foreign marketing agent (to which I referred in a former +chapter) appearing in the _New York Herald_ of September 3, 1905. After +describing in Mr. Libby’s words their struggles with Russia for the +European oil market, the interviewer goes on thus:-- + + It is an open secret among people familiar with the oil business + that the great and important reason for the Standard’s activity in + Europe is largely due to the fact that the European tests on oil are + not as stringent as they are in the United States. In this country + (U.S.A.) the first run of oil, or what is known as the flash-test at + a high rate, _is the only oil that is allowed to be marketed_. The + second run of oil contains much more inflammable ingredients, and + when tested with the flash will explode at a much lower temperature. + _It is this oil that finds a market abroad, and the laws there do + not demand the higher test of the product._ To get rid of its second + run the Standard naturally has to look to other markets than the + domestic, and that is why it is so anxious to extend its operations + in Europe and Asia, as otherwise the oil would be a drug on its hands. + +The case against the Standard and its liquid death could not be more +concisely put than in the foregoing passage, and so far as they are +concerned I leave the case there. But with regard to the British +officials, it should here be mentioned that the length to which they +have gone in defence of the 73 deg. flash-point was most conspicuously +demonstrated in India. When the flash-point of 73 deg. was legalised +there difficulties arose with Burma petroleum which, owing to its large +proportion of petroleum wax, became solid or viscid at 60 deg. The +Indian authorities wrote home for advice in this awkward situation, +and Sir Frederick Abel was invited to solve the riddle. Sir Frederick +Abel actually recommended the Indian Government to melt the samples, +then refrigerate them down below 73 deg., and then gradually heat them +up again to 73 deg. to test them! Here is the exact language of his +letter:-- + + For the above reasons the application of the legal flashing test as + prescribed by the Act to the examination of petroleum samples which + are solid or viscid at a temperature about 60 deg. Fahr. _must give + entirely fallacious results_. + +Then he goes on to suggest a “modification” of the system of testing, +of which the material portion is as follows:-- + + The oil-cup is then to be placed in a refrigerator, or plunged up + to the projecting collar in water maintained at a sufficiently low + temperature until both thermometers indicate the temperature at which + the testing of petroleum is directed in the Act to be commenced. The + oil-cup is then to be removed, wiped dry, placed in the water-bath, + and the testing effected in the manner prescribed in the Act (Select + Committee’s Report, 1896, Appendix, p. 747). + +Of course, to the mind of any one but an official, it would be +clear that when oil in a barrel or a tank was itself normally at a +temperature of between 80 deg. or 90 deg., it was a farce to allow it +to enter the country on the theory that it would not give off explosive +vapour below 73 deg. Fahr. But to admit that would have been too +awkward for the whole flash-point camarilla, and Sir Frederick Abel, in +the _Journal of the Society of Chemical Industry_, a few years before +the safe-oil agitation started, stated that oil which in New York was +exported as 73 deg. oil was found in India to have a flash-point of 66 +deg., and advised that in order to take the flash-point in India it +should be cooled down to 56 deg. Fahr., before the testing was started. +Yet the Standard Oil agents in India successfully opposed any raising +of the flash-point, and Sir Frederick Abel, in the letter quoted in the +1896 Blue Book, stated that public safety did not require it. + +Another Standard Oil agitation which was run here by the Anglo-American +was in February, 1900, when the railway companies issued an amended +consignment note for benzine, petrol, and all varieties of motor +spirit, by which the consignor was required to indemnify the railway +company against all claims for injury to person or property arising +out of the “inflammable character” of the goods. The Anglo-American +Oil Company first threatened that it would abandon the importation of +petroleum spirit altogether, but as that “bluff” did not succeed it +issued a circular to owners of motor-cars and users of petroleum spirit +signed by Mr. Frank E. Bliss, director. It contained this instructive +passage:-- + + There is more likelihood of our protest being heeded if it be + supported by similar protests from all users of petroleum spirit. We + ask, therefore, your co-operation in our endeavour to induce the + railway companies to revert to their old form of consignment note, + and we shall be glad if you will address a letter of protest to your + local goods agent of the railway-company over whose line you have + been accustomed to receive your traffic. + +That is the way these spontaneous agitations are got up. + +Of late years the Anglo-American’s public activities have been chiefly +concerned with its attempt to get the Thames Conservancy, and then +the Port of London Authority, to sanction the bringing of petroleum +spirit up the river in tank barges instead of landing it at Purfleet. +The Thames Conservancy, whose meetings are open to the Press, steadily +refused, but the Port of London Authority sits in secret, and it would +not be surprising if one day the Standard’s constant efforts succeeded +in this most dangerous project. “Petroleum spirit,” legally, consists +of petroleum which flashes below 73 deg. Fahr. In fact, some of its +products will flash at zero, but all of it is far more dangerous than +the petroleum lamp-oil, which flashes at 73 deg. or above. + + + + + THE LUBRICATING OIL TRADE + + + “Does Mr. Rockefeller know that modesty, benevolence, and piety are + the tricks which deceive the most people the longest time?” + + IDA M. TARBELL _in_ “_McClure’s Magazine_.” + + + + + CHAPTER XV + + THE LUBRICATING OIL TRADE + + +It is time now to turn to the Standard’s other English branch, the +Vacuum Oil Company, Limited, which posed at first as an American +company entirely independent and unconnected with the Standard. It was +registered at Somerset House as a limited liability company, with a +capital of £55,000, on May 13, 1901. Its object was to take over the +business of its parent, the Vacuum Oil Company of Rochester, N.Y., +U.S.A., and it purchased all the assets of that company in the United +Kingdom for £29,947. Up to October, 1905, its five directors were as +follows-- + + John Dustin Archbold, 26, Broadway, N.Y. + Charles Millard Pratt, 26, Broadway, N.Y. + Charles Marvin Everest, Rochester, N.Y. + Howard B. Case, Norfolk Street, Strand. + Henry Forster Grierson, Farnborough, Hants. + +Charles M. Pratt is a son of the late Mr. Charles Pratt, who founded +the refinery already referred to in connection with Mr. H. H. Rogers. +C. M. Everest has been mentioned in the Buffalo explosion prosecution, +in which he was convicted. In 1908 the Company adopted new articles +providing that the number of shareholders must never exceed fifty, and +binding the directors to refuse to register any transfer of shares +which will have the effect of increasing the shareholders beyond that +number. The directors are also empowered to refuse to register any +transfer of shares without giving their reasons. The following were the +shareholders on November, 30, 1909:-- + + Shares. + Vacuum Oil Company of Rochester, N.Y. 50,000 + Charles Marvin Everest, Rochester, N.Y. 2,000 + Howard B. Case, managing director 50 + Henry Forster Grierson, Farnborough 10 + Louis Chas. Panizzardi, Paris, merchant 50 + Edward Prizer, 29, Broadway, N.Y. 2,790 + Ernest Michaelson, Copenhagen, merchant 50 + Everett Oscar Wader, 29, Broadway, N.Y. 50 + ------ + Total 55,000 + +Mr. Archbold and Mr. Pratt have left the board of directors, which +included in November, 1909, Messrs. Everest, Case, Grierson, Prizer, +Panizzardi, Michaelson, and Mr. George Percy Whaley, of 29, Broadway, +New York. (Probably 29, Broadway is a copyist’s blunder for 26, the +Standard’s home.) + +One complaint which the English trade makes against the Vacuum Oil +Company is this: through the Anglo-American Oil Company the Standard +sells large quantities of refined oils to British manufacturers, +compounders, or blenders of lubricants. At the same time, through +the Vacuum Oil Company, it goes to the customers of these firms and +offers to undersell them, saying that it can supply the oils direct. +A great deal of correspondence appeared in the _Oil and Colourman’s +Journal_ on this subject in 1905. For example, one correspondent told +this story of his experience with the Standard. He was dealing in +illuminating oil, getting all his supplies from the Anglo-American +Oil Company. In 1898 his trade was 60,000 gallons per annum, then the +“Anglo” sent tank wagons to his customers, and in 1905 it was less +than 15,000 gallons. He was persuaded then to devote his attention to +motor-car spirit. After he had spent a considerable sum on bricks, +concrete, iron doors, &c., for storage purposes, the Anglo-American +began delivering broadcast motor spirit to cycle agents. This merchant, +when he saw his kerosene trade vanishing, put up plant for blending, +filtering, and refining for the lubricating oil trade. Then he found +the Vacuum Oil Company underselling him with his own customers. Of +course, it was quite obvious that if the Vacuum Oil Company could by +these tactics secure the whole trade of the British lubricating oil +blenders, the price of lubricants would go up as suddenly as the price +of kerosene always did when the Standard had killed competition. This +fact was pointed out in the trade Press, and I understand that the +Vacuum’s great campaign in 1905 has not destroyed the British makers of +lubricants. + +A gentleman connected with the lubricating trade wrote me the other +day of the latest methods of these people. The Standard ships large +quantities of oils for lubricating to the Anglo-American by the +ordinary steamship lines. In a very attractive little booklet which +I have before me, entitled “The Light that Fails Not,” issued by the +Anglo-American Oil Company in 1902, it is stated that their import of +lubricating oil in a year was 462,000 barrels. This is now larger, and +is a valuable freight, and so the Vacuum people go to the principal +steamship lines, and say, “We give you this freight; you must let +us lubricate your boats in return.” The result is that the freight +which the English maker of lubricants pays on what he buys from the +“Anglo” is used to secure business for his trade rivals, who are +undercutting him with owners of engines. This may be the American idea +of “business,” but it will take a great deal of acclimatising here, and +the Vacuum is not growing in popularity. + +But the Vacuum does not always undersell. Complaint is made that in +some of the large tramway undertakings, especially municipal ones, no +other lubricant but the Vacuum oils can get accepted, although other +oils of equally good lubricating quality can be and are produced by +British firms at lower prices than the Vacuum obtains. The reason for +this phenomenon is simply that the engineers in charge of the plants +refuse to use any other than Vacuum oils. Of course they must be able +to supply a plausible reason for this to their superiors, and such an +explanation is provided in the “Official Circular” of the Tramways and +Light Railways Association for April and May, 1905. This “Circular” +reports a paper read at a meeting of the Association on April 28, 1905, +by Mr. William E. Parish, jun., chief technical expert of the Vacuum +Oil Company, on “Friction as Affected by Lubrication.” The keynote of +Mr. Parish’s paper may probably be found in these lines:-- + + It is possible to exactly duplicate a fine lubricating oil on the + basis of chemical tests with an improperly manufactured article. The + results from the use of both oils, _while the chemical readings show + they are exactly the same_, are widely different when applied to + actual work. + +Translated into plain English this means that the lubricants supplied +by the Vacuum’s competitors (manufactured out of the Standard Oil +Trust’s own oils) are by every recognised chemical test as good as +theirs, but yet that it is right and proper that the engineer who +actually uses the lubricants on the machinery should prefer the Vacuum +oils--a very satisfactory doctrine for both the Vacuum Company and the +engineer! + +Further on in his paper Mr. Parish was good enough to give various +tables and experiments relating to what he called + + A full efficiency test of a textile mill where an effort is being + made to reduce the total horse-power by means of applying lubricants + more suited to the work than the oils in use. + +That means, in plain English, by applying Vacuum oils, whose chemical +readings are exactly the same as those of their competitors, and whose +virtues can only be discovered by the engineer. In the debate on the +paper I notice that Mr. W. Scott Taggart, while congratulating Mr. +Parish on his paper, let fall this very valuable observation:-- + + I must say there is only one thing that spoils these tests for a + society like this or any other society of a scientific character, + and it is that these tests are all made by a person or an engineer + responsible to the oil company making them. I think they would be of + much greater value if carried out by some unprejudiced engineer. + +In replying afterwards on this important point, Mr. Parish urged that +comparative testing was very difficult, and that + + Engineers for work of this kind absolutely cannot exist outside the + large oil companies, where they have practically all the world to + operate in, and the unpublished knowledge of many experienced men in + this particular line of work to draw upon. + +Whether this reply is scientifically sufficient I do not know, but it +is obvious that it is not likely to satisfy the competitors of the +Vacuum Oil Company, who regard all these novel scientific merits, which +cannot be distinguished by any recognised chemical tests, as so much +clever “advertising bunkum”--to use Mr. Paul Babcock’s language about +the Anglo-American Oil Company’s orange-barrel advertisement. But it +can hardly be doubted that tramway and other engineers find such papers +as that read by Mr. Parish, jun., before their technical association +a very useful argument in justifying their exclusive use of Vacuum +lubricants. + +Before I leave this subject I may note that _Fairplay_, the well-known +shipping journal, has drawn attention to another aspect of this +question, and that is how the Inland Revenue collects income-tax +from this combination. As the Vacuum Company is a branch of the +Standard it can buy its oils at a high price and sell them at cost, +so that its books would show no profit assessable to income-tax. That +profit, of course, would have really vanished into the balance-sheet +of the Standard Oil Company of New Jersey. The same applies to the +Anglo-American Oil Company, which, according to the evidence in the +Missouri case, sells oil here on commission. The lower the commission +the “Anglo” accepts from the Standard Oil Company of New Jersey, the +lower its profits on its balance-sheet, and the less income-tax. But I +advise Mr. Lloyd George to look after the “richest Baptist on earth.” I +fear that he is not paying his proper share towards the expenses of the +country where he makes so many millions. + +Such, then, is the evidence, summarised of course, which has +accumulated in all parts of the world against the Standard Oil Trust. +In the examination of this evidence, which has now been completed, I +claim to have established the following propositions:-- + +1. That the Standard Oil group have always aimed, not at fair +competition, but at absolute monopoly. + +2. That they secretly obtained from the United States railroads rebates +on the carriage of their own oil, and even larger rebates on all the +oil carried for their competitors--thus rendering it to the interest +of the railroads to decrease the shipments of “independent” oil, by +refusing to furnish adequate cars, and by delaying delivery. + +3. That by means of these rebates they were able to undersell their +competitors, and either to ruin them or force them to sell out at heavy +loss. + +4. That, whereas in 1870 they controlled nearly 10 per cent. of the +American oil refining business, by means of these rebates they had +secured in 1880 control of 90 per cent. + +5. That when the petroleum well owners constructed pipe lines to pump +their oil to the seaboard refineries, the Standard used vexatious +litigation, and even open violence, to obstruct the work, and when it +was completed bought up a majority of the stock. + +6. That although they were legally “common carriers,” the Standard +constantly refused to pipe oil for other refiners, and thus forced the +well owners to sell their crude oil to them at their own price, as in +practice the Standard had become the only buyer. + +7. That an elaborate system of espionage has been established by which +information is corruptly obtained from employees as to shipment of +independent refiners’ oil; and that the oil dealer who receives such +oil is then undersold by Standard agents. + +8. That in districts where the feeling against the malpractices of the +Trust is strong, the Trust runs “bogus independent” oil companies and +“anti-Trust” oil shops, and uses them to undersell the oil dealers who +really attempt to sell non-Trust oil. + +9. That although the rebates are not paid on all the railroads now, +there existed as late as 1907--and probably still exist--widespread +railroad discriminations giving the Standard advantages over other +refiners. + +10. That although the Standard constantly claims credit for improving +the processes of manufacture and transport, most of the important +inventions of the industry were invented by others. The main thing the +Trust invented was the secret rebate. + +11. That in regard to the Standard’s claim to have reduced the price of +illuminating oil to the consumer, the Hepburn Congressional Committee +found that it had only done so when fresh supplies of petroleum had +come on the world’s markets, or in order to kill competition. + +12. That Mr. Rockefeller and his associates have frequently made on +oath before Congressional Committees and in judicial proceedings false +statements about the Trust. + +13. That the Standard Oil group has systematically adopted the methods +of bribery (direct and indirect) in dealing with politicians and +newspapers. + +14. That in Great Britain it has successfully obtained official support +for the maintenance of a dangerously low flash-point of illuminating +oil, which enables it to dump here “export oil” that it is not allowed +to sell in the majority of the American States. + +15. That the Trust has been successfully prosecuted in the courts +of its native land, and that in every country that it enters it is +the enemy of legitimate commerce. It either ruins the dealers in its +commodities, or reduces them to the position of “tied houses.” + +In fine, the Standard Oil Trust is the most unscrupulous, as well as +the most ambitious and successful, combination of capitalists that +the world has yet seen. The men it has ruined, the businesses it has +wrecked, the little children it has roasted in its oil-fires--all these +constitute a hideous record of death and destruction which not all +the long prayers and the huge alms of John D. Rockefeller should ever +induce the world to forget. + + + + + Index + + + Abel, Sir F., 159, 210, 220, 233 + + Acme Oil Company, 67 + + American Wick Company, 23 + + Ammonia in Scotch shales, 206 + + Andrews, Samuel, 15, 29, 193 + + Anglo-American Oil Company, Ltd., 11, 22, 111, 196, 241 + + ” Caucasian Oil Company, Ltd., 163 + + ” Saxon Petroleum Company, 148, 170 + + Archbold, John D., 18, 19, 67, 78, 94, 97, 110, 175, 196, 239 + + Asiatic Petroleum Company, 148, 170 + + Atlantic Refining Company (Standard), 102 + + Attfield, Professor, 208, 210, 224 + + + Babcock, Paul, 149, 192, 223 + + Bailey, Senator, and the Trust in Texas, 140 + + Baku Refiners’ Union, 163 + + “Barbarous Mexico” (its inspiration), 144 + + Base, Geo. (on Standard agreements), 203 + + Bataafsche Petroleum Maatschappij, 148, 170 + + Bayne, H. (and Security Oil Company), 113 + + Benzine, its influence on “the oil war,” 149 + + Bliss, Frank E., 195 + + Bostwick, J. A., 37, 52 + + Brady, A. N. (Manhattan Oil Company), 109 + + Bribery charges, 77, 181 + + Buffalo Refinery explosion, 97 + + Burma petroleum, 152, 233 + + + Chandler, Professor C. F. (of New York), 222 + + Chesebrough Manufacturing Company (Vaseline), 21 + + Choate, Hon. Joseph, 154 + + Collings, Right Hon. Jesse, 226, 228, 232 + + Consolidated Petroleum Company, Ltd., 163 + + Cowdray, Lord (shadowed in New York), 145 + + Cuthbert, John H. (alleged Standard Oil agent), 118 + + + Devereux, General J. H., on rebates, 31 + + Devoe Manufacturing Company, 23, 192 + + Diaz, President of Mexico, and the Trust, 144 + + Dupre, Dr. (the late), 229 + + Dutch Government excludes the Standard, 147 + + + Eagle Oil Company (of Mexico), 14 + + Elkin, P. J. (Attorney-General of Pennsylvania), and the Archbold + letters, 84 + + Erie Railroad rebates, &c., 37, 40, 50, 53, 55, 59 + + Everest, C. M., 94, 97, 175, 239 + + + Flagler, Henry M., 18, 29, 74, 197 + + Flash-point scandal in Great Britain, 209 + + ” in India, 233 + + Foraker, Senator, J. B., 78 + + + Galena-Signal Oil Company and American railways, 21 + + Galicia, discriminations against the Standard, 166 + + Garfield, J. R. (United States Commissioner of Corporations), 28 + + General Industrials Development Syndicate (of London), 108 _et seq._ + + German Vacuum Oil Company, 170 _et seq._ + + Gould, Jay (the late), 37 + + + Hamburg Court’s decision on “re-branding,” 177 + + Hanna, Senator M. (the late), 83 + + Hearst, W. R., and the Archbold letters, 18, 77 + + Hepburn Committee (U.S.A.), 35, 56, 72 + + Home Office and the flash-point, 229 + + + Inventions, the Standard’s claims to them, 129 + + + Kelvin, Lord (the late), 213 + + + Lake Shore Railroad, 31, 46 + + Lawson, T. W., on H. H. Rogers, 17 + + Leonard, W. J. (Standard tactics in England), 200 + + Lethaby, Dr. (the late), 210 + + Libby, W. H. (Standard lobbyist), 151, 152, 232 + + Limanova Petroleum Company, 166 + + Lloyd, Henry D. (the late), 5, 97 + + Lockhart, Charles, 65, 193 + + Lockwood, F. W. (Standard Oil agent), on wicks, 194 + + London Commercial Trading and Investment Company, Ltd., 113 _et seq._ + + + Macdonald, Jas. H., 111, 199 + + Maikop field, the new, 164 + + Majendie, Sir V. (the late), 214, 219 + + Manhattan Oil Company, 108 _et seq._ + + Mantascheffs of Baku, the, 164, 169 + + Mendeleef, the late Professor, 224 + + Merrill, Joshua (lubricating oil pioneer), 131 + + Missouri, proceedings against the Trust, 135 + + Moeara Enim Company and the Dutch Government, 147 + + Monnett, F. S. (Attorney-General of Ohio), 81, 134 + + + Newspapers, Trust subscriptions to, 86 + + New York Central Railroad, 37, 40, 48, 52, 60 + + Nobels of Baku, the, 162 + + + O’Day, Daniel, 19, 54, 198 + + “Oil War,” the, 147 + + “Orange Barrel,” the, 223 + + Oswego Manufacturing Company, 23 + + + Parish, W. E. (of the Vacuum Oil Company, Ltd.), 243 + + Payne, Oliver H., 20, 193 + + Pearson firm (Mexico), 142 + + Pennsylvania Railroad and rebates, 31, 37, 56, 59 + + Petroleum Association (of London), 160, 210, 214 + + ” Committee (recommendation on flash-point), 225 + + ” Producers’ Union, the, 46, 133 + + ” wax, 152, 206 + + Pierce, Henry Clay, 141 + + “Pittsburg Plan,” the, 57 + + Port of London Authority and Standard intrigues, 236 + + Pratt, Charles, 66 + + ” Charles M., 20, 175, 239 + + “Protection,” the cry of, 226 + + + Railways, English, and petrol agitation, 235 + + “Re-branding” lubricants in Germany, 176 + + Redwood, Sir Boverton, 160, 192, 220, 221, 229 + + Refiners’ Association, the, 57, 59 + + Rice, George, 71 + + Rigby, W. T. (Liverpool retailer’s experience), 202 + + Rockefeller, Frank, 39 + + ” John D., 15, 29, 33, 47, 51, 58, 67, 71, 197 + + ” John D., jun., 20 + + ” William, 19, 29, 37, 193 + + Rogers, H. H., 17, 33, 94, 97, 172, 195 + + Romano-American Petroleum Company, 22, 169 + + Roscoe, Sir Henry, 225 + + Rothschilds, the Paris, 163, 170 + + Royal Dutch Petroleum Combine, 147, 170 + + “Rutter circular,” 60 + + + Samuel, Sir Marcus, 147, 157, 170 + + Scottish oil refiners and the flash-point, 215 + + Security Oil Company of Texas, 20, 113 + + Shell Transport and Trading Company, 147, 151, 170 + + Solar Refining Company (Ohio), 20, 110 + + Sone & Fleming Company, New York, 224 + + South Improvement Company, 34, 36, 46, 48 + + _Spectator_, the, on “lobbying,” 227 + + Standard Oil Company, of New Jersey, 19, 50, 135, 199 + + ” ” of New York, 48 + + ” ” of Indiana, 134 + + ” ” of Ohio, 20, 29, 134 + + _Star_ newspaper and the flash-point, 225 + + Steana Romana, the, 169 + + Stone, Hon. W. A. (Governor of Pennsylvania), 83 + + Suez Canal Company and the bulk oil agitation, 158 + + Swedish naval engineers and Trust lubricants, 185 + + + Tank steamers and the Suez Canal, 158 + + ” wagons and retailers, 127, 166, 202, 205 + + Tarbell, Miss Ida M., 5, 16 + + Thompson, Professor Silvanus P. (and Lord Kelvin), 213 + + Thomson, Captain J. H. (the late), 229 + + “Three chemists’ cup,” the, 210 + + Tidewater pipe lines, 91, 120 + + Tramway engineers and Standard lubricants, 248 + + + Union Tank Line Company, New Jersey, 22, 110 + + United Pipe lines, 54, 60 + + ” States Pipe Line, 92 + + Ure, Alexander, K.C., M.P., 210, 212 + + + Vacuum Oil Company, of Rochester, 20, 21, 94 + + ” ” Ltd., 239 _et seq._ + + ” ” of Vienna, 165 + + Van Buren (Mr. Archbold’s son-in-law), 142 + + Vanderbilt, William H., 37, 46 + + Vandergrift, J. J., 33 + + Van Syckel, Samuel (pipe line pioneer), 131 + + + Warden, W. G. (South Improvement Company), 36, 65 + + ” Frew & Co., 74, 193 + + Wardwell, William T. (the late), 18, 198 + + Waters-Pierce Oil Company (Mexico), 140 + + Watson, D. K., Attorney-General of Ohio, 82, 134 + + ” P. H., President South Improvement Company, 37 + + + + + The Gresham Press, + UNWIN BROTHERS, LIMITED, + WOKING AND LONDON. + + + + + Transcriber’s Note + + +Some inconsistencies in spelling, hyphenation, and punctuation have +been retained. + +This file uses _underscores_ to indicate italic text. Small capitals +changed to all capitals. + +p. 7: changed location of quotation marks for Chapters VII, VIII +entries to match the chapter titles + +p. 72: changed “Insterstate” to “Interstate” (the Interstate Commerce +Commission) + +p. 112: changed “o” to “of” (pretty close track of companies) + +p. 115: changed shares total from “722,507” to “722,509”, correcting a +math error. + +p. 129: changed “Stark’s” to “Starks’s” for consistency (cart it round +after Starks’s wagon) + +p. 144: changed “monoply” to “monopoly” (fighting this American +monopoly) + +p. 165: changed “Campany” to “Company” (the Vacuum Oil Company, of +Rochester) + +p. 178: changed “Engine F” to “Engine I” (“Gas Engine I and Heavy” +respectively) + +p. 200: changed “varies” to “various” (the various groups of middlemen) + +p. 224: changed “bankum” to “bunkum” (“merely advertising bunkum,”) + +*** END OF THE PROJECT GUTENBERG EBOOK 78460 *** |