X. CHEAPENING TRANSPORTATION…

X. CHEAPENING TRANSPORTATION

Through all the tangle of this piping and dancing one thread runs clear. The oil combination had up to this time been dependent on the railroads for transportation, but it emerged out of the fracas the principal transporter of oil, made so by the railroads. It now had two trunk pipe lines to the sea-coast--the one it had conquered and the one it had built--and the railroads had made it a present of both of them.

The Tidewater--the first seaboard pipe line--had been built only because the Pennsylvania and other trunk lines had said "no" to every entreaty and demand of the oil regions for a road to the sea. That line the railroads had conquered for the combination, as they conquered for it the pipe lines of the Pennsylvania Railroad in 1877. The second seaboard pipe line was built by the combination with the railroads' money to take away the railroads' business, and best--or worst--of all, while the railroads were hard at work driving the Tidewater into its net. Such is the business genius of our "railroad kings."

This campaign closed, the duty of the hour for the oil ring was to get rates advanced by rail as well as pipe.

"Then they"--the pipe lines--"were anxious to get good paying rates,"[206] so that they could make a good thing out of the business of their own pipe and of the Tidewater which they had guaranteed $500,000 a year. The advent of the independent Tidewater had brought rates down. The restoration of exclusive control by its capture put rates up. But it was not enough for the oil combination to advance their own rates. It must induce the railroads to do the same. The railroads had furnished the means for the acquisition of both pipes, and they must now be got to drive business away from themselves to these competing oil railways. This would seem to be a delicate matter to achieve, but there was no trouble about it.

"It is our pleasure to try to make oil cheap,"[207] the president of the oil trust told Congress, but it did not use its new facilities to take in hand at reduced cost the carriage of all oil, and give the industry the economic advantage of the pipe-line idea. Quite the contrary. It united with the railroads to increase the cost. Under this new blow the independent refiners and producers whom the Tidewater had been built to keep afloat grounded again. Then the railroads--the Pennsylvania especially--repented of what they had done to these their oldest customers, and sent ambassadors to them to renew the broken promises of 1872, that if they would rebuild they should forever have equal rates and fair treatment. One of the highest officials of the Pennsylvania was sent to them to say: We recognize our error in permitting your refineries to be abandoned and the traffic destroyed. We wish to build up and maintain independent refining in the oil regions. We will give you every encouragement. We will insure you equal rates, on which you can ship and live.[208]

These invitations and guarantees were repeated and pressed. They were renewed by the officials of the Erie also: "You need have no hesitation in building up your business," said the officials of the Erie; "You shall have living rates."[209]

The independents listened and believed. They rebuilt their works and prospered.[210] This meant the return of cheapness--cheapness of transportation over the railroads, to enable the refiners they had invited back to life to compete in the market--cheapness of light. Thereupon, incredible as it seems, the Pennsylvania and the other railroads were influenced to declare war again upon the men who had reinvested their money and their life energy in response to these solicitations. This new war began with a secret contract, in 1885, for an advance in rates against the independent refiners, who, in trustful reliance on the pledged faith of the railroads, had developed their capacity to 2,000,000 barrels a year.[211]

This campaign has lasted from 1885 until the present writing, 1894. In it the pipe lines, the oil combination, the Pennsylvania Railroad, and all the other great carriers between the independents and their markets in New England, Europe, and Asia, have been mobilized into a fighting corps for the annihilation of the independents. This case illustrates nearly every phase of the story of our great monopoly: dearness instead of cheapness; willingness of the managers of transportation to deny transportation to whole trades and sections; administration of great properties like the Pennsylvania Railroad in direct opposition to the interests of the owners--to their great loss--for the benefit of favorites of the officials; great wealth thereby procured by destruction, as if by physical force, of wealth of others, not at all by creation of new wealth to be added to the general store; impossibility of survival in modern business of men who are merely honest, hard-working, competent, even though they have skill, capital, and customers; subjection of the majority of citizens and dollars to a small minority in numbers and riches; subservience of rulers of the people to a faction; last and most disheartening, the impotence of the special tribunal created to enforce the rights of the people on their highways.

This secret contract of 1885 was thus described by the counsel of the refiners before the Interstate Commerce Commission: "It is a contract," he said, "so vicious and illegal that the Pennsylvania Railroad refuses to bring it into court for fear a disclosure of its terms might subject it to a criminal prosecution."

The courts have never been allowed to see it, but its provisions are known. Some of them were admitted before the Interstate Commerce Commission to be what was charged, and others were described on the trial by the counsel of the independents from personal knowledge. By this contract the railroad and the oil combination bound themselves to advance rates, and to keep them the same by pipe and rail. In return for this pledge by the railroad not to compete it was guaranteed one-quarter--26 per cent.--of the oil business to the seaboard. The Pennsylvania Railroad made no attempt to deny that it had made this contract. It admitted that it had an arrangement "substantially the same as stated."[212]

The combination was the largest shipper of oil, and yet it wanted freight rates advanced. It had pipe lines which could easily take to the seaboard all the oil that went thither, and yet it gave up a large part of the business to the Pennsylvania Railroad. The Pennsylvania Railroad knew that the pipe line was a competitor for the carriage of oil, and yet allowed it to dictate an arrangement by which the railroad got only one-quarter of the business, and signed away its rights to win a larger share if it could.

The railroad had persuaded the independent refiners to settle along its line by solemnly promising them fair and living rates, and yet now put its corporate seal to an agreement to make those rates whatever their enemy wanted them to be. Such was its honor. As for its shrewdness, that had at last brought it to this humiliation in a business where it had once been chief, of confining itself to this insignificant quarter of a restricted traffic instead of a competitive share of a traffic enlarged by freedom to the widest correspondence to the wants of the people. The mastery of the railroad men by the oil people was thorough. The latter did not agree to give the railroad one-quarter of their business. Not at all. All the traffic that came of itself to the railroad, or which its freight solicitors drummed up, must be put to the credit of the guarantee. All that was promised the railroad was that its total should amount to one-quarter of the whole traffic. All the rest the oil combination kept for itself.

The contract went at once into vigorous operation. Freight rates to the seaboard, which had been 34 cents, and, as was proved before the Interstate Commerce Commission, were profitable, were advanced to 52 cents a barrel--an increase of one-half. The railroad and the pipe line made the raise in concert, as had been agreed, and when the rates were changed again it was to still higher figures. Why should the clique, which had its principal refineries at the seaboard--to which it had to transport large quantities of oil--scheme in this way to raise the rates of transportation? Because it paid this excessive rate on only a small part of its own shipments, and compelled its rivals to pay it on all of theirs. The independents had no pipe line of their own, but the combination sent its own oil east by its own pipe line, excepting only the quantity it needed to add to the shipments over the Pennsylvania to make good its guarantee to that railroad of one-quarter of the traffic.

The cost of the pipe-line service to its owners is very small. When the manager of the pipe lines was before the Interstate Commerce Commission the lawyers of the railroads, as zealous for the oil combination, though it was not a party in the case, as for their own clients, fought through eleven pages of argument against having him compelled to tell the cost of pumping oil through the pipe to the seaboard; and when the Commission finally said, "Go on," all the general manager of the pipe lines had to say was, "I do not believe that it is possible to know."[213]

Finally, he was cornered into an estimate that the cost of pumping was 6 or 7 cents a barrel. His questioner, who had been the organizer and manager of a great pipe line--the Tidewater--knew that oil had been pumped through for 4 cents a barrel, but he could not get his witness, who, no doubt, had done it still cheaper, to admit anything of the kind.

The net effect of this pool with the railroad was that the oil combination succeeded in making its rivals pay 64 cents a barrel to reach the East and the seaboard, while it paid only 16[214]--except on the traffic guaranteed the Pennsylvania Railroad--a difference against competition of 48 cents a barrel, a difference not for cheapness. "It only costs the pipe line 7 cents," the independents explained to the Interstate Commerce Commission, "and the published rate is 52. They are willing to pay 52 or even 70 cents on some of their product if they can make the other people pay 52 upon the whole of theirs."

So much of the contract as we have referred to was admitted. Why was it, then, the counsel for the railroad fought against showing it, even to the point of pleading that it might incriminate his client?[215] It was asserted, as of his personal knowledge, by the counsel of the independents that this was because another part of the bargain gave the proof that the rates which had been made under the agreement to put them up and keep them up were extortionate; that by a bargain within the bargain the oil combination carried oil for the railroad for the 280 miles for which they ran practically side by side, and for this charged it only 8 cents a barrel. The public, shipping either by the railroad or by the pipe line, had to pay 52 cents a barrel for 500 miles; but by this arrangement between themselves the two carriers would do business at 8 cents a barrel for 280 miles, at which rate the charge to the public to the seaboard should have been not quite 15 cents instead of 52 cents.

The statement was also made that the oil combination, instead of giving the railroads the business it has guaranteed them, makes its obligation good by turning over to them periodically a check for the profits they would have had on hauling that amount of traffic. As the guarantee was made as a consideration for the maintenance of high freight rates, such a payment by it would amount, in cold fact, to paying those in charge of the highways a large bribe to deny the use of them to the people.

This declaration of the provisions of the bargain was made by the counsel for the refiners seeking relief from the Interstate Commerce Commission. In his argument demanding the production of the document he said: "I have had it in my hand and read every word of it, and know exactly what it contains."[216]

The sharpest legal struggle of the case was made on the demand that this paper be produced. The Commission decided that it was "wholly immaterial," although the chairman had previously said: "It seems to us that we cannot exclude this evidence." It was a document establishing interstate rates, and these are required by law to be published, and the Commission had always before this been liberal in compelling the production of papers which related to the making of rates.[217] The Commission had shortly before been threatened in this case by the counsel for the Pennsylvania Railroad with extinction if it insisted upon evidence of the cost of piping oil which the oil combination refused to give.

"It is possible that the powers of this Commission may be tested,"[218] bullied the counsel of the railroad. The members of the Commission laughed ostentatiously, but, for whatever reason, they gave the powerful corporations on trial no cause thereafter to "test their powers," which have slept while justice tarried, and the victims of this "contract" were kept under its harrow for three long years more, where they still lie.

The tax levied upon the consumers of oil by this agreement for high freights amounts to millions a year. This agreement is at this writing still in force. There is reason to believe that similar arrangements exist with the other trunk-lines. The result is the surprising fact that "oil rates are very much higher than they were twelve years ago, and when there was no pipe-line competition!"[219] This is true also in the field of local pipeage--the transportation of the oil from the wells to refineries and railroads. Under the caption of "cheapening transportation" the counsel of the oil trust said, before the New York Legislature in 1888: "In 1872 the pipe-line system was in its infancy. A number of local lines existed. Their service was inefficient and expensive. There was no uniform rate. The united refiners undertook to unite and systemize this business. They purchased and consolidated the various little companies into what was long known as the United Pipe Line System. The first effect of this combination was a reduction of price of all local transportation to a uniform rate of at first 30, and soon after 20 cents per barrel."[220]

"The united refiners" and "to unite and systemize" are smooth phrases, full of the unction of good-fellowship and political economy. When the "united refiners" took possession of the pipe lines which had been forced into bankruptcy or "co-operation," they did not reduce rates--they advanced them. "The uniform rate of 20 cents," for instance, is an advance of 300 per cent. on the rate of 5 cents made by the trust's pipe-line system during the war with the Tidewater, and over the similar rates made during the earlier pipe-line competition.[221] The nominal rate, Congress learned from one of the oil-country men, was 30 cents for that service, but by competition the actual rate was down to 5 or 10 cents. "They consolidated and placed it at 20 cents, and it has remained at 20 cents, I think, since the year 1876.... The whole process of transportation has been cheapened. Pipe that cost 45 cents a foot has in that time been got for 10 cents. The quality of the pipe was improved, so that there is not the leakage or the wastage. There are all those improvements and inventions that have cheapened it. We pay the same now as we did fifteen years ago. We have reduced the cost of our wells at least 50 per cent. They have reduced nothing."[222] From other sources, once in a while, facts have come to light showing how much less than cheap the local charge of 20 cents a barrel is. For instance, it was shown before Congress that a line which, with its feeders, had fifty miles of pipe, and cost $70,000, made a clear profit in its first six months of $40,000, charging sometimes less than this rate of 20 cents a barrel.[223]

It is impossible to compute how much the defeat of legislation to regulate charges, or to allow the construction of competing lines, has cost the people. The Burdick Bill alone, to regulate prices of pipeage and storage in Pennsylvania, it was calculated by conservative men, would have saved at least $4,000,000 a year. The killing of it was in the interest of keeping up the high prices of the pipe lines, which finally rest in the price of oil.

When the combination got possession of the pipe line to Buffalo, which others had built in spite of every obstacle it could interpose, it raised the rates of pipeage to 25 cents a barrel from 10 cents,[224] and as happened in Pennsylvania in 1885, the railroads to Buffalo in 1882 raised their rates simultaneously with the pipe line. Pittsburg had the same experience. When its independent pipe line was "united and systemized" by being torn up and converted into "old iron," as the Vice-President of the Pennsylvania Railroad had told its projectors it would be, the rates of transportation for oil went up.[225] The same thing happened at Cleveland. At the rate at which the Lake Shore road carries oil from Cleveland to Chicago--357 miles for 38 cents a barrel--it should charge less than 15 cents for the 140 miles between Oil City and Cleveland; but as late as 1888 it charged 25 cents. Why? The effect of the railroad charge is that little oil comes by rail to Cleveland from the oil regions; it goes by the pipe line of those whom the Lake Shore has been "protecting" ever since the South Improvement contract of 1872. There have been 3,000,000 barrels of this business yearly. The railroad officials exercise their powers to drive traffic from the railroad to a competing line. Why? We can see why the combination, which, by the possession of this pipe line, is a competitor of the Lake Shore, should desire such an arrangement; but it exists by the act of the Lake Shore Railroad. Why? The theories of self-interest would lead one to expect that the stockholders of the road would find out why.[226]

The pipe lines are the largest single item in the property of the oil combination. Here its control has been the most complete; and here the reduction of price has been least. This is a telltale fact, soon told and soon understood.

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XI. SONG OF THE BARREL

Genius could take so unspeakable a thing as a shirt and sing it into an immortal song, but a barrel--and an oil-barrel, greasy and ill-smelling--even genius could do nothing with that. But the barrel plays a leading rôle in the drama of the great monopoly. Out of it have flown shapes of evil that have infected private fortunes, the prosperity of more than one industry, the fiduciary honor of great men, the faithfulness of the Government to its citizens. Perhaps a part of what genius could do for the shirt--force a hearing for the wronged--may be done for this homely vessel of the struggling independent by the kindly solicitude of the people to learn every secret spring of the ruin of their brothers.

The market--the barrel that went to market--the freight rate that stopped the barrel that went to market--the railway king who made the rate that stopped the barrel that went to market--the greater king who whispered behind to the railway king to make the rate that stopped the barrel that went to market--this is the house that Jack unbuilt.

Such is the superiority of a simple business organization, where "evolution" has not carried the details of the industry out of sight of the owner, and where the master and man, buyer and seller, are in touch, that the independent refiners could overcome the tax imposed on them by this pooling of the pipe line and the railroads, and not only survive but prosper moderately. During the three years--from 1885 to 1888--following the first attack upon them under the contract just described, they state, in their appeal to the Interstate Commerce Commission in 1888, they were "enabled by their advantages in the local markets to keep up, maintain, and even increase their business."[227] These "outsiders" shipped their oil largely in barrels because the trunk-lines had made it as nearly impossible as they could for them to ship in tank-cars. They, like all in the trade, could not live without access to the European market. Out of every hundred barrels of various kinds of products from the distillation of petroleum, forty are of an illuminating oil not good enough to be burned in this country. It must be sold in Europe or not sold at all; and a manufacturer who cannot get rid of 40 per cent. of his product must give up manufacturing. To destroy the barrel method of shipment would destroy those who could use no other; and to close their outlet to Europe would make it impossible for them to continue to manufacture for the home supply. The barrel was the only life-raft left to the sinking independent.

They who had planned the secret pool of 1885 between the pipe line and the railroads, and the further advance of rates by both in 1888, now called upon the railroads to deliver a final stroke against the independents.[228] The railroads, when directed in previous years to say "no" to applications for transportation, and "no" to those who wanted the right to put their own tank-cars on the road, had obeyed; they obeyed again.

A pretext for the suppression of the barrel was easily found. It was a poor one, but poor pretexts are better than none. When the future "trustees" of the "light of the world" were doing a small fraction of the business, they got the contract of 1872 from the railroads to "overcome" all their competitors, on the pretext of "increasing the trade."[229] When by this contract and those that followed it they had secured nine-tenths of the trade, they got the railroads to say "no" to the remaining one-tenth, on the pretext that they could not ship as much.[230] When the Interstate Commerce law declared it to be a crime for railroads to forbid persons the road because they could not ship as much as others, the combination had the railroads shut out its rivals, on the pretext that they did not use tank-cars,[231] although tank-cars "are worse than powder." When regular tank-cars were offered by its competitors for shipment--as to the Pacific coast--the combination introduced an inferior tank-car, of which it claimed, without warrant, as the courts afterwards held, that it owned the patent, and so obtained the sole right of way across the continent, on the pretext that other shippers did not use this poor car.[232]

The pretext now used against the refiners of Pennsylvania was the passing phrase, "He must pay freight on barrels," in a decision of the Interstate Commerce Commission concerning Southern traffic. This decision had no relevancy to the oil business of the North. Six months went by after it was given with no intimation from any one that it related in any way to the situation in Pennsylvania, and to be so applied it had to be turned inside out and upside down. In the Rice case the Commission had decided that freight rates must be reduced on barrel shipments. This was, in the sharp language of the decision, to put an end to "the most unjust and injurious discrimination against barrel shippers in favor of tank shippers," a discrimination which the Commission has elsewhere said "inured mostly to the benefit of one powerful combination."

In ordering this reduction it said: "Even then the shipper in barrels is at some disadvantage, for he must pay freight on barrels as well as on oil."

By "must pay" the Commission meant "was paying." It was, as it afterwards protested, "rather a statement of a prevailing practice than a ruling."[233] And the remark furthermore concerned the trade in the South and Southwest alone, where special circumstances existed not found at the North.

Six months after this decision the Pennsylvania and other Northern roads made these words, "He must pay freight on the barrels," the occasion of an increase of rates, which stopped the refineries of the independents. They were carrying free the heavy tanks--"the most undesirable business we do," in the language of their freight agent. They had been carrying the barrels of the independents free for twenty years. Now, continuing to carry the tank-cars free, they levied a prohibitory transportation tax on the barrels. To cap it all, they declared, in announcing the new rule, that it had been forced upon them by the Interstate Commerce Commission. But the President of the Pennsylvania Railroad is found admitting that it was the oil combination that dictated the move--"the seaboard refiners insisted." "Upon your decision" (in the Rice case) "being promulgated," he wrote the Interstate Commerce Commission, "the seaboard refiners insisted that we were bound to charge for packages," barrels, not tanks, "as well as for the oil."[234]

The seaboard refiners were the members of the oil trust; the others at the seaboard had been wiped out years before by the help of the railroads. Though the Pennsylvania Railroad was not a party to the case before the Commission, though it had not been called upon to change its practice, which was what it ought to be, it did now change it from right to wrong. The Commission had ordered that discrimination between the barrel and the tank should cease. The Pennsylvania, which had not, strange to say, been practising that forbidden kind of discrimination, immediately resorted to it, and, stranger still, gave as its reason the order of the Commission against it. It must have been a keen eye that could find in a "qualified and incidental remark," as the Interstate Commerce Commission styles it, in such a decision, a command to charge for the weight of the barrels and increase freight rates; but such an eye there was--an eye that will never sleep as long as Naboth's vineyard belongs to Naboth.

All the trunk-line railroads to the East took part in the new regulation--September 3, 1888--that freight must be paid thereafter on the weight of the barrels as well as on the oil itself, and at the same rate. This increased the cost of transportation to New York to 66 cents from 52 cents, and to other points proportionately. Freight rates on the oil of "the seaboard refiners" who shipped in tanks were left untouched. In the circulars announcing the change it was said to be done "in accordance with the directions of the Interstate Commerce Commission."[235] When the refiners whom this advance threatened with ruin wrote to expostulate, they got the same reply from all the railroad officials as from President Roberts of the Pennsylvania Railroad: "The advance in rates ... has been forced upon us by the Interstate Commerce Commission."[236]

The Commission immediately called the responsible official of the Pennsylvania Railroad, which was the leader in this move, "to a personal interview," "expressed their surprise," and suggested the withdrawal of the circular and of the increased rates. This was in August.[237] No attention was paid to this by the road. The Commission waited until October 10th, and then sent a formal communication to the President of the Pennsylvania Railroad, which was followed by correspondence and personal conferences with him. The Commission pointed out that the statement of the circular was "misleading," "not true," "decidedly objectionable"; that the Commission had made no decision with reference to the rates of the Pennsylvania Railroad or the other Eastern lines; that its decision, applicable solely to the roads of the South or Southwest, had been that rates on barrels must be reduced, and that it was not right to use this as an excuse for increasing the rates on barrels. Finally, the Commission said that if it had made any ruling applicable to the Pennsylvania Railroad it would have been compelled to hold that its practice, of twenty years' standing, of carrying the barrels free, since it carried tanks free, was "just and proper," and that there was nothing to show that an advance in its rates was called for.[238]

The Interstate Commerce Commission was the body specially created by Congress to interpret the Interstate Commerce Law. The Pennsylvania Railroad was one of the common carriers under the orders of the Commission, and its managers were subjects of jurisdiction, not judges. But its method of running the Supreme Court of Pennsylvania, as if it were one of its limited trains, was now applied with equal confidence to the Interstate Commerce Commission. It insisted that it was itself, not the Commission, which was the judge of what the latter meant by its own decisions. The road continued the rates against which the Commission protested. The Commission demanded that the assertions that the new rule of charging for the barrels and the advance of rates was made "in accordance with the directions" of the Interstate Commerce Commission be withdrawn. The Pennsylvania road responded with another circular, in which it changed the form but repeated the substance. "The action referred to was taken for the purpose of conforming the practice of this company to the principles decided by the Interstate Commerce Commission." The Commission protested that it was not laying down any such "principles" but the corporation declared that that was what it "understood," and held to the advance made on that understanding.[239]

To the almost weeping expostulations of the Commission in interviews and letters, to show that it had said nothing which could justify the action of the roads, the officials made not the slightest concession. "I did not consider it in that way," said one of them.[240] "That was their (the Commission's) view of the case, but it was not shared by us," said the President of the Pennsylvania Railroad. "It was considered best to continue the practice," he said.[241]

"Why did you not rescind the order?" he was asked before the Interstate Commerce Commission.

"We understood their ruling to be a ruling for the whole country," he incorrigibly replied.

The railway president studiously withheld any assurance that he would obey if the Commission issued a direct command, which it had not done, though it had the authority.

"We would then take the subject up," he said.

Change the order to comply with the ruling of the Interstate Commerce Commission the roads would not and did not.[242]

All the roads to the seaboard and New England had made the order in concert, and together they maintained it. It was one hand, evidently, that moved them all, and though that hand moved them, for the benefit of a carrier rival of theirs--the pipe line of the trust--against their own customers, against their own employers, against the authority of the United States Government, all these railroad presidents and freight agents obeyed it with the docility of domestic animals.

These officials were the loyal subjects of a higher power than that of the United States, higher even than that of their railway corporations. They serve the greatest sovereign of the modern world--the concentrated wealth, in whose court the presidents of railways and republics, kings, parliaments, and congresses are but lords in waiting.

Thanks to the superior enterprise of their greater need, the independents of Oil City and Titusville had been able to survive the blows that had preceded, but this was too much. They had weathered the surrender in 1883 of the Tidewater Pipe Line, which had promised them freedom forever. Even the "contract" which made the allied pipe lines and the railroads in 1885 one, to tax them half as much again for transportation, had not broken them down. In spite of it they had been able "to maintain and increase their business."[243] But now they closed their works. The new attack had been shrewdly timed to spoil for them in that year--1888--the season of greatest activity in the export to Europe and Asia. They appealed to the Interstate Commerce Commission. "The greater proportion of our refineries are idle."[244] "I have not a customer in the entire New England States. I have not had since the advance of last September."

"How was it before the advance?"

"I had a number of customers."[245]

Labor, though, as always, the most silent, suffered the most. Three hundred coopers were thrown out of work in Titusville alone within a short time, and the loss of employment to the workmen in the refineries was still more serious. This was not because trade was bad. Exports were never greater than in 1889. Government statistics reveal as in a mirror what was being done.

The exports of refined petroleum increased 21 per cent. in 1889 over 1888. But Perth Amboy, from which the independents shipped for the most part, showed a decrease of over 18-1/2 per cent. By the stroke of a freight agent's pen the business of these men was being taken from them, to be given to others. The general tide was rising, but their feet were sinking in a quicksand.

The export business of Boston in oil was given to the "seaboard refiners" by the same stroke. Freights that had been $100 were now $174 to Boston, and $188 to New York. These rates were so high as to stop oil from going through. "The Nova Scotia trade," it was testified, "goes to New York, and from there by water, whereas they used to buy in Boston. Boston brokers will ship oil from New York and get it to Nova Scotia cheaper than if it went from Boston, whereas when we had the export rate we could compete in that market."[246] Two months later most of what remained of the business of the independents in New England was added to the gift of their foreign trade, which had already been made to the "seaboard refiners." By an order of October 25, 1888, the railroads made it known to these "pestilences," as the lawyers of the railroads called the independent refiners in court,[247] that they would not be allowed to send any more through shipments into New England. This was done, as in Ohio in 1879,[248] without the notice required by law, though in the meantime a Federal law had been passed requiring notice.[249]

This order was the finishing touch in the task of using the freight tariff to prevent freight shipment. It shut the independents--the hunted shippers--out of over 150 towns in New Hampshire, Vermont, Maine, Massachusetts, including Manchester, Burlington, Portland, Salem, in which they had built up a good business, and it made it impossible to reach these places except by paying high local rates--from station to station--which were not required of their competitor, who shipped on through rates. The railroads would take the oil of the independents for shipment, but would not tell them what the rates would be. In this, as in all the moves of this game, we see the railroad managers of a score of different roads, at points thousands of miles apart, taking the same step at the same time, like a hundred electric clocks ticking all over a great city to the tune of the clock at headquarters that makes and breaks their circuit.

The independents were saved by a Canadian railroad from the destruction which American railroads had planned for them. The Grand Trunk gave them a rate by which they could still do some business in the upper part of New England, though to do this they had to ship the oil into Canada and back into the United States. The effect of this abolition of through rates in "cheapening" oil was that the people of Vermont, for instance, had to pay 2 cents a gallon more than any other place in New England.[250]

While all access for others to New England was cut off, the "seaboard refiners," sending the oil in free tanks to the seaboard, transshipping it there into vessels by the facilities of "which they have a monopoly,"[251] easily made their own the business of their rivals in the 150 towns from which the latter were thus cut off. No one has been able to move all the railroads in this way, as one interlocking switch, to obey a law or accommodate the public. But it was done easily enough for this kind of work. Possession was got of the railway managers at the initial points, as was done so successfully in another case,[252] and all the other railway managers, as far as Boston, followed in their trail. Reproducing the tactics in Ohio in 1879, it was only against oil that this attack of the tariff was made. Other freight for export, of which there was a vast variety, continued to be carried to Boston at the same rate as before.[253]

All the freight agent of the initial road had to do with the oil on its way to Europe was to pass it along to the next line. Whether, after leaving his road, it went by the way of Boston or that of New York made no difference to his road, and was in no way his affair. But it made a great deal of difference to those who wanted all the business of Europe and America for themselves, and we consequently find him serving them, and dis-serving his employer (the railroad), by charging 21 cents a barrel if the oil was going to Boston after leaving his line, but only 15-56/100 cents if it was going to New York. When asked if he thought he was justified as a railroad man under the law in making the charges for what he did vary according to what was done by the business after it left his hands, he refused to answer.

"You will not answer?"

"Not at present."[254]

All the connecting and following roads are on record as having protested against the measures in which they followed the lead of the initial lines.[255] The freight agent of the West Shore Railroad declared that the prohibition of through shipments to the towns of Massachusetts, Vermont, New Hampshire, and Maine "occurred simply through mistake;" but the mistake, he acknowledged, had never been corrected.[256] This "mistake" and that of September, which preceded it, put an end to a large business, amounting in 1888 to 900,000 barrels. The men, whom the railroads began to massacre after having pledged them full protection, saved a fraction of their trade in New England, as we have seen, only by taking refuge with a foreign railroad. The railroads against their will, as they swore, lost business as well as honor, but the mistake was not corrected.

It would tax the imagination of a Cervantes to dream out a more fantastic tangle of sense and nonsense in quixotic combat than that which these highwaymen spun out of the principles of "scientific railroading." All that highway control could do to destroy the barrel shippers for the benefit of the tank shippers was done; and yet the barrel method is the safer and more profitable for the railroads.[257] The cars that carry oil in barrels can return loaded; the railroads have to haul the tank-cars back empty and pay mileage on them.[258] For a series of years on the Pennsylvania Railroad the damage from carrying oil in barrels was less than half the damage from the carrying of oil in tanks.[259] The general freight agent of the Pennsylvania Railroad Company tells the Interstate Commerce Commission that the carriage of oil in tank-cars "is the most undesirable business we do." He described a smash-up at New Brunswick where there was a collision with a line of tank-cars. The oil got on fire; it ran two squares, got into a sewer, overflowed the canal, which was then frozen over, and followed the ice a square or two beyond. Besides having to pay nearly five hundred thousand dollars damages for the destruction done, the railroad lost its bridge, which cost two or three hundred thousand dollars. It lost more money than it could make carrying oil for ten years. "I regard it," he said, "as worse than powder to carry; I would rather carry anything else than oil in tanks."[260] Barrel shipments being the best for the railroads, these princes of topsy-turvydom move heaven and earth to destroy them.[261]

There was no end to the "mistakes" made by the railroads for the "self-renunciation" of their business, though this was in favor of those whose pipe line made them rivals. They charged more for kerosene in barrels than for other articles of more value, contradicting their own rule of charging what the traffic will bear. They let the combination carry sixty-two gallons in every tank free on the theory of leakage in transportation. "The practice," said the Commission, "is so obvious and palpable a discrimination that no discussion of it is necessary;" and they ordered it discontinued.[262]

Though the railroads brought back the tanks free, for the return of the empty barrels they never forgot to charge. This charge was made so high that at one time it prohibited the return from all points.[263] "The monopoly uses a large number of barrels in New York City," the independents said to the Commission; "it is to its interest that empty second-hand barrels should not be returned to the inland refiner." When this was brought out the Pennsylvania and other railroads promised to make reparation, but had not done so years later when the case was still "hung up" in the Interstate Commerce Commission.

It was not lack of capital or of diligence that made the independents use barrels instead of tanks; tanks were useless to them. All the oil terminal facilities of the railroads at the seaboard had been surrendered to the combination for its exclusive use.[264] These were the only places where tank-cars could be unloaded into steamers. "There are no facilities to which we, as outside refiners, have access to load bulk oil into vessels," and none where these refiners could send oil in tank-cars to be barrelled for shipment abroad.[265] No matter how many tank-cars and tank-vessels the independents might have provided, they could not have got them together. Between the two were the docks in the unrelenting grip which held solely for its private use the shipping facilities of these public carriers. Not even oil in barrels could the independents get through these oil docks.

The Weehawken oil docks of the Erie road on New York harbor are the best in the world. The Erie Railroad has $920,760 invested in them, but only one shipper can use them either for tanks or barrels.

The Western traffic manager of the Erie was asked:

"Would you take a shipment there over the Erie road of independent oil consigned to the New York docks?"

"No, sir."[266]

The Pennsylvania Railroad refuses to haul tank-cars for the independents to any other point at New York than the terminals so controlled by the combination. It will not haul them to other docks of its own. It will not let oil be shipped over its line to the points at which it connects with other roads for other harbors, though it will take shipments of anything else than oil.[267] This amounts to a refusal to allow the independents to use tank-cars or tank-steamers. Practically the same policy is pursued by all the main trunk-lines. These independents could get rid of their export oil only by selling to the combination. Through its other self--the company which controls the terminals--it has kept an agent in the oil regions for years to buy for export this refined oil which its owners and makers could not export themselves. This is the "immediate shipment" of 1878 in another phase.[268]

"You have to sell to the Standard Oil Company in order to get your oil shipped in bulk from Communipaw?"

"Yes, sir."

"The independent cannot get his oil into a bulk vessel at Communipaw?"

"No, sir."[269]

To meet these disclosures the Pennsylvania presented two affidavits. One was from its general freight agent that its tank-cars were offered freely to all; but it did not deny, for it could not deny, any of these facts about terminals, which explained why the flies did not walk into its parlor. The other affidavit was from the secretary of the corporation controlling the terminals for the oil combination, and it similarly declared that its accommodations were furnished "upon exactly the same terms to all." How long it had been doing so, or how long it would continue to do so, it did not state, as the independents pointed out to the Commission. If this were the truth instead of being, as the independents hinted, "evidently a situation that has been recently arranged for the purposes of this application"--to the Interstate Commerce Commission for further delay--why had none of the independents, dying for want of export facilities, resorted to it? This was not explained, for it could not be. The independents explained the situation to the Interstate Commerce Commission: "The inland refiner who intrusts his oil to a storage company at the seaboard with a view to exporting, puts himself completely into the power of such concern. The exactions that may be unfairly imposed in individual cases for 'loss by leakage,' 'dumping and mixing for off-color or off-test,' 'cost of water white oil for mixing,' 'tares,' 'tares guarantee,' 'commissions on sales,' 'interest on goods until loaded and paid for,' 'incidental expenses,' and many other known matters of charge, may amount to a partial confiscation of the cargo."

The corporation which manages this monopoly of the terminals at Communipaw is a mysterious concern. Who own its stock, and what its relations with the railroad are, the Interstate Commerce Commission could not find out. Its president and treasurer were summoned to testify, but refused to attend. The manager of the oil combination's pipe lines stated that he knew of stock in the company that was owned by a member of the trust, though he afterwards qualified that he did not know it "positively."[270] The charge that this company was controlled by the monopoly was specifically made before the Interstate Commerce Commission and was not denied, and the Commission found that the oil combination "have a monopoly of those facilities to the exclusion of complainants."[271] It thus reported the same state of facts in 1892 as the New York Legislature in 1879.

The barrel was therefore the fountain of life for the independent. Without barrels he could not get his oil on board ship for export, and without exporting he could not live and refine for the home market. The oil combination ships in barrels also. According to the figures given in this case by one of its "assistant managers" its shipments by barrel are very large. This testimony was introduced to make it appear cruel to insinuate that the difference between barrels and tanks was made by the railroads to favor it, since it as well as the independents used barrels. The Commission openly expressed its dissatisfaction with this evidence, and dismissed the subject by the conclusive observation that the combination gains more by the low tank-car rates than it loses by the high barrel rates.[272] For the independent, however, the difference in rates was almost all loss, for he at that time shipped mostly in barrels. The high prices it made for oil and for freights at Titusville and Oil City did not hurt the combination. It had only to close its refineries there and transfer their business for the time to its establishments elsewhere. This it did, keeping some of them idle for years.[273]

Such was the story told to the Interstate Commerce Commission, in many hundred pages of testimony, by the refiners of Oil City and Titusville, who appealed to it for the justice "without expense, without delay, and without litigation" promised the people when the Interstate Commerce Commission was created.[274] The game, of which you have perhaps been able to get a dim idea from the printed page, the Commissioners saw played before them like chess with living figures. For years the principal subject of their official investigations had been the manoeuvres of the oil ring. They had been compelled by the law and the facts to condemn its relation with the railroads in language of stinging severity, as every court has done before which it has been brought. Better than any other men in the country, except the men in the ring, the Commissioners knew what was being done. They comprehended perfectly who the "seaboard refiners" were whose demand that their competitors should be shut out of Europe and New England was better law with the Pennsylvania Railroad than the decisions of the Commission. They needed no enlightenment as to the purpose of the secret contract between the members of the oil trust and the Pennsylvania, nor any instruction that the "pool" between the pipe line and the railroad was as hostile to the public interest as any pool between common carriers.

The chairman of the Commission had openly hinted that the relations of the oil trust and the railroads were collusive, and that the spring from which they flowed was a secret contract.[275] It was shown to the Commission that at the same time the railroads advanced their rates the oil combination bid up the price of the raw material of the Titusville and Oil City refineries. This is called "advancing the premium."[276] The raise of the freight rate added 14 cents a barrel to the cost of production, and the increased price of oil put on 12 cents more, either item large enough to embarrass competition. The Interstate Commerce Commission in its decision recognized the practical simultaneity of the three movements to the disadvantage of the independent refiners: (1) the bidding up of the price of crude oil against them; (2) the new rule of charging for the weight of the barrel; and (3) the abrogation of the through rates to New England. These three things occurred in a period of about two months. This, the Commission says, lends color to the charge that there was concert of action between the combination and the railroad.

The Commissioners in their sittings had seen that the counsel for the railroads did not pretend to bring forward any evidence to prove that their attack on the barrel shippers was just or proper. Although "the seaboard refiners," for whose pecuniary profit these things had been done, were not on trial, their witnesses, agents, and attorneys were in constant attendance, and kept close watch of the testimony and arguments. The Commission had its attention called specifically to the fact that the defence of the railroads on trial was being directed by the same "seaboard refiners" who had "insisted" that the railroads should violate the law. The counsel for the Erie road was frank enough to admit that it was they who had prompted that carrier in its litigation before the Commission. When the Erie appeared before the Commission to give "further testimony," its representative could not tell at whose request its application therefor had been made, and said he had known nothing about the matter until the day before. Three of the six witnesses then examined were from the offices of the oil trust, whose members had refused to come when summoned. The only subpoenas they obey are those issued from their own headquarters.

The president of the oil combination's pipe lines--who is also the president of the steamship line in which its members are interested--and the vice-president of the pipe lines, and the president and the treasurer of the company which holds for the trust the monopoly of the terminal facilities, and the President of the New York, Lake Erie, and Western Railroad, and its vice-president, were all served with official notice to come and testify. But these gentlemen refused to appear. "It is for your honors," said the counsel for the refiners, suggestively, "to determine what obedience shall be paid to your subpoenas."[277] But the Commission did nothing.

The defendant corporations, and their lawyers, officers, and witnesses, made no pretence of treating the Interstate Commerce Commission with anything more than a physical respect. The representatives of the railroad companies practically told the Commission that its decisions were subordinate to theirs, and that they knew better than it what its rulings meant. Witnesses refused to answer questions they found awkward, and the lawyers gave the court to understand that if it did what they did not like they would snuff it out. The Commission heard one of the refiners who was a petitioner before it assailed with coarse vituperation, described in open court as a "pestilence,"[278] because he had dared to write more than once to the railroads for the reduction of rates which would save him from destruction, and which the Commission had, not once, but half a dozen times, said the railroads ought to give to all.

The Commission had itself, outrunning the complainants, been the first to "pointedly disapprove" the attempt to destroy the barrel shippers, and to call upon the railroads to rescind their action. This protest it had made repeatedly--first with the subalterns, then with the chief of the Pennsylvania Railroad, in personal interviews, letters, and finally in an official pamphlet, which was an appeal to the public to judge between it and the corporation. It had reiterated its protest in a formal decision rendered September 5, 1890, after deliberating seven months on the evidence and arguments. In this "they recalled the fact, now almost ancient history, that" the change was "pointedly disapproved by the Commission" when first made, and with lamentations noted that, though almost two years had passed, "the carriers have failed to comply with the suggestions there made. In charging for the weight of the barrels as well as the oil, the carriers that make use of both modes of transportation have disregarded the principles plainly and emphatically laid down by the Commission in the cases cited, and have paid no attention to the subsequent official memorandum explanatory of the decisions in those cases, but have persisted in maintaining a discrimination against barrel shippers. An order requiring the discontinuance of the discrimination has therefore become necessary."[279]

An order has therefore become necessary. The Commission then ordered one road concerned in this separate case to "cease and desist" within thirty days. Although several cases affecting a number of refiners and a number of roads had been heard and submitted together, as practically one in traffic, territory, circumstances, and the main question, it confined its decision to the case which involved only one road, and that a subordinate. There the Commission stopped; and there it stuck for more than two years, from September 5, 1890, to November 14, 1892, refraining from a decision in the case of the principal offender, the Pennsylvania Railroad.

The Pennsylvania Railroad is the representative carrier in the oil traffic. It controls all the oil business that passes over its lines, no matter how far away it originates. The initial road which led the attack on the barrel shippers is subsidiary to the Pennsylvania in the oil business, and the Pennsylvania controls its rates and regulations.[280] The Pennsylvania has been the head and front of the railroad attack on these men, and has been the open nullifier of the law and the Commission in this matter. It was the principal defendant on trial, and its case was identical with that of the others, except that it was the most flagrant; but no order would the Commission issue against it for two years. Wendell Phillips says: "There is no power in one State to resist such a giant as the Pennsylvania road. We have thirty-eight one-horse legislatures in this country; and we have a man like Tom Scott with three hundred and fifty millions in his hands, and if he walks through the States they have no power. Why, he need not move at all; if he smokes, as Grant does, a puff of the waste smoke out of his mouth upsets the legislatures." When the Commission had ordered a change of rates on barrels in the South, the Pennsylvania did the Commission the double disrespect of declaring that that order was binding upon itself against the protest of the Commission, and of using an order to reduce rates as an excuse for raising them. But now when the Commission, September 5, 1890, made a decision on the same point in a case arising in the territory and traffic in which the Pennsylvania was the chief carrier--a case, too, of a bunch of cases in which the Pennsylvania was a defendant--that road ignored it. The Commission, in the Rice, Robinson and Witherop case, in 1890, promulgated the very rule which the Pennsylvania Railroad established, which it had been following for twenty years, and which its officers before the Commission swore was the correct one, but the Pennsylvania refused now to accept and follow it. The road which was now ordered to go back to the correct practice, and which had perforce done so, was the initial road. The Pennsylvania had followed its initiative in adopting a "false" and "misleading" and "unwarranted" practice, but would not follow it in changing to the good.

The attitude in which the Pennsylvania road and the Commission were thus placed towards each other was this: Shall the Pennsylvania Railroad be allowed to make a charge which the Commission volunteered to rebuke it for making, and which it had decided, in the parallel case of another road in the same situation, was altogether unwarranted and must cease? They stood thus facing each other more than two years. There was apparently no excuse for delay the Commission would not accept. At one time it granted postponement on the plea of a lawyer that his father was sick. More than the lawyer's father were sick; a whole community of business men were sick; the entire country was sick, its industry, law, politics, morals--all. The administration of justice was sick. If the facts had been uncertain, or the law undetermined, the course of justice would still have seemed cruelly sluggish; but here was a matter in which the facts and the law in question had been settled, and by the Commission itself, over and over again. The only thing remaining was that the Pennsylvania Railroad, as well as the road which was its next neighbor, must obey the law. The railroad against which the Interstate Commerce Commission decided in 1890 on this point joined the Pennsylvania at Irvineton and Corry. The Commission put the law into force on one side of those points, but for two years gave the Pennsylvania Railroad and others "rehearings" and other means of delay, and did not open its lips to say that the same law must reign on the other. The conduct of this corporation meant that it intended to respect neither the Interstate Commerce Commission nor the Interstate Commerce law; that it recognized the will of cliqued wealth as the supreme law; that the protestations of loyalty to the law and the Commission with which it accompanied its defiance of both were not offered as a disguise of respect, but were chosen as a method which would most embarrass the people's tribunal in upholding itself and the rights of the citizens. All that was needed by those who had contrived and were continuing the wrong was time--they had everything else. Time they got, and plenty of it.

July 15, 1891, the refiners said to the Commission: "Two and one-half years have elapsed since these complaints were filed, and the end is not yet. We earnestly hoped that we had succeeded in convincing this Commission that this respondent was inflicting on complainants a great and unnecessary wrong, which merited the most speedy remedy and redress possible. If we have failed in this we are unable to ascribe the failure to a lack of evidence or promptness in presenting it. It was not thought possible that all this great length of time would be required to reach a conclusion in these matters, under all these circumstances, especially after the decision in the Rice, Robinson, and Witherop case (September 5, 1890). The enemies of the complainants could scarcely have found or wished for any more effectual way of injuring complainants than by a long delay of their cause. Further delay simply means further injury to complainants." The two years and a half have gone on to more than five years. A decision has been made, but the end is not yet. The delay prevented the injured men from going to any other tribunal with their complaint. They have succeeded in keeping alive, though barely alive, because the price of their raw material has declined a little, and given them a margin to cling to. This delay has denied them justice in the special tribunal they were invited to attend, and has also denied them the relief they could have got from other courts.

The Commission heard all this urged by eloquent counsel. It heard the men who were being crushed tell how their refineries were being closed, their customers lost, their business wrecked, their labor idle, while the trade itself was growing larger than ever. It saw the statistics which proved it. But no practical relief have the independents of Oil City and Titusville been able to get from it. They have lost the business, lost the hopes of five years, lost the growth they would have made, lost five years of life.

This delay of justice is awful, but it is not the end, for the decision, though it came at last in November, 1892, has brought no help. It required the roads to either carry the barrels free or furnish tank-cars to all shippers, and for the past ordered a refund of the freight charged on barrels to shippers who had been denied the use of tank-cars. More than five months after it was rendered the independents, in an appeal (April 20, 1893) to the Interstate Commerce Commission, called its attention to the fact that "none of the railroads in any one of the cases has as yet seen fit to obey any of its orders save such and to such extent as they found them advantageous to themselves, although the time for doing so has expired." More appalling still, it appeared, in an application made in March, 1893, by the Pennsylvania Railroad for a reopening of the case, that these years of litigation were but preliminary to further litigation. The counsel of the railroad, in the spirit in which it had previously warned the Commission that its powers "may be tested," now informed it that the road, if the application for further delay were not granted, would "await proceedings in the Circuit Court for enforcement of what it believed to be an erroneous order." And in another passage it referred to the proceedings before the Commission as being simply proceedings "in advance of any final determination of the case on its merits." Four years and a half had been consumed when, as the independents pleaded to the Commission, "it might reasonably have been expected that as many months would have sufficed," and yet these are only preliminary to "the final determination of the case on its merits."

"The delay suffered has been despairing--killing," was the agonized cry of the independents in their plea to the Interstate Commerce Commission not to grant this new delay. "We pray that no more be permitted." But in November, 1893, more delay was permitted by granting another application of the Pennsylvania Railroad for "rehearing." This was limited to thirty days, but these have run into months, and "the end is not yet." Five years have now passed in this will-o'-the-wisp pursuit of justice "without delay."

And another "outsider," who has been a suppliant since March, 1889,[281] before the Interstate Commerce Commission for the same relief--the free carriage of barrels where tanks are carried free--is still a suppliant in vain. The Commission consumed three years in hearings and rehearings, only to report itself unable to decide this and other important points raised by him. It was "a most perplexing inquiry," "we are not prepared to hold," "we desire to be made acquainted with the present situation," and "the results exhibited by recent experience." "No such intimation is intended," said the Commission, as that it is right for the roads to charge for barrels when they carried tanks free--not at all. "We simply refrain" from stopping the wrong, and "reserve further opinion for fuller information and more satisfactory inquiry." Perhaps, however, by "voluntary action"[282] the railroads which had contrived this wrong would be good enough to stop it, though the Commission was not good enough to order them to do so! The Commission held that the rates were "unlawful; but, for want of sufficient data, we do not undertake to point out the particular modifications and reductions which would satisfy the demands of justice."[283] "We are not now prepared to determine," "we feel unable to prescribe," "is not now decided," "reopened for further evidence and argument," are the phrases with which the Commission glided away from the settlement of other vital points as to which its intervention had been invoked for more than three years. Even when it directed the railroads to reduce their charge it added "to what extent the Commission does not now determine, and the cases will be held open for such further," etc. And there his case hangs even unto this day, for since this "not-now-decided" decision the "outsider" has never renewed his appeals to the Interstate Commerce Commission concerning these cases or others,[284] but, hopeless of redress, has let them go by default.

The secret contract stands, but the barrel men survive, barely, despite monopoly, by changing to tank-cars, and getting a pipe-line and some terminals. They create seaboard facilities and persuade the Jersey Central to haul their tanks. To meet this road they lay the pipe now to be described, and, to escape railroads altogether, will build to New York, if not ruined meanwhile.

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XII. UNFINISHED MARCH TO THE SEA

Between May and December, Sherman made his march from Lookout Mountain to the sea, cutting the Confederacy in two. For thirty years the people of Pennsylvania have been trying to break a free way to the ocean through the Alleghanies and the oil combination, and in vain. For ten years the hope of independent outlet to the sea from the oil-fields of Pennsylvania lay prostrate under the blow of the surrender of the Tidewater. Twice the people have tried again, only each time to be headed off. The first of these two rallies collapsed in the shut-down of 1887; the second was stopped at the cannon's mouth by an armed force at Hancock, New York, in the year of peace, 1892.

By 1887 the people of the oil regions had recovered from the shock of losing the independent Tidewater Pipe Line,[285] and began to make new plans for getting to the sea. By some means the committee to whom they had intrusted the management of the new enterprise was persuaded to go to New York to confer with the officers of the oil combination, who had measures of conciliation to propose that would make it unnecessary to build the new pipe lines. This committee, and finally the constituency it represented, were made to believe that the cause of the woes of the oil country was simply and only that there was too much oil--not that there were too many empty or half-filled lamps. They agreed to cut down their business one-half, and were lured away from the project of getting full prices on a full product. The outcome was the "shut-down" of 1887. The producers were persuaded it would bring back oil to a dollar a barrel--to stay there; but after a brief and unremunerative spurt in values, a reaction, lasting to the present, carried prices to a lower level than ever, and the producers found that the last state of those who let such spirits enter them is always worse than the first.

Several times before this the oil producers had tried to imitate the policy of scarcity, which the most brilliant business successes are teaching to be the royal road to wealth. It is stated by the report of the General Council of the Petroleum Producers' Union[286] that the producers had twice entered into arrangements with the oil combination to lessen the product and regulate the price of crude petroleum, and that in each case the arrangement had been violated by the latter when it seemed about to become profitable to the producer. Hence, when invited to confer for a third venture of this sort, the Council declined to do so. But in 1887 the invitation, extended for the fourth time, was a third time accepted. The producers succeeded in the restriction, but they did not better their condition. These men gave the world the spectacle of the producers flirting with the solitary and supreme buyer of their product, in the belief that he would help them to raise their price against himself.

The agreement which was made with the producers was shown before Congress.[287] The producers were bound for a year from November 1, 1887, "to produce at least 17,500 barrels of crude petroleum less per day," and to make it, if possible, "30,000 barrels less per day." In return for this the oil combination agreed to give the speculative profits on 6,000,000 barrels of oil--the profits on 5,000,000 for them, and on 1,000,000 for their laborers. This move of those who want petroleum cheap to make it dear is one of the equivocations of policy in which princes have always distinguished themselves. The need of the hour was to stop the building of the competing pipe line. That was accomplished by the scheme of the shut-down, which amused the producers, and, as subsequent prices proved, did not hurt the buyer of their oil; quite the contrary.

Drills and pumps at once ceased their operations throughout the oil regions. Working-men were thrown out of employment, stores were closed, hundreds of families had to subsist on charity. One of the Broadway producers who made this bargain for the shut-down admitted to the committee of the New York Legislature that "the oil-producing interest was abnormally depressed," and "that there was great distress."[288] The agreement itself recites that the price of petroleum had been during the preceding year "largely below the cost at which it was produced." The people of the oil country went to work with desperation to enforce the policy of oil famine. Committees were formed among the well-drillers in each district, "whose duty," the formal papers of organization stated, "shall be to keep a lookout for and endeavor to prevent the drilling of wells." "We have no way of stopping those who want to drill wells," one of the officers of the organization said, "only by good, reasonable talk." The Well-drillers' Union appointed and paid one of their members to reason with people who insisted upon digging wells. It is not necessary to question the good faith of the assurance their officials gave Congress that his duties did not require the use of nitro-glycerine. But, "unofficially," nitro-glycerine was freely used to enforce the shut-down. Men who failed to feel the influence of the "good talk," and went on putting up machinery, and drilling wells, would find their derricks blown into kindling-wood. Referring to one of these occurrences, a member of the Well-drillers' Union told Congress it was a case where no permission had been granted by the union to drill.

"Was the rig destroyed?" he was asked.

"The derrick was blowed up by some kind of compound."

The quantity of the "compound" was enough to shake windows six miles distant. The derrick and the machinery were "cheapened" into junk.

"Did you ever know of a case of any man's derrick and apparatus being blown up in the oil region before the formation of this association?" one of the shut-downers was asked.

"I could not say that I do."[289]

The owner of the apparatus destroyed, it was stated by the press, had been repeatedly requested to join the shut-down, but had refused. There were several such occurrences, recalling the affairs at the Buffalo refinery in 1885.[290] When the people in Pennsylvania saw apostles of the gospel of making oil cheap enter into a bargain with them to make it scarce, it is not surprising that they should have become bewildered to the point of thinking that the noise of nitro-glycerine was "good talk," and should have sunk into the depression, monetary and moral, that alone could make such haggard faces rise among an honest laborious people.

We have seen how the refiners who pass under the control of the trust are compelled to make monthly reports. The same perfectness of discipline appears at once among the producers in this shut-down. Every one of them had to make monthly reports of how much oil he had taken out of the earth. If the mobilization of industry goes on at the rate of recent years, it will not be long--not later, perhaps, than the end of the nineteenth century--before all producers, and all makers, will be sending monthly reports to New York of grain, cattle, iron, wool, lumber, leather, and the manufactures of them to trustees, whose "pleasure it is to try to make them"--the men as well as the commodities--"cheap." The supervision by means of these monthly reports was so close that over-production, however minute, was immediately known. If the owner of a well over-produced only the one-hundredth of a barrel, he got a notice to go slower.[291]

To the producers engaged in it the result of the shut-down was that when their representatives at the end of it called on the oil combination in New York for the profits on the 5,000,000 barrels of oil set apart for them, as agreed, they were given a check for a sum between $200,000 and $250,000.[292] This was divided among those who had co-operated--nearly one thousand--in proportion to their share in the good work of making the supply of the light of the people so much "less per day." The drama of industry has not many scenes more striking than this of these men--the principal producers of the oil country, which had yielded in the thirty years up to this time more than 300,000,000 barrels of oil--going to the great syndicate in New York to buy the privilege of restricting the production of their own wells, thankfully accepting the scanty profits on a speculative deal in the oil exchange of 5,000,000 barrels, receiving with emotions of enthusiasm a check for a couple of hundred thousand dollars for a year's "co-operation" from the men who had made out of their product hundreds of millions.

The shut-down was a great disappointment in prices. The average price of petroleum at the wells for October, the month before the shut-down, was 70-7/8 cents a barrel. The highest monthly price reached during the restriction was 93-5/8, in March, 1888. The average for October, 1888, the last month of the year originally agreed upon, was 90-5/8. By a subsequent understanding the restriction was continued until July, 1889. The price then was 95-1/8. At no time during the shut-down was the coveted dollar mark maintained, and it was barely touched in March, 1888, after which there was a sharp decline to 71-3/8 in June, with savage losses to "the lambs." High prices did not come until the accumulation of 6,000,000 barrels set aside "for the use" of the producers had been sold out. After that there were in the winter following--1889-90--a few months in which the price rose, as to $1.12-1/2 in November, 1889, but it sank the year following to 60-3/4 in December, 1890, and it continued to go down until crude oil reached 50 cents in October, 1892, the lowest point known since there was an oil market.[293]

The men with whom the producers made their bargain, shrewder than they, and versed in the dynamics of the markets, knew that the effect of setting apart 6,000,000 barrels of oil would be ultimately depressive to prices, not stimulating. Not knowing when or at what price this vast amount would be unloaded, buyers, both for use and for speculation, would be made timid, and prices would be held in check. The shut-down produced a great gambling mania. Untold millions were lost by men in the oil country, who gambled on the exchanges to make the profits of the expected advance. Local panics, bank failures, ruin in all its shapes, were the escort of shame and loss which marched with the shut-down. Curiously enough, it was those who speculated for the rise who were the losers. There was against them an element which knew better than they what prices were going to be, for it made them. It is this ability of insiders to bet on a certainty which has been the destruction of the oil exchanges. From Pittsburg to New York they are now practically all dead.

The amount of the reduction effected by the shut-down, independent of a natural decline which had set in some months before, has been estimated at 11,000,000 to 15,000,000 barrels. The production ran down from 25,798,000 barrels in 1886 to 21,478,883 in 1887, and 16,488,688 in 1888. In 1889 it was up to 21,487,435 again, and in 1890, 29,130,910.

The price of light advanced. When the negotiations were in progress the producers were told that if the flow of oil glutting the market could be stopped the price of refined could be advanced, and that for every eighth of a cent a gallon advance in it the producers could expect an advance of 4 cents a barrel on their crude oil. Refined advanced during the shut-down to a price to correspond to which the crude should have risen to 96 cents a barrel. Instead, its price fell to 78 cents. The committee went to New York "to protest." Their New York ally said there was no change in the markets of the world. That they could get the price for the refined, but they did not propose to hold up the price of the crude. "If we could not do that, they could not help it."

"He had refined to sell, and crude to buy?"

"Yes, sir."[294]

This shut-down, the New York Tribune said, was "one of the most interesting economical experiments made in recent years." It was, as the New York World said, "one of the largest restrictive movements ever attempted in commerce." The president of the trust, when examined on February 27, 1888, by the New York Legislature, as to the agreement for the shut-down, declared positively that nothing of the kind had been done.

"There has been no such agreement?" he was asked.

"Oh no, sir!... Oil has run freely all the time."

"And no attempt to do that?"

"No, sir."[295]

He afterwards recalled these denials, and excused himself on the ground that as he had been in Europe when the arrangement was made he had known of it only "incidentally."[296] A "shut-down" on facts is as necessary to the success of the schemes for scarcity as a shut-down in oil. There are too many facts, as well as too much oil.

"By advancing the price of the crude material you necessarily advance the price of the refined?" another of the combination was asked.

"Yes, sir."[297]

The average price of refined at New York for export was 6.75 cents a gallon in 1887. This rose to 7.50 in 1888, the highest average price for any year between 1885 and 1893.[298] The effect of the restriction--"one of the most extensive ever attempted in commerce"--was thus to make oil and light and all its other products scarcer and dearer. The producers really got no good. After the shut-down had been in progress five months, their committee issued an address congratulating them on the "glorious results" achieved in the fidelity with which the pledge of restriction had been kept, but continued, "But prices are not yet remunerative."[299]

"We do not seem to have gotten it," one of the producers said to Congress, referring to the assistance they expected in an advance of the price to profitable figures.[300] No lasting gain came to any one unless to the monopoly, and it is possibly too soon to tell whether its gain will be "lasting."

Part of the speculation was that the profits of 2,000,000 barrels, contributed equally by the combination and the producers, were to be distributed among the working-men affected by the loss of employment. Men who had been earning $12 a day received a dollar a day from this fund, and lay idle.[301] A blistering picture of the condition of the region is to be seen in the testimony of one of the producers.

"The payments that you have made, or that your assembly has made, have been to individuals?"

"Yes, sir."

"State what the character of the occupation of the individuals thus relieved was in relation to the shut-in."

"Pumpers and roustabout men who had families sick and impoverished. That was a source of relief to them, and we did not withhold it. It was in our community, and we thought we could well afford to allow them that."

"For what did you pay them?"

"For charity's sake."

"Did you give them any occupation?"

"We had it not to give; we gave them money instead."[302]

This was the melancholy end of the great shut-down. But the people were not broken by their new failure. They did not lie long in the cul-de-sac into which they had been trapped. There is a magnificent reserve force of public spirit and love of liberty in the province of William Penn and the chosen State of Benjamin Franklin. The oil business has been a thirty years' war. The people have been whipped until one would suppose defeat had become part of their daily routine, but there have always been enough good men who did not know they were beaten to begin fighting again early the next morning. It was so when the independents of Pennsylvania took the pool of the oil trust's pipe lines and the railroads before the Interstate Commerce Commission, only to reap the unexpected demonstration that the tribunal created by Congress to prevent and punish discrimination was but one more theatre for litigation and delay.[303] Leaving their cause on the floor of the Interstate Commerce Commission, these men went forth for the seventy and seventh time to build a pipe line of their own, on which they are now busy. Their numbers, resources, and hopes are less, but their will and courage are undiminished. To-day, in northwestern and western Pennsylvania this small, determined body of men are going forward with a new campaign in their gallant struggle for the control of their own business. Their efforts have been, a friendly observer says, not too warmly, as heroic and noble and self-sacrificing as the uprising of a nation for independence.

Of all this very little has been known outside the oil regions, for the reason that the newspapers there are mostly owned or controlled by the oil combination,[304] or fear its power. The last independent daily in northwestern Pennsylvania became neutral when the threat was made to place a rival in the field. With sympathy from but few of the home press, ridiculed by the "reptile" papers, and met at every turn by crushing opposition, and annoyances great and little from spies and condottieri, these men are, in 1894, working quietly and manfully to cut their way through to a free market and a right to live. Their new pipe line has been met with the same unrelenting, open, and covert warfare that made every previous march to the sea so weary. The railroads, the members of the oil combination, and every private interest these could influence have been united against them. As all through the history of the independent pipe lines, the officials of the railways have exhausted the possibilities of opposition. At Wilkes-barre, where a great net-work of tracks had to be got under, all the roads united to send seven lawyers into court to fight for injunctions against the single-handed counsel for the producers. They pleaded again the technicalities which had been invoked afresh at every crossing, although always brushed away by the judges, as they were here again. Though they have allowed their right of way to be used without charge for pipe lines which were to compete with them, the railroads refused to allow the independents to make a crossing, even though they had the legal right to cross. Not content with the champerty of collusive injunctions, they have resorted to physical force, and the pipe-layers of the independents have been confronted by hundreds of armed railroad employés. When they have dug trenches, the railroad men have filled them up as fast. Appeal to the courts has always given the right of way to the independents, but the tactics against them are renewed at every crossing because they cost them heart and money, and they have not the same unlimited supply of the latter as of the former. Their telegraph-poles have been cut down, lawyers and land-agents have been sent in advance of them to make leases of the farmers for a year or two of the land it was known they would want. For a few dollars earnest-money to bind the bargain, a great deal of land can be tied up in such ways. In some cases conditional offers would be made guaranteeing the owner five times as much as the independents would give, whatever that might be. Further to cripple them, a bill was introduced into the Pennsylvania Legislature and strongly pushed, repealing the law giving pipe-line companies the right of eminent domain.

The Erie, which has let the combination lay its pipe lines upon its right of way, and bore there for oil,[305] has been conspicuous in its efforts to prevent the new pipe line from getting through. The line at last reached Hancock, New York; there it had to pass under the Erie Railroad bridge in the bed of the river. The last Saturday night in November, 1892, the quiet of Hancock was disturbed by the arrival of one hundred armed men, railroad employés, by special train. They unlimbered a cannon, established a day and night patrol, built a beacon to be fired as an appeal for reinforcements, put up barracks, and left twenty men to go into winter quarters. Dynamite was part of their armament, and they were equipped with grappling-irons, cant-hooks, and other tools to pull the pipe up if laid. Cannon are a part of the regular equipment of the combination, as they are used to perforate tanks in which the oil takes fire. To let the "independents" know what they were to expect the cannon was fired at ten o'clock at night, with a report that shook the people and the windows for miles about. These opponents of competition were willing and ready to kill though their rights were dubious, and there could be no pretence that full satisfaction could not be got through the courts if any wrong was done.

For weeks Hancock remained in a state of armed occupation by a private military force. Referring to this demonstration with a private army at a moment of profound peace, the Buffalo Express said of those responsible for it: "They continue to fight with their old weapons--incendiarism and riot." No case has been come across in which the railroads made any opposition in the courts to the oil trust crossing under their tracks with its pipe line. More than once the railroads have allowed this rival carrier to lay its pipes side by side with their rails.

"Now, is your pipe line to New York laid upon the right of way of any railroad?"

"It touches at times the Erie road, and crosses the Erie road."

"Did you pay anything for that to them?"

"No, sir."

"Nothing?"

"Nothing."[306]

But never have the railroads failed to compel an independent pipe line to fight through the courts for every crossing it needed. It has made no difference how often or emphatically the law has sustained the right of the people to make such crossings. The next attempt would be resisted on the same ground, and with the same desperate determination "to overcome competition" for the favorite. The local line laid by the independents in 1892 between Coraopolis and Titusville had to pass under the Erie, the Lake Shore, the Pan Handle, the Western New York, and the Pennsylvania railroads, and in every case had to encounter needless litigation to do so. It was victorious, for the roads did not dare go to trial, though the managers, one after the other, to help cripple competition, spent the money of the stockholders in what was perfectly well known to be a hopeless opposition. A correspondent of the Bradford Record wrote: "When the news reached Bradford that the Erie Railroad had sold her independence to the combination, that the latter might defeat honorable competition and continue to rob the people, that one hundred men and a cannon confronted the United States Pipe Line at Hancock, who could have censured the outraged producers of Bradford for blowing the great Kinzua viaduct out of the Kinzua valley? Who could blame the bankrupt producers of the oil country for destroying every dollar's worth of the combination's property wherever found? The people are getting desperate; they are ready, like the blind Samson, to pull down the pillars of the temple, even though they themselves fall crushed to death amid the ruins." These are wild, even wicked words, but is it not a portent that such words rise out of the heart of an honest community?

This opposition, with show of force and threats of violence, was successful. In February, 1893, after months of facing the cannon and the private army which the railroad maintained for the oil combination, it was publicly announced by the president of the new pipe line that the route by Hancock must be abandoned. Many thousands of dollars and time worth even more were lost. "Suppose," said a daily paper of Binghamton, "that a body of laboring men had unlimbered a cannon and stationed armed men to suppress competition, what denunciation of the outrage there would have been!"

A new way through Wilkes-barre was chosen after the retreat from Hancock, and by that route the independent producers and refiners, with hope long deferred, are now seeking to finish their march to the sea.

The producers are poor men, and their resources for this unequal contest come from the sale of oil, and day by day the price of oil was depressed until it sank to the neighborhood of half a dollar a barrel. There has been some recovery since, but still the lowest prices of many years are being made, and the producers are finding the burden of their escape very heavy. "It is the honest belief of all oil men," says one of them, "that the low price of oil for the year is due to efforts to make the producer so poor that he cannot carry through his pipe line." This is the enterprise of the independent refiners as well as producers. Against these refiners, therefore, the market for refined oil also is manipulated. Very fantastic have been the operations of the "unchanging" laws of supply and demand under this manipulation. The independents found that in the export market of New York, in the spring of 1894, petroleum, just as it came from the pipe line crude from the nether earth, was quoted at a higher price a barrel than the same oil after it had gone through all the processes of refining and was aboard ship ready for the lamps of Europe or Asia.[307]

To throw another obstacle in the way of the new line, the oil trust in 1893 began again the game of 1878, of refusing to relieve producers of their oil with its pipe lines. As in 1878, the oil was left to run to waste. Then, the object was to compel the producers to sell it "always below the market";[308] now, it was to force them to sign a contract not to patronize any other pipe lines. Producers who refused to sign this contract, in order to be free to join the new line when it was finished, were refused an outlet, and they had to pump their oil on the ground while appealing to the courts to compel this common carrier to do its duty.[309] When they applied for a mandamus the combination receded from its position without waiting for a trial.

This has been a warfare on more than a new competitor; it is an attempt to suppress improvement and invention. A new idea in oil transportation, which promises a revolution in the industry, was hit upon by these independents. This was that pipe lines could be used to send refined oil long distances to market as well as crude. The announcement of their plans to do this was met with the ridicule of those who control the existing pipe lines to the seaboard and do not wish to see their old-fashioned methods of piping crude oil alone disturbed. But the independents went on with their idea. They have proved it practicable. Now, for the first time in the history of the oil industry, a pipe line transports oil ready for the lamp. Refined oil is piped from Titusville to Wilkes-barre with no loss of quality. Many hundred thousand barrels of it have been piped for nearly three hundred miles, and not a barrel has been rejected by the inspection, either at New York or its destination abroad. The success of the experiment proves that it can be piped to New York.

The independents press on. Occasionally one of them, says a local journal, unhinged by the loss of property, commits suicide or is taken to an insane asylum, and another goes down out of sight in bankruptcy, but the others close the ranks and go on, and now about 4000 men, in a strongly organized association, are marching side by side towards the sea--the blue and free.[310]

Spotted a typo or a problem in this chapter? Tell us

XIII. PURCHASE OF PEACE

Hunting about for tax-dodgers, it was discovered by the authorities of Pennsylvania some years ago that many foreign corporations were doing business within the limits of the Commonwealth and enjoying the protection of her laws, and at the same time not paying for it. Foremost among these delinquents stood the principal company in the oil combination with its mammoth capital, practically buying, refining and controlling nearly the entire oil production of the State, "and yet failing to pay one cent into the public treasury." So wrote the Auditor-General to his successor in 1882. The combination, beginning, like creation, with nothing, had grown, until in 1883 it was so rich that, according to the testimony of one of its members, it owned "between $40,000,000 and $50,000,000" in Pennsylvania alone.[311] But though doing business in Pennsylvania, and legally within the grasp of the taxing power, as decided by the courts, this company paid no taxes, and would not give the State the information called for by law as to its taxable property. It practised "voluntary taxation." "For eight years," Auditor-General Schell says, "it had been doing business in this Commonwealth, and had failed in all that time to file a single report." "It was not necessary for the department to call upon it to make reports." The law required these reports specifically and in details that could not be misunderstood, and that was notification enough. But year after year the Auditor-Generals, whose duty it was to collect due contribution from each taxpayer, made special demands upon this one for reports in compliance with the law, but with no effect.

In 1878 William P. Schell became Auditor-General, and began, shortly after taking his oath, to see if he could find out what taxes were due from this concern, and how they could be collected. He sent official circulars to the company in 1878, 1879, 1880, but "there was no reply made at any time."[312] His predecessor had had the same experience. He then sent one of his force to Pittsburg, Philadelphia, and New York to investigate. Whenever he could get the names of persons familiar with the workings of the company he would visit them, to find himself usually "not much further ahead than when he started."[313] "It was impossible to get any information. Even the men we talked to deceived us. Men came to Harrisburg to give us information, and afterwards we found they were in the interests of the company."[314] The department found itself, the Auditor-General wrote to his successor, "foiled at all points, not only by the refusal of the company to respond to the notices sent to its officers, but also by the great reticence of all persons in any manner connected with or employed by the company."

These efforts to find out the nature and character of the business of the company extended through two or three years. The first workable indication that the company was taxable in Pennsylvania came when the Governor of Ohio, in answer to inquiries, sent the Attorney-General a copy of the charter of the company. The Auditor-General wrote to the Governor and Auditor-General of New York and the Governor of Ohio for information. Letters were sent to the president and principal members of the company at Cleveland, Oil City, New York, and elsewhere. An answer was finally received from the company's attorney. He said that the company was not subject to taxation. The department replied the same day refusing to accept this view, and insisting on reports. Then the lawyer replied that the books and papers "were at Cleveland, and it would take some time to prepare reports." The Auditor-General offered to send his clerk to Cleveland "by first train," to prepare the reports for the company if assurance was given that he would be permitted to examine the books of the company when he got there.

No reply to this request was ever received. Then telegrams were sent, several days in succession, asking for reports, offering more time if the company would agree to report within any reasonable time, and finally warning the company that if it did not comply with the law and file its reports the Auditor-General would act under the authority given him by the law, and charge it with taxes estimated on such "reasonable data" as he could procure. All the department could get were evasive letters or telegrams from the counsel in New York, such as "letter explaining on the way." The letter came with the valuable information that "the officers are out of the city, and the company will answer on their return." Another "reply" was: "I have failed to get replies from the absent officers."[315] No reports forthcoming, the Auditor-General at last, on the best information he could get, backed by affidavits which were placed on file in the archives of his office, calculated the taxes due from 1872 to 1881, with penalties, at $3,145,541.64. This was totalled on an estimate, supported by affidavit, that the profits of the company had been two to three millions a year from 1872 to 1876, and ten to twelve millions a year from 1876 to 1880, figures which what is now known show to have been near the truth. After fixing upon this amount, and before charging it against the company, the latter was given still another chance, and another. Two telegrams were sent notifying that the estimated tax would be entered up if "the refusal to report" was persisted in. The last telegram said: "Still hoping that reports will come from the company, so that we will have some data to act upon."

No word of reply came.

Then the Auditor-General formally entered the amount he had estimated on his books, as the law authorized him to do.[316] His investigations had consumed his entire term, and the filing of this estimate was almost his last official act. It is a fact of record that after all this, officers of the company, in seeking to have this estimate of taxes due set aside, stated in writing that "there was no neglect or refusal on the part of said company to furnish any report or information which could lawfully be required of it by any officer or under any law of the State of Pennsylvania."[317]

Suit was now brought by the Attorney-General of the State to recover this tax, as was his duty, and then the company began to stir itself. To assist him in procuring and interpreting evidence the Attorney-General, who knew nothing of the oil business, obtained the services of a man who knew more about it than any one else in Pennsylvania. This person was a practical oil man. He was one of the leaders of the producers and refiners' association, which in the exciting times of 1872, when law and order in Pennsylvania stood on the edge of a crater, compelled the railroads to abandon the South Improvement scheme, "in name," and to give in writing the pledge that "all arrangements for the transportation of oil after this date shall be upon the basis of perfect equality to all," though he could not find a way to make them keep the pledge. He was prominent six years later in the uprising of the people when they found that all these promises were being broken, and all their rights on the highways being violated. It was largely through his influence that the producers determined to proceed against the oil combination as a criminal conspiracy, and procured the indictment of its principals in Clarion County, Pennsylvania, on charges of crime.[318] "When," as was said before the Pennsylvania Legislative Committee of 1883, "the doors of the penitentiary were gaping wide to receive them; when a true bill had been found before the Grand Jury; when, if they ever were in jeopardy before to-day, they were in jeopardy."

He was chairman of the Committee on Transportation of the Oil Producers' Association, and was one of the "legal committee" of five who represented the producers in having the "anti-discrimination suits" brought and pushed against the Pennsylvania Railroad by the State in 1879. By these suits the discriminations and favoritisms, which, though known, it had till then been impossible to prove, were forced into the light as facts, and the evidence was furnished without which the indictments just referred to could not have been found. When the accused, frightened at last, succeeded in getting the aroused producers to agree not to push the criminal trial, in consideration of a solemn pledge that all secrecy and favoritism in transportation should be given up, he withdrew from the negotiations and would not sign the compromise. He had assisted the Congressional Committees of Commerce at Washington in 1872 and 1876 in their ill-starred investigations, and had been active in the effort to get another investigation begun in 1880. He had also been one of the principal witnesses before the New York Legislative investigation of 1879. For eighteen years he had been on this quest. With him the Attorney-General now arranged to get the evidence on which the State could support its claim for taxes.

The members of the great corporation saw that they must act. In out-going Auditor-General Schell they had met the first officer of the people who was as determined to make them pay as they were not to pay. The policy of silence and nullification was abandoned. One of the members of the trust came in person to the State capital to see the Attorney-General. He made an unexpected overture. He volunteered to furnish the State with a full disclosure of the facts it needed to prove its claim.

"I confess," said the Deputy Attorney-General, "that I little knew in what direction to cross-examine him."[319] He therefore sent for the expert who had been employed by the Attorney-General. The "trustee" protested against his presence; but the Deputy Attorney-General said that he had been employed by the State, and it would be necessary that he should take part. The representative of the trust, moved, as he afterwards testified, by the patriotic consideration that "the regular cumbersome way of taking oral testimony ... would result in great labor and expense to the State, and would be an obstruction and labor to us that could be avoided," made a suggestion that the State go to the trial of the case upon a statement of facts of their business which he and his associates would make. This offer to become a volunteer witness was agreed to, and the delinquent corporation and the State went into court with an "agreement as to facts." The Attorney-General reserved for the State the right to add to these facts, but did not at any time during the proceedings do so.

His expert shrewdly foresaw that another defeat for the people was to be the result of this policy. "I objected very strenuously," he says. "It was my pet scheme to examine them orally in court or by commission, and I gave it up very reluctantly. I told the Attorney-General I could not believe those gentlemen were in earnest, that I knew I could ask a string of questions of any one of them which if answered would have given the case away to the State."[320] But the Attorney-General, the same who as counsel for the people, in 1879, against the members of the same corporation, led his clients to defeat, overruled him. The old campaigner saw the mistake of 1880 about to be repeated, and an agreement with the offenders substituted for trial and for the defeat of them he believed would follow. He determined to prevent the consummation of this second catastrophe. He sent his counsel to New York to the headquarters of the oil combination with a notice that he would not adhere to the bargain made by the Attorney-General at Harrisburg with reference to "the agreement of facts." "I propose to attack," was the message he sent.[321] He was to have received compensation from the State. He believed that this gave him an interest in the matter sufficient to gain a footing in the courts for action by himself independently of the Attorney-General. In pursuance of this idea, when the case came up for trial, he appeared with his private counsel ready to take part in the proceedings if permitted.

The notice of attack was received "with surprise," but was met with a characteristic move. "I raised the question with him"--the counsel--"as to what possible motive" his client "had in the matter," the "trustee" testifies, "and as to whether it would not be better for him to desist from it; whether it would not be possible for us, if he was needing business, to find some position in which he could legitimately earn a living."[322] The lawyer replied that he had no right to treat on any such basis, and withdrew from all connection with the case. But this was the opening of a negotiation which through another lawyer "resulted," as the expert of the State afterwards confessed, "in peace between us." He had given notice that he meant to attack, and the "negotiation" which followed "was whether anybody would give me as much as there was in my contract with the State if I would not attack."[323]

Meanwhile the Attorney-General marched gayly to another defeat of his client--the people--going into court with no other ammunition than the facts furnished by the men he was suing. He did not put his expert, nor the Auditor-General, nor his assistant, nor the men on whose information and affidavits the estimate had been made of taxes due, nor any one else on the stand. He was "perfectly satisfied," he says, "that these facts were true," and that the company were "in good faith doing exactly what they undertook to do--namely, to furnish me with all the information that was necessary to establish the Commonwealth case."[324]

His method was as singular with the argument as with the testimony. He insisted, in opposition to the opinion of Auditor-General Schell, that such a corporation must pay taxes on all its capital stock, whether it represented property in the State or out of it. The court decided against him. It held that it was taxable "only on so much of its capital stock as was represented by the business and property of the company within the State." As to what the amount of this property and business within the State was the court took the facts furnished by the delinquent itself, as they were the only ones presented to it by the Attorney-General. The amount originally charged for taxes by Auditor-General Schell, who had forced the fighting, was $3,145,541.64. The Attorney-General, on his mistaken theory of the law and on the facts volunteered by those he was suing, had "split the difference" and sued for only $796,642.20. The court cut this down to $33,270.59, and on appeal this was still further reduced to $22,660.10.[325]

This decision was not final or conclusive as to either the State or the company, both of whom afterwards sued out writs of error. The expert, who had been pushed to one side, at once determined to take what steps he could to reopen the case and mend the fortunes of the State. The moment the decision was announced he telegraphed the Attorney-General again for another conference, and was told to come to Philadelphia. He told the Attorney-General that he thought "the hope of the State to get the largest amount of money was to get a rehearing and let us have an oral examination." But the "satisfied" Attorney-General refused to do anything but carry the same argument and the same agreement of facts up to the Supreme Court. He refused to move for a new trial, and not only told his expert so, but told the "trustee" so. The trustee, by one of those coincidences which prove how much better it is to be born lucky than rich, happened to have come at the same time to stay in the same hotel with the Attorney-General.

It was in vain that the expert pointed out omissions of property and facts which he thought "had not been clearly shown in the agreement as to facts," and afterwards other matters he had discovered. After the defeat of the State he prepared an affidavit containing additional facts. He employed an attorney in the preparation of this affidavit and a petition to the court to have the case reopened. His purpose was "to get another chance at this trial."

"To get another trial?"

"Anything."

"Another hearing?"

"Anything." Anything to prevent the miscarriage of this last attempt to "round up" the men he had been trying for nearly twenty years to bring to justice. The Attorney-General would not present this petition. After this, still before the final decision, he saw the Attorney-General again to renew his pressure for a change of policy. Three times he saw the Attorney-General to lay his additional facts before him, and urge that a different method of conducting the case be tried.[326] Some of the new points he raised the Attorney-General referred and deferred to the company he was pursuing, and "we showed him how they were fully included in the statement rendered by us to the State, and he (the Attorney-General) expressed his entire satisfaction with every point raised." Others of the new points the Attorney-General declared to be "immaterial."[327] The Attorney-General showed no wish to bring proof into the case of any facts except those furnished by the people being sued. Although the decision of the lower court had been a warning that the theory on which the State had gone into court was bad, and that the amount of taxes to be recovered depended on the amount of tangible property in the State, he refused to use the right he acknowledged he had--to call other witnesses, to put the men who had made the agreed statement of facts upon the stand, and cross-examine them.

From the Attorney-General, who knew little of either the facts, as he confessed, or the law as the court declared it, who accepted their statements as gospel, and who asked them whether new facts offered him should be admitted into his side of the case against them, the company had nothing to fear. But this old opponent of theirs, whom the Attorney-General had employed, was at large, and was a dangerous man. He knew the facts; he had the right theory of the law; he was tremendously in earnest. The case had only got as far as the first decision of the lower court. There were still opportunities for all kinds of legal proceedings. By virtue of this contract he claimed such an interest in the proceedings as to give him a right to ask the courts to interfere. He might get a new trial and carry out his "pet scheme of oral examination." He might rouse the people as he had roused them before. He might interfere through the Legislature. He might raise a storm which could not be quieted until in this suit, or some other, his pet plan might be carried out, of getting these silent gentlemen into a witness-box. He considered himself to be in the service of the State. "I was under a contract with the State,"[328] he says. And we find the Attorney-General in close consultation with him in Philadelphia down to the very last day.

The company sees that something must be done, and does it. Its "trustee" calls upon the expert at his hotel.[329] He renews the suggestion he had made in New York when word had been sent by the expert that he would not be bound by the agreement of facts, and "proposed to attack." He finds his man cast down, utterly discouraged by the decision of the lower court and the attitude of the Attorney-General. Time and again he had seen the people denied justice, and their enemies escape even so much as the necessity of appearing in court. He had seen, in every one of the proceedings against them, from 1872 to 1880, committees of Congress, State governors, judges of the Supreme courts, State legislatures, attorney-generals, railroad officials, every trustee of the people, wilt, like green leaves in a fire, before this flashing wealth. His resolution gave way. He was to have received, under his agreement with the Attorney-General, in salary and commissions, $23,000, or less, according to the amount recovered. That he saw fading out of sight in consequence of the, to him, inexplicable course of the Attorney-General. Every one else who had tried to stand up for the people against this power had gone down; why should he be quixotic and poor?

"We want peace," the "trustee" said, and the, till then, faithful friend of the people sold him all he had of that commodity for $15,400, to be paid in instalments, and a salary of $5000 for a year.

"I proposed to reopen it"--the case--"and I did not."

"Why did you not?"

"Simply because I was assured I should have just as much money out of the transaction as my original contract would have paid me."

This confession made on the stand, under the strain of cross-examination in a civil suit in which he was a witness, startled the country with its first hint of the real cause of the failure of the great tax case, and led to an investigation by the Legislature of Pennsylvania.[330]

The first payment was $7500. This was paid, not in a check, as is the usual method between business men in legitimate transactions, but in bank-notes--$500's or $1000's.[331] That this method of payment was inconvenient and unusual was shown by the statement of the recipient, that he went to the Chemical Bank and got a bank certificate for his $7500 of bank-notes. "Of course I did not carry that amount of money around with me.[332] Bank-notes and bank drafts, not the company's checks, were used in the succeeding payments also.

"In sending him money to Titusville, where you had a bank account, why did you not send him a check on your own bank or draft?"

"Well, there was nobody at Titusville who had any knowledge of the matter. It was not necessary to acquaint them with it," said the "trustee."[333]

This representative of the company was diligent in business, as he understood business, and was always forehanded. He made the first moves and kept the lead. He went all the way to Harrisburg to meet the Attorney-General. He got control of the case by making the overture to volunteer testimony. He called first on the lawyer sent to New York with notice of "attack," called first on the State's expert in Philadelphia and New York, made the first suggestion for "peace," and got it "cheap."[334] But after he had bought "peace" the next interview is at the company's office. The other man must walk now. When put on the stand, the purchaser, of course, denied that this "purchase of peace" had anything to do with the case against his company, or with the suppression of the only expert in the employ of the State in that suit.

"With reference to the tax case," he said, "the payment of this money had no bearing whatever."

"Then why did you pay him the money?"

"Well, I have already said, two or three times, that I paid him the money for the purpose of having him desist from further malicious attacks upon our company."

The man of whom he had bought "peace" was not then engaged in any proceedings against "our company," except the tax case. He had been engaged in nothing for two years, since the proceedings of the Producers' Association in 1880. There were no other movements in prospect. The only war, actual or contemplated, was this tax war. Pressed through several pages of cross-examination, and challenged to name a single instance of war by this man upon them, at the time of the purchase of "peace," or since 1880, which would account for their willingness to pay him so large a sum, he was finally forced to say: "I cannot do it."[335]

The Attorney-General, who had thought it unnecessary to collect more testimony by putting the defendants on the stand under oath, testified, of course, that there had been no suppression of testimony. The seller of peace himself, when he was afterwards brought to book before the Legislature, attempted to stand to a similar denial that he had in any way been unfaithful to his trust as the expert of the State and representative of the people. But he broke down. He was asked if his agreement with the company had any relation to this case.

"Unquestionably. To all cases--this case and all others."

"You were to do nothing further for the Commonwealth in this or any other case?"

"Precisely."

"If the Supreme Court had subsequently reversed the case, and it had gone back for a new trial, and had been tried before a jury, so that the company's officers could have been subpoenaed and compelled to testify, would you then, after receiving this money, have been at liberty to assist in getting that testimony together for the Commonwealth, and aiding the Commonwealth?"

"I should say not."

"You were free to do it prior to your arrangement?"

"Certainly."

"By whom was it"--the negotiation--"begun?" he was asked.

"By the representative of the company," he replied, naming him.[336]

When this bargain was arranged and the first payment made only an opinion had been filed. No judgment had been entered. There was still time to make any one of many moves. Reargument and new trial both were possible.

These men seduced this representative of the people only to cast him aside, as seducers always do. They did not pay him "cash down" when they bought his "peace," but in instalments, and part of his pay was in the shape of $5000 for a year's service for which he was to do no work. This kept the whip-hand of him until the tax matter was finally settled and irrevocably past reopening. When that had been done they cast him off with scorching contumely. The secretary of the trust waved him into obloquy as a black-mailer.

When the trustee who negotiated the "peace" was before the committee of the Pennsylvania Legislature in 1883 which investigated this miscarriage of justice in the tax cases, he was asked if the man of whom he had bought "peace" had used the positions he had held in the producers' and other associations to further his own ends. He answered: "I think he would prostitute anything to further his own mercenary ends."[337]

The committee of the Legislature appointed to investigate this "purchase of peace" furnishes in its report the facts we have recited, which were uncontradicted, but declares that the transactions they disclose "did not prejudice the rights of the Commonwealth," and that nobody had done anything wrong. An effort was made after the failure of the tax case to get the Attorney-General of the State to issue a warrant against the purchaser of peace, upon which he could have been held to trial in a criminal court for bribery and corrupt solicitation of a public officer. An affidavit charging the crime in the usual form was presented to the Attorney-General. There was by this time a new Attorney-General, but he ditched this move with the same skill for the management of his adversaries' case that his predecessor had exhibited in the tax suit. He demanded that affidavit be made by some one who could testify to the bribery of his personal knowledge before the committing magistrate. As the facts were known only to the two principals, and neither of them could be expected to come forward to make affidavit and application for his own commitment, the Attorney-General demanded the impossible.[338] The fact of bribery was publicly known by the confession under oath of one of these principals, and the Attorney-General had been presented with the affidavit of a citizen, prepared in due and regular form, upon which he could have proceeded to issue a warrant, as is done in the case of less powerful offenders. Failing with the Attorney-General to have this transaction taken into the courts, the effort was renewed with the committee the Legislature had appointed to investigate. It was asked to do as committees had done before--to send the case to a criminal court and let it be tried. The distinguished lawyer acting for the people before the committee offered to appear as a volunteer Attorney-General in the prosecution of the trustee. "There is not an honest jury," he said, "in the State of Pennsylvania which upon the testimony would not send him to the penitentiary for the crime of bribery."[339] The committee refused to send the matter to the courts.

Upon the only occasion when the "Trustees" seemed in real danger of being brought in person and on specific charges to trial, criminally, the Supreme Court of Pennsylvania saved them. In the Clarion County cases it took the unprecedented step of interfering with the criminal jurisdiction of the lower courts. It was in reference to this that Mr. Gowen said before the Committee of Commerce of Congress in 1880: "I was a member of the Constitutional Convention of Pennsylvania, and I know that if that convention did anything effectively it was when it declared that the Supreme Court should not have original jurisdiction in criminal cases, and yet I have seen three judges of the Supreme Court lay their hands upon an indictment in a county court and hang it up." The effect of this interposition of the Supreme Court is summed up as follows in the history of the contest between the Producers' Union and their powerful antagonists: "This practically terminated the last legal proceeding conducted by the general council of the producers of petroleum." "It was the greatest violation of law," said Mr. Gowen before the Pennsylvania Legislative Committee, "ever committed in the Commonwealth."[340]

That some such action might have been expected could be inferred from the remark in Leading Cases Simplified, by John D. Lawson, warning the student of the law of carriers "not to pay much heed to the decisions of the Supreme Court of Pennsylvania--at least, during the past ten or fifteen years. The Pennsylvania Railroad appears to run that tribunal with the same success that it does its own trains."[341]

Some time after these events the purchaser of this peace gave some money to a hospital for cancers, and, in recognition of his philanthropy, was made its president. This hospital was for cancers of the body--not for moral cancers of the kind propagated for money by men who corrupt the Commonwealth. It would have been full expiation in the good old times of the priest and the baron Ruskin describes to donate to the cure of an evil a fraction of the profits of the culture of it. The newspapers in May, 1891, chronicled the opening of another pavilion of this hospital, and the delivery of "an interesting address" by the new president. One of the journals remarks that "this interest, combined with his well-known liberality in Church and humane matters generally, suggests a thought concerning the peculiar development on this line of many of our very rich men." But what the "thought" was the journalist did not go on to state.

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Chapter XIV

"I WANT TO MAKE OIL"

At this writing there is an old man named Samuel Van Syckel, over eighty years of age, partly paralyzed, but still vigorous, living in an obscure back street of Buffalo, very poor, though his fertile brain has helped to make millionaires of many others. Van Syckel's life has been one of ups and downs, possible only in the case of an adventurous mind seeking the golden-fleece in a new industry and in a new country. Of all the brave and ingenious men who have experimented, invented, and pioneered to realize for mankind all the surpassing possibilities of the coming oil age, he is one of the most notable. He had already made and lost one or two fortunes when we find him, about 1860, with a little still in Jersey City, making roof-tar.

He was born in Hunterdon County, New Jersey, the son of a farmer, and worked on the farm until he was of age, when he went into business. The panic of 1857 caught him with sails wing-a-wing, conducting all at once, and prosperously, grist-mills, linseed-oil mills, grain distilleries--these he had to take for a debt--several stores, cooper-shops, and two or three farms.

He failed because he had gone security for others, but he paid 100 cents on the dollar, and went to New York City. There he became a member of the Corn Exchange, and opened a commission-house for the sale of produce. His country friends had such confidence in his honesty and judgment that within six months he had done a business of $400,000. But he discovered that of the 1500 members of the Exchange all but one had failed, and many of them several times. He saw that he was in a position where, through the inability of some other dealer to fulfil his contract, he might be swamped any day, and lose all he had himself and all the thousands intrusted to him by his friends. He had old-fashioned notions about losing friends' money, to himself or to any one else. He left the produce business. He went to making roof-tar in Jersey City, and in 1860 built one of the first refineries for making kerosene out of petroleum. When "Colonel" Drake, in 1859, found out that oil could be got by drilling, Van Syckel was one of those the new source of supply found waiting for it. He began refining in a small way, and, with an ardor which he has carried into everything he has done, he plunged into the study of new ways of refining the oil which then started to flow with embarrassing riches out of thousands of wells. The study of oil-refining became his passion, as, fortunately for us less gifted folk, the study of the effects of heat on clay, of sulphur on the gum of the caoutchouc-tree, of steam on the lid of the teakettle, were in their time passions with Palissy, Goodyear, and Watts. In the work of his life, forcing its secrets out of this difficult liquid, he has been very successful. Earthly reward the old inventor has none, but, sitting in his story-and-a-half cottage, what he mourns most is that he has been and is denied the opportunity of work. Tortured by restless and inventive energy, which age and disappointment and betrayal have not sufficed to snuff out, his continuous word is: "I want to make oil."

When petroleum from the new wells began to come to New York, dozens of little stills were built all over the Jersey flats, many of them by Jews and Greeks. "Stills kept burning up all around," he says to his visitor. "Almost every day there was an explosion somewhere from the gases. I told my wife to give me my oldest clothes and send me my meals. I was going to find out all about this business. There was a pile of roofing-gravel under a shed by my stills. I went there and slept and ate, day and night, and watched the stills and the pipes, the gases, the oils, and all. All the sleep and rest I had for months was there. It was while watching these work that my greatest idea came to me, of making oil by a continuous process, so that I could feed in petroleum at one end and have kerosene running out at the other in an unceasing stream, day after day, without stopping the whole establishment, as the oil-refineries still do, every day or two, to cool off and clean up. By the old process, still in use, when the charge in the still of perhaps 1000 barrels had been refined, we had to draw the fires and wait perhaps ten hours--the best part of a day--for the still to cool off, so that the men could go in with iron chisels to chop it all loose and clean it out. This would take four or five men from four to six hours. The still would be idle for a day and a half, and then the same process would have to be gone through with again with every charge. All over the flats the Jews and Greeks kept burning up. The Common Council of Jersey City said we must stop refining. The rest joined a great combination to fight the Common Council, but I made up my mind to go where the oil was produced. I went to Titusville in 1865. I had all the money I could want. Some rich men told me to draw on them up to $100,000 for anything there was 'snacks in' for them."

This was about the time the founders of the oil combination began in Cleveland, with "no money."

"What makes I found in Titusville!" continued Van Syckel. "I went all up and down the creek. They were glad to get 65 gallons of kerosene out of 100 gallons of petroleum, while I could get 80. I think the head of the oil combination had a little still cocked up in the woods there--a one-horse, pig-pen kind of a place at the bend of the creek, a cobbled-up sort of a mud-hole, with a water-trough to bring the oil to the still. He was not there himself; he stayed in Cleveland. I didn't ever think anything about him then. I was 'way above him. I first saw him some years after, about 1872, in a refiner's office. He was talking up some scheme he had for a combination of refineries. He said he didn't want to have the market overstocked. He was just a common-looking kind of a man among the rest of us there. I saw, when I reached Titusville, that the most money was to be made in shipping oil. I made a dollar a barrel, and in six months I was $100,000 in pocket. The land speculation I wouldn't touch. It was wild. It scared me to see men sitting around on logs, and trading off little pieces of land for hundreds of thousands of dollars. I was the first man to lay a pipe line to carry oil up and down the hills of Pennsylvania."

"The first successful pipe line," says the United States Census Report of 1885, "was put down by Samuel Van Syckel, of Titusville, in 1865, and extended from Pithole to Miller's Farm, a distance of four miles."[342]

"When I first came to the oil country all the oil had to be teamed from the wells to the railways, over roads with no bottom in wet weather. Sometimes a line of teams a mile long would be stuck in the mud. Often the teamsters would dump their load, worth $5 a barrel, and abandon it. Mules would get so discouraged that they would lie down and die in the roadway before they could be helped. The teamsters knew their power. They charged accordingly. They charged for looking at the oil to see how many barrels their teams could draw. They charged extra for every mud-hole they struck, and if the wagon-wheels went to the hubs they doubled their bills. I paid $2 to $4 a barrel for teaming, and was shipping 4000 barrels a week. The teamsters were making more money than the well-owners, and didn't care whether they hauled oil or not. All this set me to thinking. I hit on the pipe line idea, and announced that I would carry the oil by pipe from the wells to the railroad. That was too much for the people of the oil regions. Everybody laughed me down. Even my particular friends, with whom I used to take my meals at the hotel, jeered and gibed me so that I took to coming and going through the back door and through the kitchen, and ate by myself. 'Do you expect to put a girdle around the earth?' was the favorite sarcasm. I knew it would cost a great deal--$100,000 perhaps; but I had the money. I built it--two two-inch lines, side by side--between June and November in 1865, and turned the oil in. The pipe was a perfect success from the first barrel of oil that was pumped in. It flowed, just as I expected, up hill and down dale. The line was four miles long--from the Miller Farm to Pithole--with two or three branches.

"Then the teamsters threatened to kill any one who worked on the pipe line or who used it. They would drive astraddle of it, dig down to it, put logging chains around it and pull it out of the ground, and leave the oil, worth $4 to $5 a barrel, running to waste out of the holes. I sent to New York for some carbines, hired 25 men to patrol the line, and put a stop to that. I put up the line as security for some debts owed by my partner, under an agreement that when its profits had paid the debt it was to be returned to me. The debt was wiped out in a few months, but I never got the line back.... I had no money left to sue for it. This was the end of my pipe line. It has grown into a system thousands of miles long, second in importance only to the railroad, and out of it many, many millions of profit have been made, but not a cent has it yielded me. Then I went to refining oil, and, with a partner, built one of the first big refineries in the oil regions. There has been no oil refined in this country since 1870 without the help of my improvements. Some I patented, some I did not. The refiners at Titusville were hard put to it for pure water. I drove pipes through the river into the second gravel under the river, and got the finest cold water there could be. This anticipated the 'driven wells' several years. I put steam into the stills" (this had been done before both by European and American refiners). "I found out how to burn the uncondensable gases. I showed one of my neighbors how to do this, and he saved $20 a day after that in his coal bills, but I got nothing for it. Each new thing I proposed, up would go everybody's hands and eyes, and oh, what a rumbling there would be! I never made money so fast as in this refinery. We did not use the continuous process. I had not patented it, and I had partners whom it would not have been right for me to experiment with. Our profits were over a dollar on every barrel. We sold our product as fast as we could make it. We made $125,000 in fifteen months, although we paid as high as $8 a barrel for crude. I worked like a slave to make good the loss of $100,000 in my pipe line. I worked and watched day and night, and knew I was beating them all making oil. My partners were church elders, who could never find words enough to express their indignation about the way my pipe line had been taken away from me, and so virtuous that they never smoked a cigar nor drank a drop. I got into no end of lawsuits with them, and I lost my property again. I sold a part interest in my patent to some one who was afterwards taken into this oil combination, and it now claims that they own all my patents. They have frightened off or bought off every one who has tried to use any of my inventions."

The rest of the old man's story was told by him under oath in a suit he brought against members of the combination.[343] "The idea of continuous distillation, as it was suggested to me at Jersey City, was always in my brain ever since. I made an attempt to construct such works in 1876 under Mr. Cary. I run out of money. I had been robbed out of my pipe line that cost me $100,000, and my oil-refinery in which I had more than $100,000. Mr. Cary said he was going to build a little refinery. He said he had $10,000 that we might use in making oil in a continuous way. We got our lease and broke ground in 1876. We had not got very far--we got the pipe on the ground and some brick and one old-fashioned still--when" the representative of the oil combination, one of its principal members, "came on to the ground ... the 15th of December, 1876. He asked me if I would not take a salary and not build these works in opposition to them. I told him 'No.' Then he wanted I should take a life salary, one that would support me for life comfortably. I told him I did not want his salary; I wanted to build this refinery and make oil in a new continuous way. He then wanted me to let him build it. He said, 'We will build it for you.' I objected to this. He then said that I could make no money if I did refine oil. He also said if I did I could not ship it. He said he would say to me confidentially that they had made such arrangements with the railroads in reference to freight--in reference to getting cars--he knew I could make no money if I did make oil."

Almost on the same day--May 14, 1888--on which Van Syckel was giving the jury this undisputed account, sustained by the judge and jury, of how the combination used "arrangements with the railroads" against its rivals, another pioneer, even more distinguished, was relating his almost identical experience before the committee of Congress investigating trusts, May 3, 1888. This was Joshua Merrill, "to whom," said S. Dana Hayes, State Chemist of Massachusetts, "more than to any one else, belongs the honor of bringing this manufacture to its present advanced state."[344] Merrill's inventions and successful labors are described in the United States Census Report on Petroleum, 1885. He was at work guessing the riddles of petroleum as long ago as 1854.[345]

From 1866 to 1888 he and his partners ran a refinery at Boston.

"What has become of it?"

"We have recently dismantled it."[346]

For several years their business had been unprofitable. There were two causes, he explained. One was that they made a better quality of oil than the average, at a cost which they could not recoup from the prices established in the market by poorer oils. The other cause was the extraordinary charges made against his firm by the railways in Boston which brought their crude.

His firm had their own tank-cars, in which their crude oil came from Pennsylvania. From Olean to Boston his freight cost him the last few years 50 cents a barrel. From the depot in Boston, to get it over two miles of track to his refinery, cost him $10 a car, or about $1.25 a barrel. This was at the rate of about 42-1/2 cents a ton a mile. The average freight rate for the United States is about half a cent a ton a mile. His rate was an advance of 8400 per cent. on the average. He appealed to the Railroad Commission of Massachusetts.

"We wrote to the commissioners that we thought the charge was very high, and they ought to interfere to have it reduced. But it was not done.

"We made repeated efforts, personal solicitations, to the railroad officers, and to the railroad commissioners also, but it was the established rate."[347]

Two roads participated in this charge of $10 for hauling a car two miles. One of these was the New York and New England road, whose haul was a mile and a half, and its charge $6.

"Who was president of the New York and New England road?"

The dismantled witness's experience had made him timid.

"I do not know."

"Do you not know," he was asked, "that one of the oil trustees is president?"

"Yes, sir."[348]

The same railroad is the principal New England link in the lines of circumvallation which the combination in coal, hard and soft, American and Nova Scotian, is drawing about the homes and industries of the country. His company sold their tank-cars to the oil combination, as "we no longer had any use for them."[349]

"I was thirty-two years in the oil business," the veteran said, mournfully, as he left the stand. "It was the business of my life."[350]

To return to Van Syckel. After his warning to the inventor that he could get no cars and make no money, even if his new idea proved a success, the representative of the combination invited Van Syckel to put himself in its hands.

"He said they would furnish the money to test the invention and pay me all it was worth. I felt a little startled at the rebates, and I knew it before, but I did not know it was so bad as he had figured it out. I then asked him who of his company would agree to furnish me money to test the patent and to pay all it was worth. He asked me who I wanted to agree with. I then asked him if a man" (naming him) "that I had had more or less dealings with" (one of the trustees) "would agree to what he had said. He said he had no doubt he would. He said, 'We will go and see him, and go at his expense.' He said he would take the works off my hands at cost, and would satisfy my partner to stop building them if I would go to New York, and I think it was the next day when we went to New York."

They went to the office of the member of the combination whom Van Syckel had said he would confide in. "He seemed to be very glad to see me, and very sorry to learn I had been so unfortunate in the oil regions. He then asked me what these patent works would cost in a small way to prove that oil could be successfully made under continuous distillation. I told him it could be done for about $10,000. He said they would give it, ... and if it proved a success they would give me $100,000. He said it was worth more. He would give me $125 a month to support my family during the time I was building and testing it. I said, 'Let us put what we have agreed upon in writing.' He begged off for a time. He said it could be done at Titusville just as well. He saw I was not quite satisfied being cut off in that way, so he took my hand and said he would give me his word and honor what they had agreed upon there should be put in writing at Titusville Monday morning. I did not want to press him any harder. I told him I would take the $125 a month until the thing was tested. If it proved a failure the whole thing should come back where it started from, and if it proved a success he was to pay me $100,000" (for the patents and the business). "He said we all understood it, then. I went home." Van Syckel called upon the Titusville member of the trust. "He begged off from me the same as the other did in New York; said they were pressed with business. He said they would fix it this afternoon, or words to that effect." Instead of building for him, as it had agreed, the combination, the moment he placed himself in its hands, destroyed the building he had already begun.

"What did they do with the works when they bought them?"

"They took the brick that was on the cars and hauled them to other places, I suppose, and I don't know where they threw the still. They kept that leased property during the five years for a junk-yard. I went the next day to see him, and pressed him about it the best I could. I could not accomplish anything; he appeared to be busy, or kept out of the way. I kept chasing to his office. I tried to catch him and talk over what I should depend on, where we were going to build; but he kept out of the way. He said he had not seen their folks. In July, 1879, more than three years after our contract in New York, he said they had had a meeting of all their wise-heads, and they had called in chemists, and they all unanimously agreed that oil could not be made by a continuous process, and gave that as a reason for not furnishing the money to build these works. I said, in reply, 'I am not responsible for the knowledge that the "oil combination" has for refining oil; neither would I exchange mine for all they have got combined. You said you would furnish me the money and build these works, and do as you had agreed to do.' I walked out. That was about the last I had to say to him on that subject."

"Did you after that build, or undertake to build, an oil refinery to test your continuous process?"

"Yes, sir; in connection with a German. He was going to build a small refinery. He said he would build it my way, if I would let him use it in the new way. He constructed it on that principle; but he was slow--he was a very slow man to deal with. We ran ... twenty days without stopping" (to clean out the stills).

"And it actually ran that length of time?"

"Yes, sir."

"What became of these works?"

"Hauled off to the junk-yard"--by one of the companies in the combination. It "bought them out after we just got them under way, and then tore them down and hauled them off."

"You then brought them up to Buffalo, and tried to put them into the Solar Works?"

"Yes, sir."

"What became of those?"

"They eventually went the same way."

In court the combination claimed that Van Syckel's was an inferior process, but it had not left it to die the natural death of the inferior process.

"And how about the expense of the two ways?" he was asked.

"The same help that would make 1000 barrels the old way, to take three or four days, I would make in the new process in one day; the old way takes about a ton of coal more and gets less oil, and the oil is not near so good."

No contradiction was offered by the defendants of any of these statements. Uncontradicted evidence showed that the new process was cheaper and produced better oil than the old processes. Stillmen from the Herman and Solar refineries, in which Van Syckel tried his new process after the combination refused to build for him, testified to the practical success of his method. "We must have run these continuous works for two months while I was there" (at the Solar).[351]

"We kept Van Syckel's process running right along continuously for sixteen days" (at the Herman refinery).[352]

"We did not have to clean out the patent stills, while by the old process they would have to be cleaned out about every day or thirty-six hours."[353]

A number of residents of Titusville, dealers in oil and consumers, testified to the superiority of the illuminant Van Syckel produced. It burned much better than that made by the monopoly, several said. "The burning qualities was extraordinarily good." "It gave better satisfaction to my customers." "It did not gum the lamp-wicks, and did not smell."[354]

This was done in spite of rusty and choked-up pipes, defective stills and apparatus.

One of the owners of the Solar, who was a practical refiner and the overseer of the works, testified that he had seen Van Syckel's continuous process run successfully both in Titusville and Buffalo:

"The result was much beyond my expectation."

"How long did you run the works?"

"I think about two weeks."

"What was the cause of it stopping?"

"The president of the company, also the treasurer, had been to New York two or three times; after the second or third visit he came back seemingly disgusted with the business; afraid of losing his money if he continued any longer, and quit."

"Was there a mortgage upon your property?"

"Yes, sir." It had been foreclosed, he said, in conclusion, by one of the leading members of the oil combination.[355]

The only thing Van Syckel can do to carry out his part of the contract he does. He develops his invention. He is successful in his application to the United States patent-office. He made his contract with the combination in 1876, and got four patents thereafter in 1877, 1878, and 1879.

"Well," it was said in court, "they are a large concern; they would make money out of this; I should think they would want it if it is such a good thing." "Why, my dear man, they have got a monopoly of the business, anyway," Van Syckel replied. "They don't care what kind of oil they sell; but they have got a plant that has cost them millions of dollars that they have got to change, and all that sort of thing, if they take my patent. That is the situation."

He lived on the $125 a month while he was testing and proving the invention. In July, 1880, when four years of his life had been thus wasted, the allowance was changed, without notice or his consent, to $75 a month. The next month he was refused even that sum "unless I signed a receipt in full of all demands, and I walked out without it."

His pipe line has become a part of the net-work of pipe lines of which the oil combination boasts. His refinery of 1869, one of the largest built in western Pennsylvania up to that time, passed into its hands. Three times in succession, after it refuses to build for him as it agreed, he arranges to put his idea of continuous distillation into use, and in each case the refinery in which he sets up his pipes and stills is bought up by it and destroyed. He is kept dangling for years by its policy of delay. Then his independent efforts are broken up; capitalists are made afraid of him. He can get no means for building new works. "Ever since I went into their hands," he said in court, "I have been just as I am now. I could not make oil; could not build a refinery; could not get anybody help me to do it; and here I have stood these last twelve years, and I want to be out. That is just where they want to keep me, so I cannot make any oil. It is the whole profit of the whole of it. They hold me to my contract, and they break theirs."

When twelve years had gone by, and he found that they would neither build for him as agreed nor let any one else build for him, Van Syckel turned to the law and sued them for damages. On the trial all the facts as we have stated were admitted--the abandonment of the enterprise in consequence of the threats that he would not be allowed to ship and market his oil; the interviews in New York; the contract; the sale; Van Syckel's later efforts to make oil in other refineries; his success in producing better and cheaper oil; its popularity; the purchase and destruction of the works using the new method. Not a word of evidence was adduced in disproof. The judge and the jury found all these questions in Van Syckel's favor.

The defence was twofold. It was admitted that the two representatives Van Syckel had dealt with had made the contract as he described it. The members of the combination did not deny that. But, they argued, it was not legally binding. "We simply concede," said these great men to the Court, "that they made a contract, but leaving it to the corporation itself to decide upon it.... There cannot be the slightest claim that the company was bound by a contract of that character." On this point they were defeated in the trial. Their second defence was that there were no damages. "The trouble is," they said, "that there are no damages sustained, no damages whatever sustained." They took the ground that his possessing a creative mind was the cause of Van Syckel's ruin, not their betrayal of him. "Mr. Van Syckel," they argued to the Court, sympathetically, "is an instance of what it means to get out a patent, and deal in patents--in nine cases out of ten. He was an inventive man. He has got out a good many patents. No question they were meritorious patents. And what is the result? Poverty, a broken heart, an enfeebled intellect, and a struggle now for the means of subsistence by this lawsuit. So that, if your honor please, there is nothing here from which we can determine what the original value of this patent was." The jury and the judge decided against them, and held there was a contract, legal and binding. That brought them face to face with the question of damages, and here the ruling of the judge saved them, as the decision of another judge saved other members of the combination in the criminal case in the same city, about the same time.[356] The judge ordered the jury to find the damages at six cents, and the jury--in the evolution of freedom juries appear to have become merely clerks of the Court--did so. "This direction of a verdict," said the Court to Van Syckel, "decides every other question of the case in your favor."

Six cents damages for breach of such a contract, and in Buffalo $250 fine for conspiracy to blow up a rival refinery! Here are figures with which to begin a judicial price-list of the cost of immunity for crimes and wrongs.

Lawyer Moot, Van Syckel's counsel, deferentially asked the Court to suggest where was the defect in the proof of damages. It would be "the wildest speculation and guesswork," the Court said, for the jury to attempt to compute the damages.

"Then the Court is unable to suggest any particular defect in the proof?"

The Court evaded the point of the counsel, and repeated in general terms that there was no testimony upon which a jury could assess damages.

Those whom he was suing did not disprove that, by threats of making it impossible for him to get transportation, they had driven Van Syckel to abandon his own business, and make a contract with them by which they were to pay him $100,000 for his new process, if successful. The Court held the contract binding. They had not furnished the money and works to test the inventions as they had agreed to do; but he had nevertheless gone on and completed the invention, so that patents were granted for it by the government. He had tested the invention in other works, they failing him, and had proved it a success; they had thereupon purchased and destroyed these works; he was beggared, and nobody else under these circumstances could be induced to venture money on his invention. Upon these facts, judicially ascertained, the judge refused to let the jury compute the damages, and ordered them to find the damages "nominal," as another judge sentenced their associates in Buffalo to "nominal" punishment.

"There are many things known to the law," said Parnell to the president of the Special Commission trying the Irish members of Parliament, "which are strange to a non-legal mind."

This pioneer, inventor, and true Captain of Industry, real creator of wealth, has ever since had his neck bent to the pressure of hands too heavy for him. While all over the earth homes are brighter, knowledge is more easily got, and civilization forwarded, because of what his head has thought and his hands have done, he has retired to what is, in fact, a life of penal exile. He has been cut off from the darlings of his brain. Like the political prisoners of Siberia, he can eat and sleep and dress, but he cannot go into the world. His mind is at work there, in every factory and pipe line and lamp; but he must sit, unknown and unrewarded, in his pine cottage on unpaved Maurice Street, ploughed up in the prairies on the outskirts of Buffalo. Dearer than money to him, as to all such creative minds, would be the privilege of feeding the appealing activities of his brain with work. But he is banished from work. He has been set down outside the frontier of industry, and commanded never to return. No one dares buy or sell of him, nor adventure labor or money with him. He is an outcast. This is his greatest grief. The day I visited him he came into the sitting-room from the patch of garden behind the house. "I keep busy," he said, "to keep my mind off--anything to keep busy, if it is only pulling weeds." He is glad to see visitors. "I have been knocked out," he said, "so that nobody now comes to see me." His clear gray-blue eyes, tall, strong frame, firm mouth, large features and limbs, eager face, fit the facts of his career. He is one of the type of country-bred, hard-working American manhood of the last generation. There are no visionary lines in his face, as in his life there have been no impracticabilities, except his too great trustfulness. Gambling oil exchanges, wild oil-land speculations, inside "deals" with railroad freight agents, have never caught him. He has been a money-maker--not a money-taker. To-day, at eighty, the only thing he asks is that he may have the chance to work out his ideas. He talks patiently and courteously, with perfect intelligence and memory, but every once in a while breaks in with an outburst of what is evidently an unceasing refrain within--"I want to make oil."

The diminutive room we are in is stark in its simplicity and poverty. A paragraph in the morning paper on the table tells of "a massive oaken case, similar to a bookcase," which one of the chief reapers where Van Syckel has sowed is having put into his stable in New York. "It has doors of polished oak, with brass hinges, and heavy plate-glass. The inside will be lined with purple plush, and, when completed, the bits which shine in the mouths of his trotters and coach-horses will be arranged inside of this magnificent case in rows, ready for use, as well as an appropriate ornament for the stable."

It is better to be one of the king's horses than one of the king's men. But no words of envy pass his lips. He does not seem to repress them. He simply appears never to feel them. It chanced that as I left him, standing on the uppermost of the three wooden steps of his cottage, bleakness all about, "plain living" within, plain enough to satisfy the hardest climber for "high thinking," it chanced that his last words to me were--"I want to make oil," with an appeal to seek for him the opportunity so long denied. These words, plain and homely as they must seem to those who feed their appetite for the sublime and heroic with the highly varnished sayings of the battle-field and illustrious death-beds, will never cease to ring in my ears with a tone of greatness.[357]

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XV. SYMPATHETICAL CO-OPERATION

Some day, perhaps, when more of our story-readers have learned that there are things in the world quite as important as the frets, follies, and loves of boys and girls half-grown, more of our story-tellers will hold their magic mirror up to the full-pulsed life with which mankind throbs through the laboring years that stretch along after the short fever of mating is over. George Rice, coming from the Green Mountains of Vermont, entered the oil business twenty-nine years ago, when he and it were young. He was one of the first comers. Beginning as a producer in the Pithole region, in the days of its evanescent glory, in 1865, he prospered. Escaping the ruin which overtook those who stayed too long in that too quick sand, he was one of the first to develop the new field at Macksburg, Ohio, and to see the advantages of Marietta, on the Ohio River, as a point for refining. Crude oil could easily be brought from Ohio and Pennsylvania by barge down the Ohio River. The field he entered was unoccupied. He drove no one out, but built a new industry in a new place. In 1876 he had risen to the dignity of manufacturer, and had a refinery of a capacity of 500 barrels a week, and later of 2000 barrels. Owning wells, he produced, himself, a part of the crude which he refined. His position gave him access to all the markets by river and rail. Everything promised him fortune. His family took hold with him in the work of bread-winning. "The executive part of the business is done altogether by my family," he says. "One daughter keeps the books, another daughter does nine-tenths of the correspondence, and my son-in-law is the general manager."[358] One of the daughters was a witness in one of her father's cases before the Interstate Commerce Commission. "She discussed with counsel," said the New York World, "the knotty points involving tank-car rates, mileage, rebates, and the long and short haul as familiarly as any general freight agent present."

Several other refiners, seeing the advantages of Marietta, had settled there. They who elected themselves to be trustees of the light of the world, thus having the advantages of the place pointed out to them by practical men, determined that Marietta must be theirs. They bought up some of the refiners. Then they stopped buying. Their representative there, afterwards a member of the trust, "told me distinctly that he had bought certain refineries in Marietta, but that he would not buy any more.... He had another way," he said, "of getting rid of them."[359] Of these "other ways" the independents were now to have a full exposition. In January, 1879, freight rates on oil were suddenly and without previous notice raised by the railroads leading out of Marietta, and by their connections. Some of the rates were doubled. The increase was only on oil. It was--in Ohio--only on oil shipped from Marietta; it was exacted only from the few refiners who had not been bought, because there were "other ways of getting rid of them."[360]

This freight-tariff attack on the independent refiners was arranged by their powerful rival and the railroad managers at a secret conference, as the latter admitted.

"Did you have any consultation or invite consultation with other manufacturers of oil at Marietta?"

"No, sir."[361]

When the representatives of the combination in this market were taxed by a dealer with getting the benefit of this manipulation of freight, "they laughed." All the railroads took part in the surprise. Curiously enough, the minds of the managers of a dozen roads acted simultaneously and identically, over thousands of miles of country--some, as they admitted, with suggestion, and some, as they testified, without suggestion--upon so precise a detail of their business as the rates on oil at one little point. "I did it at my own instance," said the freight agent of the Baltimore and Ohio. Freight officials of railways as far apart east, west, and south, and in interest, as the Baltimore and Ohio, and the Pennsylvania, and the Lake Shore, which had no direct connection with Marietta, and reached it only over other lines, stopped their "wars" to play their part in the move by raising the rate on oil only, and, most remarkable of all, to a figure at which neither they, nor the railroad connecting them with Marietta, nor (and this was the game they were gunning for) the independent refiners could do any business. From other points than Marietta, as Cleveland, Parkersburg, Pittsburg, and Wheeling, where the combination had refineries, but the Marietta independents had none, the railroads left the former rates unchanged.[362]

Rice was "got rid of" at Columbus just as effectually as if Ruskin's "Money-bag Baron," successor of "the Crag Baron," stood across the road with a blunderbuss. His successful rival had but to let its Marietta refineries lie idle, and transfer to its refineries at Wheeling its Marietta business--and Rice's too. By the pooling of the earnings and of the control of all its refineries--the essential features of the combination--its business could be transferred from one point to another without loss. One locality or another could be subjected to ruinous conditions for the extermination of competitors, and the combination, no matter how large its works there, would prosper without check. It gets the same profit as before, but the competitor by its side is ruined. All its refineries along a given railroad can be closed by high rates made to "overcome competition," but profits do not cease. Their business is done elsewhere by its other refineries, and all the profits go into a pool for the common benefit.

From Rice's point of view, Marietta was the storm-centre; but the evidence before the Ohio Legislative Investigation of 1879, before the Legislative Committee of New York of 1879, before Master in Chancery Sweitzer in Pennsylvania, and in the suit against the Lake Shore Railroad, showed that the low barometer there was part of a disturbance covering a wide area. The demonstration against the independent refiners of Marietta was only part of a wider web-spinning, in which those at all points--New York, Boston, Philadelphia, Pittsburg, Oil City, Titusville, Buffalo, Rochester,[363] and Cleveland--were to be forced to "come in" as dependents, or sell out, as most of them did.

That rates were not raised from points controlled by the combination is only part of the truth. At such places rates were lowered. This, like the increase of rates, was done at a secret conference with the oil combination and at its instance.[364] Where it had refineries the rates were to be low; the high rates were for points where it had competitors to be got rid of without the expense of buying them up. The independents knew nothing of the increase of freights prepared for them by the railroad managers and their great competitor until after, some time after, it had gone into effect.

The railroad company gave notice to their rivals what the rates were to be, but withheld that information from them.[365] That was not all. Before the new rates were given all the old rates were cancelled. "For a few days," said an independent, "we could not obtain any rates at all. We had orders from our customers, but could not obtain any rates of freight."

As to many places, the withholding of rates continued. "There's many places we can't obtain any rates to. They just say we sha'n't ship to these other places at any price."[366]

When the Ohio Legislature undertook to investigate, it found that the railroad men professed a higher allegiance to their corporations than to the State. They refused to answer the questions of the committee, or evaded them. "I am working under orders from the general freight agent," said one of them, "and I don't feel authorized to answer that." The arguments of the committee that the orders of an employer could not supersede the duty of a citizen to his government, or the obligations of his oath as a witness, were wasted. "I will tell you just how I feel," said the witness to these representatives of an inferior power. "I am connected with the railroad company, and get my instructions from the general agent, and I am very careful about telling anybody else anything." The Legislature accepted the rank of "anybody else" to which it was assigned, and did not compel the witness to answer.

To a question about the increase in freight: "I object," said another railroad officer, "to going into details about my own private business."[367]

One peculiar thing about the action of the railroads was that it was an injury to themselves. The Baltimore and Ohio, for instance, by raising its rate, cut off its oil business with Marietta entirely. "What advantage is it, then?" the freight agent of the road over which the Baltimore and Ohio reached Marietta was asked.

"There is no advantage.... We had revenue before this increase in rates, and none since."

"What would be the inducement for her (the Baltimore and Ohio) to do it, then?"

"That is a matter I am not competent to answer."[368]

The railroad men testified positively that the increase affected all alike at Marietta. It was supposed even by those who thought they saw to the bottom of the manoeuvre that the combination would close its Marietta works temporarily, in order to seem to be equally affected with all the rest. It could do this with no loss whatever, since, as explained, no raise in rates had been made from Wheeling, Parkersburg, Pittsburg, Cleveland, where it was practically alone, and it could reach all its customers from those places as well as from Marietta. But the combination kept on filling orders from its refineries at Marietta at the old freight rates, while by its side the men it was hunting down sat idle because the discriminating rates of freight made it impossible for them to use the highways. It was so careless of appearances that oil ordered of its works at Parkersburg would be sent from the Marietta branch,[369] and at the old rate of 40 cents, while the other refineries could not ship because the rate to them was 65 cents; the increase at Marietta was not enforced against it, but only against the three independents--just as planned in the South Improvement scheme.

The move was far-reaching--as far as Chicago, the rate to which was made $1.20 a barrel, instead of 90 cents a barrel.

"Then they cut you off from the Western trade as well as this State?"

"Yes, sir; almost entirely.... I was selling in Chicago, and it cut trade entirely off."[370]

"Before the rates were changed did you run to your full capacity?"

"Yes, sir; about that."[371]

At one stroke the independents lost the business which it had cost them years of work to get. As the testimony of witness after witness showed, the merchants who had been their customers in Chicago, Columbus, and other places, now had to send their orders to those for whose benefit the railroad men had raised the rates. This sweeping change was not due to any change in their desire to sell, or of their old customers to buy. They could still make oil which was still wanted. But they were the victims of a competitor who had learned the secret of a more royal road to business supremacy than making a better thing, or selling it at a better price. Their better way was not to excel but to exclude. When their "secretary" was called before the Ohio Legislature, after this freight ambuscade had transferred the bulk of the business of the independent refineries at Marietta to him and his associates, he declared that the sole cause of their success was the "large mechanical contrivances" of the combination, its "economy," and its production of the "very best oil." "With an aggregation of capital, and a business experience, and a hold upon the channels of trade such as we have, it is idle to say that the small manufacturer can compete with us; and although that is an offensive term, 'squeezing out,' yet it has never been done by the conjunction of any railroads with us."[372]

The small manufacturer did compete and flourish until these railroad men literally switched him out of the market. He competed and got his share of the business, until the men who wanted monopoly, finding that they had no monopoly of quality or price or business ability, resorted to the "large mechanical contrivance" of inducing the managers of the railroads to derail the independent, throwing him off the track by piling impassable freight tariffs in his way. The successful men secured their supremacy by preventing their competitors from entering the market at all. Instead of winning by "better" and "cheaper," they won by preventing any competitor from coming forward to test the questions of "better" and "cheaper." Their method of demonstrating superiority has been to prevent comparisons.

All the independent refiners at Marietta, except Rice, died. "Most of those we received from have gone out of the business," a Cincinnati dealer told the Legislature. Some had fled; some had sold out.[373] Rice set himself to do two things: the first, to drag into the light of day and the public view the secrets of these "better methods"; and the second, to get new business in the place of what he had lost. He succeeded in both. It was in January that he had notice served upon him that he could no longer go to market. In two months he had the Ohio Legislature at work investigating this extraordinary administration of the highways. This was a great public service. It did not yield the fruit of immediate reform, but it did work which is the indispensable preliminary. It roused the people who were still asleep on these new issues, and were dreaming pleasant dreams that in George III. they had escaped from all tyrants forever, and that in the emancipation of the blacks they had freed all slaves forever.

Rice knew that the Legislature were planting trees for posterity, and did not wait for help from them. He set about looking up markets where the public were free to choose and buy. He could not go West or East or North. He went South. The little family kept the refinery at Marietta running, and the father travelled about establishing new agencies in the South, and studying freight tariffs, railroad routes, and terminal facilities for loading and unloading and storing. In 1880, through all the storm and stress of these days, he was able to double the capacity of his refinery. Again he succeeded in building up a livelihood, and again his success was treated as trespass and invasion. His bitter experience in Ohio in 1879 proved to be but an apprenticeship for a still sterner struggle. Rice was getting most of his crude oil from Pennsylvania, through a little pipe line which brought it to the Alleghany. The pipe line was taken up by the oil trust.[374]

This compelled him to turn to the Macksburg, Ohio, field for most of his petroleum. He had one tank-car, and he ran this back and forth faster than ever. Then came the next blow. The railroad over which he ran his tank-car doubled his freight to 35 cents a barrel, from 17-1/2. That was not all. The same railroad brought oil to the combination's Marietta refineries at 10 cents a barrel, while they charged him 35. That was not all. The railroad paid over to the combination 25 cents out of every 35 cents he paid for freight. If he had done all the oil business at Marietta, and his rival had put out all its fires and let its works stand empty, it would still have made 25 cents a barrel on the whole output. Rice found a just judge when he took this thing into court. "Abhorrent," "dangerous," "gross," "illegal and inexcusable abuse by a public trust," "an unparalleled wrong," are the terms in which Judge Baxter gave voice to his indignation as he ordered the removal of the receiver of the railroad who had made this arrangement with the combination, to enable it, as the judge said, "to crush Rice and his business."[375]

In an interview, filling four columns of the New York World of March 29, 1890, the head of the trust which would receive this rebate is reported to have made this attempt to reverse the facts of this and similar occurrences: "The railroad company proposed to our agent," he said. But the judge who heard all the evidence and rendered the decision, which has never been reversed or impaired, declared that it "compelled" the railroad to make the arrangement, "under a threat of building a pipe line for the conveyance of its oils and withdrawing its patronage." This arrangement was negotiated by the same agent of the oil combination who engineered the similar "transfer" scheme by which the trunk-line railroads gave it, in 1878, 20 to 35 cents a barrel out of the freights paid by its competitors in Pennsylvania, as already told.[376]

"I reluctantly acquiesced," the receiver said, writing in confidence to his lawyer, anxious lest so acquiescing he had made himself legally liable. The interview describes the arrangement as an innocent thing: "A joint agreement for the transportation of oil." It was an agreement to prevent the transportation of oil by anybody else. Judge Baxter shows that it was a joint agreement, procured by threats, for the transportation of "$25 per day, clear money," from Rice's pockets into the pockets of the members of the trust for no service rendered, and without his knowledge or consent, and with the transparent purpose of transporting his business to their own refineries. Judge Baxter called it "discrimination so wanton and oppressive it could hardly have been accepted by an honest man, and a judge who would tolerate such a wrong or retain a receiver capable of perpetrating it, ought to be impeached and degraded from his position."[377]

This matter was also passed upon by the Select Committee of the United States Senate on Interstate Commerce. "No comment," the committee say, "is needed upon this most impudent and outrageous proposition"--by the oil company to the railroad.[378]

"Are you going to deny that story?" a great American statesman of the latter-day type was asked by one of his friends.

"Not I," was the reply. "The story's false. When you find me taking the trouble to deny a thing, you can bet it's true!"

This "agreement for the transportation of oil" had its calculated effect. It put a stop to the transportation of oil from the Ohio field by Rice over the railroad, just as the destruction by the same hands of the pipe line to the Alleghany had cut him off from access to the Pennsylvania oil-fields. He then built his own pipe line to the Ohio field. To lay this pipe it was necessary to cross the pipe line of his great rival. Rice had the pluck to do this without asking for a consent which would never have been given. His intrepidity carried its point, for, as he foresaw, they dared not cut his pipe for fear of reprisals.

In turning to the South, after his expulsion from the Ohio and Western markets, the Marietta independent did but get out of one hornet's nest to sit down in another. His opponent was selling its oil there through a representative who, as he afterwards told Congress, "was very fortunate in competing." He thought it was "cheaper in the long-run to make the price cheap and be done with it, than to fritter away the time with a competitor in a little competition. I put the price down to the bone."[379] Rice, in the South, ran into the embrace of this gentleman who had the "exclusive control" of that territory, and whose method of calling the attention of trespassers to his right was to cut them "to the bone." The people and the dealers everywhere in the South were glad to see Rice. He found a deep discontent among consumers and merchants alike. They perhaps felt more clearly than they knew that business feudalism was not better, but worse, because newer, than military feudalism. This representative of the combination assured Congress that "99.9 of all the first-class merchants of the South were in close sympathetical co-operation with us in our whole history"--that is, out of every hundred "first-class merchants" only one-tenth of one merchant was not with them. This is a picturesque percentage.

Rice's welcome among the people would not verify his opponent's estimate that his vassalage included all but one-tenth of one dealer in every hundred. From all parts came word of the anxiety of the merchants to escape from the power that held them fast. From Texas: "Most of our people are anxious to get clear." From Arkansas: "The merchants here would like to buy from some other." From Tennessee: "Can we make any permanent arrangement with you by which we can baffle such monopoly?" From Kentucky: "I dislike to submit to the unreasonable and arbitrary commands." From Mississippi: "It has gouged the people to such an extent that we wish to break it down and introduce some other oils." From Georgia, from different dealers: "They have the oil-dealers in this State so completely cooped in that they cannot move." "We are afraid."[380] As Rice went about the South selling oil the agents of the cutter "to the bone" would follow, and by threats, like those revealed in the correspondence described below, would coerce the dealers to repudiate their purchases. Telegrams would pour into the discouraged office at Marietta: "Don't ship oil ordered from your agent." "We hereby countermand orders given your agent yesterday." One telegram would often be signed by all the dealers in a town, though competitors, sometimes nearly a dozen of them, showing that they were united by some outside influence they had to obey.[381]

Where the dealers were found too independent to accept dictation, belligerent and tactical cuts in price were proclaimed, not to make oil cheap, but to prevent its becoming permanently cheaper through free competition and an open market. Rice submitted to Congress letters covering pages of the Trust Report,[382] showing how he had been tracked through Tennessee, Missouri, Nebraska, Georgia, Kansas, Kentucky, Iowa, Mississippi, Louisiana, Texas, Arkansas, Alabama. The railroads had been got to side-track and delay his cars, and the dealers terrorized into refusing to buy his oils, although they were cheaper. If the merchants in any place persisted in buying his oil they were undersold until they surrendered. When Rice was driven out prices were put back. So close was the watch kept of the battle by the generals of "co-operation" that when one of his agents got out of oil for a day or two, prices would be run up to bleed the public during the temporary opportunity. "On the strength of my not having any oil to-day," wrote one of Rice's dealers, "I am told they have popped up the price 3-1/2 cents."[383]

The railroad officials did their best to make it true that "the poor ye have with you always." By mistake some oil meant for the combination was delivered to Rice's agent, and he discovered that it was paying only 88 cents a barrel, while he was charged $1.68, a difference of 80 cents a barrel for a distance of sixty-eight miles.

"Could you stand such competition as that?"

"No, sir. Before that I went up there and sold to every man in the place nearly. They were glad to see me in opposition.... I lost them, except one man who was so prejudiced that he would not buy from them."

"Your business had been on the increase up to that time?"

"Increasing rapidly.... I haul it in wagons now forty miles south of Manito."

"The rates against you on that railroad are so high that you can for a distance of forty miles transport your oil by wagon and meet the competition better than you can by using their own road?"

"Infinitely better."[384]

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Chapter XVI

"TURN ANOTHER SCREW"

A spy at one end of an institution proves that there is a tyrant at the other. Modern liberty has put an end to the use of spies in its government only to see it reappear in its business.

Rice throughout the South was put under a surveillance which could hardly have been done better by Vidocq. One of the employés of the oil clique, having disclosed before the Interstate Commerce Commission that he knew to a barrel just how much Rice had shipped down the river to Memphis, was asked where he got the information. He got it from the agents who "attend to our business."

"What have they to do with looking after Mr. Rice's business?... How do your agents tell the number of barrels he shipped in April, May, and June?"

"See it arrive at the depot."

"How often do your agents go to the depot to make the examination?"

"They visit the depot once a day, not only for that purpose, but to look after the shipment of our own oil."

"Do they keep a record of Mr. Rice's shipments?"

"They send us word whenever they find that Mr. Rice has shipped a car-load of oil."

"What do their statements show with respect to Mr. Rice's shipments besides that?"

"They show the number of barrels received at any point shipped by Mr. Rice, or by anybody else."

"How often are these statements sent to the company?"

"Sent in monthly, I think."

"It is from a similar monthly report that you get the statement that in July, August, and September, Mr. Rice shipped 602 barrels of oil to Nashville, is it?"

"Yes, sir."

"Have you similar agents at all points of destination?"

"Yes, sir."[385]

This has a familiar look. It is the espionage of the South Improvement Company contract, in operation sixteen years after it was "buried." When the representative of the oil combination appears in public with tabulated statements exhibiting to a barrel the business done by its competitors for any month of any year, at any place, he tells us too plainly to be mistaken that the "partly-born," completely "buried" iniquity, sired by the "sympathetical co-operation" of the trustees and their railroad associates of easy virtue, is alive and kicking--kicking a breach in the very foundations of the republic.

A letter has found the light which was sent by the Louisville man who was so "fortunate in competing," immediately after he heard that one of "his" Nashville customers had received a shipment from the Marietta independent. It was addressed to the general freight agent of the Louisville and Nashville Railroad. It complained that this shipment, of which the writer knew the exact date, quantity, destination, and charges, "slipped through on the usual fifth-class rate." "Please turn another screw," the model merchant concluded. What it meant "to turn another screw" became quickly manifest. Not daring to give the true explanation, none of the people implicated have ever been able to make a plausible explanation of the meaning of this letter. The railroad man to whom it was sent interpreted it when examined by Congress as meaning that he should equalize rates. But Congress asked him:

"Is the commercial phrase for equalizing rates among railroad people 'turn another screw'?"

He had to reply, helplessly, "I do not think it is."

The sender before the same committee interpreted it as a request "to tighten up the machinery of their loose office."[386] Rice found out what the letter meant. "My rates were raised on that road over 50 per cent. in five days."

"Was it necessary to turn on more than one screw in that direction to put a stop to your business?"

"One was sufficient."[387]

The rates to the combination remained unchanged. For five years--to 1886--they did not vary a mill. After the screw had been turned on, he who suggested it wrote to the offending merchants at Nashville, that if they persisted in bringing in this outside oil he would not only cut down the price of oil, but would enter into competition on all other articles sold in their grocery. He italicized this sentence: "And certainly this competition will not be limited to coal-oil or any one article, and will not be limited to any one year."[388] "Your co-operation or your life," says he.

"Have you not frequently, as a shipper of oil, taken part in the competition with grocers and others in other business than oil, in order to force them to buy oil?"

"Almost invariably I did that always."[389]

"The expense and influence necessary for sustaining the market in this manner are altogether expended by us, and not by the representatives of outside oil," he further wrote. "Influence," as a fact of supply and demand, an element of price-making, is not mentioned in any political economy. And yet the "influence" by which certain men have got the highways shut to other shippers has made a mark as plain as the mountains of the moon on our civilization. "If we allow any one to operate in this manner," he continued, "in any one of our localities, it simply starts off others. And whatever trouble or expense it has given us in the past to prevent it we have found it to be, and still believe it to be, the only policy to pursue."[390]

They "are threatening," his Nashville agent, after the screw was turned, wrote Rice, "to ruin us in our business."[391]

The head of the Louisville "bone-cutters," when a witness before Congress during the trust investigation, stigmatized the action of his Nashville victims as "black-mail." They were "black-mailers" because they had sold a competitor's oil, and refused to continue to sell his own unless it was made as cheap or cheaper. Competition, when he practised it on others, was "sympathetical co-operation." Tried on him, it was "black-mail." "That man wanted us to pay him more than we paid the other jobbers"--i.e., he wanted them to meet the prices of competitors "because he thought we had the market sustained, and he could black-mail us into it. I bluffed him in language, and language is cheap."[392] The "language" that could produce an advance of freights of 50 per cent. in five days against a competitor was certainly "cheap" for the man whose rates remained unchanged, and who thereby absorbed his neighbor's vineyard. The inevitable result followed at last. Rice fought out the fight at Nashville seven years, from 1880 to 1887; then, defeated, he had to shut up his agency there. That was "evacuation day" at Nashville. It was among his oldest agencies, he told Congress, "and it was shut out entirely last year on account of the discriminations. I cannot get in there."[393]

State inspection of oil and municipal ordinances about storage have been other "screws" that have been turned to get rid of competition. City councils passed ordinances forbidding oil in barrels to be stored, while allowing oil in tanks, which is very much more dangerous, as the records of oil fires and explosions show conclusively. His New Orleans agent wrote Rice concerning the manoeuvres of his pursuer: "He has been down here for some time, and has by his engineering, and in consequence of the city ordinances, cut me out of storage. As matters now stand, I would not be able to handle a single barrel of oil."[394] In Georgia the law was made so that the charge to the oil combination shipping in tank-cars was only half what it was to others who shipped in barrels. The State inspector's charge for oil in tanks was made 25 cents a barrel; for oil in barrels it was 50 cents a barrel. But as if that was not advantage enough, the inspector inspected the tanks at about two-thirds of their actual capacity. If an independent refiner sent 100 barrels of oil into the State, he would have to pay $50 for inspection, while the oil combination sending in the same would pay but 25 cents a barrel, and that on only 66-2/3 barrels, or $16 in all. This difference is a large commercial profit of itself, and would alone enable the one who received it to sell without loss at a price that would cripple all others. In this State the chief inspector had the power to appoint inspectors for the towns. He would name them only for the larger places, where the combination had storage tanks. This prevented independent refiners from shipping directly to the smaller markets in barrels, as they could not be inspected there, and if not inspected could not be sold.[395] All these manoeuvres of inspection helped to force the people to buy of only one dealer, to take what he supplied, and pay what he demanded. Why should an official appointed by the people, paid by them to protect them, thus use all his powers against them? Why?

"State whether you had not in your employ the State inspector of oil and gave him a salary," the Louisville representative of the combination was asked by Congress.

"Yes, sir."[396]

Throughout the country the people of the States have been influenced to pass inspection laws to protect themselves, as they supposed, from bad oil, with its danger of explosion. But these inspection laws prove generally to be special legislation in disguise, operating directly to deprive the people of the benefit of that competition which would be a self-acting inspection. They are useful only as an additional illustration of the extent to which government is being used as an active partner by great business interests. Meanwhile any effort of the people to use their own forces through governments to better their condition, as by the ownership of municipal gas-works, street-railways, or national railroads and telegraphs, is sung to sleep with the lullaby about government best, government least.

This second campaign had been a formidable affair--a worse was to follow; but it did not overcome the independent of Marietta. With all these odds against him, he made his way. Expelled from one place and another, like Memphis and Nashville, he found markets elsewhere. This was because the Southern people gave him market support along with their moral support. Co-operation of father and son and daughter made oil cheaper than the "sympathetical co-operation" opposing them, with its high salaries, idle refineries, and dead-heads. Rice had to pay no dividends on "trust" stock capitalized for fifteen times the value of the property. He did not, like every one of the trustees, demand for himself an income of millions a year from the consumer. He found margin enough for survival, and even something more than survival, between the cost of production and the market price. "In 1886 we were increasing our business very largely. Our rates were low enough so that we could compete in the general Southern market."[397]

Upon this thrice-won prosperity fell now blow after blow from the same hand which had struck so heavily twice before. From 1886 to the present moment Rice and his family have been kept busier defending their right to live in business than in doing the business itself. Their old enemy has come at them for the third time, with every means of destruction that could be devised, from highway exclusion to attacks upon private character, given currency by all the powerful means at his command. The game of 1886 was that of 1879, but with many improvements gained from experience and progress of desire. His rates were doubled, sometimes almost tripled; in some cases as much as 333 per cent. Rates to his adversary were not raised at all. The raise was secret. Suspecting something wrong, he called on the railroad officer July 13th, and asked what rates were going to be. The latter replied that he "had not the list made out." But the next day he sent it in full to the combination. Rice could not get them until August 23d, six weeks later, and then not all of them. As in 1879 the new tariff was arranged at a conference with the favored shippers.[398]

This was the first gun of a concerted attack. Rice was soon under fire from all parts of the field. One road after another raised his rates until it seemed as if the entire Southern market would be closed to him. While this was in progress the new Interstate Commerce Law passed by Congress--in part through the efforts of Rice--to prevent just such misuse of the highways, went into effect. But this did not halt the railway managers. A month after it was passed the Senate Committee on Interstate Commerce was shown that discrimination was still going on, as it is still. At points as far apart as Louisville, New Orleans, Atlanta, St. Louis, and San Francisco switches were spiked against Rice, and the main lines barricaded of all the highways between the Ohio River, the Atlantic and Pacific oceans, and the Gulf of Mexico. In the face of the Interstate Commerce Act the roads raised his freights to points in Georgia, Alabama, Tennessee, Kentucky, Louisiana, and Mississippi in no case less than 29, and in some cases as high as 150, 168, and 212 per cent. more than was charged the oil combination. Where the latter would pay $100 freight, he, shipping the same amount to the same place, would sometimes pay $310--if he got it taken at all.[399]

The general freight agent of one of the roads, when before the Interstate Commerce Commission, denied this. When confronted with written proof of it he could only say, "It is simply an error."[400]

Rice shows that in some cases these discriminations made him pay four times as much freight, gallon for gallon, as the monopoly. The differences against him were so great that even the self-contained Interstate Commerce Commission has to call them "a vast discrepancy."[401] The power that pursued him manoeuvred against him, as if it were one track, all the railroads from Pennsylvania to Florida, from Ohio to Lake Superior and the Pacific coast. "Through its representative the oil combination was called before the Interstate Commerce Commission to explain its relation to this 'vast discrepancy.'"

"Your company pays full rates?"

"Pays the rates that I understand are the rates for everybody."

"Pays what are known as open rates?"

"Open rates; yes, sir."[402]

That the increase of rates in 1886, like that of 1879, was made by the railroads against Rice, under the direction of his trade enemy, is confirmed by the unwilling testimony of the latter's representative before Congress. "I know I have been asked just informally by railroad men once or twice as to what answer they should make. They said, Here is a man--Rice, for instance--writing us that you are getting a lower rate." He was asked if he knew any reason, legal or moral, why the Louisville and Nashville Railroad should select his firm as the sole people in the United States. "No, sir," the witness replied; but then added, recovering himself, "I think they did because we were at the front."[403] The railroads bring the people they prefer "to the front," and then, because they are "at the front," make them the "sole people."

Rice did not sleep under this new assault. He went to the Attorney-General of Ohio, and had those of the railroads which were Ohio corporations brought to judgment before the Supreme Court of Ohio, which revoked their action, and could, if it chose, have forfeited their charters. The Supreme Court found that these railroads had charged "discriminating rates," "strikingly excessive," which "tended to foster a monopoly," "actually excluded these competitors," "giving to the favored shippers absolute control."[404] Rice went to Cincinnati, to Louisville, to St. Louis, and Baltimore to see the officials of the railroads. He found that the roads to the South and West, which took his oil from the road which carried it out of Marietta, were willing to go back to the old rates if the connecting road would do so. But the general freight agent of that company would give him no satisfaction. He wrote, October 3d, to the president of the road over which he had done all his business for years. He got no answer. He wrote again October 11th, no answer; October 20th, no answer; November 14th, no answer. Rice had been paying this road nearly $10,000 a year for freight, sending all his oil over it. The road had used its rate-making power to hand over four-fifths of his business to another, but he has never been able to get so much as a formal acknowledgment of the receipt of his letters to the head of the road, asking that his petitions for restoration of his rights on the highway be considered. A part only of the letters and telegrams which he sent during these years--to get rates, to have his cars moved, to rectify unequal charges, to receive the same facilities and treatment others got--fill pages of close print in the Trust Report of the Congressional Committee of Manufactures of 1888.

"Your time is a good deal occupied with correspondence, is it not?"

"I should say so. If the rates had been more regular, I would not have had so much correspondence. It takes about all my time to look after rates."[405]

Driven off his direct road to market, Rice set to hunting other ways. The Baltimore and Ohio, he found, was, though very roundabout, the only avenue left by which he could get his oils into Southern markets. He began to negotiate with it immediately, but it was not until several months later--the middle of November--that he succeeded in closing arrangements. To get to Chattanooga, Tennessee, over this route his oil had to travel 1186 miles as against 582 miles by the roads which had been closed to him, and yet the rate was lower over the more than double distance. Again, he could send a barrel of oil 1213 miles by the Baltimore and Ohio to Birmingham, Alabama, for $1.22, while the roads he had been using put his rate up to $2.26, although their line to Birmingham was only 685 miles.

All the arrangements had been concluded to the mutual satisfaction of Rice and the Baltimore and Ohio Railroad. After this thorough discussion of four months, in which every point had been examined, Rice sends forward his first shipment December 1st. He is not a little elated to have blazed his way out of the trackless swamp in which he had been left by the other roads. His satisfaction is short enough. In about a fortnight--on December 15th--the then general freight agent of the Baltimore and Ohio telegraphed him that he could not be allowed to ship any more. "We will have to withdraw rates on oil to Southern points, as the various lines in interest"--the connections to which the Baltimore and Ohio delivered the oil for points beyond its own line, and which shared in the rates--"will not carry them out."

This was stunning. It nullified the labor of months which had been spent in opening a way out of this blockade. It put the cup of ruin again to the lips of the family at Marietta, innocent of all offence but that of trying to make a living out of the industry of their choice, and asking no favors, only the right to travel the public highway on equal terms, and to stand in the open markets. The excuse given was heavy-laden with inaccuracy. Rice immediately found out by wire that the Piedmont Air Line, one of the most important of the connections, had not refused to carry at the agreed rate. Its traffic manager telegraphed the Baltimore and Ohio people to reconsider their action, and continue taking Rice's oil. When asked first by Rice, and afterwards by Congress, to name the lines which refused, as he alleged, to carry out the rates he had agreed upon, the general freight agent of the Baltimore and Ohio could not give one. He escaped from Congress by promising to send its committee, "within a day or two," all the correspondence with these other companies. Once out of the committee-room, he never sent a scrap of paper to redeem his promise, and the whole matter was lost sight of by the committee.[406]

Rice, badly shattered, still sought and managed to find a few long-way-around routes. He presented to Congress in 1888 a table showing how he still managed to get to some of his markets. To Birmingham, Alabama--the direct route of 685 miles, as well as the Baltimore and Ohio, being closed to him--he shipped over seven different railroads forward and backward 1155 miles. The rates of all these roads added together made only $2.10 a barrel instead of $2.66, to which the shorter line had raised its price, for the purpose, as this comparison shows, not of getting revenue, but of cutting it off. To get into Nashville he had to go around 805 miles over five different lines instead of 502 miles, as usual, and still had a rate of $1.28 instead of $1.60.

From 1880, the moment he turned to the Southern field, after the destruction of his business in the West, everything that railroad men's ingenuity could do was done to prevent him from becoming a successful manufacturer who might increase the amount to be shipped, open new markets, and steady the trade by making it move by many minds of different views and reasons instead of by one. In order barely to live he was kept writing, telegraphing, travelling, protesting, begging, litigating, worrying, and agitating by press, prosecutions, private and public, and by State and national investigation. The ingenuity of the railroad officials in chasing him down was wonderful. Nothing was too small if it would hurt. Sometimes the railroad made through rates so high that it was cheaper for him to ship his oil along by short stages, paying the local rates from place to place until it reached its destination. In this way he got a car from Cincinnati to Knoxville at the rate of 32 cents altogether, when, if it had been shipped at once all the way on the through rate, it would have cost 40 cents a hundred. The railroads have spent hundreds of thousands of dollars, used up armies of gifted counsel, and spoiled tons of white paper with ink to argue out their right to charge more for short hauls than long hauls; but when some traffic manager wants to crush one of his employer's customers, no short-haul long-haul consistency stands in his way.[407] It was not enough to fix his rates at double what others paid. All kinds of mistakes were made about his shipments. Again and again these mistakes were repeated; nor were they, the Interstate Commerce Commission shows, corrected when pointed out.[408] One of the stock excuses made by railroad managers for giving preferential rates to their favorites is that they are the "largest shippers," and, consequently, "entitled to a wholesale rate." But when Rice was the largest shipper, as he was at New Orleans, they forgot to give him the benefit of this "principle." When Rice wrote, asking if a lower rate was not being made, the railroad agent replied: "Let me repeat that the rates furnished you are just as low as furnished anybody else." "This lacks accuracy," is the comment of the Interstate Commerce Commission.

Wishing to know if the Louisville and Nashville would unite with other roads in making through rates to him, Rice asked the question of its freight agent. He replied: "I do not see that it is any of your business." "It was undoubtedly his business," the Interstate Commerce Commission says, sharply; "and his inquiry on the subject was not wanting either in civility or propriety." When Rice asked the same road for rates, the officials refused to give them to him, and persisted in their refusal.[409] Like Vanderbilt before the New York Legislative Committee, they seemed to think excuses to shippers were a substitute for transportation, and evidently thought they had done more than their duty in answering Rice's letters. But as the Commission dryly observes, their answers to Rice's letters did not relieve him of the injurious consequences. In attempting to explain these things to the Interstate Commerce Commission, the agent of the railroad said:

"If I have not made myself clear, I--"

"You have not," one of the Commission interrupted.[410]

The refusal to give Rice these rates was an "illegal refusal," the Commission decided; "the obligation to give the rates ... was plain and unquestionable." This general freight agent was summoned by Congress to tell whether or not lower rates had been made to the oil combination than to their competitors. He refused to produce the books and papers called for by the subpoena. He had been ordered by the vice-president of the road, he said, to refuse. He declined to answer the questions of the committee. Recalled, he finally admitted the truth: "We gave them lower rates in some instances."[411]

Rice took to the water whenever he could, as hunted animals do. The Ohio, Mississippi, Tennessee, Missouri were public highways that had not been made private property, with general agents or presidents to say "No" when asked permission to travel over them. He began to ship by river. The chairman of the Committee of Commerce rose in his seat in Congress to present favorably a bill to make it illegal to ship oil of less than 150 degrees fire-test on the passenger boats of inland waters. The reason ostentatiously given was public safety. But, as was at once pointed out in the press, the public safety required no such law. The test proposed was far above the requirement of safety. No State in its inspection laws stipulated for so high a test. Most of the States were satisfied with oil of 110 degrees fire-test; a few, like Ohio, went as high as 120 degrees. All but a very small proportion of the oil sent to Europe was only 110 degrees fire-test. The steamboat men did not want the law, and were all against it. There was no demand from the travelling public for such legislation. General Warner, member of Congress, said, in opposing the bill: "Petroleum which will stand a fire-test of 110 degrees is safer than baled cotton or baled hay, and as safe as whiskey or turpentine to be carried on steamers. What is the object, then? There can be but one, and I may as well assert it here, although I make no imputation whatever upon the Committee of Commerce, or any member of it. It will put the whole carrying trade of refined petroleum into the hands of the railroads and under the control of ... a monopoly which has the whole carrying trade in the oil business on railroads, and they will make it as impossible for refiners to exist along the lakes and the Ohio River as it is impossible for them now to exist on any of the railroads of the country." Why the trust, though it was the greatest shipper, should seek to close up channels of cheapness like the waterways was plain enough. They were highways where privilege was impossible. With its competitors shut off the railroads by privilege, and off the rivers by law, it would be competition proof.

The United States authorities, too, moved against Rice, responsive to the same "pull" that made jumping-jacks for monopoly out of committees of commerce and railway kings. When the Mississippi River steamer U.P. Schenck arrived at Vicksburg with 56 barrels of independent oil, the United States marshal came on board to serve a process summoning the officers and owners to answer to the charge of an alleged violation of law. Several steamboats were similarly "libelled."

"We were threatened a great many times," the representative of the steamboat company told Congress.[412] The steamboat men were put to great expense and without proper cause. When the cases came to trial they were completely cleared in every instance. But the prosecution had done its work of harassing competition. The success of the campaign of 1879 in Ohio was now repeated over a wider field. The attack of 1886, "in a period of five months," Rice said before Congress, "shut up fourteen of my agencies out of twenty-four, and reduced the towns we had been selling in from seventy-three to thirty-four."[413] This was a loss in one year of 79 per cent., or about four-fifths of his business.

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