Spirit of Jefferson. [volume] (Charles Town, Va. [W. Va.]) 1844-1948, 1889-07-23
HistorY OF a Commercial Crime:

the baiIlmOre Oue history OF the
rise of the Standard Oil Trust. The
facts are furnished from the records
of Congress, aud were elected dur
ing an investigation by Committee
of the House of which Mr.. Wilson
was member.
This story supplies the strongest
example that can be produced, of
prosperous wrong doing, or the evil
effect of permitting greedy corpora
tions to override the public welfare
through long series of years.
Y The following resume is from the
Sun:
prior to 1870, there was in CIeve-
land, Ohio, firm of oil refiners, do
ing small business under the part
nership name of Rockefeller, An
drews & Flagler. They produced no
oil, but received from Pennsylvania
the crude oil, which they refined to
the extent of some 600 barrels per
day. In 1870 they became incorpo-
rated under the Ohio law, as The
Standard Oil Company. with capt
tai of 81, 100000. Their capacity
was then about 1000 barrels per
day, or one-tenth of the oil refining
of this country at that time. The To-
cation of the Company at Cleveland
was, of course, against it. 1t was,
on one hand, too far from the oil
fields, and on the other it was too far
from the Atlantic coast cities and the
European market. Companies at
Pittsburg and farther east had adj
vantages over it, some as respects
the cost of the crude oil, and all as
respects the cost of transportation to
he seab oard. Out of this difficulty
it organized its greatness. First, it
acquired all the other refneries in
Cleveland, having in 1872 largely in
creased its stock. In the same year
it consummated secret contract
with the Pennsylvania Railroad, the
New York Central and Erie, by the
terms of which its oil was to be ship
ped at rates from 40 cents to SI.32
per barrel lower than could be had
by other shippers having smaller pro-
ductive capacity and shipping
smaller quantities. Ostensibly this
contract was in the interest of the
Southern Improvement Company
but the latter was subordinate to the
Standard Oil Company and its crea-
ture. The matter having been dis
covered by rival retiners, the Penn
sylvania Legislature repealed the
charter of the bogus Company, and
the rivals of the Standard Oil exulted
over what they considered decisive
EispEXp IRsy 5y 5ReEpssgatsd SHsfs.S it. as
tion in writing, March %, 1872, by
which the railroad companies, pro-
ducers and refiners covenanted that
thereafter the transportation of oil,
crude and refined, should be on a
basis of equality to all But while,
under this solemn covenant, the
Standard Oil continued to prosper,
the other reliners did not. Econ
omies were of no avail their profits
dwindled steadily. Bankruptcy over.
took many of them, and nearly all
the rest were absorbed by the STAN
dard Oil Company. The latter ox-
tended its territory and acquired re-
! fineries in the Atlantic coast cities.-
A strange phenomenon attracted the
attention of persons who continued
in the management of works sold to
the monster corporation. Whatever
it touched paid handsomely. A Phil
adelphia refinery. for example, that
cost S130, 900 and paid its owner be-
fore absorption but $4,000 year,
after absorption, on the same output
and with the same manager, paid
from $3.50, 900 to S175, 900 year.
The mystery was explained in 1879,
when, in a suit brought by the
State of Pennsylvania, an official of
the Pennsylvania Railroad confessed
that he was paying the Standard Oil
rebates, over and above the draw
backs allowed other refiners, of from
40 to 5l1 cents per barrel Of crude
oil, and 649 cents per barrel of re-
fined oil, making an advantage per
year for the Standard Oil on its aver
age shipment of over s., 900, ,000.-
This it was that enabled the Standard
Oil to ruin its rivals in the refining
business. The managers of the Erie
and New York Central were no bet
ter in this matter than the Pennsyl-
vania Railroad all contributed TO the
strength of the monopoly by secret
agreements, which were betrayal Of
the trust reposed in them by the peo-
lpIe and by their stockholders. A
subsidiary corporation Of the kind so
often created by the railroads and by
the Standard Oil to cloak their opera
tions received 223 cents a barrel on
all oil carried ever the Pennsylvania
Railroad, no matter by whom shipped.
This subsidiary corporation, with a
capital Of but $4,000 and no debt,
received in 1878 from the three rail-
roads as much, it is estimated as 3d.
O93, $50 year. Who we're the stock
holders in this profitable corporation?
Whether the railroad managers were
in on the ground floor with this sub
sidiary corporation is an open ques-
ton, though, as BIr. Wilson observes,
there was no proof Of this. AS the
: Standard Oil grew strong it showed
3 its power, sometimes at the expense
: of the railroads that had nurtured it.
: 1t forced the Pennsylvania Company,
: for example, to suppress the Empire
Il Company, a rival refiner, by causing
the other railroads to make var
:. upon it. Finally it constructed pipe
}. lines to tidewater and discarded the