The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1900-01-16
UNFOLDING THE TRUSTS
ROCKEFELLER'S VIEWS CONCERN
ING BUSINESS COMBINATIONS.
President of the Standard Oil COM
pany Submits n Statement to the
Industrial Commission.

plies TO a series of questions sent him by
the commission, this being in the form of
a sworn statement These replies relate to
what are regarded vital phases of the
investigation into the subject of trusts
and industrial combinations, and especially
as they relate to the oil industry.
After explaining the system that pre-
vailed before 1887 of rebates by railroads to
shippers and denying that the Standard
Oil Company was granted favors not ex-
teded to that companys competitors, Mr..
Rockefeller's statement continues:
"Q.-To what advantages or favors or
methods of management do you ascribe
chiefly the success of the Standard Oil
Company?
Al ascribe the success of the Stand
ard to its consistent policy to make the
volume of its business large through the
merits and cheapness of its products. 1t
has spared no expense in finding, securing
and utilizing the best and cheapest meth
DDS of manufacture. 1t has sought for
the best superintendent and the best men,
1t has paid the best wages. 1t has not
hesitated to sacrifice old machinery and old
plants for new and better ones. 1t has
placed its manufactures at the points
where they could supply markets at the
least expense. 1t has not only sought
markets for its principal products, but for
all possible by-products, sparing no expense
in introducing them to the public. 1t has
not hesitated to invest millions of dollars
in methods for cheapening the gathering
and distribution OF oils, by pipe lines,
special cars, tank steamers and. tank
wagons. 1t has created tank stations in
every important railroad station to cheaper
the storage and delivery of its products. 1t
has spared no expense in forcing its
products into the markets of the world
among people civilized and unciviized. 1t
has had faith in American oil and brought
together millions for the purpose of max
ing 1t what 1t is and holding the market
against the competition of Russia and all
those countries which are producers of oil
and competitors against American OIL
ADVANTAGES OF TRUSTS.
"Q.-What are. in your judgment, the
chief advantages from industrial combina-
tons? (a) Financially TO stockholders CD
To the public"
'A.-All the advantages which can be
derived from a cooperation of persons
and aggregation of capital. Much that one
man cannot do alone two can do together
and one must admit the fact that while
cooperation, or what is the same thing
combination, is necessary on a small scale
the limit depends solely upon the neces-
sites OF business. Two parties in partner
ship may be a sufficiently large combina-
ton for a small business, but the bust
ness may grow so large that a partner
ship ceases to be proper instrumentality
for its purposes, and then a corporation
becomes necessity. In some countries
as in England, this industrial combina-
ton is sufficient for business coexten-
sive with the parent company, but it is
hot so in this country. Our federal form
or government makes every corporation
created by State foreign to every other
State and renders it necessary for per-
sons doing business through corporate
agency to organize corporations in some
many of the different States in which
their business is located. Instead of doing
business through the agency of one cor
poration they must do business through
the agencies of several corporations If the
business is extended to foreign countries
and Americans are not to-day satisfied
with home markets alone-it will be found
helpful and possibly necessary to organ
ize corporations in such countries, for
Europeans are as prejudiced against for
eign corporations as the people of many
of our States These different corporations
thus become cooperating agencies in the
same business and are held together by
common ownership of their stocks.
SAYS THEY ARE NECESSITY.
ut is too late to argue about advantages
of Industrial combinations. They are a
necessity, and If Americans are to have the
privilege of extending their business in all
the States of the Union and into foreign
countries as we'll they are necessity on a
large scale and require the agency of more
than one corporation. Their chief advan-
tages are:
"First-Command of necessary capital.
-, VI re- 81 Of mi Of hIrc
''Third-Increase of number of persons
interested in the business.
Fourth-Economy in the business.
Fifth - improvements and economies
which are derived from knowledge of many
interested persons OF wide experience
''Sixth-Power to give the public im-
proved products at less prices and still
make profit for stockholders.
'Seventh-Permanent work and good
wages for laborerS.
81 speak from my experience i'm the bust
ness with which L have been intimately
connected for about forty years. Our fist
combination was a partnership and after
ward corporation i'm Ohio. That was suf-
icient for local refining business. But de-
pendent solely upon local business We
would have failed years ago We were
forced to extend our markets and to seek
for export trade. This latter made the sea-
board cities necessary place of business,
and we soon discovered that manufacturing
for export could be more economically car
ried on at the seaboard; hence refineries
at Brooklyn, at Bayonne, at PHILADELPHIA
and necessary corporations in New York.
New Jersey and Pennsylvania.
I'VE soon discovered as the business grew
that the primary methods of transporting
oil in barrels could not last. The packing
often cost more than the contents and the
forests OF the country were not sufficient
to supply the necessary material for an ex-
tended length of time. Hence we devoted
attention to other methods of transporta-
ton, adopted the pipeline system and
found capital for pipeline construction
equal to the necessities of the business.
OPERATION OF PIPE LINES.
''To operate pipe lines required franchises
from the State in which they were located,
and consequently corporations i'm those
States, just as railroads running through
different States are forced to operate un-
der separate State charters. To perfect
the pipeline system of transportation re-
quired in the neighborhood of $50OOO,OOO of
capital. This could not be accomplished
without combinations. The entire oil bust
ness is dependent upon this pipeline sys-
tenn. Without IL the company would shut
down and the foreign market would be
closed TO us.
1.-The pipeline system requires other i'm
provements, such as tank cars upon rail-
roads, and finally the tank steamer. Capt.
tai had TO be furnished for them and cor
porations created TO own and operate them.
business was to be properly developed. and
only through such successive steps and by
such an industrial combination is America
to-day enabled 10 utilize the bOlintv which