New-York tribune., 1907-10-04
STANDARD OILS ROADS.
TWO FIRMS IN CONTROL.
Chief Counsel Objects to RmI7cay
Contracts Being Made Public.


When the taking of evidence in the government
suit to have the Standard Oil Company dissolved
on account OF monopoly resumed yesterday
morning, Frank B. kellogg tried TO prove the gov
ernments contention that the corporation has en-
tire control OF the business OF supplying lubricat-
ing oil to the railroads OF the United States The
yearly cost OF lubricating oil to the railroads As
figured out by the governments attorneys and ac-
oountants. is more than 81 3oo0 In support Of the
governments statement that over 50 per cent Of this
amount finds its way into the Golfers of the GaIeu
Signal Oil Company and the Waters -Pierce com
pany. two Standard subsidiary companies Mr. Kel.
logg read a letter WRITTEN by Charles Miller nresi-
dent Of the former corporation, on December q
1903, admitting that the two companies controlled
the sales OF lubricating oil used on s71a per cent
of the railways in the United States Mexico and
Canada
c. c. Stenbrenner, auditor of the railway depart
rnent Of the Galena Signal OIL Company. who was
the stand throughout the hearing yesterday
could not authenticate the document. but the let
Ter went into the court record, nevertheless
Mr. Steinhrenner went so far as to admit that tho
two Standard subsidiary corporations did in hts
belief, Top off, for themselves each wear o. ner
cent Of the business. Later he said the companies
hoped 10 get control of 100 per cent Of the sales
Of lubricatng oil supplied to all kinds Of RAILWAYS
In this country.
VERY likely you'll succeed" said Mr. Kellogg 'if
you are allowed to go doing as you are now
doing" Mr.. Milburn. the Standards chief coun-
must go on
The manner in which business went on IN
creasng for the Standards two subsidiaries dur
ing the last ten years Mr.. kellogg tried to show
through Mr.. Stenbrenners testimony. This is the
way that official Of the Galena Company accounted
for II:
The Galena has q staff Of experts perhaps fifty
who go about the country comforting with execu-
lives Of railroads. employees and operators in an
earnest desire TO reduce the fabrication of engines
cars, etc. to art" Mr.. Milburn termed It.
and TO point out chiefly TO executives. the sin OF
wastefulness. By this altruisic policy. It would
appear from Mr.. steinbrenners testimony in re-
sponse to Mr.. Mlburn's well directed queries. and
by the railroads quick appreciation OF the ideal
conduct Of the Galena company in maintaining an
instruction corps in the of oil. the Standards
company has been able 20 get the business even
when competitors in lubricating oil offered cheaper
prices. Mr.. Kellogg seemed TO be suspicious OF
this high philanthropy, and wanted TO know If the
Galenas soliciting agents weren't instructed to
remind the railroad executives. in asking for con-
tracts. what a great amount OF oil given them
to carry each year by the Standard Oil Company.
Mr.. 6teinbrenner couldn't say to that.
Mr.. Kellogg revealed enough at yesterdays ses-
sion to verify the governments assertions that
there Is decided discrimination in the cost OF ubr-
eating oil 10 different railroads. The Pennsylvania
stands prominent in the list OF most favored
Shippers whereas the New York Central. the New
York. New Haven & Hartford and the Illinois Cen
tral the fun tnVocesrates FOR oil as fo-
lows: Valve OIL. for luhricating valves and other
parts Of locomotives. As cents a gallon: engine oil,
also used locomotives Is cents gallon; coach
OIL used principally for passenger cars. SO cents
gallon. and OIL employed locomotives.
freight and passenger cars. Is cents a gallon.
Honinally. also, the Pennsylvania pays these
prices, but gets refunds from the Gaiera Signal
Company that reduce the price Of the first men
toned product 10 235 cents gallon. In the same
way. the Baltimore Il Ohio pays only 5s cents and
fha ole paors q ph 10
Southern Railway has TO pay IS cents and the
Erie 471z cents Refunds the other oils make Ike
Determinations in price
The Pennsylvania business Is done at loss to
the Galena company, Mr.. Steinbrenner admitted,
but Mr. kellogg found out that the Pennsylvania
had also made the art of fabrication study be-
fore the Standard went out 10 get the business.
Mr. Milburn got the witness TO say that the Penn
sylvania's patronage was such asset in the ac-
QUESTION of foreign business that it compensated
for the loss. Mr.. Steinbrenner promptly admitted
that # did but when Mr.. Kellogg took him in hand
egan he said he had never beer abroad and couldn't
say from personal knowledge how potent factor
the Pennsylvania's patronage was in obtaining the
business from European railways. Il thought Mr..
Miiburn testifying.' said Mr. Kellogg, cheer
fully.
The contracts Of the Galena company with the
railroads appear their face practically the same
4 maximum cost for fabrication is made to a rail-
road. this being based on the amount required for
a thousand miles. If the railroad fails use
enough oil to reach the maximum cost, the Galena
company refunds the difference between that cost
and the cost of the amount actually used. Mr.
Kellogg is going TO try 10 show that the railroads
never use up more than the maximum cost, and
tnat the real business of he fifty trained experts
is 10 that the roads do not The contract Sc
cured Mr.. Kellogg showed how prices went up
from year to year various roads In 1906 despite
the great anxiety avoid waste in the Of its
products. il shown that the company had
profed to the amount OF s2So305s over so per
OF It's net assets. Sss556s, and % per
turn on its capitalization OF 100000
During the examination of Mr. SteinbreEner, Mr |
1liloulh made vigorous protest against the !
"alena companys contracts with the railroads be-
cunning public property. He willing to have !
'Iell 20 on the records but not to the newspaper
Ieaoing public Special Examiner Ferriss said that
'o1Isei Tor both sides entitled have copies
u al evidence and exhibits submitted in the case
ana that ne could dictate what use the counsel
made Of them
4eH becomes a matter Of professional honor |
- Nii- -hAourn, looking Mr.. Kellogg
tH.hH understand my prerogatives in this |
- iuIE' said the government attorney sharply