Los Angeles herald., 1909-04-06
SUIT TO SMASH
OCTOPUS BEGUN
GOVERNMENT FILES BRIEF IN
COURT AT ST. LOUIS
KELLOGG QUOTES TAFTAs LEGAL
AUTHORITY
Federal Prosecutor Opens Fight TO
Dissolve Standard Oil Trust with
Startling Array of DAM
aging Facts
rBy Associated Press. J

logg's argument in the government
case to dissolve the Standard Oh CON-
pany of New Jersey, as a Vlolator Vi
the Sherman antitrust act.
Mr.. Kellogg read at length from
decision rendered in the Addyston pipe
case by President Taft, when judge
in Cincinnati The issue involved was
an alleged restraint of trade.
Mr.. kellogg will conclude his re-
marks at noon tomorrow. AS one OF
the four judges of the federal circuit
court hearing the case VIII ieaVe Si ~;
Louis on Saturday, Mr.. Kellogg VIII
insist upon the defense completing Its
argument by Friday evening",
This would leave John G. Milburn OF
New York, Morits Rosentnai OF chi
cago, John G. Johnson of Philadelphia
and David G. Watson of Pittsburg put
two and half hours each. This, the
defense will bitterly oppose.
The argument was heard by the full
circuit court bench, Judges Sanporn'
Vandeventer, Hook and Adams. with
Mr.. kellogg was Assistant Attorney
General c. B. Morrison of Chicago,
who will argue certain phases of the
governments case
Many Aid Defense
The defense has half a score of
counsel present, including its principal
ATTORNEYS. Messrs Milburn of New
York, Rosenthal of Chicago, Johnson
of Philadelphia and Watson of Pitts
burg.
yers and laymen alike caused crowd
to be present when the arguments
commenced.
Mr.. kellogg commenced with a full
review of the evidence taken by the
government before discussing the law
applicable to his case. To tell more
clearly the story of Standard Oil, the
special attorney general divided tire
alleged conspiracy into three periods
the first from 1870 to 1882, when it was.
he said, a simple combination acting
in harmony with it's stock interests
pooled in the hand of three trustees.
From 1882, continued Mr.. Kellogg. to
1899, the defendants interests were in
the form of a trust controlled by
nine trustees. This trust. declared lie
gal by the Ohio courts, was nquidateo,
and from 1899 to the present time, said
Mr.. Kellogg, concluding that portion of
his narrative. has taken the form of
a holding corporation. the Standard OIL
company of, New Jersey controlling
subsidiary corporations in alleged re-
straint of trade and otherwise.
Gives History of Case
Mr.. Kellogg then proceeded to re-
trace his steps and went into the his
tory of the first period, from 1870 to
1882, with great care and description.
Mr.. Kellogg told of the wonderful
profits of the Standard. For the ten
years ending with 1906 the concern had
earned, he asserted, the comfortable
sum of $685. 226 525 upon a capitaliza-
ton of $97,250,000.
The Standard trust and the Stand
ard Oil company had paid dividends of
SEAS 436 446 between 1882 and 1906.
"And yet" exclaimed Mr.. Kellogg.
"Mr Rockefeller. while on the witness
stand. talked Of the hazard of the
business"
That the defendants profits had av-
eraged about cents a gallon for ten
years was another of Mr.. Kellogg's
assertions.
"The only place where oil is cheap
is where independents sell It," observed
Mr. Kellogg, land If this court gives
the Standard Oil company carte blanche
to do as it pleases there would not be
an independent company in this coun-
try in two years"
The state line terminals between New
York, Pennsylvania and New Jersey.
Mr.. Kellogg insisted, had been so ar
ranged that a common carriage by in
dependent shippers was impossible. One
pipe line was cited which cost, accord
ing to the Standard Oil company's
books, $4,000, to construct. and 1t was
earning an annual dividend of ST.
100000.
Governments Brief
The governments brief in the case of the
United States against the Standard OIL COM
pany of New Jersey, by which it seeks to dis
solve that corporation, was filed this morning.
The brief reviews the history OF the com
pany and declares the testimony shows that the
various defendants have pursued system of
unfair competition whereby the independent
companies selling and marketing petroleum
have either been driven out of business, so
restricted that the Standard has practically
controlled the prices and monopolized commerce
in petroleum products.
This system It is contended, has taken the
form of price cutting in various localities.
while keeping up high prices or raising them
still higher in other localities where no compe-
tition exists; of paying rebates to customers
part OF their system of the price cutting; Of
obtaining secret Information as to competitive
business largely through bribing railroad en-
ployes and using their secret information to
secure the countermanding of orders OF indie
pendent producers and to facilitate the price
cutting policy; of the of companies held
out by the Standard as Independent, which are
engaged in price cutting while the Standard
maintains the price through its we'll known
companies and other abusive competitive meth
DDS against the competitors.
The Standard Oil company, the brief all
leges is particularly able to carry on this
competition for the reason that II does not sell
its products at central markets or through
ordinary channels as do most other ordinary
manufacturers 1t markets its products to the
retailer in every village and community in the
United States. and 1t sells directly to the con-
sumers. 1t is also held that the testimony
taken In Standard prosecutions shows that the
company through the Galena Signal Oil COM
pany also controls about 97h per cent of the
fabrication oils and that 1t sells to most rail-
roads at enormous profits. This is evidenced
by the net earnings of the company, which in
1906 were about liz per cent on a liberal valua-
ton Of the capital used.
Some Lines Favored
It Is also charged the prices to most rail-
reads are substantially double the price
charged to few favored lines. notably the
Pennsylvania. For instance, the brief says
the New York Central railroad for ten years
has paid about 100 per cent per gallon more
than the Pennsylvania 1t is also stated that
wherever the Standard can do so, 1t has made
contracts whereby 1t has either marketed Il
part or all of the product OF the Independent
refineries, has limited the output.
One of the evidences of monopoly, II is
charged, is the company's enormous earnings
summarized follows
The Standard oil trust and the Standard OIL
company on an investment of $50, 0244S0 had
earned up to the end of 1906 $685., 1888. Add
ing the estimated profits of 1907 and 1908, we
r have substantially one billion dollars earned by
this company in twenty-seven years with an
original Investment of about S69000O00.
Further the brief says: 1T has usually
been claimed for large corporations in this
country that they have increased business and
decreased the cost to the consumer, but In the
case OF the standard 1t has during ten or fifteen
years actually increased the price to the re-
taller and this is a good deal more than the
prices OF other products although the price OF
It's raw material and cost Of manufacture and