The Story of a Great Monopoly

"America has the proud satisfaction of having furnished the world with the greatest, wisest, and meanest monopoly known to history."

So the Standard obtained the control of all the pipe lines and of the transportation, of everything, in fact as a witness said before the New York Railroad Investigating Committee, except the bodies of the producers. Mr. Vanderbilt began, as did the Erie and Pennsylvania railroad kings, with paying back to the Standard, but to no other shipper, ten per cent of its freight bills. He continued making one concession after another, till when he was doing the business for other shippers $1.40 and $1.25 a barrel, he charged the Standard only eighty and eighty-one cents, and this was afterwards reduced to sixty cents a barrel. During the war against the Pennsylvania road to make it sell out to the Standard, the New York Central carried oil for less than nothing. Besides the other allowances, Mr. Vanderbilt paid the Standard through its alias, the American Transfer Company, a rebate of thirty-five cents a barrel on all crude oil shipped by it or its competitors.

When the oil producers, whom the Standard had cut off from all access to the world except through it, sought an exit through an out-of-the-way railroad and the Erie Canal, or down the Ohio River hundreds of miles to Huntingdon, thence by the Chesapeake and Ohio Railroad to Richmond, and so to the sea, Mr. Vanderbilt lowered his rates to the Standard so that it could undersell any one who used these devious routes. When the producers, June, 1879, completed their own tidewater pipe line, 104 miles long, to a junction with the Reading Railroad, obtaining in this way a direct connection with the seaboard, Mr. Vanderbilt reduced his rate to the public from $1.40 to $1.25 a barrel to thirty-five and twenty-five cents, and charged the Standard twenty, fifteen, finally but ten cents. For ten cents Mr. Vanderbilt hauled for the Standard a barrel weighing 390 pounds over 400 miles, and hauled back the empty cars, at the same time that he charged forty-five cents for hailing a can of milk weighing ninety pounds for sixty miles.

So closely had the Standard octopus gripped itself about Mr. Vanderbilt that even at the outside rates its competitors could not get transportation from him. He allowed the Standard to become the owner of all the oil cars run over his road, and of all his terminal facilities for oil. As the Standard owned all but 200 of the oil cars run on the Erie, and leased all that road's terminal facilities, it could charge its rivals anything it pleased for the privileges of New York harbor. When Mr. Vanderbilt was questioned by Mr. Simon Sterne, of the New York committee, about these and other things, his answers were, "I don't know," "I forget," "I don't remember," to 116 questions out of 249 by actual count. At a time when the Standard Oil Company through its other self, the American Transfer Company, was receiving from the New York Central thirty-five cents a barrel on all oil shipped by itself or its competitors, and was getting other rebates which cost the New York Central over $2,000,000 from October 17, 1877, to March 31, 1879, Mr. Vanderbilt testified positively before the New York Investigating Committee that he knew nothing whatever about the American Transfer Company, its officers, or the payments to it.

The Standard's control of the Erie was not less complete than its hold of the New York Central. The Erie shipped only ten cars for outsiders in a whole year, and those were given by mistake. Although a public corporation and a common carrier, the Erie let the Standard sink hundreds of wells on its road-bed, and steal the oil of the neighboring wells. After promising cars, of which it had hundreds idle, to independent shippers, the Erie withdrew them at the dictation of the Standard. One shipper had 10,000 barrels of oil brought down to the side of the track by pipe line to be put into cars promised him by the Erie. The agent of the Standard appeared and stopped the shipment. When this shipper told his story, months later, before the New York committee the oil had not been shipped, though meanwhile the market value of oil had gone down thirty per cent. In giving the Standard special rates, rebates, and the like, the Erie followed the same course as the New York Central and the Pennsylvania railroads.

When the Pennsylvania Railroad began its discriminations against the oil producers, they appealed to President Scott for equal rates with the Standard. At the interview they obtained after repeated solicitations, he answered their petition by recommending them to make a compromise with the Standard Oil Company! He did not want, he said, to get into any trouble with that concern. Representing the greatest common carrier under the constitution of Pennsylvania, which expressly provides that everybody shall have "equal rights" on the railroads of the State, President Scott actually offered to get from the Standard Oil Company for the shippers the privilege of transportation over his own road. He volunteered his personal services to mediate between the Pennsylvania Railroad and the Standard. More American than he, they refused the proposed service. One of them, a New York refiner, in describing the scene, says, "We gave him very distinctly to understand that we didn't propose to go into any 'fix up,' where we would lose our identity, or sell out, or be under anybody else's thumb." President Scott told these outsiders that they could not have the same rate as the Standard, not even if they shipped the same amount of oil, and refused to tell them what discriminations were being made. He refused to give them transportation or to let them put their own cars on the road, although they had been his heaviest customers in the years when the Standard was an ally of his competitors in one of the fiercest railroad wars ever waged between the trunk lines.

Mr. Vanderbilt, Mr. Jewett, and Mr. Scott contracted with the oil producers in writing, March 25, 1872, "not to give any party the slightest difference in rates or discrimination of any character whatever" and "to make no change in rates without ninety days' notice in writing to the producers." Among other features of the systematic and chronic violations of this compact, which began almost immediately, was a special allowance by the Pennsylvania road of twenty-two and a half cents a barrel to the Standard on all oil shipped by its competitors or itself. Vice-President Cassatt, of the Pennsylvania, said under oath, in the Pennsylvania suit against his road, that he did not think this special allowance was any violation of the agreement. But by it, as Mr. E. G. Patterson, of Titusville, said before the New York Investigating Committee, the Standard was able to sell refined oil at less than the cost of manufacture, and put its buyings of oil into the field, and crush out the business of any rival, by bidding this twenty-two and a half cents, or part of it, above the price any one not getting this rebate could pay. In the end the rebate came out of the unfortunate producer. After the Standard had used the rebate to crush out the other refiners, who were its competitors in the purchase of petroleum at the wells, it became the only buyer, and dictated the price. It began by paying more than cost for crude oil, and selling refined oil for less than cost. It has ended by making us pay what it pleases for kerosene, and compelling the owner of the well to take what he can get for his product. For the producer of petroleum, as for the producer of grain, the railroad fixes the price the producer receives.

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