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."

Mr. Roger Sherman, of counsel for the complainants in the suit brought by the State of Pennsylvania, hunted through the officers of the Pennsylvania Railroad to find some one who knew what rebates the Standard was getting. Most of the officers knew as little as Mr. Vanderbilt. Finally, Mr. Cassatt was put on the stand. He testified as to the rebate of twenty-two and a half cents, already referred to, and similar rebates of thirty-five cents a barrel from the New York Central, and twenty to thirty cents a barrel from the Erie. He showed that, while the open rate to the public was $1.90 to New York for carrying a barrel of refined oil, the Standard had the work done for $1.10 and $1.20 a barrel less, and that out of the seventy and eighty cents the Pennsylvania received it paid ten cents for storage and six cents for lighterage for the Standard. The public rate for transporting crude oil was $1.40 a barrel, but the Standard paid only eighty-eight and a half cents, and finally but ten cents. While the Pennsylvania was giving all these special allowances, carrying oil at one time, according to Vice-President Cassatt's sworn declaration, for less than nothing, it charged shippers like George W. Cachaan, who were not in with the officers of the road, the extreme rate of $2.00 a barrel. The effect of these discriminations was well expressed by Mr. B.B. Campbell, a witness for the State of Pennsylvania, who when asked what profit there was in refining replied, "To any one paying the open rate of freight there would be a heavy loss, but with a $1.10 rebate on every barrel there would be a heavy profit." The New York Central, the Pennsylvania, and the Erie railroads and their connections lost between January and October, 1879, about $13,000,000 of freight earnings they would have had but for their alliance with the Standard. The latest annual report of the Reading company gives a great deal of space to these heavy losses. The president of the Baltimore and Ohio Railroad called the attention of the other trunk line presidents to its statements. They could not, he said, fail to embarrass the railroads before Congress, and to do them "most serious damage" before the bar of public opinion. He appealed to the trunk line presidents at their meeting on January 21, 1880, to reform "the wasteful and absurd rates on oil," which virtually for the Standard amounted to free transportation. His appeal was without effect. The presidents decided at that meeting not to alter their rates. The rebates given the Standard extend to nearly every State in the Union. These rebates are about equal to the average value of the oil at the wells. The railroads of the United States virtually give the Standard its raw material free. The Western railroads favor the Standard in the same way that the Eastern ones do. They refused competing shippers, in the days before these had been killed off, equal rates with the Standard, unless they did an equal business. The railroads create the monopoly, and then make the monopoly their excuse. When the Lake Shore charged nominally eighty cents a barrel and thirty cents a hundred pounds to carry oil from Cleveland to Chicago, it did the business for the Standard at seventy cents a barrel and twenty-five cents a hundred.

It seems incredible that Americans should have been willing to do what the Standard, by means of these special privileges from the railroads, did to its competitors. The refineries at New York had often to lie idle while the oil was running on the ground at the wells, because they could not get transportation. The monopoly of the pipe lines which the railroads gave it made the Standard the master of the exits of oil from the producing districts. Producing themselves but one fiftieth of the oil yield they stood between the producers of the other forty-nine fiftieths and the world. There was apparently no trick the Standard would not play. It delivered its competitors inferior oils when they had ordered the high-priced article, out of which alone they could manufacture the fancy brands their customers called for. The Standard received as a common carrier from E. W. Coddington oil for transportation through its United Pipe Line, but, when he sold it to a New York dealer outside the Standard combination, refused to deliver it, at the same time shipping oil to one of this dealer's competitors in New York. The Standard controlled the pipes by which alone Mr. Coddington and all other producers could get to market. When the flow from his wells had filled his tanks, and he had to have them emptied, his application to the Standard's United Pipe Line, a common carrier, was met by refusal to move his oil unless he sold it to the Standard. The following extract from the stenographic report tells the story plainly enough.

QUES. Upon what conditions would they run it?

ANS. Upon condition it was sold to certain parties,—J. A. Bostwick & Co., members of the Standard.

QUES. At what price compared with the market price?

ANS. Below the market price.

QUES. Always below the market price?

ANS. Always below it.

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