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."

Its genius for monopoly has given the Standard control of more than the product of oil and its manufacture. Wholesale merchants in all the cities of the country, except New York, have to buy and sell at the prices it makes. Merchants who buy oil of the Standard are not allowed to sell to dealers who buy of its few competitors. Some who have done so have been warned not to repeat the offense, and have been informed that, if they did so, the Standard, though under contract to supply them with oil, would cut them off, and would fight any suit they might bring through all the courts without regard to expense. At least one case is known where the deputy oil inspector, in a city to which oil had been shipped by an outside dealer, received from the state inspector peremptory orders by telegraph, before the oil had arrived, to condemn it. In the South, the Standard's control is absolute. It has now stretched out its hands to grasp the turpentine trade, and its peculiar tactics have already been disastrously felt in the turpentine market.

These oil producers and refiners whom the Standard was robbing with and without forms of law fought with every weapon they could command. The struggle has been going on continuously for nine years. All that men could do who were fighting for self-preservation was done. They caused to be introduced into Congress the first original bill to regulate railroads in interstate commerce. The outrages done by the roads and the Standard were proved before an investigating committee of Congress, but Congress did nothing. The legislature of Pennsylvania was besought to pass laws to enforce the constitutional provision for equal rights on the railroads of the State, but the money of the Standard was more powerful than the petition of business men who asked only for a fair chance. Numbers of suits were brought, by individuals and nominally by the State, but by the harmonious efforts of the governor, the attorney-general, the courts, and the defendants they were prevented from coming to any conclusion. Indictments for criminal conspiracy were found by a grand jury, but when Governor Hoyt, of Pennsylvania, in due course of law, was called upon to issue requisitions for the extradition of the two Rockefellers and their accomplices, he refused to do so. Worst failure of all, the supreme court of Pennsylvania stayed the trial of the most important of the cases in progress in a lower court, and so brought the legal proceedings against the Standard and the railroads to an end, in striking agreement with the prediction of one of the defendants that "the case would never be tried." In short, the plundered found that the courts, the governor, and the legislature of their State, and the Congress of the United States were the tools of the plunderers, and were forced to compromise. This compromise, signed February 5, 1880, was a victory in forcing a pledge from the Standard and the railroads of the abandonment of the worst of their practices, but there lies in it, as in most compromises, a germ of disaster. It permits the Standard to receive any rebate the railroads have a right to grant, and allows the railroad to give rebates to large shippers, of whom there is but one,—the Standard. This is the relative position of the parties to-day. The Standard holds it vantage-ground, and America has the proud satisfaction of having furnished the world with the greatest, wisest, and meanest monopoly known to history.

To-day, in every part of the United States, people who burn kerosene are paying the Standard Oil Company a tax on every gallon amounting to several times its original cost to that concern. The average price of crude oil at the wells or at Cleveland, as the railroads carry the crude free to the Standard's refineries, was in December last about three cents a gallon. The price of refined at Cleveland was seventeen cents a gallon. Oil that the Standard sells in New York at a profit, at ten and one half cents a gallon, they charge nineteen and three fourths cents for in Chicago. The average cost, last December, of the one and a third barrels of petroleum needed to make a barrel of kerosene was $2.05 at Cleveland. The cost of refining, barreling, and all expenses, including a refiner's profit of half a dollar a barrel, is, according to the testimony of experts, $2.75 a barrel.To bring it by rail to Chicago cost seventy cents, making the total cost $5.50 for a barrel of fifty gallons, or eleven cents a gallon.

The price the Standard charges in Chicago is nineteen and three fourths cents a gallon, in which, as the difference between eleven and nineteen and three fourths cents, there is a tax on the public of eight and three fourths cents. This tax is transmitted by the middle-men, jobbers, and retailers to the consumer. When at twenty-five cents a gallon the working-man buys kerosene because it is cheaper than gas, or the student because it is better, each pays the Standard this tax of eight and three fourths cents a gallon. A family that uses a gallon of kerosene a day pays a yearly tribute to the Standard of $32, the income from $800 in the four per cents. In Pennsylvania, the tax levied by the Standard above all expenses and legitimate profits is calculated by an expert at fourteen cents a gallon.

This makes a yearly tax on the light in most general use in that State of $2,555,000. The whole country consumed last year, at a low estimate, 220,000,000 gallons of kerosene. Putting the Standard tax, to avoid all possibility of exaggeration, down to five cents a gallon, we have a levy on the whole country of $11,000,000, besides the millions taken from the railroads in rebates. These, according to the sworn evidence of the officers of the railroads and the known figures of shipments, amounted in 1878 to $6,960,840, and in the period between October 17, 1877, and March 31, 1879, to $10,151,218. These figures make reasonable the current estimate that the Standard pays dividends of $1,000,000 a month. It can do this, and have millions left to pay the suits of refineries it has leased and keeps idle, its backsheesh to railroad men, the bribes it has had to give judges, state legislatures, and state inspectors, and its salaries of hundreds of thousands of dollars a month to men whom it has turned out of the business, and who are acting as its paid agents.

Presented by

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus


The Absurd Psychology of Restaurant Menus

Would people eat healthier if celery was called "cool celery?"


This Japanese Inn Has Been Open For 1,300 Years

It's one of the oldest family businesses in the world.


What Happens Inside a Dying Mind?

Science cannot fully explain near-death experiences.


Is Minneapolis the Best City in America?

No other place mixes affordability, opportunity, and wealth so well.

More in Business

More back issues, Sept 1995 to present.

Just In