APPENDIX (continued 3)

XVII. Whenever in the opinion of the board of directors it may be advisable they may, subject to the approval of the Council, provide such refining capacity as may be required to maintain the highest price for crude petroleum consistent with the consumptive demand.

XVIII. The Agency shall not at any time sell to, or contract with, or make any arrangement whatever, with any individual, organisation, combination, or association, by which they may have a monopoly, inside rate, advantage or preference over, or to the prejudice of, any present or future competitor for the purchase of the crude oil coming into, or passing through its hands; provided, that nothing in this section shall be so construed as to prevent the Agency, with the sanction of the Council, from making such temporary discrimination as may be necessary for the purpose of protecting or promoting the interests of producers by securing higher prices for crude oil, increased consumption of refined oil, or decreased margins between the price of crude and refined oil.

XIX. The Agency, with the approval of the Council, may take such measures as may be expedient to increase the consumption of petroleum by securing its application to new uses.

XX. The Agency shall publish daily a correct statement showing the amount of oil purchased, the oil sold, and oil placed in store during the day; also showing the points at which the same was done and the amounts at the time in store at the various sub-agencies; also the destination of the oil sold.

XXI. The Agency shall publish tri-monthly, full and complete reports of all its transactions and showing its condition at the date of the report; the correctness of the report shall be verified in such manner as may be prescribed by the Council.

XXII. A committee may be appointed by the board of directors, or by the Council of the Petroleum Producers’ Association, at any meeting, for the purpose of investigating 1340the condition and management of the affairs of the Agency; and it shall be the right and duty of such committee, duly appointed, to thoroughly investigate everything affecting the interest of the Agency, to examine its books, accounts and vouchers; its safes, vaults and tanks; and to make a true and faithful report of the condition and management of the affairs of the Agency as they may be found, which report shall be published at the expense of the organisation which appointed the committee. It shall be the duty of the Council to see that such committee is appointed and such examination and report made and published at least once in every year.

XXIII. The Agency shall establish a bureau of statistics and information, which shall carefully collect and publish facts, relating to the business of producing, refining, marketing and the consumption of oil. The rooms of the bureau shall at all times be open to the members of the Petroleum Producers’ Association, and the Agency shall hold itself open for daily communications by telegraph with local associations.

1341

NUMBER 17 (See page 1123) CONTRACT BETWEEN PETROLEUM PRODUCERS’ ASSOCIATION AND PETROLEUM REFINERS’ ASSOCIATION

[From the Oil City Derrick.]

The contract between the producers and refiners read as follows:

Whereas, The necessities of trade call for co-operation between the producers and refiners of oil, for purposes of mutual protection:

Therefore, We, the undersigned, representing the Petroleum Producers’ Association and the Petroleum Refiners’ Association, hereby enter into the following articles of agreement, which stipulate as follows:

First.—Each of the two associations hereby agrees to appoint a representative committee, which committee shall meet together weekly, or as often as may be necessary, and at such places as they may determine.

It shall be the duty of these committees (so far as in their power lies) to see that the provisions of this agreement are executed in good faith, and to discharge such duties as are devolved upon them by this agreement, and in general (within the limitation of their authority) to act for the mutual advantage of the trade, whose interests it is the purpose of this agreement to secure.

Second.—The Producers’ Association shall appoint a comptroller, who shall have the right to examine the books of the Refiners’ Association, and its daily reports so far as they relate to the purchase, sale, and shipments of crude and refined oil, and who, together with the auditor of the Refiners’ Association, shall make joint reports daily to both associations.

The Refiners’ Association shall appoint a comptroller, who shall have the right to examine the books of the Producers’ Association and its agencies, and their daily reports, so far as they relate to the purchase, sale, and shipments of crude and refined oil, and who, together with the secretary of the Producers’ Association, shall make joint reports daily to both associations of all sales and shipments.

Third.—Each association agrees that it will keep accurate books of account, which shall show all purchases, sales, and shipments of crude and refined oil, which shall also be open at all reasonable hours to the inspection and examination of the authorised agents of each association, as hereinbefore provided.

1342Fourth.—The Refiners’ Association agrees to admit all existing refiners to membership, and to a participation in the future benefits of the association on equal terms with present members, and the Producers’ Association agrees to allow all producers to join its association on the same terms with the present members.

Fifth.—The Producers’ Association agrees to sell (through its regular appointed agencies) crude oil exclusively to the Refiners’ Association and its members, and the Refiners’ Association and its members agree to purchase crude oil exclusively of the Producers’ Association or its appointed agents.

Sixth.—The Producers’ Association agrees that all producers enjoying the benefits of this contract shall be required to bind themselves to sell their oil exclusively through the Producers’ Association.

Seventh.—The Refiners’ Association and its members agree that they will not until after sixty (60) days from the date of this contract sell any portion of the crude or refined oil now held by them, except so far as they shall have previously purchased the equivalent of crude oil to take the place of the oil so sold.

They further agree to buy from the Producers’ Association daily such quantities of crude oil as the markets of the world may take of them, the same to be determined from time to time by the representative committees herein provided for.

Eighth.—The price of crude oil so purchased and sold to be conditionally five dollars per barrel of forty-two gallons each, at “common points,” payment to be made as follows:

When refined oil is sold in New York at twenty-six cents per gallon, no additional amount is to be paid; but for every one cent per gallon of advance in the average price of sales of refined oil in New York, twenty-five cents per barrel shall be added to the price of so much crude oil as shall be the equivalent of refined oil sold at such advance until the price reaches five dollars per barrel. A proportionate addition to the average price of crude oil shall be paid for each fraction of one cent per gallon increase in the average price of sales of refined oil at New York, by members of the Refiners’ Association.

The price of refined oil in New York and of crude oil at common points to be adjusted by the representative committee herein provided to be appointed.

Ninth.—The representative committees may at any time, when it may be necessary to do so, reduce the prices of crude and refined oils below the minimum or advance them above the maximum prices above named, the increase and reduction in price and the cash payments on crude oil to be determined by said committees.

Tenth.—Settlements to be made to the end of each calendar month and balances to be paid not later than the fifth of the succeeding month.

Eleventh.—The profits on all crude oil sold for export by members of the Refiners’ Association shall be credited to the Producers’ Association in the next succeeding regular monthly settlement after delivery of said oil.

1343Twelfth.—Either association may discontinue this agreement at any time by giving to the president of the other association ten (10) days’ notice in writing of its purpose to do so.

Thirteenth.—This agreement to remain in full force and effect for and during the term of five years from this date, unless sooner terminated in the manner provided in section twelve (12) of this agreement.

Fourteenth.—Amendments and alterations may be made at any time by the representative committees, subject to the approval of the respective associations.

In testimony whereof, the Petroleum Producers’ Association, by its executive committee, and the Petroleum Refiners’ Association, by its president and secretary, have hereunto set their hands this nineteenth day of December, A.D. 1872, in the City of New York.

Petroleum Producers’ Association, by C. V. Culver, A. H. Bronson, Samuel Q. Brown, William Parker, B. B. Campbell, Executive Committee.

Petroleum Refiners’ Association, by John D. Rockefeller, President.

1344

NUMBER 18 (See page 1132) TESTIMONY OF GEORGE R. BLANCHARD ON REBATES GRANTED BY THE ERIE RAILROAD

[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume III, pages 3393–3395.]

October 1, 1872, when I first became general freight agent of the Erie Railroad, no oil was produced in the Bradford District, and all petroleum then transported by the Erie Railway eastward came from the Atlantic and Great Western Railroad. At that time, Adnah Neyhart, of Tidioute, Pennsylvania, represented by W. T. Scheide, afterwards by H. C. Ohlen at New York, shipped small quantities of refined oil, for which he received a rebate of over $7,000 on his shipments for the prior month, to wit, September, 1872.... I looked for the reasons, and found the agreement next prior to that time as to shipments and rates was the one already in evidence between producers, shippers, refiners and railroad companies, dated March 25, 1872; I asked why that contract was not observed, and was then convinced in reply that the agreement of March 25 lasted less than two weeks, and that at that early date the Empire Line was receiving a large drawback or commission from the Pennsylvania Railroad, which was either being shared with its shippers or an additional amount was being allowed to them, besides that which the Empire Line itself received from the Pennsylvania system; and as the Empire Line also owned the Union Pipe Line, its shippers had advantages which our company and its shippers did not even jointly possess. At the close of that calendar year (1872), the entire petroleum traffic for the five months of the administration of President Watson, the former president of the South Improvement Company, to January 1, 1873, was but 265,853 barrels, or but about 53,000 barrels per month; while the Pennsylvania Railroad was carrying about six times as much, or 300,000 barrels per month, and the New York Central was carrying the entire refined oil sent from Cleveland to New York. The representations then made to me also convinced the Atlantic and Great Western Company as to what our rivals were doing, and that railway company and our own decided to continue to pay the twenty-four cents per barrel drawback then being paid on the rate of $1.35 provided by this producers’ agreement of March 25, 1872.

It is therefore clear that one of the largest of the shippers, who signed that March agreement, did not feel that it bound him to pay the rates he had agreed to pay, and 1345he gave convincing reasons to believe that others, signers and parties to that agreement, did not pay them, and possessed equal or greater advantages by way of rival routes. Early in 1873 Mr. Scheide came to our line with Mr. Neyhart’s crude business, under the circumstances Mr. Scheide has stated, but being yet without any shippers of refined oil, and believing that the Empire Line would pay a rebate on refined, as I now know from Mr. Scheide’s testimony, they had paid Mr. Scheide on crude, I opened negotiations to increase our traffic, which resulted in an agreement, with the concurrence of the Atlantic and Great Western, as follows:

Erie Railway Company,

Office of Second Vice-president.

New York, March 29, 1873.

MEMORANDUM

Between John D. Archbold, Mr. Bennett, and Mr. Porter, and Mr. Osborn, and self. Rate for March, 1873, to be 132½ from Union. Rate thereafter to be 125 from same point as the maximum for 1873. If the common point rate is made from Titusville at any time in 1873, on bona fide shipments, Erie and Atlantic and Great Western will make same rate from same date. With this rate the refiners agree to give us their entire product to New York for the year, and the preference always at same rate as actual shipment by other lines.

(Signed) John D. Archbold.

G. R. Blanchard.

This Mr. Bennett was also one of the signers to the agreement of March 25, as a refiner, and from these gentlemen I also learned at that time that this producers’ agreement was exploded by the action of the Producers’ Union before that time.

Notwithstanding this agreement of March 29, 1873, with its reduced rates, its signers left us in November, 1873, and gave the Empire Line their entire shipments; and we were then left with but one small shipper of refined oil, Mr. G. Heye, whose consignments were small, and to retain even this small business, against similar solicitations by our rivals we were compelled to make his rate $1.10 in November, 1873, instead of $1.50, as provided by this producers’ agreement.

These facts effectually refute the testimony of Mr. Patterson that the agreement of March 25 continued for two years, or any other period beyond three weeks, at the rates it stipulated, and show that at least two of its signers did not feel bound to pay the rates it named, and that they and others by other lines endeavoured immediately after it was signed to obtain, and did secure reduced rates, as usual before its execution and peddled their oil among different railroads wherever they could secure an advantage, however small, over each other or the railroads.

1346

NUMBER 19 (See page 1133) TESTIMONY OF W. T. SCHEIDE

[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume III, pages 2774–2777.]

Q. Why were you shipping over the Pennsylvania road and not over the Erie?

A. For the reason that the Pennsylvania was most eligibly situated for our purposes.

Q. How did you come, then, to ship over the Erie at all?

A. We came to ship over the Erie because of what we considered very bad treatment on the part of the Pennsylvania Railroad.

Q. What was that bad treatment that you received at the hands of the Pennsylvania road?

A. It consisted, principally, in a discrimination against us in furnishing us with cars.

Q. They refused you transportation?

A. Yes, sir.

Q. Were they refusing you transportation in the interest of the combination?

A. In the interest of a peculiar idea that they had, that all shippers should be placed upon the same basis.

Q. And in consequence of that peculiar idea, they gave to other shippers transportation and did not give it to you?

A. Yes, sir.

Q. And that was the practical way in which that corporation carried out that idea?

A. Yes, sir; you will allow me to explain, please?

Q. Yes; go on.

A. The oil business differs from other business in this, that it is a daily crop; there is a certain amount of oil produced that has to be shipped every day; the consumption, however, is not equal to the daily production of our trade; the consumption varies and the demand varies; the consequence is that there are seasons of the year when a man engaged in shipping oil ships oil really at a loss because there is no demand for it, and there are other seasons when there is a large profit; now the Pennsylvania Railroad always insisted upon having a large number of shippers; this large number of shippers 1347would ship only when there was profit, and when there was no profit somebody else had to ship; we had been their shipper for a number of years.

Q. When you speak of their shipper—their leading shipper, do you mean?

A. Yes, sir; we did their business between Philadelphia and Baltimore and New York.

Q. Were you their evener, so to speak?

A. We did not have any eveners in those days.

Q. Did you practically stand in the position of an evener?

A. No, sir; we were simply their shipper of crude oil.

Q. When you speak of their “shipper,” in the singular, do you mean that you were their sole shipper, as you subsequently became on the Erie?

A. I mean we had better rates of freight than anybody else could have obtained over the Pennsylvania Railroad at that time.

Q. And therefore monopolised the business; go on?

A. And the consequence is that in consequence of this change in the demand that when there comes a season that there is a little money in it, the Pennsylvania Railroad would encourage these numerous small shippers who would come in and they would pro-rate cars with them; they would only allow us to put in a requisition for a certain number of cars and they would allow anybody else, an entire stranger, a man who never shipped any before, to put in an equal requisition, and they would pro-rate with him, and the consequence was in the paying business we were out and in the unpaying business we were in.

Q. And you left it?

A. Yes, sir.

Q. Because you could not get rates better than other people?

A. No, sir; because we could not stand it; because we were losing money.

Q. On the same basis that other people were?

A. No, sir; other people were not shipping except when there was a profit.

Q. Why did you ship when there was not a profit?

A. Because that was our business; we were shippers of petroleum.

By the Chairman.

Q. I don’t understand why you were obliged to ship at a loss?

A. That is the reason why we left the Pennsylvania Railroad.

Q. I don’t understand why you were obliged to ship at a loss?

A. We were in the petroleum business and shippers of petroleum, and we had contracts; in order to keep the cars running it was necessary for us to make a contract for one, two, three, five, or six months ahead.

By Mr. Sterne.

Q. Isn’t it true that upon the basis of your having better rates than anybody else, you proceeded to make contracts to extend your business?

1348A. Yes, sir.

Q. With the Pennsylvania road?

A. Yes, sir.

Q. And that the moment that you were placed in the position of having——

A. No transportation.

Q. No transportation equal to your expectations, with your special rates?

A. I had to buy oil in New York.

Q. That was the real fact?

A. Yes, sir.

Q. The business was based upon the rate of transportation?

By the Chairman.

Q. Why did you have to buy oil in New York?

A. To fill my contract.

Mr. Sterne.—He had made his contract upon the basis of his special rate.

The Witness.—And there was a certain supply of transportation which was given to me.

By Mr. Sterne.

Q. Practically an exclusive supply of transportation you had at one time over the Pennsylvania road, hadn’t you?

A. Yes, sir.

Q. And when they changed their policy in that respect and gave other people transportation, you could not fill the orders upon the basis of which you had made your contracts?

A. You will excuse me; this would seem as though this was a sudden arrangement; it was not; it lasted three or four years.

Q. You had reason to suppose that it would last, had you not?

A. This policy of theirs.

Q. This policy.

A. Yes, sir.

Q. That drove you on the Erie?

A. Yes, sir.

1349

NUMBER 20 (See page 1133) STATEMENT OF AMOUNTS PAID FOR OVERCHARGES AND REBATES ON OIL DURING THE YEAR 1873 BY THE NEW YORK, LAKE ERIE AND WESTERN RAILROAD

[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume V, page 275 of Exhibits.]

Name. Erie pro.

A. Neyhart $188,127.78

Gust. Heye 7,235.31

J. J. Vandergrift 929.11

Durant and Company 145.95

Dutilk and Company 815.95

S. D. Karns 7,089.69

Standard Oil Company 469.11

H. B. Everest 6.66

Lyman and Williams 13.44

J. H. Willever 32.98

L. Van Duzer 3.50

H. Roach and Son .29

L. Y. Wiggins and Brother 24.11

P. A. Stebbins, Jr. 4.53

C. P. Prince and Company 2.69

E. L. Houghton and Company 45.24

McKirgan and Company 2.70

Marks and Bean 45.82

McManagle and Rogers 18.27

Theodore Merritt 4.56

W. F. Smith 3.86

Vacuum Oil Company 8.80

Vandusen Brothers 38.88

Woodbury, Morse and Company 5.40

Ward, Leonard and Company 88.06

Young and Borden 7.97

Total $205,170.66

1350

NUMBER 21 (See page 1135) AGREEMENT OF 1874 BETWEEN THE ERIE RAILROAD SYSTEM AND THE STANDARD OIL COMPANY

[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume III, pages 3398–3402.]

Agreement concluded this seventeenth day of April, A.D. 1874, by and between the Erie Railway Company and the Atlantic and Great Western Railroad Company, parties of the first part, and the Standard Oil Company, of Cleveland, Ohio, party of the second part, witnesseth:

First.—The parties of the first part (Erie Railway Company and the Atlantic and Great Western Railroad Company) agree to furnish a sufficient number of good and suitable cars for the purpose of transporting petroleum and its products from the refineries now owned by the party of the second part (Standard Oil Company), at Cleveland, Ohio, and Oil City, Pennsylvania, and any others they may hereafter control or own, to Weehawken Oil Yards, in New Jersey.

Second.—The parties of the first part agree to transport said products of said refineries, and deliver the same in cars (if destined for the New York market) at and upon the side tracks connected with said Weehawken Oil Yards, in good order and condition, except as provided for in Article Four (4), and do all switching of cars at said oil yards necessary to the prompt and rapid discharge and handling of cars employed in said business. They also agree to haul said cars (whenever practicable) in full trains over their respective roads, with promptness and uniformity of movement, and accept compensation therefor as hereinafter provided.

Third.—Rates of freight on all said products to be made from time to time between J. H. Devereux, president of the Atlantic and Great Western Railroad Company, and the Standard Oil Company; the same to be to the satisfaction of the said J. H. Devereux, president; to be, however, no higher than is paid by the competitors of the said Standard Oil Company, from competing Western refineries to New York by all rail lines—each of said railway companies accepting its pro rata proportion of the through rate thus made.

Fourth.—The party of the second part agrees not to ship more than fifty (50) per cent. of the product of its said refineries by any other line or lines Eastward, to be 1351shown by monthly statements verified by its president and secretary. It also agrees to assume all risks and losses of its property by fire when in the charge or custody of the parties of the first part, whether said property is being moved in trains or stored, or lying at any station between place of shipment and destination (both included). It further agrees to assume all losses from natural leakage or breakage, except the same is caused by collisions or the wrecking of cars by unavoidable accidents. It also agrees, at its own cost, to safely load at places of shipment all of said products, and unload the same when delivered at the said Weehawken Oil Yards, and furnish said products for shipment with as great regularity as possible.

Fifth.—In the event of unavoidable detention, occasioned by the elements, or by strikes of employees of the parties of the first part, or either of them, whereby said first parties are unable (for the time being) to fulfill their covenants under this agreement, then it shall be the duty of said first parties to immediately notify the second party of such casualty or strikes, and such casualty or strike shall be considered good and sufficient cause for delay in the execution (for the time being) of the provisions of this agreement. And said first parties, and each of them, shall be saved from all obligation for the fulfillment of this agreement during the period of such detention, anything in this contract to the contrary notwithstanding. It shall be the duty of said first parties to proceed forthwith to put themselves in position to resume their obligations under this agreement, giving notice at the earliest possible moment to the second party of their ability to resume.

Sixth.—The Erie Railway Company for itself hereby stipulates and agrees to and with the second party, that on or before the first day of May, A.D. 1874, it will give full and complete possession of the property known as the Weehawken Oil Yards, in New Jersey, together with all buildings, erections, docks and appurtenances thereunto, belonging unto the second party to have and to hold, with all revenues derived therefrom, from and after the said first day of May, A.D. 1874, or until the expiration of this agreement, as otherwise herein provided. The Erie Railway Company further agrees, at its own cost, on or before the first day of May, A.D. 1874, to put said buildings, erections and appurtenances in good repair; after which said second party shall maintain the same in like good order, and to do all dredging required to provide and preserve the requisite depth of water.

Seventh.—In consideration of the possession of said Weehawken Oil Yards, the second party hereby agrees to and with the Erie Railway Company as follows: to wit: To pay weekly to said Erie Railway Company the sum of five (5) cents on each and every barrel (of 45 gallons) of crude oil, and the same sum on each and every barrel (not to exceed 46 to 48 gallons) of the products of petroleum passing through or into the aforesaid yards; the rate of five (5) cents to be absolute on all said refined products, but subject to rateable reductions on crude oil, in case the terminal charges on crude oil are reduced, taking present schedule of rates thereon (adopted November, 13521872), a copy whereof is hereto annexed, as the standard; the Erie Railway Company retaining the right to reduce said schedule of rates on crude, to meet competition; the second party further agrees to conduct said warehouse business in the name of the Erie Railway Company, at its own cost and expense, to assume such risks on the oil, while in its possession, as the Erie Railway Company, or the Atlantic and Great Western Railroad Company would be responsible for to forwarders, consignees, or owners after its arrival and delivery in cars at yards; to make the charges uniform to all parties who use the yards, or for whom services are performed therein, and always as low as any other oil yard affording proper facilities for the transfer, storage preparation and shipment of the oil at the terminus of any railway, or other line competing with the Erie Railway, at or adjacent to the port of New York, and generally so to manage the premises as to give all patrons of the road fair and equal facilities for their oil business at uniform cost, to retain and pay the present superintendent and other officers and employees of the yard, so long as their duties are satisfactorily performed, and from time to time to appoint such other officers as shall not be objected to by the Erie Railway Company, to maintain the buildings, erections, and mechanical appliances of the premises in as good order as when possession is given, natural wear and unavoidable (by due diligence) damages from the elements excepted, to make no rules or regulations discriminating against any other shipper or shippers, or receivers. It is understood and agreed that the consent of the Erie Railway Company is to be obtained before any refined or crude oil shall be received at the Weehawken Oil Yards, which arrives from the west via any transportation line competing with the Erie Railway.

Eighth.—It is further agreed that the second party shall assume the charge and collection of freights and charges—accounts to be rendered and adjusted, and paid weekly—Erie way-bills to govern quantities received, except when the same are shown to be incorrect, or loss in transit (except from natural leakage) has occurred through fault or neglect of said railway companies, or either of them. Any new fixtures which the party of the second part may add to the property shall be and remain its property, and they may remove the same at their cost, at the expiration of this agreement, unless mutually satisfactory terms of purchase and sale can be agreed to.

Ninth.—This agreement to take effect and be binding upon the parties hereto, on the first day of May, A.D. 1874, and to continue until the first day of May, A.D. 1877, provided, however, that either party may terminate the same upon giving notice in writing to the other party six (6) months in advance of its intention so to terminate; and provided further, that within thirty days after the election of a new board of directors, of either the Erie or Atlantic and Great Western Railway Companies, the second party shall have the right to terminate this agreement, by giving notice in writing to the other party one month in advance of its intention so to terminate, and upon the expiration of either of said periods, this agreement shall be then at an end.

1353Tenth.—In consideration of the premises, the party of the second part agrees to pay to the Erie Railway Company, weekly, the sums which such weekly settlement shall show to be due to the said first parties, as freight on its property delivered at the Weehawken Oil Yards.

Eleventh.—It is hereby expressly understood and agreed that neither of the said parties of the first part shall be liable for the acts or defaults of the other; and that each shall only be liable for its own acts and defaults, on and over its own line and premises.

In Witness Whereof, the parties hereto have affixed their hands, this twentieth day of April, 1874.

(Signed) The Erie Railway Company,

By G. R. Blanchard, Second Vice-President.

(Signed) The Atlantic and Great Western Railroad Company,

By J. H. Devereux, President.

(Signed) Standard Oil Company,

By William Rockefeller, Vice-President.

1354

NUMBER 22 (See page 1139) AGREEMENT OF 1874 BETWEEN THE RAILROADS AND PIPE-LINES

[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume III, pages 3431–3437.]

Memorandum of agreement entered into this fourth day of September A.D. 1874, by and between the following parties, viz.:

First.—J. J. Vandergrift, G. V. Forman, and John Pitcairn, Jr., partners themselves, and agreeing that they have authority to represent all other partners in the association trading under the name of the United Pipe Lines, and holding themselves individually responsible to the other parties hereto that they have such authority.

Second.—The Union Pipe Company by Charles P. Hatch, manager.

Third.—The Antwerp Pipe Company and the Oil City Pipe Company, each being corporations under the laws of the State of Pennsylvania.

Fourth.—The American Transfer Company, a corporation under the laws of the State of Pennsylvania.

Fifth.—The Grant Pipe Company, a corporation under the laws of the State of Pennsylvania.

Sixth.—The Karns Pipe Line Company, a corporation under the laws of the State of Pennsylvania.

Seventh.—The Relief Pipe Line Company, a corporation under the laws of the State of Pennsylvania.

Eighth.—The Pennsylvania Transportation Company, a corporation under the laws of the State of Pennsylvania.

Ninth.—J. J. Vandergrift, G. V. Forman, and John Pitcairn, Jr., trading under the name of Vandergrift, Forman and Company, and owning and representing the Milton and Sandy Pipe Lines.

Whereas, The pipe lines owned and controlled by the parties hereto have a joint capacity for transportation more than twice as great as the total volume of petroleum produced in the district traversed by said lines; and whereas, the separate and discordant relations now prevailing among the parties hereto, lead to a needless multiplication of extensions, branches, and other matters involving heavy cost, which 1355ultimately becomes in some shape a charge upon the business transported, and also leads to the offering of open or secret inducements of an illegitimate nature, such as rebates, special rates, selling oil for less than its cost and full pipage rates, and in other ways hereby to attract an under share of traffic to the respective lines represented herein; and

Whereas, it is believed to be desirable both for the interests of the parties hereto and those of the public whom they serve, that all needless expenditure and all illegitimate inducements should cease; now,

Therefore, for those purposes and for other valuable considerations mutually moving the parties hereto, they do each respectively agree with each other, as follows:

First.—The parties hereto do not by these presents create in any respect a partnership with each other, but each party is to be wholly and solely responsible for all of its own acts in the conduct of its business for its certificates, receipts, and collection of its charges, its expenses, shortages, maintenance, and management of its property, and of its engagements and obligations of every sort.

Second.—The pipe-lines which are covered by this agreement are those which are or may be owned by any of the parties hereto, and which are situated south of Oil City, and which terminate at any of the following points, viz. points on the Franklin branch of the Atlantic and Great Western Railway, points on the Jamestown and Franklin branch of the Lake Shore and Michigan Southern Railway, points on the Alleghany Valley, between or at Oil City and Pittsburg, points on the Schenango and Alleghany Railroad and points on the Butler branch railroad, excepting two small pipe lines, one owned by F. Prentice and Company, running from Mount Hope to Foster, and one owned by Vandergrift, Forman and Company, called the Franklin Pipe Line, running from the heavy oil district to Franklin, Pennsylvania.

Third.—Each party hereto shall retain eight (8) cents per each forty-two (42) gallons remaining after deduction of allowances for shortage and sediment, on all of the oil it actually pumps; also, all allowances made it on such oil to meet shrinkage and sediment, and also all of its other receipts of every description, except as stated in the next article.

Fourth.—Each party shall account monthly to the executive committee hereinafter provided for, at the rate of twenty-two (22) cents for each forty-two (42) gallons of petroleum (after deducting shrinkage allowances) received by it for transportation during such months; which twenty-two (22) cents shall be considered by said committee as a common fund to be cleared and divided on the basis hereinafter designated.

Fifth.—The executive committee shall consist of one representative from each of the parties hereto.

Each representative to be appointed by the party he represents to be changeable from time to time by such party, at its pleasure; the said committee shall faithfully execute such provisions of this agreement as are by its terms confided to them.

1356Their action must, in all cases, be unanimous before it shall be binding upon any party hereto.

They shall keep a record of their proceedings, to which each of the members shall have free access, and whenever desired by any, a full transcript, or any part thereof.

The members of said committee shall, until changed, as hereinbefore provided, be as follows: Charles P. Hatch, representing the Union Pipe Company; A. M. Hughes, representing the Antwerp Pipe Company and the Oil City Pipe Company; D. O’Day, representing the American Transfer Company; R. B. Allen, representing the Grant Pipe Company; S. D. Karns, representing the Karns Pipe Line Company; F. Prentice, representing the Relief Pipe Line Company; H. Harley, representing the Pennsylvania Transportation Company; E. Hopkins, representing the United Pipe Lines, Milton Pipe Line, and the Sandy Pipe Lines.

Sixth.—Each party hereto shall furnish to the executive committee, on or before the fifth of each month, a report of its business for the month next preceding, duly verified by the affidavit of its proper officer or agent; and the amounts found due by the executive committee from any of the parties hereto shall be paid by them through the executive committee to the parties to whom they may be due, on or before the tenth of the month in which the report is made.

Seventh.—The committee shall prescribe the form of said return, and shall act as a clearing house thereof. They shall have power to verify the same by inspection of books and records, and shall make to each party hereto, on or before the tenth day of each month, a full exhibit of the results of the returns and clearings for the next preceding month.

Eighth.—The committee shall prescribe and enforce uniform rates and conditions for the reception, storage, and transportation of oil, including substantially uniform wordings of certificates and gaugers’ tickets; uniform conditions for the accepting of tanks owned by other parties; uniform conditions as to responsibility for losses through unavoidable causes, such as lightning; and uniform rates of allowances for shrinkages. Until changed by said committee, the rates for transportation shall be as follows:

For each forty-two gallons remaining after deducting allowance for shrinkage and sediment, viz., from all points which, by any pipe-lines represented herein, which terminate at Oil City or on the various railways as hereinbefore described, thirty (30) cents; excepting, First, on oil reached by pipes terminating on the Alleghany Valley Railroad south of Oil City, and north of Parker City. Second, on oil from the west side of the Alleghany River, not pumped from north of Bear Creek. Third, on oil pumped from Sheakley to Monterey by the United Lines, and from south of Bear Creek, and north of Sheakley district by the Union and Karns lines, all of which shall be twenty-five (25) cents. But the rates on oil covered by the third exception shall be made thirty (30) cents on or before January 1, 1875. The only remaining 1357exceptions to these rates on such private contracts at different figures, as each party may now have, a list of which together with any special conditions appertaining thereto shall be filed with the executive committee on or before September 1, 1874; no new contracts for transportation or storage or tankage shall be made by any party whatever, except at the regular rates as herein fixed, or as shall be, from time to time, fixed by the executive committee. All rates less than thirty (30) cents may be at any time advanced to thirty (30) cents by the party subject thereto.

Ninth.—The committee shall adopt all proper and practicable measures to secure the transportation by each line of a share of the total oil pumped each month by all the lines, equal in percentage to the share of the common fund allotted to each herein, having reference to the facilities of each party for doing the work; they shall assign to each party, and as early in each case as possible, such share of the duty of making extensions and connections with wells as most legitimately appertains to it, or as may be required by the well owner, or by the contracts of each party; but constant reference shall be had to maintaining for each party its share as heretofore described of the total oil to be transported, and to distributing the total cost involved as nearly as practicable in the proportion of the common fund assigned to each, and no other party shall make such improvements except by consent of said committee. The committee shall arrange with a chief gauger and the needful assistants (all of whom shall be under oath to act honestly and impartially), to gauge from time to time all tanks with which the lines of the parties hereto are or may be connected, or car tanks which they may load; and may collect the expense thereof from the parties hereto in proportion to their respective shares in the common fund; and may also assess upon the trade such reasonable charge for car gauging, or may wholly waive such charge as they may deem judicious. The committee shall have general power to inaugurate and carry into effect any other features than those especially named herein which will not be inconsistent with and which will in their judgment more effectually accomplish the purposes and spirit of the agreement.

Tenth.—The division of the common fund shall be as follows:

The United Pipe Lines, twenty-nine and one-half (29½) per cent.

The Union Pipe Company, twenty-five and one-half (25½) per cent.

The Antwerp Pipe Company and Oil City Pipe Company, seven (7) per cent.

The American Transfer Company, seven (7) per cent.

The Grant Pipe Company, seven (7) per cent.

The Karns Pipe Line Company, seven (7) per cent.

The Relief Pipe Line Company, seven (7) per cent.

The Pennsylvania Transportation Company, seven (7) per cent.

The Sandy Pipe Line and Milton Pipe Line, three (3) per cent.

Eleventh.—All parties hereto agree to faithfully carry out the spirit and purposes of this agreement, and to do nothing between the date of its execution and the date 1358of its taking effect, inconsistent therewith, and it is mutually agreed that from the date of its taking effect until it is terminated, any violation thereof by any party will work an injury to the whole interest of not less than ten thousand ($10,000) dollars; and if any such violation shall not be fully rectified by the offending party within thirty (30) days after written notice shall have been given to the said offending party by the executive committee, through its secretary, upon a vote of all of said committee except the representative of the offending party, it is agreed that ten thousand ($10,000) dollars shall be the stipulated and liquidated damages for each and every such violation so unrectified, which damages shall be collected by the executive committee, and shall be divided among the other parties hereto in the same relative proportion as the common fund is divided. This contract shall take effect on the first day of October, A.D. 1874, and shall continue for two (2) years, and shall continue after the expiration of said two (2) years until after three (3) months’ written notice shall have been given by either of the parties hereto, to the executive committee, through its secretary, of a wish to have it terminate, at the expiration of which notice it shall cease and determine.

In Witness Whereof, the parties hereto, by their representatives, have affixed their signatures this fourth day of September, A.D. 1874.

The United Pipe Lines: J. J. Vandergrift, George V. Forman, John Pitcairn, Jr., by George V. Forman, Attorney for themselves and others.

The Sandy and Milton Lines: J. J. Vandergrift, George V. Forman, John Pitcairn, Jr., by George V. Forman, Attorney.

For the Relief Pipe Line Company: F. Prentice, President.

For the American Transfer Company: Daniel O’Day, Superintendent.

For the Union Pipe Line Company: Charles P. Hatch, Manager.

For the Grant Pipe Company: R. B. Allen, President.

For the Karns Pipe Line Company: S. D. Karns, President.

For the Antwerp Pipe Company and the Oil City Pipe Company: E. C. Bradley, President.

For the Pennsylvania Transportation Company: Henry Harley, President.

1359

NUMBER 23 (See page 1141) THE RUTTER CIRCULAR

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3112, page 363.]

The New York Central and Hudson River Railway Company, General Freight Agent’s Office, Grand Central Depot.

New York, September 9, 1874.

Dear Sir: Commencing October 1, 1874, the following rates on refined and crude oil shall govern all lines:

The rates on refined oil from all refineries at Cleveland, Titusville and elsewhere in and adjacent to the Oil Region shall be as follows:

Per Barrel.

To Boston $2.10

Philadelphia 1.85

Baltimore 1.85

New York 2.00

Net rate on Albany fifteen per cent. less, from which shall be refunded the amount paid for the transportation of crude oil by rail from the mouth of the pipes to the said refineries, upon the basis of fourteen barrels of crude oil to the refineries for every ten barrels of refined oil forwarded by rail from them (the refineries) to the Eastern points named.

Settlements of this drawback to be made on the refined oil forwarded during each month.

No rebate on these rates will be paid on oil reaching refineries direct by pipes.

On crude oil the rates from all initial points of rail shipments in the Oil Region shall be as follows:

Per Barrel.

To Boston $1.75

Philadelphia 1.50

Baltimore 1.50

New York 1.50

Net rate on Albany fifteen per cent. less, from which shall be refunded twenty-two cents per barrel only on oil coming from pipes which maintain the agreed rates of pipage.

1360A barrel shall in all cases be computed at forty-five gallons.

You will observe that under this system the rate is even and fair to all parties, preventing one locality taking advantage of its neighbour by reason of some alleged or real facility it may possess.

Oil refiners and shippers have asked the roads from time to time to make all rates even, and they would be satisfied. This scheme does it, and we trust will work satisfactorily to all.

Respectfully yours,

J. H. Rutter,

General Freight Agent.

1361

NUMBER 24 (See page 1148) STANDARD OIL COMPANY’S APPLICATION FOR INCREASE OF CAPITAL STOCK TO $3,500,000 IN 1875

To the Secretary of the State of Ohio:

The undersigned, being a majority of the board of directors of THE STANDARD OIL COMPANY OF CLEVELAND, OHIO, do hereby certify that on the tenth day of March, A.D. 1875, at a special meeting of the stockholders of said company held at its office in Cleveland, Cuyahoga County, Ohio, by a vote then and there taken, all the stockholders of said company being present and voting therefor, it was resolved and agreed by each and all of them, that the capital stock of said company be increased the sum of One Million Dollars, thereby making the capital stock of said company Three Million Five Hundred Thousand Dollars, which action of the stockholders was as follows, to wit:

Resolved, and it is agreed by each and all of us that the capital stock of this company, viz.: THE STANDARD OIL COMPANY OF CLEVELAND, OHIO, be increased to the sum of Three Million Five Hundred Thousand Dollars, and it is also agreed and the proper officers of this company are hereby instructed to take the requisite steps to so increase said capital stock.

John D. Rockefeller; S. V. Harkness; H. M. Flagler, Trustee; S. Andrews; J. D. Rockefeller, Agent; J. D. Rockefeller, Trustee; O. H. Payne; B. Brewster, by J. D. Rockefeller, his Attorney; T. P. Handy, by J. D. Rockefeller, his Attorney; O. B. Jennings, by J. D. Rockefeller, his Attorney; Wm. Rockefeller, by J. D. Rockefeller, his Attorney; Jas. Stanley, by O. H. Payne, his Attorney; A. M. McGregor, by J. D. Rockefeller, his Attorney; W. C. Andrews; A. J. Pouch, by J. D. Rockefeller, his Attorney; F. A. Arter, by J. D. Rockefeller, his Attorney; P. H. Watson, by H. M. Flagler, his Attorney; J. A. Bostwick, by J. D. Rockefeller, his Attorney; J. Huntington, by O. H. Payne, his Attorney; D. M. Harkness, by H. M. Flagler, his Attorney; Josiah Macy, by J. D. Rockefeller, his Attorney; W. H. Macy, by J. D. Rockefeller, his Attorney; W. G. Wardwell, by H. M. Flagler, his Attorney; D. P. Eells, by J. D. Rockefeller, his Attorney; S. F. Barger, by J. D. Rockefeller, his Attorney; W. H. Vanderbilt, by J. D. Rockefeller, his Attorney; H. W. Payne, by O. H. Payne, his Attorney; 1362J. J. Vandergrift, by O. H. Payne, his Attorney; John Pitcairn, Jr., by O. H. Payne, his Attorney; L. G. Harkness, by H. M. Flagler, his Attorney.

And afterwards said meeting was duly adjourned.

H. M. Flagler,

Secretary.

Cleveland, March 10, 1875.

And we further certify that the whole amount of such increase of capital stock has been paid to said company in money, that no note, bill, bond, or other security has been taken for the same or any part thereof, and that the credit of the company has not been used directly or indirectly to raise funds to pay the same or any part thereof.

In Witness Whereof, we hereunto set our names at Cleveland, this tenth day of March, A.D. 1875.

John D. Rockefeller,

Henry M. Flagler,

Samuel Andrews,

Oliver H. Payne,

Stephen V. Harkness.

1363

NUMBER 25 (See page 1148) HENRY M. FLAGLER’S TESTIMONY ON THE UNION OF THE STANDARD OIL COMPANY WITH OUTSIDE REFINERS IN 1874

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3112, page 291 and page 770.]

A. ... The original Standard Oil Company was organised in the early part of 1870. The increased capacity and the acquisition of the Cleveland refineries was, as I remember it, in 1872. It remained at that until 1875 or 1876,^[85] according to the best of my recollection. Then was consummated a negotiation which had been pending for some two years, perhaps, with certain parties in Pittsburg, Philadelphia and New York, by which a value was agreed upon, and their refinery property was purchased and the capital of the company was increased a still further sum of a million, and they were paid for these properties, and money which they contributed, in the stock of the Standard Oil Company of Ohio.

By Mr. Gowen.

Q. When did the Standard Oil Company of Ohio first enter into an alliance with other refineries?

A. If you mean, (by) an alliance, Mr. Gowen, I should say never.

Q. I am only endeavouring to aid your friends in getting at what they want. Here, I notice, they propose to prove by you—I will give it in this way—that on account of the disastrous condition of the refining business, the Standard, on October 15, 1874, entered into an alliance with a number of Pittsburg refineries?

A. That is more correctly stated by saying that the Standard Oil Company purchased the refineries owned by the parties in Pittsburg.

Q. Who were they?

A. Lockhart, Frew and Company, I think was the company. Wait a moment. It was the Standard Oil Company of Pittsburg, it being a corporation, and Warden, Frew and Company, of Philadelphia, and, I should say, Charles Pratt and Company, of New York.

Q. Any others?

A. That is all.

1364

Q. All those gentlemen, Warden, Frew and Company, and the Standard Oil Company of Pittsburg, Charles Pratt and Company of New York, are now associated with you as parties interested in the present Oil Trust?

A. They are stockholders. The property formerly owned by them was at that time purchased by the Standard Oil Company.

Q. When you speak of purchasing their interest, you do not exclude them from their interest? They united with you and remained as your associates in the business?

A. If it was not from the fact that ours was a corporation, we might call it a co-partnership.

Q. They becoming interested in yours, and you in theirs?

A. Yes, sir.

Q. And you simply used your name to represent the joint ownership, as it was a corporation?

A. Yes, sir.

1365

NUMBER 26 (See page 1153) GEORGE H. BLANCHARD’S TESTIMONY ON THE BREAKING UP OF THE PIPE POOL OF 1874

[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume III, pages 3445–3447 and 3449–3451.]

The contract with the Standard Company of April 17, 1874, as I have said, contained nothing inconsistent with our obligations to the Pennsylvania and New York Central Railroads, and the New York Central, under their later contract, and our company, convinced the Pennsylvania Railroad of that fact during the discussions both as to rates and each and every other detail agreed to, but President Jewett thought it better to rely upon the arrangements between the railway companies alone, and decided to avail himself of the ninth clause of the agreement with the Standard Oil Company of April 17, 1874, which provided that either party might terminate it by six months’ written notice, but that notice might be given by the Standard Company within thirty days after the election of a new board of directors of the Erie or Atlantic and Great Western Company. This trunk line oil pool of October 1 being in operation, President Jewett gave notice of the termination of the Standard agreement of April 1, 1874, on October 31, 1874, which would have terminated in six months. It was the thirty-first of the following May, but an election having in the meantime taken place upon the Atlantic and Great Western Railroad, the Standard Oil Company gave the thirty days’ notice it had the right to do on January 13, 1875, which, therefore, terminated the agreement upon February 13, 1875, about three months and a half before President Jewett’s notice could, under the contract, take effect.

The trunk line agreement of October 1, 1874, continued in force, and pool settlements were made thereunder for but five months, namely, until the close of February, 1875, during which time the Erie Company paid $31,019.05 and received $6,570.55.

Notice of the abandonment of that contract was given by the Erie Company, April 1, 1875, although no statements or moneys were exchanged for March, and dissatisfaction with its operations had been expressed by us prior to that time, the reasons therefor being as follows:

The higher rates of the pipe pool had stimulated new pipe-lines, and the Hunter and Cummings Line and other small pipes had been completed, or did not maintain 1366the agreed rates of pipage. The Columbia Conduit Company had also been completed to Pittsburg, in the interest of the Baltimore and Ohio Company, and either acting upon the then policy or advice of that company, or with a desire to be bought out, declined to charge equal rates of pipage or agree to any fixed rates, a fact which threatened the diversion of oil largely to Baltimore, the Baltimore and Ohio Railroad not being in the trunk line oil pool of October 1, 1874, and publicly and frequently announcing its endeavour to divert the oil trade to Baltimore.

We also believed that large drawbacks or commissions were paid by the Pennsylvania Railroad to the Empire Line in addition to those provided in our joint pool contract; and our belief has since been confirmed by later knowledge of the fact that the Pennsylvania Railroad paid to the Empire Line about 30 per cent., including the use of cars; and the mileage, being about ten (10) per cent. at current rates of car service, left the commission equal to about 20 per cent., an advantage not possessed by any other shipper or company over any of the northern lines.

It was clear that, as the Empire Line added to its already large resources, not only this commission upon the oil business excepting Pittsburg, but the added profits upon its pipe-lines, that its combined operation and profit united to control an increasing share of the entire trade and put it in strong financial shape for a control which it subsequently entered upon to absorb also a large refining interest.

As the northern trunk lines made no similar arrangements, allowances or commissions to any forwarder or receiver, and derived no profit from any pipe-lines, it was clearly unfair to concede them to the Empire Line, and the agreement which gave it these growing advantages was very properly annulled.

We also desired the actual transportation of the oil rather than to receive money from others, as we had done during the pool, as their increased business might finally result in a demand for larger percentages if the pool continued.

I directed careful examination of our records up to date of the abandonment of this oil pool contract; and upon the authority of General Freight Agent Vilas, state that the net rates charged to the Standard Company during this period to through points were uniform with the rates charged by our lines to other shippers, taking into account, as before stated, the transportation of the crude equivalent to their refineries.... The preliminary discussions and general conclusions relating to those (new) contracts were all with President Jewett, although many of their details were subsequently discussed and suggested by me; and the reasons influencing him to make them have been stated by him in his testimony; I was directed to carry them out, and have from time to time attended meetings at which the rates thereunder were advanced or reduced. I believe those contracts were not concluded until the latter part of April or early in May, and were then dated back to the disruption of the trunk line oil pool, in order to secure our guaranteed proportion of oil shipments from that earlier date and without interruption. The transportation contract continued to guarantee us 50 per cent. 1367of the business of the Standard Oil Company, which 50 per cent. should not be less than the percentage we had received in the year 1874 of the total arrivals at the seaboard; and at this time, for that reason, the Standard Oil Company had no transportation arrangements with the Pennsylvania Railroad, and this fact and guaranty induced us to disregard the question as to whether or not the Standard Company had similar or other contracts with the New York Central or its connections, our only interest in the question being as to whether rates were equal and if we received our guaranteed share of the oil.

There was no understanding or agreement by the Erie Company to my knowledge that the New York Central Company or Pennsylvania Railroad, or either of them, had or had not similar or other contracts with the Standard Oil Company.

They were shipping by the New York Central route, and we assumed from their large business, terminal arrangements, etc., that some defined understanding probably regulated such large interests, but we were not consulted as to the terms or conditions of its contracts with other companies if it had any, because we relied upon their responsible guaranty to give us our proportion of the total arrivals of oil at the seaboard and at rates equal to those of other companies, as ample protection to our interests.

At the time this transportation contract was made by the Erie Company, other considerations than relief from risks and the equalisation of the arrivals at the seaboard bore upon the contracts for an allowance of 10 per cent. It continued to be our belief, since fully confirmed by Mr. Cassatt’s testimony, that other shippers via the Empire Line over the Pennsylvania Railroad had at least similar rates and arrangements, to which, on the part of the Erie Company, no objection was offered; it also continued to be the fact that the Empire Line continued to receive in addition to its probable pipe profits, the same or about the same, large commission as before, from the Pennsylvania Railroad, and it was believed by the officers of the Erie in making this contract with the Standard Company that the allowance to it of 10 per cent. was not much more than one-half the allowance then being made by the Pennsylvania Railroad to the Empire Line.

In addition thereto, we secured the actual transportation of our full share of the oil, at the agreed rates, without delays or disputes in adjustments, or the preparation or exchange of the pool statements.

It maintained the business to New York and provided against any increase to our rival railways or ports, no matter how the territory of oil production might shift or vary, and while under the trunk line pool we could not influence the various shippers to send them oil over our railway or to this city, unless their varying and dissimilar interests all agreed (as they did not), and no matter how much one company might be in deficit, the Standard Company is compelled to send it over our line. The loading and unloading, and taking the risks, were also important items to us as has before been detailed, and relieved us from a class of claims we had paid prior to that time.

1368It was also important to us that by this contract we were explicitly released from large losses when the great fire consumed the Weehawken docks in July, 1874.

The ninth section of the contract has also been of much value to us. In the delivery of oil to vessels or exporters, the Standard Company assumes all the risks and expenses of delays to ships, and their demurrage, even if it be the fault of the railway by nondelivery, and I have known of cases where this amounted to a large sum.

In 1877 when the general and extended railway strikes occurred, this clause also released us beyond doubt from large claims that might otherwise have been urged.

The freight rates provided by the railway pool of October 1, 1874, were not changed until October 1, 1875; and my recollection is that it was not until the discussion upon that change that anything was definitely known by any of the trunk lines of the arrangements of the others with the Standard Oil Company. At that meeting the 10 per cent. reduction to be allowed the Standard was distinctly understood as due upon its shipments via all the trunk lines in consideration of the facts stated, and it then first came to my knowledge that Warden, Frew and Company, of Philadelphia, represented the Standard Oil Company, as Charles Pratt and Company represented their crude interests at New York via our line.

1369

NUMBER 27 (See page 1196) MR. FLAGLER’S EXPLANATION OF THE COMMISSION OF 10 PER CENT. ALLOWED THE STANDARD OIL COMPANY IN 1877

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3112, pages 774–775.]

I would like the privilege of explaining about that 10 per cent. commission. The railroad companies, as perhaps Mr. Gowen will remember, he at that time having been head of the Reading Railroad, tried and did agree among themselves for divisions of the oil business. I know that they agreed among themselves that a certain percentage of it the New York Central should take; a certain other percentage the Erie should take; a certain other percentage the Pennsylvania Railroad should take; and a certain other percentage the Baltimore and Ohio should take. We were only anxious that uniform rates should be maintained by these roads. All these roads, and each one of the roads, found it impossible to secure the divisions of the business as they had agreed upon. Notwithstanding, we co-operated with them, for we were heartily in favour of its being done and were only seeking for a uniformity of rates by the different roads. But as any gentleman connected with railroad interests well knows there always is that desire to get more than belongs to the line. That desire kept cropping out in the practical shape of cutting under rates for the sake of getting a little more, each road feeling that it was not getting enough to insure it its percentage. The Standard Oil Company at that time owned a very large percentage of the entire oil traffic. It was possible for it to do a service for the roads that the roads were unable to do for themselves. That service, however, involved a good many hardships.

The practical working of it was this, that at the end of each month after the arrangement had been made, each of these railroad companies, they first having agreed how they would divide among themselves and not seek to go beyond that certain percentage—at the end of each month each railroad company sent to us a statement of the number of barrels of oil they had transported during the month. It was incumbent upon us during the succeeding month to ship over the road or roads which had received less than its percentage an amount during that following month sufficient to bring up the deficit of the previous month. Undertaking to do that meant, as I well knew at the time, a responsibility imposed upon us, and an obligation to run refineries at certain 1370localities which perhaps at the time it was unprofitable for us to run. It meant a steady continuance of a large volume of business at periods of time when it might not be profitable to run them; and if the gentlemen of the committee will bear with me just a moment you will see the difficulties. It was not only the three trunk lines—the New York Central, terminating at Buffalo, the Pennsylvania, terminating at Pittsburg, and the Baltimore and Ohio, I don’t know where—but there came in their Western connections. I remember well the New York Central had two; the Lake Shore was its connection west of Buffalo to Cleveland, and the Dunkirk and Allegheny Valley was its western division to the Oil Region. It was not an easy matter, for we had not only to regard the percentage delivered at the seaboard, but we had to try to keep the Lake Shore satisfied with its proportion, the New York Central’s proportion, and the Dunkirk and Allegheny Valley’s proportion. As I say, it was no light task, and realising that, I said to these gentlemen, “We will undertake to do this business for you, to secure to each one of you the percentage which we may have agreed upon, upon condition that we are paid for that service a sum which shall be equal to 10 per cent. of the rate you receive for doing the business.” There were, however, to be added to what I have already stated as an inducement for the railroad companies to pay that commission, other agreements, one of which was that we assumed the risk of loss by fire in transportation. That may seem to be to the gentlemen of the committee a cheap thing to do, but Mr. Gowen understands, as well as I do, that a railroad company cannot divest itself of the obligations by the common law imposed upon it as a common carrier without a special agreement to that effect. We took that risk, and did not collect from the railroad companies, any of them, any losses sustained by fire in transit. We furnished terminal facilities at the seaboard free of charge to the railroad companies, and for all this service the Pennsylvania Railroad agreed to pay us a commission of 10 per cent. We carried out our part of the contract faithfully, and secured to the roads such a division of the traffic as kept them in a state of accord and peace, so far as quantity was concerned, and yet the Pennsylvania Railroad paid to other shippers than ourselves a rebate or a drawback, or whatever you choose to call it, on their shipments, which were exactly equal to the 10 per cent. they agreed to pay us. So that in that respect we were not favoured at all.

1371

NUMBER 28 (See page 1196) CORRESPONDENCE BETWEEN WILLIAM ROCKEFELLER AND MR. SCOTT IN OCTOBER, 1877

[Commonwealth of Pennsylvania vs. Pennsylvania Railroad Company, United Pipe Lines, etc., Testimony. Appendix, pages 734–736.]

Philadelphia, October 17, 1877.

Thomas A. Scott,

President Pennsylvania Railroad Company.

Dear Sir: In consideration of the covenants by your company to be performed as hereinafter mentioned, we will agree as follows:

First.—It having been agreed by the trunk lines that of all the oil shipped by the trunk lines to the cities of New York, Philadelphia, and Baltimore, 63 per cent. shall be considered as the proportion which would naturally go to the City of New York, and it having been further agreed that of this percentage one-third shall be transported over each of the trunk lines having termini in New York, viz.: The New York Central, Erie, and Pennsylvania, we agree, unless the aforesaid division shall be changed by mutual consent of said trunk lines, to ship such quantities of oil over your lines, from time to time, as will, when added to the quantities shipped by parties other than ourselves, give your line one-third of the shipments to New York by the said trunk lines, or 21 per cent. of the whole amount shipped to the three cities above named by the said trunk lines; it being understood that in stating the number of barrels for the purpose of making this division or for carrying out any of the other stipulations herein contained, the barrel of forty-five gallons of crude shall be the unit, and that each barrel of the usual size of refined oil shall be counted as equal to one and three-tenths barrels of crude.

Second.—It having been agreed, as we are informed, between your company and the Baltimore and Ohio Railroad Company, that of the remaining 37 per cent. of the total shipments aforesaid you should be entitled to transport by lines owned and controlled by your company to Philadelphia and Baltimore, 26 per cent., and the Baltimore and Ohio Railroad Company to Baltimore by its lines 11 per cent., we agree, until these proportions are changed by mutual consent, to ship such quantities to Philadelphia and Baltimore by lines owned and controlled by your company as will, 1372when added to shipments of parties other than ourselves, give for transportation by your lines to Philadelphia and Baltimore, 26 per cent. of the total shipments by the four trunk lines to the three seaboard cities above named.

Third.—We further agree that the quantity of oil which we will ourselves ship over your line shall not in any calendar year be less than two million barrels, based upon an average production of not less than thirty thousand barrels per day. If we should fail to give you traffic herein named, we will pay to you a sum equal to the profits which you would have realised upon the quantity in deficit—provided, however, that you will at all times furnish us with transportation, as we may reasonably require it.

Fourth.—We will, of the proportion of oil going to Philadelphia, refine as much as is practicable in Philadelphia, as we understand that you desire to see the refining capacity of Philadelphia fully employed, and, if needful, increased. And in shipping by your lines, whether to Philadelphia, Baltimore, or New York, we will endeavour to deliver the oil to you at points from which you will have short hauls; and to the extent that we can, we will make the proportion of crude shipped as large as possible, as we understand its transportation to be more profitable to you than that of refined oil.

Fifth.—We ask, in consideration of the above named guarantee of business, upon which it is understood we shall pay such rates as may be fixed from time to time by the four trunk lines (which rates it is understood shall be so fixed by the trunk lines as to place us on a parity as to cost of transportation with shippers by competing lines), that you shall furnish us promptly all the transportation we may reasonably require; and that you shall allow to, and pay us, weekly, such commission on our own shipments and the shipments which we may control, as may be agreed to by your company and the other trunk lines from time to time; this commission, it is understood, has for the present been fixed at 10 per cent. upon the rate, and shall not be fixed at a less percentage, except by mutual agreement of your company and ours—provided, that no other shipper of oil by your line shall pay less than the rate fixed for us before such commission is deducted; and no commission shall be allowed any other shipper unless he shall guarantee and furnish you such quantity of oil for shipment as will, after deduction of commission allowed him, realise to you the same amount of profit you realise from our trade; that is, you will not allow any other shipper of oil any part of such commission, unless after such allowance you realise from the total of his business the same total amount of profit you realise from the total of our business, except so far as your company may be compelled to fill certain contracts for transportation made by the Empire Line with refiners and producers, which contracts terminate on or before May 1, 1878, a statement of which shall accompany your reply to this letter—such contracts to be fulfilled. We agree that all the stipulations herein contained shall be carried out by us for the period of five years from the date hereof, unless sooner changed or terminated by mutual consent, 1373provided that you advise us in writing within ten days that your company accept, and will carry out, its part of the arrangement for the like term. In entering into this agreement we desire to put ourselves on record as expressing our wish and intention of making our business relations with your company such that not only your main lines but the connecting lines controlled by you, especially the Allegheny Valley Railroad, shall secure the best possible results from the oil traffic consistent with our existing obligations to other transportation interests. We feel that the location of our refineries—all of which can be reached by your lines—should naturally create a close alliance between your company and ours, and that the best results from this important traffic can only be secured to yourselves and ourselves, and, we might add, to the entire petroleum interests of the country, by the establishment of friendly and mutually satisfactory arrangements between us.

Yours truly,

Standard Oil Company,

By William Rockefeller,

Vice-President.

Office of the Pennsylvania Railroad Company,

Philadelphia, October 17, 1877.

William Rockefeller,

Vice-President Standard Oil Company.

My Dear Sir: I am in receipt of your letter of this date, reciting the understanding and agreement to exist between the Pennsylvania Railroad Company and your company for a period of five years.

I beg leave to say that the same covers the whole basis of the arrangements, and is satisfactory to this company—the provisions of which will be duly carried out by it.

Very respectfully yours,

Thomas A. Scott,

President.

1374

NUMBER 29 (See page 1197) CORRESPONDENCE BETWEEN MR. O’DAY AND MR. CASSATT

[Commonwealth of Pennsylvania vs. Pennsylvania Railroad Company, United Pipe Lines, etc., Testimony. Appendix, pages 732–733.]

Office of the American Transfer Company,

Oil City, Pennsylvania, February 15, 1878.

A. J. Cassatt,

Third Vice-President, Philadelphia.

Dear Sir: Referring to the conversation I had with you in January, I wish to submit the following facts: That our company has at large expense (involving the payment of several hundred thousand dollars), purchased and created certain pipe-lines to Pittsburg, through which we are able not only to protect the Allegheny Valley road in a paying rate of freight for the oil it carries, but also to secure to that company (by agreement with it) its full proportion of the oil traffic going to Pittsburg.

You are acquainted with the efforts we have put forth in other directions during the last months in which we have acted in thorough accord with the trunk line interests, and I believe I may say without egotism, we have, to the extent of our ability, effectually protected their interests in such action. I here repeat what I once stated to you and which I asked you to receive and treat as strictly confidential, that we have, been for many months receiving from the New York Central and Erie Railroads certain sums of money, in no instance less than twenty cents per barrel on every barrel of crude oil carried by each of those roads.

Co-operating, as we are doing, with the Standard Oil Company and the trunk lines in every effort to secure for the railroads paying rates of freight on the oil they carry, I am constrained to say to you that, in justice to the interest I represent, we should receive from your company at least twenty cents on each barrel of crude oil you transport.

The fruit of co-operation referred to has been fully evidenced in the fact that since last fall your company has received fifty to sixty cents per barrel more freight than was obtained by it prior to our co-operation.

In submitting this proposition I feel I should ask you to let this date from the first of November, 1877, but I am willing to accept as a compromise (which is to be regarded 1375as strictly a private one between your company and ours) the payment by you of twenty cents per barrel on all crude oil shipments commencing with February 1, 1878.

I make this proposition with the full expectation that it will be acceptable to your company, but with the understanding on my part that in so doing, I am not asking as much of the Pennsylvania road and its connections as I have been and am receiving from the other trunk lines.

You are doubtless aware that during the last two years a large amount of oil has been shipped to Richmond via the Chesapeake and Ohio road, and that since the purchase of the Pittsburg lines by us not one barrel has been permitted to go in that direction.

During the season of 1877, and so long as the Columbia Conduit Company afforded the Baltimore and Ohio road access to the Oil Regions, that company, I understood, refused to accept from the other trunk lines (for its proportion of the oil traffic) less than 20 per cent., but after the purchase by us of the Columbia Conduit you succeeded in arranging with the Baltimore and Ohio for about half as much as they previously claimed.

I may add that the Baltimore and Ohio road are wholly dependent upon us for any oil they may carry.

Yours truly,

(Signed) Daniel O’Day,

General Manager.

Philadelphia, May 15, 1878.

R. W. Downing, Comptroller.

Dear Sir: I enclose herewith copy of letter from Daniel O’Day, general manager of the American Transfer Company, which refers to a conversation I had with him in January last in reference to allowing the American Transfer Company a commission of twenty cents per barrel on all crude oil transported over this company’s lines to New York, Philadelphia and Baltimore.

I agreed to allow this commission from and after February 1, until further notice, after having seen receipted bills showing that the New York Central Railroad allowed them a commission of thirty-five cents per barrel and that the Erie Railway allowed them a commission of twenty cents per barrel on Bradford oil, and thirty cents per barrel on all other oil, and that they had been doing so continuously since the 17th of October last.

Of this, however, you saw the evidence yourself in the bills which I submitted to you last week. Please, therefore, prepare vouchers in favour of the American Transfer Company per Daniel O’Day, for this commission of twenty cents on shipments during February, March and April, and hereafter make settlements with that company monthly.

Yours truly,

(Signed) A. J. Cassatt,

Third Vice-President.

1376

NUMBER 30 (See page 1197) HENRY M. FLAGLER’S TESTIMONY ON THE REBATE PAID TO THE AMERICAN TRANSFER COMPANY

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3112, pages 777–778.]

Q. Mr. Cassatt testified and offered in evidence the correspondence which showed that his company agreed to the payment of that 22½ cents to the American Transfer Company on every barrel of crude oil passing over their line in consequence of the fact that the writer of the first letter on behalf of the American Transfer Company had asserted that the New York Central and the New York and Lake Erie roads paid the same amount. You know that to be a fact, do you not?

A. May I explain that now?

Q. You are entitled to make any explanation you wish.

A. The American Transfer Company was built originally for, really, the New York Central road. The New York Central had no means of getting south of Titusville with its cars. The American Transfer Company’s lines were built really in the interest of the New York Central road. In those days the pipe-lines purchased the oil and oftentimes sold it at just what they paid for it, and sometimes less. They got more when they could. The New York Central, as I said, paid the American Transfer Company a price, which I presume was the figures named in Mr. Cassatt’s testimony, for collecting oil in the lower country and delivering it to the Dunkirk and Allegheny Valley, which is the New York Central’s connection. As that pipe-line increased its business the Erie road did the same thing. Later the Pennsylvania Railroad wanted the service of that pipe-line in collecting oil. Mr. O’Day did what I suppose any manager would do. He said to Mr. Cassatt, if you do the same thing for me that the other roads are doing, I have no objection to making the same arrangement with you. The payment made by the Pennsylvania, the Erie, and the New York Central roads constituted the gross income of the American Transfer Company, out of which it paid its expenses of doing its business and its losses, if it made any, in the purchase and sale of oil. It acted as a factor for those northern roads, and, as I said, was originally built in order that oils might be reached by the New York Central.

Q. But in addition to the sum of 22½ cents, or whatever it may have been, which 1377these trunk lines paid to the American Transfer Company, that company as a transporter of oil through its own pipe got this pipage charge besides?

A. I never so understood it. As I remember the facts in the case, while there was a nominal pipage—there might have been; I do not say there was; I do not remember.

Q. You do not say there was?

A. I do not remember. But while there might have been a nominal pipage, that nominal pipage might have been absorbed in the crude oil. In other words, it threw away its nominal pipage and relied——

Q. I am speaking now solely of the relations of the American Transfer Company to the railroads. The former received 22½ cents on every barrel of oil passing over the Pennsylvania road and the other roads. But the American Transfer Company was a transporter of oil itself, and to the extent it transported oil through its pipes it made charge for that service also?

A. That is a point where I say I want to correct you. While it may have made a nominal charge, about which my memory fails me, I say it threw away that nominal charge by paying to the owner or the producer of the oil the value of the oil at the wells, plus what that pipage might have been, and that twenty odd cents paid by the Pennsylvania constituted its gross revenue.

1378

NUMBER 31 (See page 1199) LETTER TO PRESIDENT SCOTT OF THE PENNSYLVANIA RAILROAD FROM B. B. CAMPBELL AND E. G. PATTERSON

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3112, pages 363–365.]

To the President and Directors Pennsylvania Railroad Company.

Gentlemen: About July 1 last the undersigned were of a delegation from the Oil Region of our state, asking of your road an assurance that its course during the preceding two months, in giving to all producers and shippers of petroleum equal facilities and impartial rates, might be formally made its permanent policy.

In an interview with your president at that time, that assurance was given, coupled with the requisition that such support should be given it by the producers and shippers as would repay it for the exertion it must make in defending that policy, and guaranteeing that such support should be continuous and permanent.

The people of the Oil Region were only too glad to enter into such an agreement, and steps were immediately taken of a practical nature to carry it out.

It was understood that it could not be immediately done.

After the formal abandonment by the trunk lines of the South Improvement Company in 1872, your road for some months faithfully adhered, as we believe, to the pledge then given by all the trunk lines, that no discrimination should thenceforth be permitted. We believe also that it stood alone among the roads in adhering to it, for gradually the persons constituting the South Improvement Company were placed by the roads in as favourable a position as to rates and facilities as had been stipulated in the original contract with that company. At this time the line of your road in Western Pennsylvania, including that under your influence and control, was dotted with refineries capable of producing a large proportion of the refined oil needed by the world. The policy of the Standard Oil Company, the successor in everything but name of the South Improvement Company, has resulted in the dismantling and abandonment of every one of those refineries (as soon as they fell into their possession) which could not be reached by some other and a rival road to yours, and now there are in the Oil Region proper but few refineries and those universally owned by the Standard Oil Company, those in Pittsburg being owned or controlled by that combination or by 1379the Conduit or Empire lines. The use and export of crude oil is but a small proportion of the consumption, and time and money were required to re-establish this great product upon its former basis, and these people were glad to furnish all needed means to accomplish this end, as are also capitalists at other points not strictly within the Oil Region, yet upon your lines.

We are met in the midst of this preparation by assertion of agents of the combination, and as accepted news by the press, that such a combination is entered into, or under consideration by your road and the Empire Transportation Company, the Erie, Central, Lake Shore, and Baltimore roads of the one part, and the Standard Oil Company of the other, as would preclude your road from carrying out the policy announced by your president at the interview heretofore referred to.

We believe there is danger that such a result may be reached, and we in behalf of these whom we represent, in making our efforts to prevent its accomplishment, or if accomplished to defeat it, as the first step, address this communication to you, desiring to present its aspect as affecting your road from our stand-point.

So far as we, and the general public are affected, you will not question that the present scheme is but the repetition of the South Improvement scheme, never abandoned by its authors, and seeking the sole and absolute control of all petroleum produced, purchased, refined, and shipped within the states of Pennsylvania, New York, Ohio, or West Virginia.

The over-production of 1873, 1874, 1875, and the consequent almost entire destruction of petroleum values, gave the Standard Oil Company, with its organisation and capital, almost the desired monopoly. The equalisation of consumption and production of 1876–1877 brought that combination to the same point that they were in 1872—utterly unable by reason of geographical position, if for no other, to monopolise this product without the co-operation of all the transportation, and then only under a contract similar to that of the South Improvement Company, and including all of its dangerous and extraordinary features. None other can serve them, and so they stand to-day, and we believe that your road can enter into no compromise, treaty, or arrangement which will serve the ends of the monopoly, under any less stringent stipulations and devoid of the liabilities thereof.

Under such an arrangement it is probable that the Central and Erie have transported its oil, during nearly all of this year. It is now an open secret in the producing region, that no charges follow the shipments over at least one of these roads, and crude oil is delivered in New York, on shipping order, at prices which barely repay the cost of packages and contents, with little or no remainder for transportation charges. This aid to the scheme of the combination is possibly given in view of the high tariff and consequent large revenue promised to be derived hereafter, when the scheme has been made a success, and all opposition in trade and transportation extinguished.

Suppose your opposition to be withdrawn, and you join the alliance, when does 1380your profit come in? We are entitled to impartiality. As we are advised, the law, common and statute, provides for it; it pronounces those participating in such a scheme conspirators against the public weal, and there is no court upon your line but what will enforce by mandamus and injunction the impartiality that we ask. The combination will promise you an immediate increase of revenue. If we are well advised, will you realise upon that promise? Can you make a contract with them that if we do not succeed in destroying, it will be their interest to keep? You will not have a refinery left; and they are now completing pipe-lines from Pittsburg to Oil City, and can deliver the oil received by all their pipe-lines, independent of your road and its branches. In case of a contract with them executed but afterwards broken, from what source will you derive your oil traffic and what court will enforce the broken contract in your favour? We urge that you cannot enter into any arrangement with the monopoly that can be permanently useful to it and to you, and doubt if it can be made temporarily so.

Suppose that you decline to enter into such a treaty, or any such scheme, but announce and adhere to the opposite policy? There is no law, not even that of necessity, to compel you to serve the ends of the Standard Oil Company.

If Messrs. Vanderbilt and Jewett believe that their aid alone is insufficient to the establishment of the monopoly, for how long will they carry its oil as at present for nothing, when they could have full rates, by uniting the railroad interest, and leaving the Standard Oil Company to do its business in common with all others?

If the Pennsylvania Railroad, having the geographical position in its favour, will announce and adhere to the policy of impartial and competitive rates, in three or six months, it can have all the facilities and extent of business which the Standard Oil Company can give the competitive roads, and by men who have all to gain by so doing.

We ask consideration of our views and of our assurance of good results from their favourable consideration.

If you choose to place the matter in the light of an experiment, its trial can cost you nothing but the failure to realise upon the immediate fulfillment of the promises of the common enemy, and that realisation we believe will not be permitted.

Very respectfully,

B. B. Campbell, of Pittsburg,

E. G. Patterson, of Titusville.

Philadelphia, September 11, 1877.

1381

NUMBER 32 (See page 1225) PRODUCERS’ APPEAL OF 1878 TO GOVERNOR JOHN F. HARTRANFT, OF PENNSYLVANIA

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3112, pages 351–356.]

Sir: The undersigned, members of a committee appointed by the General Council of the Petroleum Producers’ Union for that purpose, address to you, as the official head of the Commonwealth, a plain statement of facts, to a great extent known to be true from personal knowledge, and all material parts of which are susceptible of proof by competent evidence.

We address you, not only as individuals whose personal interests have been affected, whose property has been rendered comparatively valueless, and whose capital and labour are bound against their consent, to increasing the gains of grasping corporations, but as citizens of the great Commonwealth of Pennsylvania, apparently prostrate and powerless to control one of its greatest products, and the immense business that annually flows from it.

The petroleum production of Pennsylvania is confined geographically to the Northwestern portion of the state, extending from its border upon New York State nearly to Pittsburg, and is the chief interest in the counties of McKean, Warren, Forest, Crawford, Venango, Clarion, Butler and Armstrong.

The amount of money invested in well property, constantly to be renewed and kept good, represents at least twenty millions of dollars, and while the value of the lands upon which the wells are located is not easily determined, it represents many times the value of the well property.

Petroleum should yield at the wells, with its transportation and sale unfettered, twenty-five to thirty-five million dollars annually, while as an article of export, it ranks third among the products of the nation, and as first among its manufactured exports.

For transportation outlets, it has the Pennsylvania Railroad to the seaboard at an average distance therefrom of less than 400 miles. The New York Central and Lake Shore Railroads reach Oil City by way of Cleveland, Ohio, 764 miles from the seaboard, and Titusville, by way of Dunkirk, New York, 571 miles to the seaboard, 1382and the New York, Lake Erie and Western, and Atlantic and Great Western Railways reach Oil City by way of Meadville, 550 miles to the seaboard.

CONDITION OF THE TRADE IN 1871

At that time the lines of the Pennsylvania Railroad in the Oil Region were dotted with refineries located at Tidioute, Henry’s Bend, Oleopolis, Oil City, Corry, Titusville, Miller Farm, Rouseville, and other points on the Oil Creek Railroad, at various points on the Philadelphia and Erie Railroad, and on the Allegheny Valley Railroad, these roads being tributaries of and controlled by the Pennsylvania Railroad, while upon its main line extensive refineries were located at Pittsburg and Philadelphia. The refineries at Cleveland, Ohio, confined themselves in a measure to the Western domestic trade, and those of Portland, Boston and New York had generally specialties in the trade.

The markets were filled with buyers of crude and refined; information as to stocks, production and consumption was open and obtainable, and values were regulated by the law of supply and demand.

In its relation to this trade, Western Pennsylvania almost exclusively possessing this product, with ample refineries in its midst, with its great state railroad penetrating the producing region, and by it, having the shortest route to the seaboard, with the Allegheny River as an additional means of transportation to Pittsburg, the Western terminus of the Pennsylvania Railroad, and with Philadelphia, its Eastern terminus as an exporting point, Pennsylvania had, and was entitled to, the control of the refining and transportation of its own product.

CONDITION OF THE TRADE IN 1877–1878

Now, this is all changed! The refineries on the lines of the Pennsylvania Railroad have been demolished, excepting where reached by rival railroads, and this business has been transferred to Cleveland and New York, the refineries remaining in this state having passed into the ownership and control of a foreign organisation, as has also the local transportation from the wells, by means of pipe-lines to the lines of the railways.