Introductory material (continued 10)

His refinery had been giving him a profit of $21,000 to $22,000 a year. It had cost him $41,000, but he had to sell it for $15,000. This purchase of $41,000 for $15,000 was one of "the little economies" to which the trust ascribes its success. It was not a "good time to sell," but he sold. Part of the "squeeze" put upon him was the rebate given to the buyer. He could not have got the rebate if he had applied for it, but he would not apply for it. "I made application for lower freights, but not for any drawbacks; I did not suppose that was the right way to do business."[626]

"This business belongs to us." This remark was not prophecy, but history. It was in 1878, and the claim had been already made good. The New York Legislature, in 1879, reported that the speaker and his associates had control of 90 or 95 per cent. of the industry. "It has absorbed and monopolized this great traffic, which ranks second on the list of exports of our country."[627] This conclusion was based on the evidence of officers and stockholders.[628] Their shadow grew no less. The Interstate Commerce Commission found in 1890 that they "manufacture nearly 90 per cent. of the petroleum and its products in the United States."[629]

"Trifles make perfection, and perfection is no trifle." For the perfection of this triumph no trifle has been disdained, from the well in the mountain to the peddler's cart in the city. The bargemen of the Alleghany, the coasters of the sea-shore, and the stern-wheelers of the Western rivers all had to go one way. "We drove out the shipments in the schooners from Baltimore and Washington, and we stopped almost the shipments by river down the Mississippi by boat," said one of the successful men. His plan had been so thorough as even to seek to "drive off the river schooners."[630]

The last stage in their economic development—that in which the people of the oil region lose the ownership of the oil lands and become hired men—is already far along. Although at first the oil combination owned no oil lands to speak of—"It does not own any oil wells or land producing oil, and never did," its president said, in 1880; "an infinitesimal amount," he said later[631]—it has of late years, through corporations organized for that purpose, been a heavy buyer and leaser of the best oil lands in Pennsylvania, New York, Ohio, Kentucky, and the West.

Monopoly anywhere must be monopoly everywhere. At the beginning it was enough to control the railways; by these the pipe lines, refineries, and markets were got. These were secured, only to find that it was vital to control the source of supply. The producers once gave an illustration of what it would be for the sole buyer to come to the market and find that the oil he must have was not on sale at his price.[632] "We have during the past year," one of the combination said, in 1891, before a committee of the Pennsylvania Legislature, "invested a very large amount of money, and have induced our friends to come forward with new capital to engage in the business of producing oil."[633] By the policy of becoming producers the combination has changed its position from that of mere intermediary—though one as irresistible as a toll-gate keeper—to that of absolute owner. The spectre it has seen rise before it, of the producers organized as one seller to meet it as the only buyer, has been laid to rest.

"We are pushing into every part of the world, and have been doing so," the president told the New York Legislature in 1888.[634] Their tank-steamers go to all the ports of Europe and Asia, and their tank-wagons are as familiarly seen in the cities of Great Britain and the Continent as of America. An agitation of extensive proportions was begun in 1893 in the press of Canada and in the Dominion Parliament to admit American oil at a lower duty. There was no popular demand for such a step. No general reduction of the tariff was proposed. The movement was simultaneous in the press of different parts of Canada, and it was promoted by papers as important as the Toronto Globe and Montreal Star. It was resisted with desperation by the 20,000 persons who are employed in the Canadian oil industries, the growth of thirty-two years—"not a rich, gay, bloated population, rioting with the plunderings of the farmers, revelling in all kinds of luxuries, making merry with their friends," says a newspaper correspondent, who visited them in December, 1892, "but a hard-working community, in which all live comfortably; few are rich."

This opposition was successful with the Dominion Parliament in that year, and it refused to admit American oil at a lower tax. But the finance minister then, by executive action, did in part what the Legislature had refused to do. By lowering the inspection duty and changing custom-house conditions he made a considerable reduction in the tax. The agitation to reduce the tariff was not relaxed, and was finally successful in 1894, when Parliament lowered the duties on oil, and to that extent surrendered the Canada producers and refiners to their American competitors.

The Scotch refiners, some of whom have been in business forty years, have become as loyal subjects of an American ruler as of their own queen. They make only as much as he allows, and sell at the price he fixes. He has demanded year by year a greater proportion of their business.[635] In 1892 they were notified that they must reduce their output by 10 per cent.[636] The Scotch, anxious for the accelerating future, begged that the "arrangement" might be made for three years instead of one. But this was denied them. The agent from America who brought them their orders would promise no more than "to place the matter in a favorable light before his colleagues in America."[637] By October of that year the capital of the Scotch companies, held mainly by small investors, had shrunk $5,000,000 in value. But to this item the London Economist adds the consolation that "that powerful organization"—the American—"has for years professed the kindliest feelings for the Scotch producers." Dr. Johnson said that much may be made of a Scotchman if caught young. The American caught him old.

The disturbance fell heaviest, as always, on the working-men. "Reduction in wages is now being effected," writes the managing director of the oldest and largest of the Scotch companies in the Economist. "Another 10 per cent. reduction in miners' wages has been resolved upon," the Economist announces in its issue of October 8, 1892.

One of the causes that contributed to the downfall of the Scotch refiners was the fact that the British government reduced the test required for illuminating oil. This new regulation opened the British markets to a flood of cheap oil from America.[638] The Scotch oil is better made and more expensive. "We cannot tell," said a correspondent of the Glasgow Herald, "what powerful interest the American oil combination did not bring to bear on our government. The public had then no champion, and as a rule never have on these occasions."

The unkindest cut of all is that it was from the Scotch manufacturers themselves that their American rival and ruler learned the secrets of the industry it is now absorbing on the instalment plan. In one of its publications it has told how its "experts visited the great shale works in Scotland, and studied their methods," and how "the consequence was that extensive works were erected."[639]

The economic development of Germany is not so much behind that of Great Britain and America as to seem uninviting to the unhasting but unresting American. Some years ago enterprising German importers invested a large amount of capital in tank-steamers, because they thought these solved the problem of the transportation of petroleum. When the Americans refused to supply them any longer with oil for their steamers to carry, they saw that there was more in this problem than they had guessed. Importers who had no steamers found one day that American enterprise had secured practically all of them, and had very decided notions as to whom cargoes should be taken. The heads of two or three of the largest houses boarded a steamer for New York, and came back stockholders in a German-American company which controls most of the German business, as the Anglo-American company controls that of Great Britain. "If the great company with unlimited capital cares to lose money, it can drive us from the field," was the explanation of the head of one of the largest German concerns, as quoted in the Weser Zeitung.

At the beginning of the next year some Holland firms were invited into the same shelter, and became the "fittest"; and then followed the Belgian and the Scandinavian countries. The Berlin Vossische Zeitung of June 18, 1891, described the line of march: "One group of business men after another is thus made superfluous and pushed aside. First the wells, pumps, and refineries in America, then the American export trade, then the private freight vessels adapted for transportation of petroleum, then the European import trade, then the export trade from European ports, and, finally, this over-powerful company threatens to seize the entire retail trade in petroleum. It is a world monopoly." Hundreds of boatmen engaged in a flourishing river trade in Germany were driven out by tank-boats. If they had changed to tanks, they would have been dependent on their opponent for the oil to fill them. Importers in barrels were cut off by a change which the German government made in the tariff on barrels. The Americans were also helped by an increase in the German tariff on Russian oil of 50 per cent., which made it so much the more difficult for it to compete with American oil. As one way to kill competition where it still existed, all statistics were suddenly withheld by the German-American member of the trust. Neither exports nor imports were known except to the ruling company; all others were kept in the dark.

This success in Germany has not been due to favoritism on the highways. The extraordinary discrimination on railroads in America would be impossible in Germany. With hardly an exception the railroads are under the supervision of the State, and are very carefully controlled. Even the private roads would not dare to give any but the open rates. In Austria-Hungary, formerly, secret rates were in full swing, but the system is now said to be destroyed.

Prices have declined in Germany, and the people at large make few complaints except about the quality of the American oil. It has become more sooty than formerly. In the beginning it burns well, but it ends with giving a very poor light. This has been conjectured to be due to a mixture of the inferior Ohio oil with that of Pennsylvania; but "it cannot be proved," the German chronicler reports.[640] "The working people," says one of the Berlin papers, "will have to foot the bill, and the working people only. The well-to-do and rich of to-day can have other fuel and light, but to the oppressed working-man petroleum is as great a necessity as his potatoes." The German papers, in casting about for means of checkmating the increase of prices which they believe will result from the consummation of this monopoly, advocate the use of water-power and also wind-power to create electricity.

The attention that has been attracted to the growth of this power does not come from the public at large, but from those directly interested and the sympathy and interest of the German "national economists." The latter point out that the present cheap prices are "war prices." They predict that as soon as the world monopoly is established and all territory is under complete control a rise of prices will take place. They are advocates of State monopoly as better than private monopoly. If State monopolies prevent free competition, at least they are able, they say, to give some compensation to those who are hurt. In the tobacco monopoly hundreds of millions were set aside by the German government for this purpose, but even that was not considered sufficient. But this monopoly is a private affair. It swallows the profits of all those whom it destroys. Numerous industries have been ruined—importers, ship-owners, brokers, local dealers, exporters, retailers, river boatmen, and numerous other trades—but no one receives indemnity. The public opinion of the government, the Reichstag, the national economists, the philanthropists, is active in support of the middle class, but in spite of all this a whole department of industry has been torn away from it.

There are one or two "independents" in Germany whom, like the independents in America, the trust has not yet been able to crush, though it is turning the markets topsy-turvy for that purpose. The Pall Mall Gazette of June 18, 1894, notes that the trust is selling refined oil in Europe at prices lower than those at which crude oil can be delivered from America.

The Austrian journals have been chronicling the absorption of the principal refineries of Austria and Hungary by a combination, of which the Rothschilds are the most important members, as they are of that in Russia. This combination, which first appears in 1892, has by 1894 accumulated a reserve of 3,000,000 gulden on a capital of 1,000,000 gulden, and its profits for 1894 are expected to be 100 per cent. The Prager Lloyd of April 26, 1894, giving these and other facts, adds that "the government of Austria as well as of Hungary takes the ground that if a petroleum monopoly is to be formed it should be in the hands of the State, not of a corporation, certainly not of a foreign corporation, least of all an American one."

This remedy of a State monopoly as an alternative to private monopoly, as suggested in Austria and Germany, has as yet had few advocates in America. Our public opinion, so far as there is any public opinion, restricts itself to favoring recourse to anti-trust laws and to boycotting the monopoly and buying the oil of its competitors. But there are too few of these to go around, and they are shut out of most of the markets. The shrewd monopoly is itself the most diligent caterer to such American demand as there is for the "anti-monopoly" product. It does business under hundreds of assumed names, and employs salesmen at large salaries to push the sale of "opposition oil" in our disaffected provinces.

With the news from Germany came the announcement that similar control had been obtained of the business of the firm at Venice which did most of the oil business of Italy, and a new company had been formed, of which the American "trustees" own a majority. In a letter sent to Minister Phelps, at Berlin, a resident representative of the American oil combination says, as quoted in the New York Tribune, October 5, 1891: "For the furtherance of our programme and as participators in the large European investment which this programme involves, we have sought and been fortunate enough to secure the co-operation of a coterie of well-known merchants, who have been long and prominently identified with the petroleum commerce of the Continent." The Società Italo-Americana del Petrolio (the Italian-American Oil Company) is in Italy what the concerns just described are in the countries to the north of it. The head of the oil combination was quoted by the New York Tribune of July 1, 1891, as saying: "The cable despatches are substantially correct as regards our interest in the German and Italian companies."

The French government a year ago lowered the tariff on petroleum one-half. This was followed, the French press reports, by the erection of a refinery by the American trust at Rouen, and the purchase by it of land in Marseilles, Cette, Bordeaux, and Havre for other refineries. The machinery needed was shipped from America. Large offices were opened at Paris by the American combination for the administration of the industry in France, which was to be concentrated into its hands like that of the rest of Europe. The sequel, if the Frankfurter Zeitung, a prominent German commercial paper, is correctly informed, is that the French refiners, as the Scotch did before them, have come to terms with the American trust. It has agreed not to start up its refineries in France, not to sell any refined oil in America for shipments to France, and not to allow any American outsiders to compete with the French refiners.

There was a report in June, 1892, that a Dutch company had succeeded in refining petroleum in Sumatra, one of the possessions of the Netherlands' East India colonies, and selling it in India. The solicitor of the trust, asked about it by the New York Times, June 5, 1892, said, "It cannot be true." The oil combination, he continued, "has agents in the Netherlands' East India colonies and at Sumatra, and it would certainly have heard of this corporation and its competition if there was anything worth hearing."

There are great oil-fields in Peru. Since the close of the war with Chili there has been an active development of them, and the commercial reports of San Francisco say that fuel oil is now being supplied from this source to our Pacific States. This has not been done by the Peruvians. It was an American who organized the oil industry of Peru. The principal company was formed by the same expert who went years ago from Pennsylvania to Russia to Americanize the oil interests of the Caucasus. After he had succeeded in that task he went to Peru. He died in the spring of 1894. At about the time of his death the newspapers, by a coincidence that arrests attention, chronicled the departure from New York of a well-known man who was going to Peru, as he stated in an interview, to look after the interests of the members of the oil trust. But there is no official information that they have any ownership or control there.

When one of the officers of the combination was before Congress, in 1888, he was asked if there had been any negotiations by his associates with the Russian oil men.

"We have never had any serious negotiations,"[641] he replied.

The word "serious" was a slip. He withdrew it. "We have never had any" was his revision. Three years later the same official, in a speech to persuade the Pennsylvania Legislature that the pipe-line interests of the oil country did not need the regulation by the State then under debate, but were abundantly safeguarded by him and his associates, said: "It may not be amiss for me to say that we have had, at different times during the last several years, most flattering propositions from people who are identified with the Russian petroleum industry, to come there and join them in the development and introduction of that industry. We have declined these offers, gentlemen, always and to this day, and have held loyal to our relations to the American petroleum."[642]

There had been negotiations, after all!

The reports of the United States consul-general at Berlin, in 1891, transmitted many interesting articles from the German papers concerning the alliance which it was believed had been made between the Rothschilds and the American oil combination. A company managed by the great bankers has obtained a commanding position in the Russian oil business, and the American and the Russian were even then said to have divided the world between them. The Berlin Vossische Zeitung said: "Heretofore the two petroleum speculators have marched apart, in order to get into their hands the two largest petroleum districts in the world. After this has been accomplished they unite to fight in unison, and to fix as they please the selling price for the whole world, which they divide between themselves. So an international speculating ring stands before the door, such as in like might and capital power has never before existed, and everywhere the intelligible fear prevails that within a short time the price of an article of use indispensable to all classes of people will rise with a bound, without its being possible for national legislation or control to raise any obstacles."[643]

But some of the closest European observers have seen reasons from the beginning to believe that the Rothschilds are in the Russian oil business only as the agents of the American combination. This is freely asserted by the Continental press. The policy of the Rothschilds has been never to engage in commercial enterprise on their own account. The tactics used by the Rothschilds in oil have been an almost exact reproduction of those of the combination in America. From the first they gave the subject of freights their special attention. They showed no ability for new or independent undertakings, but they tried, to use the words of an Austrian-Hungarian consular report from Batoum in 1889, "following the example of the combination in the United States, to get the bulk of the Russian petroleum trade into their hands"; using the large money power at their command for speculation, freely advancing money for leases and delivery contracts, and specially acquiring all the available means of transportation. The experience of the people of Parker[644] is recalled by the statement that the Rothschild company would leave hundreds of cars loaded with petroleum on the tracks for weeks to prevent competitors from shipping and from filling their contracts. When the city of Batoum, in 1888, refused to allow it to lay pipes over the city lands to the harbor, it was with the enthusiastic approbation of the agitated citizens. The authorities gave as their reason that through large establishments of this kind the capitalists gained a monopoly, crushing out smaller producers to the disadvantage of all classes of the population. In the absence of official investigations, a free press, and civilized courts—that knowledge which is not only power but freedom—it is impossible for any one in Russia, or out of it, to know the truth as to the relations of the Rothschilds to the American monopoly. The latest news in the summer of 1894 is of a great combination of Russian and American oil interests, under the direction of the Russian Minister of Finance, for a division of territory, regulation of prices, and the like. Information of this was given to the world by that minister's official organ in November, 1893. Thus says the Hanover (Germany) Courier of November 11th: "With the direct sanction of the Russian government the management of the enormous wealth that lies in the yearly production of Russian petroleum will be concentrated in the hands of a few firms.... The Russian government lends its hand for the formation of a trust that reaches over the ocean—a trust, under State protection, against the large mass of consumers. This is the newest acquisition of our departing century."

It was announced that, in pursuance of this plan, the Russians were to be given exclusive control of certain Asiatic markets. The officers of the American combination are not easily reached by newspaper men. But when this news came long interviews with them were circulated in the press of the leading cities, dwelling upon the "Waterloo" defeat they had suffered, and reassuring the people with this evidence that there was, after all, "no monopoly." The Russian interests are dominated by the Rothschilds, and if the Rothschilds are, as these European observers declare, merely the agents of the Americans, even unsophisticated people can understand the cheerfulness with which the trustees in New York dilate on their Waterloo at the hands of their other self. Only this could make credible the report that the world has been divided with the Russians by our American "trustees," who never divide with anybody. In dividing with the Russians they are dividing with themselves.

Though it is reported that discriminations by the government railroads of Russia were used to force the Russian producers into this international trust, still, at worst, every Russian producer was given by his government the right to enter the pool. But no similar right for the American producer is recognized by our trust. It admits only its own members. The others must "sell or squeeze." There is something in the world more cruel than Russian despotism—American "private enterprise."

One of the conditions said to have been made by the Russian government is the natural one that the American trust, as it has agreed to do for the French, must protect its Russian allies from any competition from America. Extinction of the "independents" has therefore become more important than ever to the trust. The prize of victory over them is not only supremacy in this country, but on four other continents. This will explain the new zeal with which the suppression of the last vestige of American independence in this industry has been sought the last few months of 1893 and in 1894. Especially strenuous has been the renewal of the attack on the pipe line the independents are seeking to lay to tide-water, and which they have carried as far as Wilkes-barre.[645]

That pipe line, as it is the last hope of the people, is the greatest menace to the monopoly. The independents, as they have shown by the fact of surviving, although they have to pay extraordinary freights and other charges from which the trust is free, can produce more cheaply than the would-be Lords of Industry, as free men always do.[646] By means of this pipe line, suspended though it is at Wilkes-barre, are now made the only independent exports of oil that go from America to Europe. Once let the "outsiders" with their line reach the sea-shore and its open roads to the coast of America and Europe, and it will be a long chase they will give their pursuers. Everything that can be brought to bear by market manipulation, litigation, and other means is now being done to prevent the extension of this line, and to bankrupt the men who are building it through much tribulation. The mechanical fixation of values, by which the refiners who use this line to export oil are compelled to meet a lower price for the refined in New York than can be got for the crude out of which it is made, has been already referred to, and, as shown above, the same prestidigitation of prices is being resorted to in Europe against the independents of Germany.

Early in 1894 the independent refiners and producers resolved to consolidate with this pipe line some other lines owned by them in order to strengthen and perfect the system, and put it in better shape to be extended to tide-water. This consolidation was voted by a large majority both of stock and stockholders. But a formidable opposition to it was at once begun in the courts by injunction proceedings in behalf of one man, a subordinate stockholder in a corporation of which the control is owned, as he admitted in court, by members of the oil trust.[647] The real litigant behind him, the independents stated to the court, was the same that we have seen appear in almost every chapter of our story, with its brigades of lawyers. "An unlawful organization," the independents described it to the court, "exercising great and illegal powers, ... and bitterly and vindictively hostile to our business interests." They came into court one after the other and described the ruin which had been wrought among them, telling the story the reader has found in these pages.

"It is our hope," they said, "when we once reach the salt-water that there will be no power there controlling the winds and the waves, the tides and the sun and moon, except the Power that controls everything. When we once are there the same forces that guide the ships of this monopoly to the farther shore will guide ours. The same winds that waft them will waft ours. There is freedom, there is hope, and there is the only chance of relief to this country.... Through three years of suffering and agony we have attempted to carry on our purpose.... You could have seen the blood-marks in the snow of the blood of the people who are working out their subscription as daily laborers on that line with nothing else to offer."

The injunctions asked for by this opposition were granted by the lower court, but the independents took an appeal to the Supreme Court of Pennsylvania. They first placed their petition for the rehearing in the hands of the chief-justice on Thursday, May 24th; on Monday, May 28th, the petition was renewed before the full court; on Thursday, May 31st, the court adjourned for the summer without taking any action upon the petition. The court in July agreed to hear the case at the opening of its next term, the first Monday of October. Section II. of Article I. of the Constitution of Pennsylvania says: "All courts shall be open, and every man, for an injury done him in his lands, goods, person, or reputation, shall have remedy by due course of law, and right and justice administered, without sale, denial, or delay." To guard against the injustice which might arise by the granting of special injunctions by the lower courts—like that granted in this case—which might remain for months without remedy, the Legislature, in 1866, enacted a law which reads as follows: "In all cases in equity, in which a special injunction has been or shall be granted by any Court of Common Pleas, an appeal to the Supreme Court for the proper district shall be allowed, and all such appeals shall be heard by the Supreme Court in any district in which it may be in session."

As if there had not been enough to try these men, misfortune marked them in other ways. The Bradford refinery of the president of their pipe line was visited by a destructive fire during these proceedings in court. The Associated Press despatches attributed the fire to "spontaneous combustion," whatever that may be. But in another newspaper an eye-witness described how he saw a man running about the works in a mysterious way just before the flames broke out. On the same day, by a coincidence, the main pipe of the independent line was cut, and the oil, which spouted out to the tree-tops, was set on fire at a point in a valley where the greatest possible damage would result, and the telegraph wires were simultaneously cut, so that prompt repairs or salvage of oil were impossible. The Almighty is said to favor the heaviest battalions, and accident, if there is such a thing, seems to have the same preference, as has been shown in many incidents in our history, such as the mishaps to the Tidewater pipe line, and the Toledo municipal gas line.[648]

An intimation is given in the Continental press as to one of the motives under which the Russian government acted in promoting the alliance between the Russian and American oil men. It desired, it is said, to secure the influence of the powerful members of the oil combination in favor of certain plans for which Russia needed co-operation in America. There has been nothing for which the Russian government has so much needed "sympathetical co-operation" in America as for the ratification of the Extradition Treaty. The Russian government has obtained this ratification, and obtained it in a way which indicated that some irresistible but carefully concealed American influence was behind it. The New York World, in its editorial columns of May 25, 1894, made the suggestion that the power behind this treaty of shame was that of the oil trust, earning from the czar the last link in its chain of world monopoly. It asked if it was the influence of the oil combination that induced the Senate's consent to this "outrageous treaty." "Was this one of the conditions upon which that monopoly was permitted to secure its present concessions from Russia? Did it wield an influence in the Senate like that which the sugar trust has since exercised, though for an advantage of a different kind?" The Philadelphia Press points out that the Russian government had long and unsuccessfully sought to obtain the ratification of this treaty, but at last got it quickly and quietly. Did the oil combination, it asks, "succeed in bartering the character of this country as a political sanctuary for the monopoly of the world's markets?" Seldom has any public measure been so universally and so indignantly condemned in America as was this proposal to use the powers of Anglo-Saxon justice to return men who were accused only, and were, therefore, legally innocent, to be tried without jury, counsel, publicity, or appeal. Never has public opinion availed less. The Federal executive refused even to delay the ratification in deference to the sentiment against it. Those who were active in the agitation against the treaty found something inexplicable in the unresting and unlistening relentlessness with which it was pushed through. Napoleon said that in fifty years Europe would be all Russian or all republican. Even he did not dream that republican America would become Russianized before Europe. The San Francisco Call of March 3, 1894, discussing the report that a commercial treaty with China was under consideration at Washington, says the negotiation is in the interest of the oil combination. It warns the public that the trust is willing to reopen the opium trade in reciprocity to China for better terms for the admission of American petroleum. This free trade with China and Russia in the souls and bodies of Russians, Chinese, and Americans would add only another instance of the many manipulations of government which this combination has successfully attempted in all parts of the world—in the tariffs of France, Germany, Cuba, Canada, and our own country; in the raising or lowering of the governmental requirements as to explosiveness of oil sold the people in England and the United States, and in the subsidy legislation by which it got from Congress for its ocean steamers a privilege rigorously denied by law to all other citizens.

In this the oil trust is but an illustration. What it has done scores of other combinations have accomplished, though not with equal genius. The Hon. John De Witt Warner, member of Congress from New York, has published a list of one hundred trusts which have been able to influence the tariff legislation of the country in their favor. The orgy of the sugar trust and Congress, out of which the tariff bill of 1894 was born, was in the plain view of all the people. "The appalling fact already disclosed," the New York Daily Commercial Bulletin, the most important commercial and financial daily in the United States, said in its editorial columns of June 4, 1894, "is that for some months past the sugar trust has been the government of the United States." The Bulletin estimates that the profit to the trust of one detail of the tariff bill postponing the duty on raw sugar for six months will be $34,620,000. In all this our country is not singular. The governments of Europe are used as the instruments of profit for private enterprise to an extent which the people endure only because they do not understand it. The latest instance is one of the best. The Investor's Review of London, England, in May, 1894, calls attention to the fact that upon the accession of Lord Rosebery to the Premiership of England the hitherto outspoken opposition of the War Office to the Maxim gun had become entirely silent, and the gun had been put into use in the army without competitive trial with other machine-guns, some of them its superiors. "This is an unfortunate fact for Lord Rosebery," says the Investor's Review, "because of his relationship to the Rothschilds." This great house, the Review says, has "a strong pecuniary interest in the Maxim-Nordenfeldt Company," and his lordship's affinities to the house "have not in the past been confined to those of family relationship alone, but extend to community of interests on the stock exchange." The Review therefore appeals to Lord Rosebery, for his own sake and the sake of the government "to prove by his deeds that he not only has had nothing to do with it, but will peremptory stop this crime." If not, the Review hopes enough may be made of the scandal to overthrow Lord Rosebery's government, for it desires "to see a beginning made of the endeavor to purge Parliament of the guinea-pig director, the stock-gambler and punter, and the whole unclean brood of City 'bulls' and 'bears,' jobbers in patents, bribers and bribed, who help to degrade public life."

We of America are most sovereign when we sit in Constitutional Convention by our representatives, and change the fundamental law as we will. The Constitutional Convention gives us the unique power of peaceful and perpetual revolution, to make bloody and spasmodic revolutions unnecessary. Of all the inventions of that ablest group of statesmen the world has seen—the founders of this government—this is the greatest. The people of the State of New York are holding a Constitutional Convention in 1894 to enlarge the garment of 1846 to fit the growth of half a century. In that half-century the revolution in society and industry which had been getting under headway ever since the steam-engine and competition were invented has come to its consummation. But the basic law of the Empire State has faced this new world as changeless as the sphinx. Nearly half the other states have made new constitutions, or amended the old ones to bring law into line with life. Pennsylvania forbids the common carrier to become the owner of coal-mines, or to consolidate with competing carriers, or to give preference to any citizen. Michigan, Illinois, Nebraska, Colorado, and many other states have framed provisions to control the abuse of industrial and highway power. The State of Washington in its Constitution declares that "monopolies and trusts shall never be allowed in this State," and it forbids any association "for the purpose of fixing the price or limiting the production, or regulating the transportation of any product or commodity." The manual of the constitutions of the world prepared for the use of the New York convention shows that fifteen of the states of the Union have in one way or another recognized the revolution which has taken place in the industrial economy of the people, and sought to meet it with the necessary political safe-guards.

When the delegates of the citizens of New York State meet in May, 1894, at Albany, in such a time to face such problems, the press notes that a large proportion of them are corporation lawyers. The place of president of the convention is secured by the chief counsel of the oil trust. He is in Albany to resist the application to the Attorney-General of the State to move for the forfeiture of the charter of the principal corporation in the trust, and on his way he plucks the presidency of the Constitutional Convention. "It is truly a momentous event," he says in his opening speech, "when the delegates of many millions of people gather together after an interval of fifty years almost, for the purpose of revising and amending the fundamental law of the State." The delegates thus momentously assembled, when they came to choose the officer who was to wield over them a power as great as that of the Speaker over the Federal House of Representatives, momentously selected the most conspicuous attorney of the most conspicuous embodiment of the forces with which the people are in conflict. The president found words of kindly reference for many great questions—of education, suffrage, city government, and the like—but for the great questions of social power which fifteen states have found serious enough for constitutional cognizance he had not a syllable. No plan or even suggestion, great or little, for the new Constitution can reach the convention direct. All must go to the appropriate committee, to be smothered or reported, as the case may be. There are thirty of these committees, and they are made up by the president of the convention, who also designates their chairmen. Each committee has its subject, and the subjects cover the bill of rights, the regulation of suffrage, the control of corporations, the election of judges, future amendments of the Constitution, and every other part of the organic law. Practically the work of the convention will be the work of the committees, and the committees are the work of one who is not only the attorney of the oil trust, but is a part of the trust, a member of the organization. "I happen to own one hundred shares in the Standard Oil Trust," he said in his argument in Albany before the Attorney-General in behalf of the trust. The trust has given formal notice that out of deference to public opinion and the decision of the Supreme Court of Ohio, and in pursuance of an agreement with the late Attorney-General of New York,[649] it had dissolved itself. But this distinguished member disregards the dissolution, for reasons of personal convenience, as he tells the Attorney-General. "I have never gone forward and claimed my aliquot share." The character of this trust, of which the president and organizer of the Constitutional Convention persists in being a member to the extent of refusing to be "dissolved" out of it, has been adjudicated. It was, the Supreme Court of Ohio said,[650] "organized for a purpose contrary to the policy of our laws. Its object was to establish a virtual monopoly ... throughout the entire country, and by which it might not merely control the production but the price at its pleasure. All such associations are contrary to the policy of our State and void." A similar judgment has been passed upon the trust by the judiciary of the State of which this president of the Constitutional Convention, besides being an officer of the courts, is a citizen. It was entered into, the Supreme Court of New York has said,[651] "for the purpose of forming a combination whose object was to restrict production, control prices, and suppress competition, and the agreement was therefore opposed to public policy and void." And a higher court, the highest in the State, the Court of Appeals, decided in the sugar-trust, case that a trust was in avoidance and disregard of the laws of the State.

To the monopoly of oil, which was the starting-point, are being added by its proprietors, one after the other, as we have shown, a progressive series of other monopolies, from natural gas to iron. To these assets is now to be added our bill of rights. The long fingers of this power of mortmain reincarnate are long enough to reach from its counting-room to the Constitutional Convention. The new Magna Charta, to which the people look for help against void and unlawful combinations, is to be drafted by committees made up by the attorney of the chief of these void and unlawful combinations. The instrument which is to protect the people against monopoly will come to them only after every section has been exposed to the moulding touch of the greatest monopoly in history. "This business belongs to us," and theirs is the first and the last hand on the reins of the convention. The people can vote on the Constitution after it is made, but the trust will see it made. If the new Constitution is made so obnoxious that it is rejected, as that of 1867 was, the old Constitution will do for the next fifty years as for the last fifty. It is not monopoly that needs the revision.

Is this the end? When before the Interstate Commerce Commission, the head of the combination was asked:

"The properties included in your trust are distributed all over the United States, are they not?"

"Oh, not all over the United States. They are distributed."

"Are they not distributed, and are they not sufficiently numerous to meet the requirements of your business from the Atlantic to the Pacific, and from the Gulf to the northern boundary?"

"Not yet."[652]

The reply came in a tone and with a smile so significant that it was answered by a comprehending laugh from the whole room—judges, lawyers, reporters, spectators, and all.

"Not yet!"

CHAPTER XXXII

"NOT BUSINESS"

This "business success" is the greatest commercial and financial achievement of history. Its broad foundation was laid in the years from 1872 to 1879, the severest time of panic for others the world has known. A universal jaundice of ill-fortune has given its sallow complexion to every one else. From the Alleghanies to the Caucasus thousands of men have been somehow thrown out of work because so much new work has come to the world. "At the flash of a telegraphic message from Cleveland, Ohio," said the people of the oil regions in their appeal to the Governor of Pennsylvania in 1878, "hundreds of men have been thrown out of employment at a few hours' notice, and kept for weeks in a state of semi-starvation." These men filled up many of the insurrectionary ranks of the great railway strike of 1877, as the employés of the Pennsylvania Railway declared in a public communication at that time. The eight oil-producing counties of Pennsylvania were said by the general council of the petroleum producers, in a public address in 1879, to be "fast sinking beneath such financial distress that resistance to threatened bankruptcy or servitude could not long be made." They grew too poor to pay the counsel they employed to help them in the courts, the legislatures, and before the executive of Pennsylvania and Congress. "The universal complaint we find is the poverty of the people, not their unwillingness to give." "I am ashamed," said one of them in court, "to see our counsel every day on account of the beggarly amounts I have paid them. A large number of producers have subscribed that have not paid."[653]

Men who were "frozen out" of their occupation in transporting or refining oil took to digging wells. "That is the only thing they have been allowed to do. They went on in a wild way, hunting new oil, and when they found it they would develop it rapidly." This made oil fall in price, and the more they produced the more they had to produce. The wages of labor kept going down. They were lower in 1888 than they were twenty-four years before. "A well-digger that I paid $6 a day and his expenses twenty-four years ago is now working for $40 a month. That is true of every department of the oil business so far as the wages of workmen are concerned." "We were $10,000,000 poorer at the end of 1887 than at the beginning," said the association of oil producers of Pennsylvania. Their executive committee the next year said the people were on "the verge of bankruptcy."[654]

The railroads were no happier than the laborers, the producers, the manufacturers, or the merchants. As early as 1879 Vanderbilt II. declared that the oil business of the railroads—worth $30,000,000 a year—had been destroyed.

"I think the business is gone."[655]

In 1892 a number of refiners and producers of Pennsylvania, in a formal appeal to Governor Pattison, asked him to investigate the causes which were working "to the injurious depression if not the ultimate destruction of a great industry." In the same year mutterings of a turbulent discontent and threats of violence and the destruction of property, repeating those of 1872, were heard again in Pennsylvania and in Ohio, which had become an oil-producing State. "Many of the oil producers," a member of their protective association in Ohio said, in the spring of 1892, "are in a bad way. They are at that point that they don't know just where their next sack of flour is coming from, and I am not surprised at anything they may do."

This area of low pressure, following the habit of American storms, made itself felt abroad in bankruptcies and falling wages from Scotland to Baku and beyond. Meanwhile the little nest-egg of nothing of the group which came into the field in 1862 grew to $1,000,000 in 1870; to $2,500,000 in 1872; to $3,500,000 in 1875; to $70,000,000 in 1882; and in 1887 to a capital of $90,000,000, which the New York Legislature reported in 1888, "according to the testimony of the trust's president," to be worth "not less than $148,000,000."[656] Before the trust was dissolved in name, in 1892, and the "trustees" betook themselves to the greater seclusion of separate corporations, acting in concert, its stock sold as high as 185, a valuation of $166,500,000 for the whole.

Its dividends had been $10,800,000 a year for several years. These ducal incomes and the vaster sums accumulated as undivided profits made themselves visible in the progressive embonpoint of the capitalization. In the six years (1876-81) preceding their taking the veil as trustees their net earnings added up the total of $55,000,000. In the next six years (to 1888) the dividends alone—not the net earnings—were more than $50,000,000.[657] These did not absorb their profits. In one year they spent $8,000,000 out of their profits for construction, besides making the regular payments to stockholders.[658]

"All this vast wealth," the New York Legislature said, "is the growth of about twenty years; this property has more than doubled in value in six years, and with this increase the trust has made aggregate dividends during that period of over $50,000,000. It is one of the most active," the report continued, "and possibly the most formidable moneyed power on this continent."[659]

"This is an immense property," says the Interstate Commerce Commission," ... and it gives an immense power which is capable of being so employed as to put all competitors at a great and perhaps ruinous disadvantage."[660]

For the first time the New York investigation of 1888 revealed that it was only the beginning of the truth that these hundreds of millions were controlled by "trustees." It now became known that some one or more of the trustees owned personally more than half of every concern in the trust, and of the best ones owned all.

"These eight trustees control all these ninety millions of property scattered over the United States?" the president of the trust was asked.

"They have as trustees, and they have as individual owners both."[661]

In corroboration of this testimony the trust furnished the New York Senate Committee of 1888 a "list of corporations, the stocks of which are wholly or partially held by the trustees of the Standard Oil Trust." In this list, under the head of "New York State," appears this: "Capital stock, $5,000,000. Standard Oil Company of New York, manufacturers of petroleum products. Standard Oil Trust ownership, entire."[662] But when the company was threatened with the forfeiture of its charter by the proceedings before the Attorney-General in May, 1894, its president made oath as follows: "The Standard Oil Company of New York never permitted its stock to be transferred to trustees."[663]

Even this ownership by eight men is not the whole of the truth. The eight trustees have a ruling power within themselves. An examination of the personnel of the board at the beginning, middle, and end of its career as a board shows four men always there. This agrees with the remark reported in the press to have been made by the solicitor of the trust upon its ostensible dissolution in 1892: "A majority of the stock being held by four men."

A friendly journal, the New York Sun, of April 25, 1889, in an editorial paragraph concerning the wealth of one of the trustees, said: "His regular income is twenty millions of dollars a year. That makes him the richest man in the United States—perhaps the very richest in the world." This is nearly three times the dividends paid in 1892 to all its stockholders by the Bank of England. The Bank of England has built up this earning power by two hundred years' work at the head of the finances of the greatest empire of history. This American wins thrice its dividend capability in less than a generation by contriving and managing an institution which he says does not do any business. Another entirely friendly paper, with sources of information of the very best, put his income two years later at $30,000,000 a year.[664] No denial of the Sun's statement was attempted, and the Sun never withdrew or modified its figures. Shortly after the secretary of the trust gave, in a public interview, a statement of the income of its principal members. That of one of them he put at $9,000,000 a year; his own at $3,000,000.

This wealth is as much too vast for the average arithmetical comprehension as the size of the dog-star, 400 times larger than the sun. These incomes are sums which their fortunate owners could not count as they received them. If they did nothing but stand all day at the printing-presses of the Treasury Department while the millions came uncrinkled out in crisp one-dollar greenbacks, or worked only at catching the new dollars as they rolled out from the dies of the Mint, they could not count them. If they worked eight hours a day, and six days a week, and fifty-two weeks in the year, they could not count their money. The dollars would come faster than their fingers could catch them; the dollars would slip out of their clutch and fall to the floor, and, piling up and up, would reach their knees, their middle, their arms, their mouth, and Midas would be snuffed out in his own gold.

Commodore Vanderbilt, Parton tells us, was forty-four years old before he was worth $400,000. In the next thirty years he increased this to over $100,000,000—perhaps twice that; no one knows. Vanderbilt had to multiply this nest-egg of his forty-fourth year 250 times, but one of these "trustees" will be a billionaire when he has turned himself over only ten times. Poor's Railroad Manual shows these men and their associates to be presidents or directors in thousands of miles of railroads, valued at hundreds of millions. Their names were prominent in the railroad "deal" of 1892 and 1893, which had for its end to put the whole of New England under one hand, controlling both its land and water connections with the rest of the country. They stand at the receipt of custom at the railroad gates to the oil regions; to the coal-fields of Pennsylvania, Ohio, Kentucky, West Virginia, Illinois; the copper, gold, and silver mines of the West; the iron mines of the West and South; the turpentine forests and the lumber regions and cotton fields; the food-producing areas of the Mississippi basin; the grazing lands of the plains. They are owners in the principal steamship line between America and Europe, and in the "whalebacks," which appear destined to drive other models out of the freight traffic of the lakes, and have begun to appear on the Eastern and Western oceans, to capture the carrying business of the world. Every dollar for the construction of a State building at the World's Fair was advanced by one of them, as the principal journal of the State announced, and it referred to him as "the man who breathes life into its East coast towns, and the lifting of his pen by his hand is like turning upsidedown the horn of plenty." They are "in" the best things—telegraphs, the gas supply of our large cities, street-railways, steel mills, ship-yards, Canadian and American iron mines, town sites. Ore dug out of their own iron mines at the head of Lake Superior is carried over their own railroad to their own furnaces and mills. It rolls along until that which began to move as ore lies at the docks of their ship-yards as a finished vessel, cut out of the mountains, as it were, at one cheap stroke, or is loaded in the cars in some perfected shape of steel, as steam radiators or what not. They feed entire mountain ranges into their mills with one hand, and with the other despatch the product in their own cars and ships to all markets. Betrayal, bankruptcy, broken hearts, and death have kept quick step with the march of the conquerors in iron as in oil. They are in the combination in anthracite coal, with which the acquisition by an American syndicate of the Nova Scotia coal deposits is closely connected. Theirs is the largest share in the natural-gas business in Pennsylvania, Ohio, New York, Indiana, Illinois. They are in the combination which controls lead, from pig to white lead, and turpentine and linseed-oil and paints.

"Its members," it was said in the application to the Attorney-General of New York, in 1894, for a forfeiture of one of their charters, "are now presidents and directors in 33,000 miles of road, one-fifth of the total mileage in the United States. Its surplus is invested in banking, in natural and manufacturing gas companies, in iron ore beds and coal beds and crude-oil production, in lead and zinc, in turpentine and cotton-seed oil, in steel, in jute manufacture, in ocean steamships, in palatial hotels, in street-railroads."

Most of their interests are in public functions, railroads, pipe lines, telegraphs, postal contracts, steamers, municipal franchises, and the like; but it is impossible to know their full extent with our present crude means for enforcing the truth that property is power and that civilization endures no irresponsible anonymous power. The corporation is an agency by which the capitalist can do business in ambuscade. "They are all in our company," said the manager of a very important public agency, "but their names do not appear." It is not out of deference to the obsolete idea that such matters are private business that all the details of their possessions are not given, but only because they are not known.

"There is no such thing as extemporaneous acquisition," Daniel Webster said; but he spoke of eloquence, not of the perfected modern commerce. Selligue, the French genius to whose discoveries nothing of equal importance has been added, is not dignified with an entry in the encyclopædias or biographical dictionaries. For "Colonel" Drake, who struck oil, a pension had to be provided by his friends in the regions which he had filled with fountains of wealth. Mr. Van Syckel, who first proved the pipe line to be practicable, died in Buffalo, paralytic, helpless, and poor.

The "age of oil" could not have come without the oil well and the drill and derrick, and these in America are the lineal descendants of the first salt well, drilled and whittled out of the rocks by the Ruffner brothers, in 1806, in the "Great Buffalo Lick" of the Kanawha. Their first "drill" was a great sycamore-tree, four feet through, hollowed out, set on end on the ground in the lick, and gradually lowered as the earth and stone within were dug away by a man inside. When they came to the rock, which they could not blast because it was under water, they hung a roughly-made iron drill by a rope to a spring pole and went inch by inch through the rock, "kicking down" the well. Metal tubes were not to be had, but the Yankee whittler solved the problem of tubing the well. Two slender strips of wood were whittled into two long, thin, half tubes, and tied together. This is the genesis of the bored "well" and the "drill and derrick."[665] It took eighteen months to accomplish this, but the wonder is that it was done at all "without preliminary study, previous experience or training, without precedent, in a newly-settled country without steam-power, machine-shop, skilled mechanics, suitable tools or materials."

These almost-forgotten men, shrewd, patient, undauntable, were the pioneers of the skilful well-borers who have gone forth from the Kanawha wells all over the country to bore wells for irrigation on the Western plains, for cities, factories, and private use, for salt, for gas, for geological and mineralogical explorations, and for oil. "Billy Morris," of the Kanawha borings, invented a tool simple enough, but not so simple as to be described here, called the "slips" or "jars," which has done more for deep boring than anything except the steam-engine, and for which, considering the part played in the life of man by oil, gas, water, brine, and other wells, we are told he "deserves to be ranked with the inventors of the sewing-machine, reaper, and cotton-gin."[666] But "Uncle Billy" made a free gift to the well-diggers of the world of his invaluable "slips," and slipped into poverty and an unknown grave. To Joshua Merrill, more than to any one else, belongs the honor of bringing the manufacture of oil in America to its perfection.[667] He made better oil than any one else, and he loved his work. "I was thirty-two years in the oil business. It was the business of my life."[668] But he had to dismantle his refinery, and join the melancholy procession of two thousand years of scouts, inventors, pioneers, capitalists, and toilers who march behind the successful men.

Yet, strange to say, these successful men did not discover the oil, nor how to "strike" it. They were not the lucky owners of oil lands. As late as 1888 they produced only 200 barrels a day—about 1 in every 3000—"an infinitesimal amount," their president said.[669] They did not invent any of the processes of refining. They did not devise the pipe line, and they did all they could to prevent the building[670] of the first pipe line to the seaboard, and to cripple the successful experiment of piping refined oil.[671] They own all the important refineries, and yet they have built very few. They did not project the tank-car system, which came before them,[672] and have used their irresistible power to prevent its general use on the railroads, and successfully.[673] They were not the first to enter the field in any department. They did not have as great capital or skill as their competitors.[674] They began their career in the wrong place—at Cleveland—out of the way of the wells and the principal markets, necessitating several hundred miles more of transportation for all of their product that was marketed in the East or Europe.[675] They had no process of refining oil which others had not, and no legitimate advantages over others.[676] They did not even invent the rebate. They made oil poor[677] and scarce[678] and dear.[679]

The power to chalk down daily on the black-board of the New York Produce Exchange the price at which people in two hemispheres shall buy their light has followed these strokes of "cheapness":

1. Freight rates to the general public have been increased, often to double and more what is paid by a favored few.[680]

2. The construction has been resisted of new lines of transportation by rail,[681]

3. And pipe.[682] This has been done by litigation,[683] by influence, by violence,[684] even to the threatened use of cannon,[685] and by legislation, as in Ohio and Pennsylvania, to prevent the right of eminent domain from being given by "free pipe-line bills" to the people generally.

4. The cost of pipeage has been raised.[686]

5. Rivers and canals have been closed.[687]

6. Oil has been made to run to waste on the ground.[688]

7. The outflow of oil from the earth has been shut down.[689]

8. The outflow of human energy that sought to turn it to human use has been shut down by restricting the manufacture by the combination and by others, by contract,[690] dismantling,[691] and explosion.[692]

9. High fees have been maintained for inspection,[693] and the inspectors have been brought into equivocal relations with the monopoly.[694]

10. The general use of tank-cars and tank-steamers has been prevented.[695]

11. The people have been excluded from the free and equal use of the docks, storehouses, and other terminal facilities of the railroads in the great harbors of export.[696]

12. Inventors and their better processes have been smothered.[697]

13. Men have been paid more for spying than they could earn by working.[698]

14. "Killing delay" has been created in the administration of justice.[699]

All are poorer—oil-producers, land-owners, all labor, all the railroads, all the refiners, merchants, all the consumers of oil—the whole people. Less oil has flowed, less light shone, and there has been less happiness and virtue. In every one of the few intervals, says Hudson, during which oil could flow freely to Pittsburg, all the businesses connected with it were active and expanding.[700]

When the trust's secretary was asked for the proper name of the combination, his reply was: "The Lord only knows; I don't." "An indescribable thing," he said again.[701]

"Do you understand the practical work of refining as a refiner?" he was asked.

"I do not.... I have not been inside a refinery in ten years."[702]

"Two mills a ton a mile for five hundred miles would be a dollar a ton?"

"I am not able to demonstrate that proposition."

"You have some arithmetical knowledge?"

"I cannot answer that question."[703]

He could not state what proportion of the oil trade is now controlled by the trust. He had never looked into that question. He did not know who knows these things.[704]

"You own the pipe line to New York?"

"Yes, sir."

"What does it cost you to do business on that pipe line?"

"I do not know anything about it.... I have never been in the oil regions but once in my life.... I am not a practical oil man.... For perhaps eight years I have given absolutely no attention to the details of our business."[705]

Asked upon another occasion, before the Pennsylvania Legislature, about the accounts of the company when he was its secretary, he said:

"I am not familiar with the accounts."[706]

"I am a clamorer for dividends. That is the only function I have," said another trustee.[707]

"When was your last rate given you, the rate at which you are now being carried (on the New York Central)?"

"I could not tell."[708]

The secretary had testified that this associate attended to getting the rates of freight; but the latter avowed that he could not remember "any rate" that he had paid "at any time." But a little later he who could not remember any rate he had ever paid was able to tell the committee, off-hand, the exact rate of freight on oil by steamer from Batoum in Russia to Liverpool, and knew the rate from the wells at Baku by rail to the sea at Batoum![709]

"Had you ever been interested in the refinery of oil in any manner when you first became connected with the oil business?" another trustee was asked.

"Never."

"Or the production of oil?"

"Never."

He was a railroad man, and had been taken into the combination for his value as such; but when he was asked if he could tell any of the rates of freight his company had paid, he said:

"I cannot."[710]

"What is your business and where do you reside?" another of the trustees was asked by the State of New York.

"I decline to answer any question until I can consult counsel."[711]

"What is the capital stock?" was asked of another.

"I do not know."

"How much has the capital been increased since?"

"I don't know."

"Where are the meetings of the Standard Oil Company held?"

"I don't know."

"How many directors are there?"

"I don't know."

"Do they own any pipe lines?"

"I don't know."

"I don't know anything about the rates of transportation."[712]

"What quantity of oil was exported by the different concerns with which you were connected from the port of New York in 1881?" the president was asked.

"I do not know."

"How many millions of barrels of oil were refined by such concerns in the vicinity of New York in 1881?"

"I don't know how much was refined."

"Did not the concern with which you were so connected purchase over 8,000,000 barrels of crude petroleum in 1881?"

"I am unable to state."

He was asked to give the name of one refinery in this country, running at the time (1883), not owned or substantially controlled by his concern. "I decline to answer."[713]

He was asked if he would say the total profits of his trust's companies for the last year (1887) were not as much as $20,000,000.

"I haven't the least knowledge on that subject."[714]

Phrenologists are right. Memory is not to be ranked with the mental attributes of the highest importance. The head of the New York Central could not tell when a stock dividend of something like $46,000,000 had been declared on one of his railroads—and a $46,000,000 dividend is something worth remembering. "I don't know.... I don't remember."[715] It is lucky for the rest of us that these great men forget something.

One of the chiefs of the oil combination was a witness in Cleveland in 1887 in a suit by the State of Ohio against certain railroads.

"What business in connection with the oil business is done in the building in which the oil trust has its office in New York?"

"I do not think I could state just what business is done in that building, I am sure."

Asked on the witness-stand in the Buffalo explosion case when it was he formed the "trust" with $70,000,000 of capital, the president replied: "I am unable to state," and he could not say where its articles of agreement were, nor who has control of it. When questioned before the Interstate Commission he could not tell within $25,000,000 how much business they were doing a year.[716]

These men keep no books. The whole arrangement is just a happy family, like Barnum's monkeys, birds, cats, dogs, and mice in the same cage. "It is a business of faith," one of the ruling four puts it. Another was asked about the by-laws under which he and his associates transacted their business. "I don't know that I have seen a copy," he replied, and as to where it was he was able only to "suppose."[717]

When the committee of the Legislature called for the books recording the transactions of the trust and its attorneys and committees, there were practically none to produce. All there was in the way of a record of transactions of a magnitude beyond those of any other commercial institution in this country or the world were a few pages of formal entries from which nothing could be learned. The executive committee received and passed upon the disbursements of money by the treasurer, and the reports of sub-committees and of members, who had sweeping powers of attorney, by which these countless millions were kept rolling themselves up into more, but it never kept any records.

"I have no knowledge of any formal record having been made," one of them said. The reports were "either verbal or on pieces of paper.... I think it was memorandums," he continued, and the memorandums were "undoubtedly destroyed." They were transcribed into the records of the trustees, he said, but the search of the committee showed that the transcription was a "skeleton," consisting mainly of the mere phrase, "Minutes of the executive committee approved." "The real minutes do not appear upon the book," Senator Ives, of the committee, said.

"There is no book to produce?"

"There is no book."

"And there is no memorandum?"

"There is no memorandum."[718]

"Does the trust keep books?" the "president" was asked by Congress.

"No, we have no system of book-keeping."

On further pressure he said that the treasurer had "a record to know what money comes in."

"You have never seen those books?"

"I do not think I have ever seen those books."

"Has any member of the nine" (trustees) "ever seen those books?"

"I do not know that they have."[719]

Simplicity is said to be always a characteristic of greatness. What could be simpler, and so greater, than this? The elements of success are only—

1. Not to know anything about the business.

2. To keep no books.

3. To have "a record to know what money comes in," and

4. Never to look at it.

Finally, the operations of these men have, in their own language, not been "business." Its secretary told Congress that the "trust" was "not a business corporation,"[720] and an associate declared in court that it "cannot do business." The report of the New York Legislature shows that on October 3, 1883, the president had by a formal instrument been made the attorney of the trust to sign and execute all the contracts made by it. The same instrument in express terms confirmed the execution of contracts heretofore signed by him, showing that he had been making contracts.[721]

"Those gentlemen" (the members of the trust who hold its power of attorney) "do actually execute contracts involving pretty large amounts, sometimes without a formal resolution of the Board of Trustees, do they not?" one of them was asked.

"Undoubtedly they do."[722]

Following their employers, the lawyers in the Pennsylvania Tax case for the oil combination argued that its operations were not business within the meaning of the tax law. If the "no money" of 1862 has become the control, in one industry alone, of $160,000,000 in 1892 by methods that are not "business," what are they?

Note.—The principal members of the oil combination were heard at great length in its defence before the committee of Congress investigating trusts in 1888.[723] Their testimony has been frequently used in our pages. But they felt that their case needed further elucidation, and asked the committee to hear them again. The committee declined to hear them again "explain or contradict," as they offered to do, but by printing their communication gave them the benefit of their denials and explanations.[724] Their offer was mainly to go again over the ground that the "South Improvement Company never did any business," that the combination "obtained no preferences" on the railroads, that they had cheapened transportation, improved machinery, made better oil at less cost, and so on. The chief officers and owners had been heard on all these points to the extent of hundreds of pages of testimony. But though it did not recall them to the witness-stand, the committee, in addition to printing their communication, printed most of the documentary evidence they desired to submit. This covered nearly two hundred pages more.[725]

The examination, which any one can make, of this record discloses an interesting fact concerning the proof, and the trust's offer to prove, which can best be shown in parallel columns:

TRUST'S OFFER TO PROVE. THE PROOF.

It offered the evidence of the third vice-president of the Pennsylvania Railroad to "show the South Improvement Company never did any business, and its charter was repealed in 1872." But the testimony of this witness states that his connection with the oil business of the Pennsylvania that scheme—did not begin until 1873. [726]

It offered the same evidence to prove that the same rebates granted it by the contract of October 17, 1877, "were also granted to every shipper who contracted to do all his business over the Pennsylvania Railroad." But this witness stated that his road would give other shippers as low rates as to the oil combination, "if they would guarantee the same quantity—not otherwise—under that contract";[727] and the contract itself states that no other shipper should have the same rebate—"commission," it is called—unless his business gave the road "the same amount of profit you realized from our trade."[728] No shipper could get the same rates by giving "all his business." He must give "the same quantity"—a totally different proposition.

It offered the evidence taken in the Buffalo Explosion case, to show that "C.B. Matthews testified falsely" in testifying that it was sworn to that the members of the oil combination on trial employed detectives in Matthews' refineries, and that the detective was some time in Matthews' employ, and made his report to the lawyer of the trust, and he got his pay from this lawyer. The evidence shows that this was what was sworn to: "I have now a detective agency here" (Buffalo). "I employed L—— B——. At the time he was in my employ he was employed at the works of the Buffalo Lubricating Company" (Matthews' company). "He made reports to me.... I forwarded copies—one to New York, one to Rochester.... The one forwarded to New York was addressed to" (the lawyer of the oil trust). "I met" (this lawyer, naming him) "at New York City, at No. 44 Broadway, which is the office of the" (oil trust). "I received my pay from" (him). "My instructions from" (him) "were in writing."[729]

It offered "to prove that C.B. Matthews testified falsely in saying that it was proved by a witness" that the Rochester representative of the oil combination said that the principal company in it "would sue Matthews once a month, or once a week, if necessary, to squeeze him out." This was what "was proved by a witness," and referred to by Matthews. "He" (the Rochester representative of the oil combination) "said he thought they" (Matthews' company) "would not survive.... By the time they got through with all the suits that they" (the oil combination) "would bring, the Buffalo Lubricating Company would be pretty much used up.... He didn't know as they would gain anything really, but they would embarrass them by bringing these suits, and if it was necessary they would bring them once a month—yes, they would bring them once a week."[730]

Similarly, throughout, the trust's offer to prove falls when confronted with its own proof. Many more instances could be given, but more than one instance is not needed.

CHAPTER XXXIII

THE SMOKELESS REBATE

With searching intelligence, indomitable will, and a conscience which makes religion, patriotism, and the domestic virtues but subordinate paragraphs in a ritual of money worship, the mercantile mind flies its air-line to business supremacy. That entirely modern social arrangement—the private ownership of public highways—has introduced a new weapon into business warfare which means universal dominion to him who will use it with an iron hand.

This weapon is the rebate, smokeless, noiseless, invisible, of extraordinary range, and the deadliest gun known to commercial warfare. It is not a lawful weapon. Like the explosive bullet, it is not recognized by the laws of war. It has to be used secretly. All the rates he got were a secret between himself and the railroads. "It has never been otherwise," testified one of the oil combination.[731] The Chevalier Bayard declared proudly, as he lay on his death-bed, that he had never given quarter to any one so degraded and unknightly as to use gunpowder. Every one would close in at once to destroy a market combatant who avowed that he employed this wicked projectile.

The apparatus of the rebate is so simple that it looks less like a destroying angel than any weapon of offence ever known. The whole battery consists only of a pen and ink and some paper. The discharge is but the making of an entry—but the signing of a check. But when the man who commands this simple enginery directs it against a business competitor you can follow the track of wreckage like the path of a cyclone, by the ruins which lie bleaching in the air for years. The gentlemen who employ it give no evidence of being otherwise engaged than in their ordinary pursuits. They go about sedate and smiling, with seemingly friendly hands empty of all tools of death. But all about them as they will, as if it were only by wish of theirs which attendant spirits hastened to execute, rivals are blown out of the highways, busy mills and refineries turn to dust, hearts break, and strong men go mad or commit suicide or surrender their persons and their property to the skilful artillerists.

"And in the actual practice of daily life," says Ruskin, "you will find that wherever there is secrecy, there is either guilt or danger." "When did you discover the fact that these rebates had been paid?" one of the victims was asked.

"We never discovered it as a fact until the testimony was taken in 1879.... We always suspected it; but we never knew of it of our personal knowledge, and never would really have known it of our personal knowledge.... I had no idea of the iniquity that was going on."[732]

Nothing so demolishing was ever so delicate and intangible as this, for its essence is but a union of the minds of a railroad official and some business friend, perhaps a silent partner, bent on business empire. The model merchant, fortunate in having a friend willing so to use a power sovereigns would not dare to use, walks the public way, strong in his secret, and smiles with triumph as all at whom he levels his invisible wand sicken and disappear. "He has the receipt of fern-seed. He walks invisible."

Men who hunt their fellow-men with this concealed weapon always deny it, as they must. To use it has always been a sin, and has been made a crime in every civilized State. Under United States law it is, since 1887, an offence punishable with imprisonment in the penitentiary.[733] Moral ideals are not born in legislatures. When an act attains by a law the distinction of being made a crime, it is already well on its way to extinction. It is made infamous by law, because it has already become infamous before the conscience and honor of men. It was not the prohibition of highway privilege by the Constitution of Pennsylvania or the laws of the United States which made the rebate an iniquity. This legal volley is but a salute to the established conscience.

The question most often pressed before all the many legislative and judicial inquests held upon the dead bodies which strew every field of the oil industry has been whether the extraordinary powers which the invention of the locomotive and the transformation of public highways into private property had given railways over the livelihoods of the people had been used to make it impossible for any but a preferred few to live.

One of the successful men disposed of the evidence that these powers had been so used by styling it before the committee of Congress of 1888 as the "worst balderdash," and before the New York Legislative Committee of 1888 as "irresponsible newspaper statements," "a malignity and mendacity that is little short of devilishness." The secretary of the oil trust waved it away as "all this newspaper talk and flurry." The president knows nothing about the existence of such privileges, except that he has "heard much of it in the papers." And yet another of the trust in the North American Review of February, 1883, similarly describes the accusation as "uncontradicted calumny," to which, he regrets to say, "several respectable journals and magazines lent themselves."

After taking 3700 pages of evidence and sitting for months, the committee of 1879 of the New York Legislature said in their report: "The history of this corporation is a unique illustration of the possible outgrowth of the present system of railroad management in giving preferential rates, and also showing the colossal proportions to which monopoly can grow under the laws of this country.[734] ... The parties whom they have driven to the wall have had ample capital and equal ability in the prosecution of their business in all things save their ability to acquire facilities for transportation."[735]

The committee of the Ohio Legislature which took the evidence of the treatment of the Marietta independents by the railroads[736] is, so far as the author knows, the only body of all the legislative and judicial tribunals that have been investigating for the past thirty years which has found the relations of the railroads and the oil combination to be proper. It used the words "public," "uniform," "in accordance with law," "equitable," "no special discriminations or privileges" to describe the conduct of the common carriers in that case. But in doing so it had to except from these exculpations the railroad which originated the attack on the independent refiners, and the rates of which controlled the others, as it was the initial road. It had also to admit that the oil combination had received "better rates," but defended them on the ground that its shipments were larger. These two exceptions are doors wide enough to admit every possibility of the rebate. The Secretary of State for Internal Affairs of Pennsylvania made an investigation in 1878 on the complaint of citizens. He reported to the Attorney-General that no case had been made out "beyond the ordinary province of individual redress." He was hung in effigy by the citizens, and the evidence he took remains, like that of the Ohio Committee of 1879, a valuable repository of facts from which students can draw their own conclusions.

More than any others the wrongs of the oil industry provoked the investigations by Congress from 1872 to 1887, and caused the establishment of the Interstate Commerce Commission, and more than any others they have claimed the attention of the new law and the new court. The cases brought before it cover the oil business on practically every road of any importance in the United States—in New England, the Middle States, the West, the South, the Pacific coast; on the great East and West trunk roads—the Pennsylvania, the Erie, the Baltimore and Ohio, the New York Central, and all their allied lines; on the transcontinental lines—the Union Pacific, the Central Pacific, the Southern Pacific; on the steamship and railroad association controlling the South and Southwest. They show that from ocean to ocean, and from the Gulf of St. Lawrence to the Gulf of Mexico, wherever the American citizen seeks an opening in this industry, he finds it, like the deer forests and grouse moors of the old country, protected by game-keepers against him and the common herd. The terms in which the commission have described the preferences given the oil combination are not ambiguous: "Great difference in rates," "unjust discrimination," "intentional disregard of rights," "unexcused," "a vast discrepancy," "enormous," "illegal," "excessive,"[737] "extraordinary," "forbidden by the act to regulate commerce,"[738] "so obvious and palpable a discrimination that no discussion of it is necessary," "wholly indefensible," "patent and provoking discriminations for which no rational excuse is suggested," "obnoxious," "disparity ... absurd and inexcusable," "gross disproportions and inequalities,"[739] "long practised," "the most unjust and injurious discrimination ... and this discrimination inured mostly to the benefit of one powerful combination."[740]

This was what the Interstate Commerce Commission found all along the record from 1887 to 1893. When one of those who got the benefits so characterized was before the New York Legislature in 1888, he said:

"I know of no discrimination in the oil traffic of any kind since the passage of the Interstate Commerce Act."

"Do you use any means for the purpose of avoiding the effect of that new law?"

"None whatever."[741]

But the people have found that the explicit prohibitions of the Interstate Commerce law were of no more protection to them than the equally explicit prohibitions given long before by the State constitutions and laws, the common law of the court, and by the still older common law of right, which the statute was created to enforce. The "unjust," "enormous," "illegal" differences in freights by which the public was excluded were got from the railroads after, as before, Congress, obedient to an aroused and universal demand, had passed a special statute and created a special tribunal to prevent and punish this special sort of crime. This is the adjudicated fact.

This "uncontradicted calumny," "worst balderdash," "malignity and mendacity," "irresponsible newspaper statements" proves upon examination to be:

1. Testimony of unimpeached and in many cases uncontradicted witnesses, given under oath in legislative investigations and in court, subject to examination and cross-examination and rebuttal.

2. Reports of State legislative committees.

3. Copies of the contracts.[742]

4. Decision of courts, State and national.[743]

The South Improvement plan of 1872 is still in unrelenting operation, according to the latest news. A case is now pending before the Interstate Commerce Commission,[744] in which charges of highway abuse even more sensational than any of those we have seen judicially proved are made against the thirty railroads by which the oil of Ohio, Pennsylvania, and New York reaches the Pacific coast. A San Francisco oil dealer is the petitioner for relief. He recites the discriminations given the oil combination on the Pacific coast before the Interstate Commerce law was enacted. These were admitted by the officials of the roads before the United States Pacific Railway Commission of 1887. The traffic managers of the Southern Pacific testified that the oil combination, "from the time it acquired the oil business on this coast, had lower rates than the general tariff provided, or than other shippers paid on coal oil."[745] The general freight agent of the Central Pacific Railroad admitted that his road had the same arrangement, and had accepted the business "at rates dictated" by the oil combination.[746] The general traffic manager of the Union Pacific Railroad said:

"We have paid them a good deal in rebates." It was a "pretty large" preference.

"What was the effect on the small dealer?"

"I should think it would be embarrassing to the small shipper!"[747]

When the Interstate Commerce law went into force the oil combination introduced a patented car for the transcontinental trade, which it claimed the sole right to use. Though the new car was to the disadvantage of the railroads, as it cost more to haul, the managers gave it lower rates than any other car and carried it back free, while they punished the shippers who gave them a lighter and better car by charging them $105 for carrying that back.

The San Francisco complainant goes on to charge that a plan was concocted and put in operation by which rates were lowered whenever the combination wanted to fill its warehouses on the Pacific coast, and as soon as they were full were put back again. This lowering and raising of rates was "to the public sudden and unexpected."[748] It was known in advance only to the ring and the railroads. Before other shippers could take advantage of the low rates they would be raised again. The complaint recites that in pursuance of this plan, after the combination had transferred to the Pacific coast at the end of 1888 from its Eastern refineries all it needed for the next season's business, the railroads advanced the rates from 82½ cents a hundred pounds to $1.25. The next May the railroads made a similar seesaw, and, he says, in December, 1892, "are still making ... such arbitrary and sudden reductions ... to the undue advantage" of the oil combination "and to the detriment and injury of all other shippers." The San Francisco merchant also charges that in the interest of the Eastern refineries of the combination rates are made to prevent the large product of the oil-fields and independent refineries of Colorado and Wyoming from reaching the Pacific coast, "which needs them to furnish fuel for its manufactories, as well as for light for its residents." Similarly we find the Chicago and Northwestern Railroad charging $105 for a car-load of cattle from Wyoming to Chicago, while for a car of 75 barrels of oil the freight would be $348. In connection with these charges the press published the telegrams, filling columns, which were said to have passed between the officials of the railroads and the oil combination in the negotiation of this arrangement. In one of these telegrams the freight agent of the Southern Pacific explains the new deal. "He" (the agent of the oil combination) "would stock up at the low rate, then notify the association of railroads when to advance." The advance or decline was to be "made at certain seasons of the year in accordance with this supply on hand." When the negotiation was finished and the plan was agreed to, a San Francisco agent of the oil combination is said to have telegraphed to its officers in New York: "I think we have managed this freight business pretty well from this long distance, especially when you think that we have secured the 90-cent rate with which to stock up from time to time." His telegram also discloses that the arrangement extended to lead and linseed-oil, showing, what is well known, that the combinations in these articles belong to the members of that in oil. These charges are, it is to be remembered, still unadjudicated, this published evidence is not yet substantiated. But the arrangement which is charged is in exact pursuance of that part of the South Improvement Company contract which bound the railroads to "lower or raise the gross rates of transportation ... for such times and to such extent as may be necessary to overcome ... competition."[749] And Attorney-General Olney has been publicly informed[750] that during the summer of 1894 oil rates between Pennsylvania and Colorado were put down from 75 cents a hundred to 25 cents, and a few weeks later raised again to the old rate. Another increase made the rates to Denver higher, for oil, than to the Pacific coast. He has been asked to ascertain, judicially, if this shuffling of rates was not made, like that complained of before the Interstate Commerce Commission, to allow the oil trust "to stock up at the old rate." His informants suggest that the same powers with which he has brought railway employés to trial for infractions of the Interstate Commerce law can be used against the railways.

This is not all of the story. This patented car spoken of was a mere aggregation of old elements, as the courts held, and the patent was void. Advised by their lawyer that this would be the view the courts would have to take, competitors of the combination in the business of the Pacific coast, where they had been at the head until these new tricks of trade came in, introduced a car of their own of the same class. They thus became entitled to the same low rates and the same free return of the car as their powerful rival. This put them again on an equality in transportation. They had not been using these new cars long before two of them, shipped as usual from the East, failed to arrive. Their search for the missing cars put them in possession of the interesting information that a litigation, of which they had had no notice or knowledge whatever, had for some time been in progress, and was at that moment at the point of decision. As their interests had been entirely unrepresented, this decision would certainly have been against them, and would have forever made impossible the use of their cars on any railroad of the United States. This had been done by an apparently hostile litigation by the oil combination against the Southern Pacific Railroad. The former sued in the United States courts for an injunction to forbid the railroad from hauling the cars of the competitor, on the ground that they were an infringement on its own patented cars. No notice was given the persons most interested—the owners of the cars in question—whose business life was involved, and they were not at first made parties to the suit. The dummy defendant—the railroad—made no valid opposition, but with great condescension admitted that all the averments of its antagonist were true. The case was sent through the courts on a gallop to get a decision. After that the merchants whose cars were the object of the attack, as they had not been parties to the case, could not have it reopened, and it would stand against them without possibility of reversal. The firm found that a temporary injunction had been applied for and had been granted; that this had been followed by proceedings to make the injunction perpetual; that subpœnas had been issued, served, and returned, and an order had been obtained from the court for taking testimony. In place of the regular examiner of the court, a special examiner had been appointed; he had begun taking evidence the same day, and taking it privately. The testimony so taken had been sealed and filed. The railroad had made its answer December 2d, the testimony already taken was filed in court December 3d, making the case complete for decision by the judges. December 4th the firm heard for the first time of what was being done, and December 5th applied for the right to take part, which saved them. To get such cases ready for a hearing in the United States Circuit Court, where this was done, usually requires a year. But in this instance it was done in two weeks! Only just as the door of the court was closing irrevocably, as far as their rights were concerned, did the firm get inside, and secure leave to have their side represented. The whole fabric of the litigation fell at the first touch. The temporary injunction against the use of their car was dissolved, the permanent injunction was refused, the patent of the oil trust's car was declared worthless, and this decision was upheld by the United States Circuit Court of Appeals in February, 1893.[751]