Introductory material (continued 4)

The Commission heard all this urged by eloquent counsel. It heard the men who were being crushed tell how their refineries were being closed, their customers lost, their business wrecked, their labor idle, while the trade itself was growing larger than ever. It saw the statistics which proved it. But no practical relief have the independents of Oil City and Titusville been able to get from it. They have lost the business, lost the hopes of five years, lost the growth they would have made, lost five years of life.

This delay of justice is awful, but it is not the end, for the decision, though it came at last in November, 1892, has brought no help. It required the roads to either carry the barrels free or furnish tank-cars to all shippers, and for the past ordered a refund of the freight charged on barrels to shippers who had been denied the use of tank-cars. More than five months after it was rendered the independents, in an appeal (April 20, 1893) to the Interstate Commerce Commission, called its attention to the fact that "none of the railroads in any one of the cases has as yet seen fit to obey any of its orders save such and to such extent as they found them advantageous to themselves, although the time for doing so has expired." More appalling still, it appeared, in an application made in March, 1893, by the Pennsylvania Railroad for a reopening of the case, that these years of litigation were but preliminary to further litigation. The counsel of the railroad, in the spirit in which it had previously warned the Commission that its powers "may be tested," now informed it that the road, if the application for further delay were not granted, would "await proceedings in the Circuit Court for enforcement of what it believed to be an erroneous order." And in another passage it referred to the proceedings before the Commission as being simply proceedings "in advance of any final determination of the case on its merits." Four years and a half had been consumed when, as the independents pleaded to the Commission, "it might reasonably have been expected that as many months would have sufficed," and yet these are only preliminary to "the final determination of the case on its merits."

"The delay suffered has been despairing—killing," was the agonized cry of the independents in their plea to the Interstate Commerce Commission not to grant this new delay. "We pray that no more be permitted." But in November, 1893, more delay was permitted by granting another application of the Pennsylvania Railroad for "rehearing." This was limited to thirty days, but these have run into months, and "the end is not yet." Five years have now passed in this will-o'-the-wisp pursuit of justice "without delay."

And another "outsider," who has been a suppliant since March, 1889,[281] before the Interstate Commerce Commission for the same relief—the free carriage of barrels where tanks are carried free—is still a suppliant in vain. The Commission consumed three years in hearings and rehearings, only to report itself unable to decide this and other important points raised by him. It was "a most perplexing inquiry," "we are not prepared to hold," "we desire to be made acquainted with the present situation," and "the results exhibited by recent experience." "No such intimation is intended," said the Commission, as that it is right for the roads to charge for barrels when they carried tanks free—not at all. "We simply refrain" from stopping the wrong, and "reserve further opinion for fuller information and more satisfactory inquiry." Perhaps, however, by "voluntary action"[282] the railroads which had contrived this wrong would be good enough to stop it, though the Commission was not good enough to order them to do so! The Commission held that the rates were "unlawful; but, for want of sufficient data, we do not undertake to point out the particular modifications and reductions which would satisfy the demands of justice."[283] "We are not now prepared to determine," "we feel unable to prescribe," "is not now decided," "reopened for further evidence and argument," are the phrases with which the Commission glided away from the settlement of other vital points as to which its intervention had been invoked for more than three years. Even when it directed the railroads to reduce their charge it added "to what extent the Commission does not now determine, and the cases will be held open for such further," etc. And there his case hangs even unto this day, for since this "not-now-decided" decision the "outsider" has never renewed his appeals to the Interstate Commerce Commission concerning these cases or others,[284] but, hopeless of redress, has let them go by default.

The secret contract stands, but the barrel men survive, barely, despite monopoly, by changing to tank-cars, and getting a pipe-line and some terminals. They create seaboard facilities and persuade the Jersey Central to haul their tanks. To meet this road they lay the pipe now to be described, and, to escape railroads altogether, will build to New York, if not ruined meanwhile.

CHAPTER XII

UNFINISHED MARCH TO THE SEA

Between May and December, Sherman made his march from Lookout Mountain to the sea, cutting the Confederacy in two. For thirty years the people of Pennsylvania have been trying to break a free way to the ocean through the Alleghanies and the oil combination, and in vain. For ten years the hope of independent outlet to the sea from the oil-fields of Pennsylvania lay prostrate under the blow of the surrender of the Tidewater. Twice the people have tried again, only each time to be headed off. The first of these two rallies collapsed in the shut-down of 1887; the second was stopped at the cannon's mouth by an armed force at Hancock, New York, in the year of peace, 1892.

By 1887 the people of the oil regions had recovered from the shock of losing the independent Tidewater Pipe Line,[285] and began to make new plans for getting to the sea. By some means the committee to whom they had intrusted the management of the new enterprise was persuaded to go to New York to confer with the officers of the oil combination, who had measures of conciliation to propose that would make it unnecessary to build the new pipe lines. This committee, and finally the constituency it represented, were made to believe that the cause of the woes of the oil country was simply and only that there was too much oil—not that there were too many empty or half-filled lamps. They agreed to cut down their business one-half, and were lured away from the project of getting full prices on a full product. The outcome was the "shut-down" of 1887. The producers were persuaded it would bring back oil to a dollar a barrel—to stay there; but after a brief and unremunerative spurt in values, a reaction, lasting to the present, carried prices to a lower level than ever, and the producers found that the last state of those who let such spirits enter them is always worse than the first.

Several times before this the oil producers had tried to imitate the policy of scarcity, which the most brilliant business successes are teaching to be the royal road to wealth. It is stated by the report of the General Council of the Petroleum Producers' Union[286] that the producers had twice entered into arrangements with the oil combination to lessen the product and regulate the price of crude petroleum, and that in each case the arrangement had been violated by the latter when it seemed about to become profitable to the producer. Hence, when invited to confer for a third venture of this sort, the Council declined to do so. But in 1887 the invitation, extended for the fourth time, was a third time accepted. The producers succeeded in the restriction, but they did not better their condition. These men gave the world the spectacle of the producers flirting with the solitary and supreme buyer of their product, in the belief that he would help them to raise their price against himself.

The agreement which was made with the producers was shown before Congress.[287] The producers were bound for a year from November 1, 1887, "to produce at least 17,500 barrels of crude petroleum less per day," and to make it, if possible, "30,000 barrels less per day." In return for this the oil combination agreed to give the speculative profits on 6,000,000 barrels of oil—the profits on 5,000,000 for them, and on 1,000,000 for their laborers. This move of those who want petroleum cheap to make it dear is one of the equivocations of policy in which princes have always distinguished themselves. The need of the hour was to stop the building of the competing pipe line. That was accomplished by the scheme of the shut-down, which amused the producers, and, as subsequent prices proved, did not hurt the buyer of their oil; quite the contrary.

Drills and pumps at once ceased their operations throughout the oil regions. Working-men were thrown out of employment, stores were closed, hundreds of families had to subsist on charity. One of the Broadway producers who made this bargain for the shut-down admitted to the committee of the New York Legislature that "the oil-producing interest was abnormally depressed," and "that there was great distress."[288] The agreement itself recites that the price of petroleum had been during the preceding year "largely below the cost at which it was produced." The people of the oil country went to work with desperation to enforce the policy of oil famine. Committees were formed among the well-drillers in each district, "whose duty," the formal papers of organization stated, "shall be to keep a lookout for and endeavor to prevent the drilling of wells." "We have no way of stopping those who want to drill wells," one of the officers of the organization said, "only by good, reasonable talk." The Well-drillers' Union appointed and paid one of their members to reason with people who insisted upon digging wells. It is not necessary to question the good faith of the assurance their officials gave Congress that his duties did not require the use of nitro-glycerine. But, "unofficially," nitro-glycerine was freely used to enforce the shut-down. Men who failed to feel the influence of the "good talk," and went on putting up machinery, and drilling wells, would find their derricks blown into kindling-wood. Referring to one of these occurrences, a member of the Well-drillers' Union told Congress it was a case where no permission had been granted by the union to drill.

"Was the rig destroyed?" he was asked.

"The derrick was blowed up by some kind of compound."

The quantity of the "compound" was enough to shake windows six miles distant. The derrick and the machinery were "cheapened" into junk.

"Did you ever know of a case of any man's derrick and apparatus being blown up in the oil region before the formation of this association?" one of the shut-downers was asked.

"I could not say that I do."[289]

The owner of the apparatus destroyed, it was stated by the press, had been repeatedly requested to join the shut-down, but had refused. There were several such occurrences, recalling the affairs at the Buffalo refinery in 1885.[290] When the people in Pennsylvania saw apostles of the gospel of making oil cheap enter into a bargain with them to make it scarce, it is not surprising that they should have become bewildered to the point of thinking that the noise of nitro-glycerine was "good talk," and should have sunk into the depression, monetary and moral, that alone could make such haggard faces rise among an honest laborious people.

We have seen how the refiners who pass under the control of the trust are compelled to make monthly reports. The same perfectness of discipline appears at once among the producers in this shut-down. Every one of them had to make monthly reports of how much oil he had taken out of the earth. If the mobilization of industry goes on at the rate of recent years, it will not be long—not later, perhaps, than the end of the nineteenth century—before all producers, and all makers, will be sending monthly reports to New York of grain, cattle, iron, wool, lumber, leather, and the manufactures of them to trustees, whose "pleasure it is to try to make them"—the men as well as the commodities—"cheap." The supervision by means of these monthly reports was so close that over-production, however minute, was immediately known. If the owner of a well over-produced only the one-hundredth of a barrel, he got a notice to go slower.[291]

To the producers engaged in it the result of the shut-down was that when their representatives at the end of it called on the oil combination in New York for the profits on the 5,000,000 barrels of oil set apart for them, as agreed, they were given a check for a sum between $200,000 and $250,000.[292] This was divided among those who had co-operated—nearly one thousand—in proportion to their share in the good work of making the supply of the light of the people so much "less per day." The drama of industry has not many scenes more striking than this of these men—the principal producers of the oil country, which had yielded in the thirty years up to this time more than 300,000,000 barrels of oil—going to the great syndicate in New York to buy the privilege of restricting the production of their own wells, thankfully accepting the scanty profits on a speculative deal in the oil exchange of 5,000,000 barrels, receiving with emotions of enthusiasm a check for a couple of hundred thousand dollars for a year's "co-operation" from the men who had made out of their product hundreds of millions.

The shut-down was a great disappointment in prices. The average price of petroleum at the wells for October, the month before the shut-down, was 70-7/8 cents a barrel. The highest monthly price reached during the restriction was 93-5/8, in March, 1888. The average for October, 1888, the last month of the year originally agreed upon, was 90-5/8. By a subsequent understanding the restriction was continued until July, 1889. The price then was 95-1/8. At no time during the shut-down was the coveted dollar mark maintained, and it was barely touched in March, 1888, after which there was a sharp decline to 71-3/8 in June, with savage losses to "the lambs." High prices did not come until the accumulation of 6,000,000 barrels set aside "for the use" of the producers had been sold out. After that there were in the winter following—1889-90—a few months in which the price rose, as to $1.12½ in November, 1889, but it sank the year following to 60¾ in December, 1890, and it continued to go down until crude oil reached 50 cents in October, 1892, the lowest point known since there was an oil market.[293]

The men with whom the producers made their bargain, shrewder than they, and versed in the dynamics of the markets, knew that the effect of setting apart 6,000,000 barrels of oil would be ultimately depressive to prices, not stimulating. Not knowing when or at what price this vast amount would be unloaded, buyers, both for use and for speculation, would be made timid, and prices would be held in check. The shut-down produced a great gambling mania. Untold millions were lost by men in the oil country, who gambled on the exchanges to make the profits of the expected advance. Local panics, bank failures, ruin in all its shapes, were the escort of shame and loss which marched with the shut-down. Curiously enough, it was those who speculated for the rise who were the losers. There was against them an element which knew better than they what prices were going to be, for it made them. It is this ability of insiders to bet on a certainty which has been the destruction of the oil exchanges. From Pittsburg to New York they are now practically all dead.

The amount of the reduction effected by the shut-down, independent of a natural decline which had set in some months before, has been estimated at 11,000,000 to 15,000,000 barrels. The production ran down from 25,798,000 barrels in 1886 to 21,478,883 in 1887, and 16,488,688 in 1888. In 1889 it was up to 21,487,435 again, and in 1890, 29,130,910.

The price of light advanced. When the negotiations were in progress the producers were told that if the flow of oil glutting the market could be stopped the price of refined could be advanced, and that for every eighth of a cent a gallon advance in it the producers could expect an advance of 4 cents a barrel on their crude oil. Refined advanced during the shut-down to a price to correspond to which the crude should have risen to 96 cents a barrel. Instead, its price fell to 78 cents. The committee went to New York "to protest." Their New York ally said there was no change in the markets of the world. That they could get the price for the refined, but they did not propose to hold up the price of the crude. "If we could not do that, they could not help it."

"He had refined to sell, and crude to buy?"

"Yes, sir."[294]

This shut-down, the New York Tribune said, was "one of the most interesting economical experiments made in recent years." It was, as the New York World said, "one of the largest restrictive movements ever attempted in commerce." The president of the trust, when examined on February 27, 1888, by the New York Legislature, as to the agreement for the shut-down, declared positively that nothing of the kind had been done.

"There has been no such agreement?" he was asked.

"Oh no, sir!... Oil has run freely all the time."

"And no attempt to do that?"

"No, sir."[295]

He afterwards recalled these denials, and excused himself on the ground that as he had been in Europe when the arrangement was made he had known of it only "incidentally."[296] A "shut-down" on facts is as necessary to the success of the schemes for scarcity as a shut-down in oil. There are too many facts, as well as too much oil.

"By advancing the price of the crude material you necessarily advance the price of the refined?" another of the combination was asked.

"Yes, sir."[297]

The average price of refined at New York for export was 6.75 cents a gallon in 1887. This rose to 7.50 in 1888, the highest average price for any year between 1885 and 1893.[298] The effect of the restriction—"one of the most extensive ever attempted in commerce"—was thus to make oil and light and all its other products scarcer and dearer. The producers really got no good. After the shut-down had been in progress five months, their committee issued an address congratulating them on the "glorious results" achieved in the fidelity with which the pledge of restriction had been kept, but continued, "But prices are not yet remunerative."[299]

"We do not seem to have gotten it," one of the producers said to Congress, referring to the assistance they expected in an advance of the price to profitable figures.[300] No lasting gain came to any one unless to the monopoly, and it is possibly too soon to tell whether its gain will be "lasting."

Part of the speculation was that the profits of 2,000,000 barrels, contributed equally by the combination and the producers, were to be distributed among the working-men affected by the loss of employment. Men who had been earning $12 a day received a dollar a day from this fund, and lay idle.[301] A blistering picture of the condition of the region is to be seen in the testimony of one of the producers.

"The payments that you have made, or that your assembly has made, have been to individuals?"

"Yes, sir."

"State what the character of the occupation of the individuals thus relieved was in relation to the shut-in."

"Pumpers and roustabout men who had families sick and impoverished. That was a source of relief to them, and we did not withhold it. It was in our community, and we thought we could well afford to allow them that."

"For what did you pay them?"

"For charity's sake."

"Did you give them any occupation?"

"We had it not to give; we gave them money instead."[302]

This was the melancholy end of the great shut-down. But the people were not broken by their new failure. They did not lie long in the cul-de-sac into which they had been trapped. There is a magnificent reserve force of public spirit and love of liberty in the province of William Penn and the chosen State of Benjamin Franklin. The oil business has been a thirty years' war. The people have been whipped until one would suppose defeat had become part of their daily routine, but there have always been enough good men who did not know they were beaten to begin fighting again early the next morning. It was so when the independents of Pennsylvania took the pool of the oil trust's pipe lines and the railroads before the Interstate Commerce Commission, only to reap the unexpected demonstration that the tribunal created by Congress to prevent and punish discrimination was but one more theatre for litigation and delay.[303] Leaving their cause on the floor of the Interstate Commerce Commission, these men went forth for the seventy and seventh time to build a pipe line of their own, on which they are now busy. Their numbers, resources, and hopes are less, but their will and courage are undiminished. To-day, in northwestern and western Pennsylvania this small, determined body of men are going forward with a new campaign in their gallant struggle for the control of their own business. Their efforts have been, a friendly observer says, not too warmly, as heroic and noble and self-sacrificing as the uprising of a nation for independence.

Of all this very little has been known outside the oil regions, for the reason that the newspapers there are mostly owned or controlled by the oil combination,[304] or fear its power. The last independent daily in northwestern Pennsylvania became neutral when the threat was made to place a rival in the field. With sympathy from but few of the home press, ridiculed by the "reptile" papers, and met at every turn by crushing opposition, and annoyances great and little from spies and condottieri, these men are, in 1894, working quietly and manfully to cut their way through to a free market and a right to live. Their new pipe line has been met with the same unrelenting, open, and covert warfare that made every previous march to the sea so weary. The railroads, the members of the oil combination, and every private interest these could influence have been united against them. As all through the history of the independent pipe lines, the officials of the railways have exhausted the possibilities of opposition. At Wilkes-barre, where a great net-work of tracks had to be got under, all the roads united to send seven lawyers into court to fight for injunctions against the single-handed counsel for the producers. They pleaded again the technicalities which had been invoked afresh at every crossing, although always brushed away by the judges, as they were here again. Though they have allowed their right of way to be used without charge for pipe lines which were to compete with them, the railroads refused to allow the independents to make a crossing, even though they had the legal right to cross. Not content with the champerty of collusive injunctions, they have resorted to physical force, and the pipe-layers of the independents have been confronted by hundreds of armed railroad employés. When they have dug trenches, the railroad men have filled them up as fast. Appeal to the courts has always given the right of way to the independents, but the tactics against them are renewed at every crossing because they cost them heart and money, and they have not the same unlimited supply of the latter as of the former. Their telegraph-poles have been cut down, lawyers and land-agents have been sent in advance of them to make leases of the farmers for a year or two of the land it was known they would want. For a few dollars earnest-money to bind the bargain, a great deal of land can be tied up in such ways. In some cases conditional offers would be made guaranteeing the owner five times as much as the independents would give, whatever that might be. Further to cripple them, a bill was introduced into the Pennsylvania Legislature and strongly pushed, repealing the law giving pipe-line companies the right of eminent domain.

The Erie, which has let the combination lay its pipe lines upon its right of way, and bore there for oil,[305] has been conspicuous in its efforts to prevent the new pipe line from getting through. The line at last reached Hancock, New York; there it had to pass under the Erie Railroad bridge in the bed of the river. The last Saturday night in November, 1892, the quiet of Hancock was disturbed by the arrival of one hundred armed men, railroad employés, by special train. They unlimbered a cannon, established a day and night patrol, built a beacon to be fired as an appeal for reinforcements, put up barracks, and left twenty men to go into winter quarters. Dynamite was part of their armament, and they were equipped with grappling-irons, cant-hooks, and other tools to pull the pipe up if laid. Cannon are a part of the regular equipment of the combination, as they are used to perforate tanks in which the oil takes fire. To let the "independents" know what they were to expect the cannon was fired at ten o'clock at night, with a report that shook the people and the windows for miles about. These opponents of competition were willing and ready to kill though their rights were dubious, and there could be no pretence that full satisfaction could not be got through the courts if any wrong was done.

For weeks Hancock remained in a state of armed occupation by a private military force. Referring to this demonstration with a private army at a moment of profound peace, the Buffalo Express said of those responsible for it: "They continue to fight with their old weapons—incendiarism and riot." No case has been come across in which the railroads made any opposition in the courts to the oil trust crossing under their tracks with its pipe line. More than once the railroads have allowed this rival carrier to lay its pipes side by side with their rails.

"Now, is your pipe line to New York laid upon the right of way of any railroad?"

"It touches at times the Erie road, and crosses the Erie road."

"Did you pay anything for that to them?"

"No, sir."

"Nothing?"

"Nothing."[306]

But never have the railroads failed to compel an independent pipe line to fight through the courts for every crossing it needed. It has made no difference how often or emphatically the law has sustained the right of the people to make such crossings. The next attempt would be resisted on the same ground, and with the same desperate determination "to overcome competition" for the favorite. The local line laid by the independents in 1892 between Coraopolis and Titusville had to pass under the Erie, the Lake Shore, the Pan Handle, the Western New York, and the Pennsylvania railroads, and in every case had to encounter needless litigation to do so. It was victorious, for the roads did not dare go to trial, though the managers, one after the other, to help cripple competition, spent the money of the stockholders in what was perfectly well known to be a hopeless opposition. A correspondent of the Bradford Record wrote: "When the news reached Bradford that the Erie Railroad had sold her independence to the combination, that the latter might defeat honorable competition and continue to rob the people, that one hundred men and a cannon confronted the United States Pipe Line at Hancock, who could have censured the outraged producers of Bradford for blowing the great Kinzua viaduct out of the Kinzua valley? Who could blame the bankrupt producers of the oil country for destroying every dollar's worth of the combination's property wherever found? The people are getting desperate; they are ready, like the blind Samson, to pull down the pillars of the temple, even though they themselves fall crushed to death amid the ruins." These are wild, even wicked words, but is it not a portent that such words rise out of the heart of an honest community?

This opposition, with show of force and threats of violence, was successful. In February, 1893, after months of facing the cannon and the private army which the railroad maintained for the oil combination, it was publicly announced by the president of the new pipe line that the route by Hancock must be abandoned. Many thousands of dollars and time worth even more were lost. "Suppose," said a daily paper of Binghamton, "that a body of laboring men had unlimbered a cannon and stationed armed men to suppress competition, what denunciation of the outrage there would have been!"

A new way through Wilkes-barre was chosen after the retreat from Hancock, and by that route the independent producers and refiners, with hope long deferred, are now seeking to finish their march to the sea.

The producers are poor men, and their resources for this unequal contest come from the sale of oil, and day by day the price of oil was depressed until it sank to the neighborhood of half a dollar a barrel. There has been some recovery since, but still the lowest prices of many years are being made, and the producers are finding the burden of their escape very heavy. "It is the honest belief of all oil men," says one of them, "that the low price of oil for the year is due to efforts to make the producer so poor that he cannot carry through his pipe line." This is the enterprise of the independent refiners as well as producers. Against these refiners, therefore, the market for refined oil also is manipulated. Very fantastic have been the operations of the "unchanging" laws of supply and demand under this manipulation. The independents found that in the export market of New York, in the spring of 1894, petroleum, just as it came from the pipe line crude from the nether earth, was quoted at a higher price a barrel than the same oil after it had gone through all the processes of refining and was aboard ship ready for the lamps of Europe or Asia.[307]

To throw another obstacle in the way of the new line, the oil trust in 1893 began again the game of 1878, of refusing to relieve producers of their oil with its pipe lines. As in 1878, the oil was left to run to waste. Then, the object was to compel the producers to sell it "always below the market";[308] now, it was to force them to sign a contract not to patronize any other pipe lines. Producers who refused to sign this contract, in order to be free to join the new line when it was finished, were refused an outlet, and they had to pump their oil on the ground while appealing to the courts to compel this common carrier to do its duty.[309] When they applied for a mandamus the combination receded from its position without waiting for a trial.

This has been a warfare on more than a new competitor; it is an attempt to suppress improvement and invention. A new idea in oil transportation, which promises a revolution in the industry, was hit upon by these independents. This was that pipe lines could be used to send refined oil long distances to market as well as crude. The announcement of their plans to do this was met with the ridicule of those who control the existing pipe lines to the seaboard and do not wish to see their old-fashioned methods of piping crude oil alone disturbed. But the independents went on with their idea. They have proved it practicable. Now, for the first time in the history of the oil industry, a pipe line transports oil ready for the lamp. Refined oil is piped from Titusville to Wilkes-barre with no loss of quality. Many hundred thousand barrels of it have been piped for nearly three hundred miles, and not a barrel has been rejected by the inspection, either at New York or its destination abroad. The success of the experiment proves that it can be piped to New York.

The independents press on. Occasionally one of them, says a local journal, unhinged by the loss of property, commits suicide or is taken to an insane asylum, and another goes down out of sight in bankruptcy, but the others close the ranks and go on, and now about 4000 men, in a strongly organized association, are marching side by side towards the sea—the blue and free.[310]

CHAPTER XIII

PURCHASE OF PEACE

Hunting about for tax-dodgers, it was discovered by the authorities of Pennsylvania some years ago that many foreign corporations were doing business within the limits of the Commonwealth and enjoying the protection of her laws, and at the same time not paying for it. Foremost among these delinquents stood the principal company in the oil combination with its mammoth capital, practically buying, refining and controlling nearly the entire oil production of the State, "and yet failing to pay one cent into the public treasury." So wrote the Auditor-General to his successor in 1882. The combination, beginning, like creation, with nothing, had grown, until in 1883 it was so rich that, according to the testimony of one of its members, it owned "between $40,000,000 and $50,000,000" in Pennsylvania alone.[311] But though doing business in Pennsylvania, and legally within the grasp of the taxing power, as decided by the courts, this company paid no taxes, and would not give the State the information called for by law as to its taxable property. It practised "voluntary taxation." "For eight years," Auditor-General Schell says, "it had been doing business in this Commonwealth, and had failed in all that time to file a single report." "It was not necessary for the department to call upon it to make reports." The law required these reports specifically and in details that could not be misunderstood, and that was notification enough. But year after year the Auditor-Generals, whose duty it was to collect due contribution from each taxpayer, made special demands upon this one for reports in compliance with the law, but with no effect.

In 1878 William P. Schell became Auditor-General, and began, shortly after taking his oath, to see if he could find out what taxes were due from this concern, and how they could be collected. He sent official circulars to the company in 1878, 1879, 1880, but "there was no reply made at any time."[312] His predecessor had had the same experience. He then sent one of his force to Pittsburg, Philadelphia, and New York to investigate. Whenever he could get the names of persons familiar with the workings of the company he would visit them, to find himself usually "not much further ahead than when he started."[313] "It was impossible to get any information. Even the men we talked to deceived us. Men came to Harrisburg to give us information, and afterwards we found they were in the interests of the company."[314] The department found itself, the Auditor-General wrote to his successor, "foiled at all points, not only by the refusal of the company to respond to the notices sent to its officers, but also by the great reticence of all persons in any manner connected with or employed by the company."

These efforts to find out the nature and character of the business of the company extended through two or three years. The first workable indication that the company was taxable in Pennsylvania came when the Governor of Ohio, in answer to inquiries, sent the Attorney-General a copy of the charter of the company. The Auditor-General wrote to the Governor and Auditor-General of New York and the Governor of Ohio for information. Letters were sent to the president and principal members of the company at Cleveland, Oil City, New York, and elsewhere. An answer was finally received from the company's attorney. He said that the company was not subject to taxation. The department replied the same day refusing to accept this view, and insisting on reports. Then the lawyer replied that the books and papers "were at Cleveland, and it would take some time to prepare reports." The Auditor-General offered to send his clerk to Cleveland "by first train," to prepare the reports for the company if assurance was given that he would be permitted to examine the books of the company when he got there.

No reply to this request was ever received. Then telegrams were sent, several days in succession, asking for reports, offering more time if the company would agree to report within any reasonable time, and finally warning the company that if it did not comply with the law and file its reports the Auditor-General would act under the authority given him by the law, and charge it with taxes estimated on such "reasonable data" as he could procure. All the department could get were evasive letters or telegrams from the counsel in New York, such as "letter explaining on the way." The letter came with the valuable information that "the officers are out of the city, and the company will answer on their return." Another "reply" was: "I have failed to get replies from the absent officers."[315] No reports forthcoming, the Auditor-General at last, on the best information he could get, backed by affidavits which were placed on file in the archives of his office, calculated the taxes due from 1872 to 1881, with penalties, at $3,145,541.64. This was totalled on an estimate, supported by affidavit, that the profits of the company had been two to three millions a year from 1872 to 1876, and ten to twelve millions a year from 1876 to 1880, figures which what is now known show to have been near the truth. After fixing upon this amount, and before charging it against the company, the latter was given still another chance, and another. Two telegrams were sent notifying that the estimated tax would be entered up if "the refusal to report" was persisted in. The last telegram said: "Still hoping that reports will come from the company, so that we will have some data to act upon."

No word of reply came.

Then the Auditor-General formally entered the amount he had estimated on his books, as the law authorized him to do.[316] His investigations had consumed his entire term, and the filing of this estimate was almost his last official act. It is a fact of record that after all this, officers of the company, in seeking to have this estimate of taxes due set aside, stated in writing that "there was no neglect or refusal on the part of said company to furnish any report or information which could lawfully be required of it by any officer or under any law of the State of Pennsylvania."[317]

Suit was now brought by the Attorney-General of the State to recover this tax, as was his duty, and then the company began to stir itself. To assist him in procuring and interpreting evidence the Attorney-General, who knew nothing of the oil business, obtained the services of a man who knew more about it than any one else in Pennsylvania. This person was a practical oil man. He was one of the leaders of the producers and refiners' association, which in the exciting times of 1872, when law and order in Pennsylvania stood on the edge of a crater, compelled the railroads to abandon the South Improvement scheme, "in name," and to give in writing the pledge that "all arrangements for the transportation of oil after this date shall be upon the basis of perfect equality to all," though he could not find a way to make them keep the pledge. He was prominent six years later in the uprising of the people when they found that all these promises were being broken, and all their rights on the highways being violated. It was largely through his influence that the producers determined to proceed against the oil combination as a criminal conspiracy, and procured the indictment of its principals in Clarion County, Pennsylvania, on charges of crime.[318] "When," as was said before the Pennsylvania Legislative Committee of 1883, "the doors of the penitentiary were gaping wide to receive them; when a true bill had been found before the Grand Jury; when, if they ever were in jeopardy before to-day, they were in jeopardy."

He was chairman of the Committee on Transportation of the Oil Producers' Association, and was one of the "legal committee" of five who represented the producers in having the "anti-discrimination suits" brought and pushed against the Pennsylvania Railroad by the State in 1879. By these suits the discriminations and favoritisms, which, though known, it had till then been impossible to prove, were forced into the light as facts, and the evidence was furnished without which the indictments just referred to could not have been found. When the accused, frightened at last, succeeded in getting the aroused producers to agree not to push the criminal trial, in consideration of a solemn pledge that all secrecy and favoritism in transportation should be given up, he withdrew from the negotiations and would not sign the compromise. He had assisted the Congressional Committees of Commerce at Washington in 1872 and 1876 in their ill-starred investigations, and had been active in the effort to get another investigation begun in 1880. He had also been one of the principal witnesses before the New York Legislative investigation of 1879. For eighteen years he had been on this quest. With him the Attorney-General now arranged to get the evidence on which the State could support its claim for taxes.

The members of the great corporation saw that they must act. In out-going Auditor-General Schell they had met the first officer of the people who was as determined to make them pay as they were not to pay. The policy of silence and nullification was abandoned. One of the members of the trust came in person to the State capital to see the Attorney-General. He made an unexpected overture. He volunteered to furnish the State with a full disclosure of the facts it needed to prove its claim.

"I confess," said the Deputy Attorney-General, "that I little knew in what direction to cross-examine him."[319] He therefore sent for the expert who had been employed by the Attorney-General. The "trustee" protested against his presence; but the Deputy Attorney-General said that he had been employed by the State, and it would be necessary that he should take part. The representative of the trust, moved, as he afterwards testified, by the patriotic consideration that "the regular cumbersome way of taking oral testimony ... would result in great labor and expense to the State, and would be an obstruction and labor to us that could be avoided," made a suggestion that the State go to the trial of the case upon a statement of facts of their business which he and his associates would make. This offer to become a volunteer witness was agreed to, and the delinquent corporation and the State went into court with an "agreement as to facts." The Attorney-General reserved for the State the right to add to these facts, but did not at any time during the proceedings do so.

His expert shrewdly foresaw that another defeat for the people was to be the result of this policy. "I objected very strenuously," he says. "It was my pet scheme to examine them orally in court or by commission, and I gave it up very reluctantly. I told the Attorney-General I could not believe those gentlemen were in earnest, that I knew I could ask a string of questions of any one of them which if answered would have given the case away to the State."[320] But the Attorney-General, the same who as counsel for the people, in 1879, against the members of the same corporation, led his clients to defeat, overruled him. The old campaigner saw the mistake of 1880 about to be repeated, and an agreement with the offenders substituted for trial and for the defeat of them he believed would follow. He determined to prevent the consummation of this second catastrophe. He sent his counsel to New York to the headquarters of the oil combination with a notice that he would not adhere to the bargain made by the Attorney-General at Harrisburg with reference to "the agreement of facts." "I propose to attack," was the message he sent.[321] He was to have received compensation from the State. He believed that this gave him an interest in the matter sufficient to gain a footing in the courts for action by himself independently of the Attorney-General. In pursuance of this idea, when the case came up for trial, he appeared with his private counsel ready to take part in the proceedings if permitted.

The notice of attack was received "with surprise," but was met with a characteristic move. "I raised the question with him"—the counsel—"as to what possible motive" his client "had in the matter," the "trustee" testifies, "and as to whether it would not be better for him to desist from it; whether it would not be possible for us, if he was needing business, to find some position in which he could legitimately earn a living."[322] The lawyer replied that he had no right to treat on any such basis, and withdrew from all connection with the case. But this was the opening of a negotiation which through another lawyer "resulted," as the expert of the State afterwards confessed, "in peace between us." He had given notice that he meant to attack, and the "negotiation" which followed "was whether anybody would give me as much as there was in my contract with the State if I would not attack."[323]

Meanwhile the Attorney-General marched gayly to another defeat of his client—the people—going into court with no other ammunition than the facts furnished by the men he was suing. He did not put his expert, nor the Auditor-General, nor his assistant, nor the men on whose information and affidavits the estimate had been made of taxes due, nor any one else on the stand. He was "perfectly satisfied," he says, "that these facts were true," and that the company were "in good faith doing exactly what they undertook to do—namely, to furnish me with all the information that was necessary to establish the Commonwealth case."[324]

His method was as singular with the argument as with the testimony. He insisted, in opposition to the opinion of Auditor-General Schell, that such a corporation must pay taxes on all its capital stock, whether it represented property in the State or out of it. The court decided against him. It held that it was taxable "only on so much of its capital stock as was represented by the business and property of the company within the State." As to what the amount of this property and business within the State was the court took the facts furnished by the delinquent itself, as they were the only ones presented to it by the Attorney-General. The amount originally charged for taxes by Auditor-General Schell, who had forced the fighting, was $3,145,541.64. The Attorney-General, on his mistaken theory of the law and on the facts volunteered by those he was suing, had "split the difference" and sued for only $796,642.20. The court cut this down to $33,270.59, and on appeal this was still further reduced to $22,660.10.[325]

This decision was not final or conclusive as to either the State or the company, both of whom afterwards sued out writs of error. The expert, who had been pushed to one side, at once determined to take what steps he could to reopen the case and mend the fortunes of the State. The moment the decision was announced he telegraphed the Attorney-General again for another conference, and was told to come to Philadelphia. He told the Attorney-General that he thought "the hope of the State to get the largest amount of money was to get a rehearing and let us have an oral examination." But the "satisfied" Attorney-General refused to do anything but carry the same argument and the same agreement of facts up to the Supreme Court. He refused to move for a new trial, and not only told his expert so, but told the "trustee" so. The trustee, by one of those coincidences which prove how much better it is to be born lucky than rich, happened to have come at the same time to stay in the same hotel with the Attorney-General.

It was in vain that the expert pointed out omissions of property and facts which he thought "had not been clearly shown in the agreement as to facts," and afterwards other matters he had discovered. After the defeat of the State he prepared an affidavit containing additional facts. He employed an attorney in the preparation of this affidavit and a petition to the court to have the case reopened. His purpose was "to get another chance at this trial."

"To get another trial?"

"Anything."

"Another hearing?"

"Anything." Anything to prevent the miscarriage of this last attempt to "round up" the men he had been trying for nearly twenty years to bring to justice. The Attorney-General would not present this petition. After this, still before the final decision, he saw the Attorney-General again to renew his pressure for a change of policy. Three times he saw the Attorney-General to lay his additional facts before him, and urge that a different method of conducting the case be tried.[326] Some of the new points he raised the Attorney-General referred and deferred to the company he was pursuing, and "we showed him how they were fully included in the statement rendered by us to the State, and he (the Attorney-General) expressed his entire satisfaction with every point raised." Others of the new points the Attorney-General declared to be "immaterial."[327] The Attorney-General showed no wish to bring proof into the case of any facts except those furnished by the people being sued. Although the decision of the lower court had been a warning that the theory on which the State had gone into court was bad, and that the amount of taxes to be recovered depended on the amount of tangible property in the State, he refused to use the right he acknowledged he had—to call other witnesses, to put the men who had made the agreed statement of facts upon the stand, and cross-examine them.

From the Attorney-General, who knew little of either the facts, as he confessed, or the law as the court declared it, who accepted their statements as gospel, and who asked them whether new facts offered him should be admitted into his side of the case against them, the company had nothing to fear. But this old opponent of theirs, whom the Attorney-General had employed, was at large, and was a dangerous man. He knew the facts; he had the right theory of the law; he was tremendously in earnest. The case had only got as far as the first decision of the lower court. There were still opportunities for all kinds of legal proceedings. By virtue of this contract he claimed such an interest in the proceedings as to give him a right to ask the courts to interfere. He might get a new trial and carry out his "pet scheme of oral examination." He might rouse the people as he had roused them before. He might interfere through the Legislature. He might raise a storm which could not be quieted until in this suit, or some other, his pet plan might be carried out, of getting these silent gentlemen into a witness-box. He considered himself to be in the service of the State. "I was under a contract with the State,"[328] he says. And we find the Attorney-General in close consultation with him in Philadelphia down to the very last day.

The company sees that something must be done, and does it. Its "trustee" calls upon the expert at his hotel.[329] He renews the suggestion he had made in New York when word had been sent by the expert that he would not be bound by the agreement of facts, and "proposed to attack." He finds his man cast down, utterly discouraged by the decision of the lower court and the attitude of the Attorney-General. Time and again he had seen the people denied justice, and their enemies escape even so much as the necessity of appearing in court. He had seen, in every one of the proceedings against them, from 1872 to 1880, committees of Congress, State governors, judges of the Supreme courts, State legislatures, attorney-generals, railroad officials, every trustee of the people, wilt, like green leaves in a fire, before this flashing wealth. His resolution gave way. He was to have received, under his agreement with the Attorney-General, in salary and commissions, $23,000, or less, according to the amount recovered. That he saw fading out of sight in consequence of the, to him, inexplicable course of the Attorney-General. Every one else who had tried to stand up for the people against this power had gone down; why should he be quixotic and poor?

"We want peace," the "trustee" said, and the, till then, faithful friend of the people sold him all he had of that commodity for $15,400, to be paid in instalments, and a salary of $5000 for a year.

"I proposed to reopen it"—the case—"and I did not."

"Why did you not?"

"Simply because I was assured I should have just as much money out of the transaction as my original contract would have paid me."

This confession made on the stand, under the strain of cross-examination in a civil suit in which he was a witness, startled the country with its first hint of the real cause of the failure of the great tax case, and led to an investigation by the Legislature of Pennsylvania.[330]

The first payment was $7500. This was paid, not in a check, as is the usual method between business men in legitimate transactions, but in bank-notes—$500's or $1000's.[331] That this method of payment was inconvenient and unusual was shown by the statement of the recipient, that he went to the Chemical Bank and got a bank certificate for his $7500 of bank-notes. "Of course I did not carry that amount of money around with me.[332] Bank-notes and bank drafts, not the company's checks, were used in the succeeding payments also.

"In sending him money to Titusville, where you had a bank account, why did you not send him a check on your own bank or draft?"

"Well, there was nobody at Titusville who had any knowledge of the matter. It was not necessary to acquaint them with it," said the "trustee."[333]

This representative of the company was diligent in business, as he understood business, and was always forehanded. He made the first moves and kept the lead. He went all the way to Harrisburg to meet the Attorney-General. He got control of the case by making the overture to volunteer testimony. He called first on the lawyer sent to New York with notice of "attack," called first on the State's expert in Philadelphia and New York, made the first suggestion for "peace," and got it "cheap."[334] But after he had bought "peace" the next interview is at the company's office. The other man must walk now. When put on the stand, the purchaser, of course, denied that this "purchase of peace" had anything to do with the case against his company, or with the suppression of the only expert in the employ of the State in that suit.

"With reference to the tax case," he said, "the payment of this money had no bearing whatever."

"Then why did you pay him the money?"

"Well, I have already said, two or three times, that I paid him the money for the purpose of having him desist from further malicious attacks upon our company."

The man of whom he had bought "peace" was not then engaged in any proceedings against "our company," except the tax case. He had been engaged in nothing for two years, since the proceedings of the Producers' Association in 1880. There were no other movements in prospect. The only war, actual or contemplated, was this tax war. Pressed through several pages of cross-examination, and challenged to name a single instance of war by this man upon them, at the time of the purchase of "peace," or since 1880, which would account for their willingness to pay him so large a sum, he was finally forced to say: "I cannot do it."[335]

The Attorney-General, who had thought it unnecessary to collect more testimony by putting the defendants on the stand under oath, testified, of course, that there had been no suppression of testimony. The seller of peace himself, when he was afterwards brought to book before the Legislature, attempted to stand to a similar denial that he had in any way been unfaithful to his trust as the expert of the State and representative of the people. But he broke down. He was asked if his agreement with the company had any relation to this case.

"Unquestionably. To all cases—this case and all others."

"You were to do nothing further for the Commonwealth in this or any other case?"

"Precisely."

"If the Supreme Court had subsequently reversed the case, and it had gone back for a new trial, and had been tried before a jury, so that the company's officers could have been subpœnaed and compelled to testify, would you then, after receiving this money, have been at liberty to assist in getting that testimony together for the Commonwealth, and aiding the Commonwealth?"

"I should say not."

"You were free to do it prior to your arrangement?"

"Certainly."

"By whom was it"—the negotiation—"begun?" he was asked.

"By the representative of the company," he replied, naming him.[336]

When this bargain was arranged and the first payment made only an opinion had been filed. No judgment had been entered. There was still time to make any one of many moves. Reargument and new trial both were possible.

These men seduced this representative of the people only to cast him aside, as seducers always do. They did not pay him "cash down" when they bought his "peace," but in instalments, and part of his pay was in the shape of $5000 for a year's service for which he was to do no work. This kept the whip-hand of him until the tax matter was finally settled and irrevocably past reopening. When that had been done they cast him off with scorching contumely. The secretary of the trust waved him into obloquy as a black-mailer.

When the trustee who negotiated the "peace" was before the committee of the Pennsylvania Legislature in 1883 which investigated this miscarriage of justice in the tax cases, he was asked if the man of whom he had bought "peace" had used the positions he had held in the producers' and other associations to further his own ends. He answered: "I think he would prostitute anything to further his own mercenary ends."[337]

The committee of the Legislature appointed to investigate this "purchase of peace" furnishes in its report the facts we have recited, which were uncontradicted, but declares that the transactions they disclose "did not prejudice the rights of the Commonwealth," and that nobody had done anything wrong. An effort was made after the failure of the tax case to get the Attorney-General of the State to issue a warrant against the purchaser of peace, upon which he could have been held to trial in a criminal court for bribery and corrupt solicitation of a public officer. An affidavit charging the crime in the usual form was presented to the Attorney-General. There was by this time a new Attorney-General, but he ditched this move with the same skill for the management of his adversaries' case that his predecessor had exhibited in the tax suit. He demanded that affidavit be made by some one who could testify to the bribery of his personal knowledge before the committing magistrate. As the facts were known only to the two principals, and neither of them could be expected to come forward to make affidavit and application for his own commitment, the Attorney-General demanded the impossible.[338] The fact of bribery was publicly known by the confession under oath of one of these principals, and the Attorney-General had been presented with the affidavit of a citizen, prepared in due and regular form, upon which he could have proceeded to issue a warrant, as is done in the case of less powerful offenders. Failing with the Attorney-General to have this transaction taken into the courts, the effort was renewed with the committee the Legislature had appointed to investigate. It was asked to do as committees had done before—to send the case to a criminal court and let it be tried. The distinguished lawyer acting for the people before the committee offered to appear as a volunteer Attorney-General in the prosecution of the trustee. "There is not an honest jury," he said, "in the State of Pennsylvania which upon the testimony would not send him to the penitentiary for the crime of bribery."[339] The committee refused to send the matter to the courts.

Upon the only occasion when the "Trustees" seemed in real danger of being brought in person and on specific charges to trial, criminally, the Supreme Court of Pennsylvania saved them. In the Clarion County cases it took the unprecedented step of interfering with the criminal jurisdiction of the lower courts. It was in reference to this that Mr. Gowen said before the Committee of Commerce of Congress in 1880: "I was a member of the Constitutional Convention of Pennsylvania, and I know that if that convention did anything effectively it was when it declared that the Supreme Court should not have original jurisdiction in criminal cases, and yet I have seen three judges of the Supreme Court lay their hands upon an indictment in a county court and hang it up." The effect of this interposition of the Supreme Court is summed up as follows in the history of the contest between the Producers' Union and their powerful antagonists: "This practically terminated the last legal proceeding conducted by the general council of the producers of petroleum." "It was the greatest violation of law," said Mr. Gowen before the Pennsylvania Legislative Committee, "ever committed in the Commonwealth."[340]

That some such action might have been expected could be inferred from the remark in Leading Cases Simplified, by John D. Lawson, warning the student of the law of carriers "not to pay much heed to the decisions of the Supreme Court of Pennsylvania—at least, during the past ten or fifteen years. The Pennsylvania Railroad appears to run that tribunal with the same success that it does its own trains."[341]

Some time after these events the purchaser of this peace gave some money to a hospital for cancers, and, in recognition of his philanthropy, was made its president. This hospital was for cancers of the body—not for moral cancers of the kind propagated for money by men who corrupt the Commonwealth. It would have been full expiation in the good old times of the priest and the baron Ruskin describes to donate to the cure of an evil a fraction of the profits of the culture of it. The newspapers in May, 1891, chronicled the opening of another pavilion of this hospital, and the delivery of "an interesting address" by the new president. One of the journals remarks that "this interest, combined with his well-known liberality in Church and humane matters generally, suggests a thought concerning the peculiar development on this line of many of our very rich men." But what the "thought" was the journalist did not go on to state.

CHAPTER XIV

"I WANT TO MAKE OIL"

At this writing there is an old man named Samuel Van Syckel, over eighty years of age, partly paralyzed, but still vigorous, living in an obscure back street of Buffalo, very poor, though his fertile brain has helped to make millionaires of many others. Van Syckel's life has been one of ups and downs, possible only in the case of an adventurous mind seeking the golden-fleece in a new industry and in a new country. Of all the brave and ingenious men who have experimented, invented, and pioneered to realize for mankind all the surpassing possibilities of the coming oil age, he is one of the most notable. He had already made and lost one or two fortunes when we find him, about 1860, with a little still in Jersey City, making roof-tar.

He was born in Hunterdon County, New Jersey, the son of a farmer, and worked on the farm until he was of age, when he went into business. The panic of 1857 caught him with sails wing-a-wing, conducting all at once, and prosperously, grist-mills, linseed-oil mills, grain distilleries—these he had to take for a debt—several stores, cooper-shops, and two or three farms.

He failed because he had gone security for others, but he paid 100 cents on the dollar, and went to New York City. There he became a member of the Corn Exchange, and opened a commission-house for the sale of produce. His country friends had such confidence in his honesty and judgment that within six months he had done a business of $400,000. But he discovered that of the 1500 members of the Exchange all but one had failed, and many of them several times. He saw that he was in a position where, through the inability of some other dealer to fulfil his contract, he might be swamped any day, and lose all he had himself and all the thousands intrusted to him by his friends. He had old-fashioned notions about losing friends' money, to himself or to any one else. He left the produce business. He went to making roof-tar in Jersey City, and in 1860 built one of the first refineries for making kerosene out of petroleum. When "Colonel" Drake, in 1859, found out that oil could be got by drilling, Van Syckel was one of those the new source of supply found waiting for it. He began refining in a small way, and, with an ardor which he has carried into everything he has done, he plunged into the study of new ways of refining the oil which then started to flow with embarrassing riches out of thousands of wells. The study of oil-refining became his passion, as, fortunately for us less gifted folk, the study of the effects of heat on clay, of sulphur on the gum of the caoutchouc-tree, of steam on the lid of the teakettle, were in their time passions with Palissy, Goodyear, and Watts. In the work of his life, forcing its secrets out of this difficult liquid, he has been very successful. Earthly reward the old inventor has none, but, sitting in his story-and-a-half cottage, what he mourns most is that he has been and is denied the opportunity of work. Tortured by restless and inventive energy, which age and disappointment and betrayal have not sufficed to snuff out, his continuous word is: "I want to make oil."

When petroleum from the new wells began to come to New York, dozens of little stills were built all over the Jersey flats, many of them by Jews and Greeks. "Stills kept burning up all around," he says to his visitor. "Almost every day there was an explosion somewhere from the gases. I told my wife to give me my oldest clothes and send me my meals. I was going to find out all about this business. There was a pile of roofing-gravel under a shed by my stills. I went there and slept and ate, day and night, and watched the stills and the pipes, the gases, the oils, and all. All the sleep and rest I had for months was there. It was while watching these work that my greatest idea came to me, of making oil by a continuous process, so that I could feed in petroleum at one end and have kerosene running out at the other in an unceasing stream, day after day, without stopping the whole establishment, as the oil-refineries still do, every day or two, to cool off and clean up. By the old process, still in use, when the charge in the still of perhaps 1000 barrels had been refined, we had to draw the fires and wait perhaps ten hours—the best part of a day—for the still to cool off, so that the men could go in with iron chisels to chop it all loose and clean it out. This would take four or five men from four to six hours. The still would be idle for a day and a half, and then the same process would have to be gone through with again with every charge. All over the flats the Jews and Greeks kept burning up. The Common Council of Jersey City said we must stop refining. The rest joined a great combination to fight the Common Council, but I made up my mind to go where the oil was produced. I went to Titusville in 1865. I had all the money I could want. Some rich men told me to draw on them up to $100,000 for anything there was 'snacks in' for them."

This was about the time the founders of the oil combination began in Cleveland, with "no money."

"What makes I found in Titusville!" continued Van Syckel. "I went all up and down the creek. They were glad to get 65 gallons of kerosene out of 100 gallons of petroleum, while I could get 80. I think the head of the oil combination had a little still cocked up in the woods there—a one-horse, pig-pen kind of a place at the bend of the creek, a cobbled-up sort of a mud-hole, with a water-trough to bring the oil to the still. He was not there himself; he stayed in Cleveland. I didn't ever think anything about him then. I was 'way above him. I first saw him some years after, about 1872, in a refiner's office. He was talking up some scheme he had for a combination of refineries. He said he didn't want to have the market overstocked. He was just a common-looking kind of a man among the rest of us there. I saw, when I reached Titusville, that the most money was to be made in shipping oil. I made a dollar a barrel, and in six months I was $100,000 in pocket. The land speculation I wouldn't touch. It was wild. It scared me to see men sitting around on logs, and trading off little pieces of land for hundreds of thousands of dollars. I was the first man to lay a pipe line to carry oil up and down the hills of Pennsylvania."

"The first successful pipe line," says the United States Census Report of 1885, "was put down by Samuel Van Syckel, of Titusville, in 1865, and extended from Pithole to Miller's Farm, a distance of four miles."[342]

"When I first came to the oil country all the oil had to be teamed from the wells to the railways, over roads with no bottom in wet weather. Sometimes a line of teams a mile long would be stuck in the mud. Often the teamsters would dump their load, worth $5 a barrel, and abandon it. Mules would get so discouraged that they would lie down and die in the roadway before they could be helped. The teamsters knew their power. They charged accordingly. They charged for looking at the oil to see how many barrels their teams could draw. They charged extra for every mud-hole they struck, and if the wagon-wheels went to the hubs they doubled their bills. I paid $2 to $4 a barrel for teaming, and was shipping 4000 barrels a week. The teamsters were making more money than the well-owners, and didn't care whether they hauled oil or not. All this set me to thinking. I hit on the pipe line idea, and announced that I would carry the oil by pipe from the wells to the railroad. That was too much for the people of the oil regions. Everybody laughed me down. Even my particular friends, with whom I used to take my meals at the hotel, jeered and gibed me so that I took to coming and going through the back door and through the kitchen, and ate by myself. 'Do you expect to put a girdle around the earth?' was the favorite sarcasm. I knew it would cost a great deal—$100,000 perhaps; but I had the money. I built it—two two-inch lines, side by side—between June and November in 1865, and turned the oil in. The pipe was a perfect success from the first barrel of oil that was pumped in. It flowed, just as I expected, up hill and down dale. The line was four miles long—from the Miller Farm to Pithole—with two or three branches.

"Then the teamsters threatened to kill any one who worked on the pipe line or who used it. They would drive astraddle of it, dig down to it, put logging chains around it and pull it out of the ground, and leave the oil, worth $4 to $5 a barrel, running to waste out of the holes. I sent to New York for some carbines, hired 25 men to patrol the line, and put a stop to that. I put up the line as security for some debts owed by my partner, under an agreement that when its profits had paid the debt it was to be returned to me. The debt was wiped out in a few months, but I never got the line back.... I had no money left to sue for it. This was the end of my pipe line. It has grown into a system thousands of miles long, second in importance only to the railroad, and out of it many, many millions of profit have been made, but not a cent has it yielded me. Then I went to refining oil, and, with a partner, built one of the first big refineries in the oil regions. There has been no oil refined in this country since 1870 without the help of my improvements. Some I patented, some I did not. The refiners at Titusville were hard put to it for pure water. I drove pipes through the river into the second gravel under the river, and got the finest cold water there could be. This anticipated the 'driven wells' several years. I put steam into the stills" (this had been done before both by European and American refiners). "I found out how to burn the uncondensable gases. I showed one of my neighbors how to do this, and he saved $20 a day after that in his coal bills, but I got nothing for it. Each new thing I proposed, up would go everybody's hands and eyes, and oh, what a rumbling there would be! I never made money so fast as in this refinery. We did not use the continuous process. I had not patented it, and I had partners whom it would not have been right for me to experiment with. Our profits were over a dollar on every barrel. We sold our product as fast as we could make it. We made $125,000 in fifteen months, although we paid as high as $8 a barrel for crude. I worked like a slave to make good the loss of $100,000 in my pipe line. I worked and watched day and night, and knew I was beating them all making oil. My partners were church elders, who could never find words enough to express their indignation about the way my pipe line had been taken away from me, and so virtuous that they never smoked a cigar nor drank a drop. I got into no end of lawsuits with them, and I lost my property again. I sold a part interest in my patent to some one who was afterwards taken into this oil combination, and it now claims that they own all my patents. They have frightened off or bought off every one who has tried to use any of my inventions."

The rest of the old man's story was told by him under oath in a suit he brought against members of the combination.[343] "The idea of continuous distillation, as it was suggested to me at Jersey City, was always in my brain ever since. I made an attempt to construct such works in 1876 under Mr. Cary. I run out of money. I had been robbed out of my pipe line that cost me $100,000, and my oil-refinery in which I had more than $100,000. Mr. Cary said he was going to build a little refinery. He said he had $10,000 that we might use in making oil in a continuous way. We got our lease and broke ground in 1876. We had not got very far—we got the pipe on the ground and some brick and one old-fashioned still—when" the representative of the oil combination, one of its principal members, "came on to the ground ... the 15th of December, 1876. He asked me if I would not take a salary and not build these works in opposition to them. I told him 'No.' Then he wanted I should take a life salary, one that would support me for life comfortably. I told him I did not want his salary; I wanted to build this refinery and make oil in a new continuous way. He then wanted me to let him build it. He said, 'We will build it for you.' I objected to this. He then said that I could make no money if I did refine oil. He also said if I did I could not ship it. He said he would say to me confidentially that they had made such arrangements with the railroads in reference to freight—in reference to getting cars—he knew I could make no money if I did make oil."

Almost on the same day—May 14, 1888—on which Van Syckel was giving the jury this undisputed account, sustained by the judge and jury, of how the combination used "arrangements with the railroads" against its rivals, another pioneer, even more distinguished, was relating his almost identical experience before the committee of Congress investigating trusts, May 3, 1888. This was Joshua Merrill, "to whom," said S. Dana Hayes, State Chemist of Massachusetts, "more than to any one else, belongs the honor of bringing this manufacture to its present advanced state."[344] Merrill's inventions and successful labors are described in the United States Census Report on Petroleum, 1885. He was at work guessing the riddles of petroleum as long ago as 1854.[345]

From 1866 to 1888 he and his partners ran a refinery at Boston.

"What has become of it?"

"We have recently dismantled it."[346]

For several years their business had been unprofitable. There were two causes, he explained. One was that they made a better quality of oil than the average, at a cost which they could not recoup from the prices established in the market by poorer oils. The other cause was the extraordinary charges made against his firm by the railways in Boston which brought their crude.

His firm had their own tank-cars, in which their crude oil came from Pennsylvania. From Olean to Boston his freight cost him the last few years 50 cents a barrel. From the depot in Boston, to get it over two miles of track to his refinery, cost him $10 a car, or about $1.25 a barrel. This was at the rate of about 42½ cents a ton a mile. The average freight rate for the United States is about half a cent a ton a mile. His rate was an advance of 8400 per cent. on the average. He appealed to the Railroad Commission of Massachusetts.

"We wrote to the commissioners that we thought the charge was very high, and they ought to interfere to have it reduced. But it was not done.

"We made repeated efforts, personal solicitations, to the railroad officers, and to the railroad commissioners also, but it was the established rate."[347]

Two roads participated in this charge of $10 for hauling a car two miles. One of these was the New York and New England road, whose haul was a mile and a half, and its charge $6.

"Who was president of the New York and New England road?"

The dismantled witness's experience had made him timid.

"I do not know."

"Do you not know," he was asked, "that one of the oil trustees is president?"

"Yes, sir."[348]

The same railroad is the principal New England link in the lines of circumvallation which the combination in coal, hard and soft, American and Nova Scotian, is drawing about the homes and industries of the country. His company sold their tank-cars to the oil combination, as "we no longer had any use for them."[349]

"I was thirty-two years in the oil business," the veteran said, mournfully, as he left the stand. "It was the business of my life."[350]

To return to Van Syckel. After his warning to the inventor that he could get no cars and make no money, even if his new idea proved a success, the representative of the combination invited Van Syckel to put himself in its hands.

"He said they would furnish the money to test the invention and pay me all it was worth. I felt a little startled at the rebates, and I knew it before, but I did not know it was so bad as he had figured it out. I then asked him who of his company would agree to furnish me money to test the patent and to pay all it was worth. He asked me who I wanted to agree with. I then asked him if a man" (naming him) "that I had had more or less dealings with" (one of the trustees) "would agree to what he had said. He said he had no doubt he would. He said, 'We will go and see him, and go at his expense.' He said he would take the works off my hands at cost, and would satisfy my partner to stop building them if I would go to New York, and I think it was the next day when we went to New York."

They went to the office of the member of the combination whom Van Syckel had said he would confide in. "He seemed to be very glad to see me, and very sorry to learn I had been so unfortunate in the oil regions. He then asked me what these patent works would cost in a small way to prove that oil could be successfully made under continuous distillation. I told him it could be done for about $10,000. He said they would give it, ... and if it proved a success they would give me $100,000. He said it was worth more. He would give me $125 a month to support my family during the time I was building and testing it. I said, 'Let us put what we have agreed upon in writing.' He begged off for a time. He said it could be done at Titusville just as well. He saw I was not quite satisfied being cut off in that way, so he took my hand and said he would give me his word and honor what they had agreed upon there should be put in writing at Titusville Monday morning. I did not want to press him any harder. I told him I would take the $125 a month until the thing was tested. If it proved a failure the whole thing should come back where it started from, and if it proved a success he was to pay me $100,000" (for the patents and the business). "He said we all understood it, then. I went home." Van Syckel called upon the Titusville member of the trust. "He begged off from me the same as the other did in New York; said they were pressed with business. He said they would fix it this afternoon, or words to that effect." Instead of building for him, as it had agreed, the combination, the moment he placed himself in its hands, destroyed the building he had already begun.

"What did they do with the works when they bought them?"

"They took the brick that was on the cars and hauled them to other places, I suppose, and I don't know where they threw the still. They kept that leased property during the five years for a junk-yard. I went the next day to see him, and pressed him about it the best I could. I could not accomplish anything; he appeared to be busy, or kept out of the way. I kept chasing to his office. I tried to catch him and talk over what I should depend on, where we were going to build; but he kept out of the way. He said he had not seen their folks. In July, 1879, more than three years after our contract in New York, he said they had had a meeting of all their wise-heads, and they had called in chemists, and they all unanimously agreed that oil could not be made by a continuous process, and gave that as a reason for not furnishing the money to build these works. I said, in reply, 'I am not responsible for the knowledge that the "oil combination" has for refining oil; neither would I exchange mine for all they have got combined. You said you would furnish me the money and build these works, and do as you had agreed to do.' I walked out. That was about the last I had to say to him on that subject."

"Did you after that build, or undertake to build, an oil refinery to test your continuous process?"

"Yes, sir; in connection with a German. He was going to build a small refinery. He said he would build it my way, if I would let him use it in the new way. He constructed it on that principle; but he was slow—he was a very slow man to deal with. We ran ... twenty days without stopping" (to clean out the stills).

"And it actually ran that length of time?"

"Yes, sir."

"What became of these works?"

"Hauled off to the junk-yard"—by one of the companies in the combination. It "bought them out after we just got them under way, and then tore them down and hauled them off."

"You then brought them up to Buffalo, and tried to put them into the Solar Works?"

"Yes, sir."

"What became of those?"

"They eventually went the same way."

In court the combination claimed that Van Syckel's was an inferior process, but it had not left it to die the natural death of the inferior process.

"And how about the expense of the two ways?" he was asked.

"The same help that would make 1000 barrels the old way, to take three or four days, I would make in the new process in one day; the old way takes about a ton of coal more and gets less oil, and the oil is not near so good."

No contradiction was offered by the defendants of any of these statements. Uncontradicted evidence showed that the new process was cheaper and produced better oil than the old processes. Stillmen from the Herman and Solar refineries, in which Van Syckel tried his new process after the combination refused to build for him, testified to the practical success of his method. "We must have run these continuous works for two months while I was there" (at the Solar).[351]

"We kept Van Syckel's process running right along continuously for sixteen days" (at the Herman refinery).[352]

"We did not have to clean out the patent stills, while by the old process they would have to be cleaned out about every day or thirty-six hours."[353]

A number of residents of Titusville, dealers in oil and consumers, testified to the superiority of the illuminant Van Syckel produced. It burned much better than that made by the monopoly, several said. "The burning qualities was extraordinarily good." "It gave better satisfaction to my customers." "It did not gum the lamp-wicks, and did not smell."[354]

This was done in spite of rusty and choked-up pipes, defective stills and apparatus.

One of the owners of the Solar, who was a practical refiner and the overseer of the works, testified that he had seen Van Syckel's continuous process run successfully both in Titusville and Buffalo:

"The result was much beyond my expectation."

"How long did you run the works?"

"I think about two weeks."

"What was the cause of it stopping?"

"The president of the company, also the treasurer, had been to New York two or three times; after the second or third visit he came back seemingly disgusted with the business; afraid of losing his money if he continued any longer, and quit."

"Was there a mortgage upon your property?"

"Yes, sir." It had been foreclosed, he said, in conclusion, by one of the leading members of the oil combination.[355]

The only thing Van Syckel can do to carry out his part of the contract he does. He develops his invention. He is successful in his application to the United States patent-office. He made his contract with the combination in 1876, and got four patents thereafter in 1877, 1878, and 1879.

"Well," it was said in court, "they are a large concern; they would make money out of this; I should think they would want it if it is such a good thing." "Why, my dear man, they have got a monopoly of the business, anyway," Van Syckel replied. "They don't care what kind of oil they sell; but they have got a plant that has cost them millions of dollars that they have got to change, and all that sort of thing, if they take my patent. That is the situation."

He lived on the $125 a month while he was testing and proving the invention. In July, 1880, when four years of his life had been thus wasted, the allowance was changed, without notice or his consent, to $75 a month. The next month he was refused even that sum "unless I signed a receipt in full of all demands, and I walked out without it."

His pipe line has become a part of the net-work of pipe lines of which the oil combination boasts. His refinery of 1869, one of the largest built in western Pennsylvania up to that time, passed into its hands. Three times in succession, after it refuses to build for him as it agreed, he arranges to put his idea of continuous distillation into use, and in each case the refinery in which he sets up his pipes and stills is bought up by it and destroyed. He is kept dangling for years by its policy of delay. Then his independent efforts are broken up; capitalists are made afraid of him. He can get no means for building new works. "Ever since I went into their hands," he said in court, "I have been just as I am now. I could not make oil; could not build a refinery; could not get anybody help me to do it; and here I have stood these last twelve years, and I want to be out. That is just where they want to keep me, so I cannot make any oil. It is the whole profit of the whole of it. They hold me to my contract, and they break theirs."

When twelve years had gone by, and he found that they would neither build for him as agreed nor let any one else build for him, Van Syckel turned to the law and sued them for damages. On the trial all the facts as we have stated were admitted—the abandonment of the enterprise in consequence of the threats that he would not be allowed to ship and market his oil; the interviews in New York; the contract; the sale; Van Syckel's later efforts to make oil in other refineries; his success in producing better and cheaper oil; its popularity; the purchase and destruction of the works using the new method. Not a word of evidence was adduced in disproof. The judge and the jury found all these questions in Van Syckel's favor.

The defence was twofold. It was admitted that the two representatives Van Syckel had dealt with had made the contract as he described it. The members of the combination did not deny that. But, they argued, it was not legally binding. "We simply concede," said these great men to the Court, "that they made a contract, but leaving it to the corporation itself to decide upon it.... There cannot be the slightest claim that the company was bound by a contract of that character." On this point they were defeated in the trial. Their second defence was that there were no damages. "The trouble is," they said, "that there are no damages sustained, no damages whatever sustained." They took the ground that his possessing a creative mind was the cause of Van Syckel's ruin, not their betrayal of him. "Mr. Van Syckel," they argued to the Court, sympathetically, "is an instance of what it means to get out a patent, and deal in patents—in nine cases out of ten. He was an inventive man. He has got out a good many patents. No question they were meritorious patents. And what is the result? Poverty, a broken heart, an enfeebled intellect, and a struggle now for the means of subsistence by this lawsuit. So that, if your honor please, there is nothing here from which we can determine what the original value of this patent was." The jury and the judge decided against them, and held there was a contract, legal and binding. That brought them face to face with the question of damages, and here the ruling of the judge saved them, as the decision of another judge saved other members of the combination in the criminal case in the same city, about the same time.[356] The judge ordered the jury to find the damages at six cents, and the jury—in the evolution of freedom juries appear to have become merely clerks of the Court—did so. "This direction of a verdict," said the Court to Van Syckel, "decides every other question of the case in your favor."