Introductory material (continued 5)

Six cents damages for breach of such a contract, and in Buffalo $250 fine for conspiracy to blow up a rival refinery! Here are figures with which to begin a judicial price-list of the cost of immunity for crimes and wrongs.

Lawyer Moot, Van Syckel's counsel, deferentially asked the Court to suggest where was the defect in the proof of damages. It would be "the wildest speculation and guesswork," the Court said, for the jury to attempt to compute the damages.

"Then the Court is unable to suggest any particular defect in the proof?"

The Court evaded the point of the counsel, and repeated in general terms that there was no testimony upon which a jury could assess damages.

Those whom he was suing did not disprove that, by threats of making it impossible for him to get transportation, they had driven Van Syckel to abandon his own business, and make a contract with them by which they were to pay him $100,000 for his new process, if successful. The Court held the contract binding. They had not furnished the money and works to test the inventions as they had agreed to do; but he had nevertheless gone on and completed the invention, so that patents were granted for it by the government. He had tested the invention in other works, they failing him, and had proved it a success; they had thereupon purchased and destroyed these works; he was beggared, and nobody else under these circumstances could be induced to venture money on his invention. Upon these facts, judicially ascertained, the judge refused to let the jury compute the damages, and ordered them to find the damages "nominal," as another judge sentenced their associates in Buffalo to "nominal" punishment.

"There are many things known to the law," said Parnell to the president of the Special Commission trying the Irish members of Parliament, "which are strange to a non-legal mind."

This pioneer, inventor, and true Captain of Industry, real creator of wealth, has ever since had his neck bent to the pressure of hands too heavy for him. While all over the earth homes are brighter, knowledge is more easily got, and civilization forwarded, because of what his head has thought and his hands have done, he has retired to what is, in fact, a life of penal exile. He has been cut off from the darlings of his brain. Like the political prisoners of Siberia, he can eat and sleep and dress, but he cannot go into the world. His mind is at work there, in every factory and pipe line and lamp; but he must sit, unknown and unrewarded, in his pine cottage on unpaved Maurice Street, ploughed up in the prairies on the outskirts of Buffalo. Dearer than money to him, as to all such creative minds, would be the privilege of feeding the appealing activities of his brain with work. But he is banished from work. He has been set down outside the frontier of industry, and commanded never to return. No one dares buy or sell of him, nor adventure labor or money with him. He is an outcast. This is his greatest grief. The day I visited him he came into the sitting-room from the patch of garden behind the house. "I keep busy," he said, "to keep my mind off—anything to keep busy, if it is only pulling weeds." He is glad to see visitors. "I have been knocked out," he said, "so that nobody now comes to see me." His clear gray-blue eyes, tall, strong frame, firm mouth, large features and limbs, eager face, fit the facts of his career. He is one of the type of country-bred, hard-working American manhood of the last generation. There are no visionary lines in his face, as in his life there have been no impracticabilities, except his too great trustfulness. Gambling oil exchanges, wild oil-land speculations, inside "deals" with railroad freight agents, have never caught him. He has been a money-maker—not a money-taker. To-day, at eighty, the only thing he asks is that he may have the chance to work out his ideas. He talks patiently and courteously, with perfect intelligence and memory, but every once in a while breaks in with an outburst of what is evidently an unceasing refrain within—"I want to make oil."

The diminutive room we are in is stark in its simplicity and poverty. A paragraph in the morning paper on the table tells of "a massive oaken case, similar to a bookcase," which one of the chief reapers where Van Syckel has sowed is having put into his stable in New York. "It has doors of polished oak, with brass hinges, and heavy plate-glass. The inside will be lined with purple plush, and, when completed, the bits which shine in the mouths of his trotters and coach-horses will be arranged inside of this magnificent case in rows, ready for use, as well as an appropriate ornament for the stable."

It is better to be one of the king's horses than one of the king's men. But no words of envy pass his lips. He does not seem to repress them. He simply appears never to feel them. It chanced that as I left him, standing on the uppermost of the three wooden steps of his cottage, bleakness all about, "plain living" within, plain enough to satisfy the hardest climber for "high thinking," it chanced that his last words to me were—"I want to make oil," with an appeal to seek for him the opportunity so long denied. These words, plain and homely as they must seem to those who feed their appetite for the sublime and heroic with the highly varnished sayings of the battle-field and illustrious death-beds, will never cease to ring in my ears with a tone of greatness.[357]

CHAPTER XV

SYMPATHETICAL CO-OPERATION

Some day, perhaps, when more of our story-readers have learned that there are things in the world quite as important as the frets, follies, and loves of boys and girls half-grown, more of our story-tellers will hold their magic mirror up to the full-pulsed life with which mankind throbs through the laboring years that stretch along after the short fever of mating is over. George Rice, coming from the Green Mountains of Vermont, entered the oil business twenty-nine years ago, when he and it were young. He was one of the first comers. Beginning as a producer in the Pithole region, in the days of its evanescent glory, in 1865, he prospered. Escaping the ruin which overtook those who stayed too long in that too quick sand, he was one of the first to develop the new field at Macksburg, Ohio, and to see the advantages of Marietta, on the Ohio River, as a point for refining. Crude oil could easily be brought from Ohio and Pennsylvania by barge down the Ohio River. The field he entered was unoccupied. He drove no one out, but built a new industry in a new place. In 1876 he had risen to the dignity of manufacturer, and had a refinery of a capacity of 500 barrels a week, and later of 2000 barrels. Owning wells, he produced, himself, a part of the crude which he refined. His position gave him access to all the markets by river and rail. Everything promised him fortune. His family took hold with him in the work of bread-winning. "The executive part of the business is done altogether by my family," he says. "One daughter keeps the books, another daughter does nine-tenths of the correspondence, and my son-in-law is the general manager."[358] One of the daughters was a witness in one of her father's cases before the Interstate Commerce Commission. "She discussed with counsel," said the New York World, "the knotty points involving tank-car rates, mileage, rebates, and the long and short haul as familiarly as any general freight agent present."

Several other refiners, seeing the advantages of Marietta, had settled there. They who elected themselves to be trustees of the light of the world, thus having the advantages of the place pointed out to them by practical men, determined that Marietta must be theirs. They bought up some of the refiners. Then they stopped buying. Their representative there, afterwards a member of the trust, "told me distinctly that he had bought certain refineries in Marietta, but that he would not buy any more.... He had another way," he said, "of getting rid of them."[359] Of these "other ways" the independents were now to have a full exposition. In January, 1879, freight rates on oil were suddenly and without previous notice raised by the railroads leading out of Marietta, and by their connections. Some of the rates were doubled. The increase was only on oil. It was—in Ohio—only on oil shipped from Marietta; it was exacted only from the few refiners who had not been bought, because there were "other ways of getting rid of them."[360]

This freight-tariff attack on the independent refiners was arranged by their powerful rival and the railroad managers at a secret conference, as the latter admitted.

"Did you have any consultation or invite consultation with other manufacturers of oil at Marietta?"

"No, sir."[361]

When the representatives of the combination in this market were taxed by a dealer with getting the benefit of this manipulation of freight, "they laughed." All the railroads took part in the surprise. Curiously enough, the minds of the managers of a dozen roads acted simultaneously and identically, over thousands of miles of country—some, as they admitted, with suggestion, and some, as they testified, without suggestion—upon so precise a detail of their business as the rates on oil at one little point. "I did it at my own instance," said the freight agent of the Baltimore and Ohio. Freight officials of railways as far apart east, west, and south, and in interest, as the Baltimore and Ohio, and the Pennsylvania, and the Lake Shore, which had no direct connection with Marietta, and reached it only over other lines, stopped their "wars" to play their part in the move by raising the rate on oil only, and, most remarkable of all, to a figure at which neither they, nor the railroad connecting them with Marietta, nor (and this was the game they were gunning for) the independent refiners could do any business. From other points than Marietta, as Cleveland, Parkersburg, Pittsburg, and Wheeling, where the combination had refineries, but the Marietta independents had none, the railroads left the former rates unchanged.[362]

Rice was "got rid of" at Columbus just as effectually as if Ruskin's "Money-bag Baron," successor of "the Crag Baron," stood across the road with a blunderbuss. His successful rival had but to let its Marietta refineries lie idle, and transfer to its refineries at Wheeling its Marietta business—and Rice's too. By the pooling of the earnings and of the control of all its refineries—the essential features of the combination—its business could be transferred from one point to another without loss. One locality or another could be subjected to ruinous conditions for the extermination of competitors, and the combination, no matter how large its works there, would prosper without check. It gets the same profit as before, but the competitor by its side is ruined. All its refineries along a given railroad can be closed by high rates made to "overcome competition," but profits do not cease. Their business is done elsewhere by its other refineries, and all the profits go into a pool for the common benefit.

From Rice's point of view, Marietta was the storm-centre; but the evidence before the Ohio Legislative Investigation of 1879, before the Legislative Committee of New York of 1879, before Master in Chancery Sweitzer in Pennsylvania, and in the suit against the Lake Shore Railroad, showed that the low barometer there was part of a disturbance covering a wide area. The demonstration against the independent refiners of Marietta was only part of a wider web-spinning, in which those at all points—New York, Boston, Philadelphia, Pittsburg, Oil City, Titusville, Buffalo, Rochester,[363] and Cleveland—were to be forced to "come in" as dependents, or sell out, as most of them did.

That rates were not raised from points controlled by the combination is only part of the truth. At such places rates were lowered. This, like the increase of rates, was done at a secret conference with the oil combination and at its instance.[364] Where it had refineries the rates were to be low; the high rates were for points where it had competitors to be got rid of without the expense of buying them up. The independents knew nothing of the increase of freights prepared for them by the railroad managers and their great competitor until after, some time after, it had gone into effect.

The railroad company gave notice to their rivals what the rates were to be, but withheld that information from them.[365] That was not all. Before the new rates were given all the old rates were cancelled. "For a few days," said an independent, "we could not obtain any rates at all. We had orders from our customers, but could not obtain any rates of freight."

As to many places, the withholding of rates continued. "There's many places we can't obtain any rates to. They just say we sha'n't ship to these other places at any price."[366]

When the Ohio Legislature undertook to investigate, it found that the railroad men professed a higher allegiance to their corporations than to the State. They refused to answer the questions of the committee, or evaded them. "I am working under orders from the general freight agent," said one of them, "and I don't feel authorized to answer that." The arguments of the committee that the orders of an employer could not supersede the duty of a citizen to his government, or the obligations of his oath as a witness, were wasted. "I will tell you just how I feel," said the witness to these representatives of an inferior power. "I am connected with the railroad company, and get my instructions from the general agent, and I am very careful about telling anybody else anything." The Legislature accepted the rank of "anybody else" to which it was assigned, and did not compel the witness to answer.

To a question about the increase in freight: "I object," said another railroad officer, "to going into details about my own private business."[367]

One peculiar thing about the action of the railroads was that it was an injury to themselves. The Baltimore and Ohio, for instance, by raising its rate, cut off its oil business with Marietta entirely. "What advantage is it, then?" the freight agent of the road over which the Baltimore and Ohio reached Marietta was asked.

"There is no advantage.... We had revenue before this increase in rates, and none since."

"What would be the inducement for her (the Baltimore and Ohio) to do it, then?"

"That is a matter I am not competent to answer."[368]

The railroad men testified positively that the increase affected all alike at Marietta. It was supposed even by those who thought they saw to the bottom of the manœuvre that the combination would close its Marietta works temporarily, in order to seem to be equally affected with all the rest. It could do this with no loss whatever, since, as explained, no raise in rates had been made from Wheeling, Parkersburg, Pittsburg, Cleveland, where it was practically alone, and it could reach all its customers from those places as well as from Marietta. But the combination kept on filling orders from its refineries at Marietta at the old freight rates, while by its side the men it was hunting down sat idle because the discriminating rates of freight made it impossible for them to use the highways. It was so careless of appearances that oil ordered of its works at Parkersburg would be sent from the Marietta branch,[369] and at the old rate of 40 cents, while the other refineries could not ship because the rate to them was 65 cents; the increase at Marietta was not enforced against it, but only against the three independents—just as planned in the South Improvement scheme.

The move was far-reaching—as far as Chicago, the rate to which was made $1.20 a barrel, instead of 90 cents a barrel.

"Then they cut you off from the Western trade as well as this State?"

"Yes, sir; almost entirely.... I was selling in Chicago, and it cut trade entirely off."[370]

"Before the rates were changed did you run to your full capacity?"

"Yes, sir; about that."[371]

At one stroke the independents lost the business which it had cost them years of work to get. As the testimony of witness after witness showed, the merchants who had been their customers in Chicago, Columbus, and other places, now had to send their orders to those for whose benefit the railroad men had raised the rates. This sweeping change was not due to any change in their desire to sell, or of their old customers to buy. They could still make oil which was still wanted. But they were the victims of a competitor who had learned the secret of a more royal road to business supremacy than making a better thing, or selling it at a better price. Their better way was not to excel but to exclude. When their "secretary" was called before the Ohio Legislature, after this freight ambuscade had transferred the bulk of the business of the independent refineries at Marietta to him and his associates, he declared that the sole cause of their success was the "large mechanical contrivances" of the combination, its "economy," and its production of the "very best oil." "With an aggregation of capital, and a business experience, and a hold upon the channels of trade such as we have, it is idle to say that the small manufacturer can compete with us; and although that is an offensive term, 'squeezing out,' yet it has never been done by the conjunction of any railroads with us."[372]

The small manufacturer did compete and flourish until these railroad men literally switched him out of the market. He competed and got his share of the business, until the men who wanted monopoly, finding that they had no monopoly of quality or price or business ability, resorted to the "large mechanical contrivance" of inducing the managers of the railroads to derail the independent, throwing him off the track by piling impassable freight tariffs in his way. The successful men secured their supremacy by preventing their competitors from entering the market at all. Instead of winning by "better" and "cheaper," they won by preventing any competitor from coming forward to test the questions of "better" and "cheaper." Their method of demonstrating superiority has been to prevent comparisons.

All the independent refiners at Marietta, except Rice, died. "Most of those we received from have gone out of the business," a Cincinnati dealer told the Legislature. Some had fled; some had sold out.[373] Rice set himself to do two things: the first, to drag into the light of day and the public view the secrets of these "better methods"; and the second, to get new business in the place of what he had lost. He succeeded in both. It was in January that he had notice served upon him that he could no longer go to market. In two months he had the Ohio Legislature at work investigating this extraordinary administration of the highways. This was a great public service. It did not yield the fruit of immediate reform, but it did work which is the indispensable preliminary. It roused the people who were still asleep on these new issues, and were dreaming pleasant dreams that in George III. they had escaped from all tyrants forever, and that in the emancipation of the blacks they had freed all slaves forever.

Rice knew that the Legislature were planting trees for posterity, and did not wait for help from them. He set about looking up markets where the public were free to choose and buy. He could not go West or East or North. He went South. The little family kept the refinery at Marietta running, and the father travelled about establishing new agencies in the South, and studying freight tariffs, railroad routes, and terminal facilities for loading and unloading and storing. In 1880, through all the storm and stress of these days, he was able to double the capacity of his refinery. Again he succeeded in building up a livelihood, and again his success was treated as trespass and invasion. His bitter experience in Ohio in 1879 proved to be but an apprenticeship for a still sterner struggle. Rice was getting most of his crude oil from Pennsylvania, through a little pipe line which brought it to the Alleghany. The pipe line was taken up by the oil trust.[374]

This compelled him to turn to the Macksburg, Ohio, field for most of his petroleum. He had one tank-car, and he ran this back and forth faster than ever. Then came the next blow. The railroad over which he ran his tank-car doubled his freight to 35 cents a barrel, from 17½. That was not all. The same railroad brought oil to the combination's Marietta refineries at 10 cents a barrel, while they charged him 35. That was not all. The railroad paid over to the combination 25 cents out of every 35 cents he paid for freight. If he had done all the oil business at Marietta, and his rival had put out all its fires and let its works stand empty, it would still have made 25 cents a barrel on the whole output. Rice found a just judge when he took this thing into court. "Abhorrent," "dangerous," "gross," "illegal and inexcusable abuse by a public trust," "an unparalleled wrong," are the terms in which Judge Baxter gave voice to his indignation as he ordered the removal of the receiver of the railroad who had made this arrangement with the combination, to enable it, as the judge said, "to crush Rice and his business."[375]

In an interview, filling four columns of the New York World of March 29, 1890, the head of the trust which would receive this rebate is reported to have made this attempt to reverse the facts of this and similar occurrences: "The railroad company proposed to our agent," he said. But the judge who heard all the evidence and rendered the decision, which has never been reversed or impaired, declared that it "compelled" the railroad to make the arrangement, "under a threat of building a pipe line for the conveyance of its oils and withdrawing its patronage." This arrangement was negotiated by the same agent of the oil combination who engineered the similar "transfer" scheme by which the trunk-line railroads gave it, in 1878, 20 to 35 cents a barrel out of the freights paid by its competitors in Pennsylvania, as already told.[376]

"I reluctantly acquiesced," the receiver said, writing in confidence to his lawyer, anxious lest so acquiescing he had made himself legally liable. The interview describes the arrangement as an innocent thing: "A joint agreement for the transportation of oil." It was an agreement to prevent the transportation of oil by anybody else. Judge Baxter shows that it was a joint agreement, procured by threats, for the transportation of "$25 per day, clear money," from Rice's pockets into the pockets of the members of the trust for no service rendered, and without his knowledge or consent, and with the transparent purpose of transporting his business to their own refineries. Judge Baxter called it "discrimination so wanton and oppressive it could hardly have been accepted by an honest man, and a judge who would tolerate such a wrong or retain a receiver capable of perpetrating it, ought to be impeached and degraded from his position."[377]

This matter was also passed upon by the Select Committee of the United States Senate on Interstate Commerce. "No comment," the committee say, "is needed upon this most impudent and outrageous proposition"—by the oil company to the railroad.[378]

"Are you going to deny that story?" a great American statesman of the latter-day type was asked by one of his friends.

"Not I," was the reply. "The story's false. When you find me taking the trouble to deny a thing, you can bet it's true!"

This "agreement for the transportation of oil" had its calculated effect. It put a stop to the transportation of oil from the Ohio field by Rice over the railroad, just as the destruction by the same hands of the pipe line to the Alleghany had cut him off from access to the Pennsylvania oil-fields. He then built his own pipe line to the Ohio field. To lay this pipe it was necessary to cross the pipe line of his great rival. Rice had the pluck to do this without asking for a consent which would never have been given. His intrepidity carried its point, for, as he foresaw, they dared not cut his pipe for fear of reprisals.

In turning to the South, after his expulsion from the Ohio and Western markets, the Marietta independent did but get out of one hornet's nest to sit down in another. His opponent was selling its oil there through a representative who, as he afterwards told Congress, "was very fortunate in competing." He thought it was "cheaper in the long-run to make the price cheap and be done with it, than to fritter away the time with a competitor in a little competition. I put the price down to the bone."[379] Rice, in the South, ran into the embrace of this gentleman who had the "exclusive control" of that territory, and whose method of calling the attention of trespassers to his right was to cut them "to the bone." The people and the dealers everywhere in the South were glad to see Rice. He found a deep discontent among consumers and merchants alike. They perhaps felt more clearly than they knew that business feudalism was not better, but worse, because newer, than military feudalism. This representative of the combination assured Congress that "99.9 of all the first-class merchants of the South were in close sympathetical co-operation with us in our whole history"—that is, out of every hundred "first-class merchants" only one-tenth of one merchant was not with them. This is a picturesque percentage.

Rice's welcome among the people would not verify his opponent's estimate that his vassalage included all but one-tenth of one dealer in every hundred. From all parts came word of the anxiety of the merchants to escape from the power that held them fast. From Texas: "Most of our people are anxious to get clear." From Arkansas: "The merchants here would like to buy from some other." From Tennessee: "Can we make any permanent arrangement with you by which we can baffle such monopoly?" From Kentucky: "I dislike to submit to the unreasonable and arbitrary commands." From Mississippi: "It has gouged the people to such an extent that we wish to break it down and introduce some other oils." From Georgia, from different dealers: "They have the oil-dealers in this State so completely cooped in that they cannot move." "We are afraid."[380] As Rice went about the South selling oil the agents of the cutter "to the bone" would follow, and by threats, like those revealed in the correspondence described below, would coerce the dealers to repudiate their purchases. Telegrams would pour into the discouraged office at Marietta: "Don't ship oil ordered from your agent." "We hereby countermand orders given your agent yesterday." One telegram would often be signed by all the dealers in a town, though competitors, sometimes nearly a dozen of them, showing that they were united by some outside influence they had to obey.[381]

Where the dealers were found too independent to accept dictation, belligerent and tactical cuts in price were proclaimed, not to make oil cheap, but to prevent its becoming permanently cheaper through free competition and an open market. Rice submitted to Congress letters covering pages of the Trust Report,[382] showing how he had been tracked through Tennessee, Missouri, Nebraska, Georgia, Kansas, Kentucky, Iowa, Mississippi, Louisiana, Texas, Arkansas, Alabama. The railroads had been got to side-track and delay his cars, and the dealers terrorized into refusing to buy his oils, although they were cheaper. If the merchants in any place persisted in buying his oil they were undersold until they surrendered. When Rice was driven out prices were put back. So close was the watch kept of the battle by the generals of "co-operation" that when one of his agents got out of oil for a day or two, prices would be run up to bleed the public during the temporary opportunity. "On the strength of my not having any oil to-day," wrote one of Rice's dealers, "I am told they have popped up the price 3½ cents."[383]

The railroad officials did their best to make it true that "the poor ye have with you always." By mistake some oil meant for the combination was delivered to Rice's agent, and he discovered that it was paying only 88 cents a barrel, while he was charged $1.68, a difference of 80 cents a barrel for a distance of sixty-eight miles.

"Could you stand such competition as that?"

"No, sir. Before that I went up there and sold to every man in the place nearly. They were glad to see me in opposition.... I lost them, except one man who was so prejudiced that he would not buy from them."

"Your business had been on the increase up to that time?"

"Increasing rapidly.... I haul it in wagons now forty miles south of Manito."

"The rates against you on that railroad are so high that you can for a distance of forty miles transport your oil by wagon and meet the competition better than you can by using their own road?"

"Infinitely better."[384]

CHAPTER XVI

"TURN ANOTHER SCREW"

A spy at one end of an institution proves that there is a tyrant at the other. Modern liberty has put an end to the use of spies in its government only to see it reappear in its business.

Rice throughout the South was put under a surveillance which could hardly have been done better by Vidocq. One of the employés of the oil clique, having disclosed before the Interstate Commerce Commission that he knew to a barrel just how much Rice had shipped down the river to Memphis, was asked where he got the information. He got it from the agents who "attend to our business."

"What have they to do with looking after Mr. Rice's business?... How do your agents tell the number of barrels he shipped in April, May, and June?"

"See it arrive at the depot."

"How often do your agents go to the depot to make the examination?"

"They visit the depot once a day, not only for that purpose, but to look after the shipment of our own oil."

"Do they keep a record of Mr. Rice's shipments?"

"They send us word whenever they find that Mr. Rice has shipped a car-load of oil."

"What do their statements show with respect to Mr. Rice's shipments besides that?"

"They show the number of barrels received at any point shipped by Mr. Rice, or by anybody else."

"How often are these statements sent to the company?"

"Sent in monthly, I think."

"It is from a similar monthly report that you get the statement that in July, August, and September, Mr. Rice shipped 602 barrels of oil to Nashville, is it?"

"Yes, sir."

"Have you similar agents at all points of destination?"

"Yes, sir."[385]

This has a familiar look. It is the espionage of the South Improvement Company contract, in operation sixteen years after it was "buried." When the representative of the oil combination appears in public with tabulated statements exhibiting to a barrel the business done by its competitors for any month of any year, at any place, he tells us too plainly to be mistaken that the "partly-born," completely "buried" iniquity, sired by the "sympathetical co-operation" of the trustees and their railroad associates of easy virtue, is alive and kicking—kicking a breach in the very foundations of the republic.

A letter has found the light which was sent by the Louisville man who was so "fortunate in competing," immediately after he heard that one of "his" Nashville customers had received a shipment from the Marietta independent. It was addressed to the general freight agent of the Louisville and Nashville Railroad. It complained that this shipment, of which the writer knew the exact date, quantity, destination, and charges, "slipped through on the usual fifth-class rate." "Please turn another screw," the model merchant concluded. What it meant "to turn another screw" became quickly manifest. Not daring to give the true explanation, none of the people implicated have ever been able to make a plausible explanation of the meaning of this letter. The railroad man to whom it was sent interpreted it when examined by Congress as meaning that he should equalize rates. But Congress asked him:

"Is the commercial phrase for equalizing rates among railroad people 'turn another screw'?"

He had to reply, helplessly, "I do not think it is."

The sender before the same committee interpreted it as a request "to tighten up the machinery of their loose office."[386] Rice found out what the letter meant. "My rates were raised on that road over 50 per cent. in five days."

"Was it necessary to turn on more than one screw in that direction to put a stop to your business?"

"One was sufficient."[387]

The rates to the combination remained unchanged. For five years—to 1886—they did not vary a mill. After the screw had been turned on, he who suggested it wrote to the offending merchants at Nashville, that if they persisted in bringing in this outside oil he would not only cut down the price of oil, but would enter into competition on all other articles sold in their grocery. He italicized this sentence: "And certainly this competition will not be limited to coal-oil or any one article, and will not be limited to any one year."[388] "Your co-operation or your life," says he.

"Have you not frequently, as a shipper of oil, taken part in the competition with grocers and others in other business than oil, in order to force them to buy oil?"

"Almost invariably I did that always."[389]

"The expense and influence necessary for sustaining the market in this manner are altogether expended by us, and not by the representatives of outside oil," he further wrote. "Influence," as a fact of supply and demand, an element of price-making, is not mentioned in any political economy. And yet the "influence" by which certain men have got the highways shut to other shippers has made a mark as plain as the mountains of the moon on our civilization. "If we allow any one to operate in this manner," he continued, "in any one of our localities, it simply starts off others. And whatever trouble or expense it has given us in the past to prevent it we have found it to be, and still believe it to be, the only policy to pursue."[390]

They "are threatening," his Nashville agent, after the screw was turned, wrote Rice, "to ruin us in our business."[391]

The head of the Louisville "bone-cutters," when a witness before Congress during the trust investigation, stigmatized the action of his Nashville victims as "black-mail." They were "black-mailers" because they had sold a competitor's oil, and refused to continue to sell his own unless it was made as cheap or cheaper. Competition, when he practised it on others, was "sympathetical co-operation." Tried on him, it was "black-mail." "That man wanted us to pay him more than we paid the other jobbers"—i.e., he wanted them to meet the prices of competitors "because he thought we had the market sustained, and he could black-mail us into it. I bluffed him in language, and language is cheap."[392] The "language" that could produce an advance of freights of 50 per cent. in five days against a competitor was certainly "cheap" for the man whose rates remained unchanged, and who thereby absorbed his neighbor's vineyard. The inevitable result followed at last. Rice fought out the fight at Nashville seven years, from 1880 to 1887; then, defeated, he had to shut up his agency there. That was "evacuation day" at Nashville. It was among his oldest agencies, he told Congress, "and it was shut out entirely last year on account of the discriminations. I cannot get in there."[393]

State inspection of oil and municipal ordinances about storage have been other "screws" that have been turned to get rid of competition. City councils passed ordinances forbidding oil in barrels to be stored, while allowing oil in tanks, which is very much more dangerous, as the records of oil fires and explosions show conclusively. His New Orleans agent wrote Rice concerning the manœuvres of his pursuer: "He has been down here for some time, and has by his engineering, and in consequence of the city ordinances, cut me out of storage. As matters now stand, I would not be able to handle a single barrel of oil."[394] In Georgia the law was made so that the charge to the oil combination shipping in tank-cars was only half what it was to others who shipped in barrels. The State inspector's charge for oil in tanks was made 25 cents a barrel; for oil in barrels it was 50 cents a barrel. But as if that was not advantage enough, the inspector inspected the tanks at about two-thirds of their actual capacity. If an independent refiner sent 100 barrels of oil into the State, he would have to pay $50 for inspection, while the oil combination sending in the same would pay but 25 cents a barrel, and that on only 66-2/3 barrels, or $16 in all. This difference is a large commercial profit of itself, and would alone enable the one who received it to sell without loss at a price that would cripple all others. In this State the chief inspector had the power to appoint inspectors for the towns. He would name them only for the larger places, where the combination had storage tanks. This prevented independent refiners from shipping directly to the smaller markets in barrels, as they could not be inspected there, and if not inspected could not be sold.[395] All these manœuvres of inspection helped to force the people to buy of only one dealer, to take what he supplied, and pay what he demanded. Why should an official appointed by the people, paid by them to protect them, thus use all his powers against them? Why?

"State whether you had not in your employ the State inspector of oil and gave him a salary," the Louisville representative of the combination was asked by Congress.

"Yes, sir."[396]

Throughout the country the people of the States have been influenced to pass inspection laws to protect themselves, as they supposed, from bad oil, with its danger of explosion. But these inspection laws prove generally to be special legislation in disguise, operating directly to deprive the people of the benefit of that competition which would be a self-acting inspection. They are useful only as an additional illustration of the extent to which government is being used as an active partner by great business interests. Meanwhile any effort of the people to use their own forces through governments to better their condition, as by the ownership of municipal gas-works, street-railways, or national railroads and telegraphs, is sung to sleep with the lullaby about government best, government least.

This second campaign had been a formidable affair—a worse was to follow; but it did not overcome the independent of Marietta. With all these odds against him, he made his way. Expelled from one place and another, like Memphis and Nashville, he found markets elsewhere. This was because the Southern people gave him market support along with their moral support. Co-operation of father and son and daughter made oil cheaper than the "sympathetical co-operation" opposing them, with its high salaries, idle refineries, and dead-heads. Rice had to pay no dividends on "trust" stock capitalized for fifteen times the value of the property. He did not, like every one of the trustees, demand for himself an income of millions a year from the consumer. He found margin enough for survival, and even something more than survival, between the cost of production and the market price. "In 1886 we were increasing our business very largely. Our rates were low enough so that we could compete in the general Southern market."[397]

Upon this thrice-won prosperity fell now blow after blow from the same hand which had struck so heavily twice before. From 1886 to the present moment Rice and his family have been kept busier defending their right to live in business than in doing the business itself. Their old enemy has come at them for the third time, with every means of destruction that could be devised, from highway exclusion to attacks upon private character, given currency by all the powerful means at his command. The game of 1886 was that of 1879, but with many improvements gained from experience and progress of desire. His rates were doubled, sometimes almost tripled; in some cases as much as 333 per cent. Rates to his adversary were not raised at all. The raise was secret. Suspecting something wrong, he called on the railroad officer July 13th, and asked what rates were going to be. The latter replied that he "had not the list made out." But the next day he sent it in full to the combination. Rice could not get them until August 23d, six weeks later, and then not all of them. As in 1879 the new tariff was arranged at a conference with the favored shippers.[398]

This was the first gun of a concerted attack. Rice was soon under fire from all parts of the field. One road after another raised his rates until it seemed as if the entire Southern market would be closed to him. While this was in progress the new Interstate Commerce Law passed by Congress—in part through the efforts of Rice—to prevent just such misuse of the highways, went into effect. But this did not halt the railway managers. A month after it was passed the Senate Committee on Interstate Commerce was shown that discrimination was still going on, as it is still. At points as far apart as Louisville, New Orleans, Atlanta, St. Louis, and San Francisco switches were spiked against Rice, and the main lines barricaded of all the highways between the Ohio River, the Atlantic and Pacific oceans, and the Gulf of Mexico. In the face of the Interstate Commerce Act the roads raised his freights to points in Georgia, Alabama, Tennessee, Kentucky, Louisiana, and Mississippi in no case less than 29, and in some cases as high as 150, 168, and 212 per cent. more than was charged the oil combination. Where the latter would pay $100 freight, he, shipping the same amount to the same place, would sometimes pay $310—if he got it taken at all.[399]

The general freight agent of one of the roads, when before the Interstate Commerce Commission, denied this. When confronted with written proof of it he could only say, "It is simply an error."[400]

Rice shows that in some cases these discriminations made him pay four times as much freight, gallon for gallon, as the monopoly. The differences against him were so great that even the self-contained Interstate Commerce Commission has to call them "a vast discrepancy."[401] The power that pursued him manœuvred against him, as if it were one track, all the railroads from Pennsylvania to Florida, from Ohio to Lake Superior and the Pacific coast. "Through its representative the oil combination was called before the Interstate Commerce Commission to explain its relation to this 'vast discrepancy.'"

"Your company pays full rates?"

"Pays the rates that I understand are the rates for everybody."

"Pays what are known as open rates?"

"Open rates; yes, sir."[402]

That the increase of rates in 1886, like that of 1879, was made by the railroads against Rice, under the direction of his trade enemy, is confirmed by the unwilling testimony of the latter's representative before Congress. "I know I have been asked just informally by railroad men once or twice as to what answer they should make. They said, Here is a man—Rice, for instance—writing us that you are getting a lower rate." He was asked if he knew any reason, legal or moral, why the Louisville and Nashville Railroad should select his firm as the sole people in the United States. "No, sir," the witness replied; but then added, recovering himself, "I think they did because we were at the front."[403] The railroads bring the people they prefer "to the front," and then, because they are "at the front," make them the "sole people."

Rice did not sleep under this new assault. He went to the Attorney-General of Ohio, and had those of the railroads which were Ohio corporations brought to judgment before the Supreme Court of Ohio, which revoked their action, and could, if it chose, have forfeited their charters. The Supreme Court found that these railroads had charged "discriminating rates," "strikingly excessive," which "tended to foster a monopoly," "actually excluded these competitors," "giving to the favored shippers absolute control."[404] Rice went to Cincinnati, to Louisville, to St. Louis, and Baltimore to see the officials of the railroads. He found that the roads to the South and West, which took his oil from the road which carried it out of Marietta, were willing to go back to the old rates if the connecting road would do so. But the general freight agent of that company would give him no satisfaction. He wrote, October 3d, to the president of the road over which he had done all his business for years. He got no answer. He wrote again October 11th, no answer; October 20th, no answer; November 14th, no answer. Rice had been paying this road nearly $10,000 a year for freight, sending all his oil over it. The road had used its rate-making power to hand over four-fifths of his business to another, but he has never been able to get so much as a formal acknowledgment of the receipt of his letters to the head of the road, asking that his petitions for restoration of his rights on the highway be considered. A part only of the letters and telegrams which he sent during these years—to get rates, to have his cars moved, to rectify unequal charges, to receive the same facilities and treatment others got—fill pages of close print in the Trust Report of the Congressional Committee of Manufactures of 1888.

"Your time is a good deal occupied with correspondence, is it not?"

"I should say so. If the rates had been more regular, I would not have had so much correspondence. It takes about all my time to look after rates."[405]

Driven off his direct road to market, Rice set to hunting other ways. The Baltimore and Ohio, he found, was, though very roundabout, the only avenue left by which he could get his oils into Southern markets. He began to negotiate with it immediately, but it was not until several months later—the middle of November—that he succeeded in closing arrangements. To get to Chattanooga, Tennessee, over this route his oil had to travel 1186 miles as against 582 miles by the roads which had been closed to him, and yet the rate was lower over the more than double distance. Again, he could send a barrel of oil 1213 miles by the Baltimore and Ohio to Birmingham, Alabama, for $1.22, while the roads he had been using put his rate up to $2.26, although their line to Birmingham was only 685 miles.

All the arrangements had been concluded to the mutual satisfaction of Rice and the Baltimore and Ohio Railroad. After this thorough discussion of four months, in which every point had been examined, Rice sends forward his first shipment December 1st. He is not a little elated to have blazed his way out of the trackless swamp in which he had been left by the other roads. His satisfaction is short enough. In about a fortnight—on December 15th—the then general freight agent of the Baltimore and Ohio telegraphed him that he could not be allowed to ship any more. "We will have to withdraw rates on oil to Southern points, as the various lines in interest"—the connections to which the Baltimore and Ohio delivered the oil for points beyond its own line, and which shared in the rates—"will not carry them out."

This was stunning. It nullified the labor of months which had been spent in opening a way out of this blockade. It put the cup of ruin again to the lips of the family at Marietta, innocent of all offence but that of trying to make a living out of the industry of their choice, and asking no favors, only the right to travel the public highway on equal terms, and to stand in the open markets. The excuse given was heavy-laden with inaccuracy. Rice immediately found out by wire that the Piedmont Air Line, one of the most important of the connections, had not refused to carry at the agreed rate. Its traffic manager telegraphed the Baltimore and Ohio people to reconsider their action, and continue taking Rice's oil. When asked first by Rice, and afterwards by Congress, to name the lines which refused, as he alleged, to carry out the rates he had agreed upon, the general freight agent of the Baltimore and Ohio could not give one. He escaped from Congress by promising to send its committee, "within a day or two," all the correspondence with these other companies. Once out of the committee-room, he never sent a scrap of paper to redeem his promise, and the whole matter was lost sight of by the committee.[406]

Rice, badly shattered, still sought and managed to find a few long-way-around routes. He presented to Congress in 1888 a table showing how he still managed to get to some of his markets. To Birmingham, Alabama—the direct route of 685 miles, as well as the Baltimore and Ohio, being closed to him—he shipped over seven different railroads forward and backward 1155 miles. The rates of all these roads added together made only $2.10 a barrel instead of $2.66, to which the shorter line had raised its price, for the purpose, as this comparison shows, not of getting revenue, but of cutting it off. To get into Nashville he had to go around 805 miles over five different lines instead of 502 miles, as usual, and still had a rate of $1.28 instead of $1.60.

From 1880, the moment he turned to the Southern field, after the destruction of his business in the West, everything that railroad men's ingenuity could do was done to prevent him from becoming a successful manufacturer who might increase the amount to be shipped, open new markets, and steady the trade by making it move by many minds of different views and reasons instead of by one. In order barely to live he was kept writing, telegraphing, travelling, protesting, begging, litigating, worrying, and agitating by press, prosecutions, private and public, and by State and national investigation. The ingenuity of the railroad officials in chasing him down was wonderful. Nothing was too small if it would hurt. Sometimes the railroad made through rates so high that it was cheaper for him to ship his oil along by short stages, paying the local rates from place to place until it reached its destination. In this way he got a car from Cincinnati to Knoxville at the rate of 32 cents altogether, when, if it had been shipped at once all the way on the through rate, it would have cost 40 cents a hundred. The railroads have spent hundreds of thousands of dollars, used up armies of gifted counsel, and spoiled tons of white paper with ink to argue out their right to charge more for short hauls than long hauls; but when some traffic manager wants to crush one of his employer's customers, no short-haul long-haul consistency stands in his way.[407] It was not enough to fix his rates at double what others paid. All kinds of mistakes were made about his shipments. Again and again these mistakes were repeated; nor were they, the Interstate Commerce Commission shows, corrected when pointed out.[408] One of the stock excuses made by railroad managers for giving preferential rates to their favorites is that they are the "largest shippers," and, consequently, "entitled to a wholesale rate." But when Rice was the largest shipper, as he was at New Orleans, they forgot to give him the benefit of this "principle." When Rice wrote, asking if a lower rate was not being made, the railroad agent replied: "Let me repeat that the rates furnished you are just as low as furnished anybody else." "This lacks accuracy," is the comment of the Interstate Commerce Commission.

Wishing to know if the Louisville and Nashville would unite with other roads in making through rates to him, Rice asked the question of its freight agent. He replied: "I do not see that it is any of your business." "It was undoubtedly his business," the Interstate Commerce Commission says, sharply; "and his inquiry on the subject was not wanting either in civility or propriety." When Rice asked the same road for rates, the officials refused to give them to him, and persisted in their refusal.[409] Like Vanderbilt before the New York Legislative Committee, they seemed to think excuses to shippers were a substitute for transportation, and evidently thought they had done more than their duty in answering Rice's letters. But as the Commission dryly observes, their answers to Rice's letters did not relieve him of the injurious consequences. In attempting to explain these things to the Interstate Commerce Commission, the agent of the railroad said:

"If I have not made myself clear, I—"

"You have not," one of the Commission interrupted.[410]

The refusal to give Rice these rates was an "illegal refusal," the Commission decided; "the obligation to give the rates ... was plain and unquestionable." This general freight agent was summoned by Congress to tell whether or not lower rates had been made to the oil combination than to their competitors. He refused to produce the books and papers called for by the subpœna. He had been ordered by the vice-president of the road, he said, to refuse. He declined to answer the questions of the committee. Recalled, he finally admitted the truth: "We gave them lower rates in some instances."[411]

Rice took to the water whenever he could, as hunted animals do. The Ohio, Mississippi, Tennessee, Missouri were public highways that had not been made private property, with general agents or presidents to say "No" when asked permission to travel over them. He began to ship by river. The chairman of the Committee of Commerce rose in his seat in Congress to present favorably a bill to make it illegal to ship oil of less than 150 degrees fire-test on the passenger boats of inland waters. The reason ostentatiously given was public safety. But, as was at once pointed out in the press, the public safety required no such law. The test proposed was far above the requirement of safety. No State in its inspection laws stipulated for so high a test. Most of the States were satisfied with oil of 110 degrees fire-test; a few, like Ohio, went as high as 120 degrees. All but a very small proportion of the oil sent to Europe was only 110 degrees fire-test. The steamboat men did not want the law, and were all against it. There was no demand from the travelling public for such legislation. General Warner, member of Congress, said, in opposing the bill: "Petroleum which will stand a fire-test of 110 degrees is safer than baled cotton or baled hay, and as safe as whiskey or turpentine to be carried on steamers. What is the object, then? There can be but one, and I may as well assert it here, although I make no imputation whatever upon the Committee of Commerce, or any member of it. It will put the whole carrying trade of refined petroleum into the hands of the railroads and under the control of ... a monopoly which has the whole carrying trade in the oil business on railroads, and they will make it as impossible for refiners to exist along the lakes and the Ohio River as it is impossible for them now to exist on any of the railroads of the country." Why the trust, though it was the greatest shipper, should seek to close up channels of cheapness like the waterways was plain enough. They were highways where privilege was impossible. With its competitors shut off the railroads by privilege, and off the rivers by law, it would be competition proof.

The United States authorities, too, moved against Rice, responsive to the same "pull" that made jumping-jacks for monopoly out of committees of commerce and railway kings. When the Mississippi River steamer U.P. Schenck arrived at Vicksburg with 56 barrels of independent oil, the United States marshal came on board to serve a process summoning the officers and owners to answer to the charge of an alleged violation of law. Several steamboats were similarly "libelled."

"We were threatened a great many times," the representative of the steamboat company told Congress.[412] The steamboat men were put to great expense and without proper cause. When the cases came to trial they were completely cleared in every instance. But the prosecution had done its work of harassing competition. The success of the campaign of 1879 in Ohio was now repeated over a wider field. The attack of 1886, "in a period of five months," Rice said before Congress, "shut up fourteen of my agencies out of twenty-four, and reduced the towns we had been selling in from seventy-three to thirty-four."[413] This was a loss in one year of 79 per cent., or about four-fifths of his business.

CHAPTER XVII

IN THE INTEREST OF ALL

The difference in freights against Rice was so great, as the Interstate Commerce Commission found, after taking hundreds of pages of testimony, that he had to pay $600 to $1200, "or more," on the same quantity his opponent got through for $500. These discriminations were made, as the commissioners say, "on no principle.... Neither greater risks, greater expense, competition by water transportation, nor any other fact or circumstance brought forward in defence, nor all combined, can account for these differences."[414]

The railroads had, of course, to give some reason, and they put forward the plea that it was much more expensive and dangerous to carry Rice's shipments, which were in barrels, than those of the combination, which were in tank-cars.[415] This excuse for charging him rates at which he could not ship at all did not stand examination by the Interstate Commerce Commission.

But he did not wait for that. When he found the railroads were so fond of tank-cars, he set about getting them. He wrote the general freight agent and the president of the road that he would build tank-cars, and asked what his rate would be then; but he got no answer. He wrote other roads, but got no answer. He asked the general manager of the Queen City and Crescent Route the same question. After a correspondence of five months with him and other officials, in which he was shuttlecocked from one to another and back again, he had not only not succeeded in getting any tank-car rates, but at the end of that protracted exchange of letters the general manager wrote: "I was not aware that you had asked for rates on oil in tank-cars."[416] Rice wrote the Louisville and Nashville: "I will build immediately twenty tank-cars if you will guarantee me ... as low a net rate as accorded any other shipper." Commenting on his failure to get answers, the commissioners say: "Complainant did not succeed in obtaining rates. The denial of his right was plain, and stands unexcused.... What reason there may have been for it"—the refusal of rates—"we do not know, but find that they were not just or legal reasons."[417]

How history is made! One of the reasons given by the solicitor of the oil trust[418] for its success is its use of the tank-car, with the obvious inference that its would-be competitors had no such enterprise. And Peckham, in his valuable and usually correct "Census Report on Petroleum," in 1885, says that the railroads require shippers to use tank-cars![419]

Determined to keep in the field and to have tank-cars, if tank-cars were so popular with the railroad officials, Rice went to the leading manufacturers to have some built. He found they were glad to get his contract. After making arrangements at considerable trouble and expense to build him the cars, they telegraphed him that they had to give it up. Bankers, who had promised to advance them money on the security of the cars, backed out "on account of some supposed controversy which they claim you have had with the Standard Oil Company and various railroads in the West. They feared you could not use these cars to advantage if the railroads should be hostile to your interests."[420]

Through the all-pervading system of espionage, to which cities[421] as well as individuals were subject, his plans had been discovered and thwarted. The espionage over shipments provided for by the South Improvement scheme has now extended to business between manufacturer and manufacturer. Why should it stop at unsealing private correspondence in the post-office in the European style, and making its contents known to those who need the information for the protection of their rights to the control of the markets?

Rice, who was nothing if not indomitable, finally got ten cars from the Harrisburg works. But this supply was entirely inadequate, and he had to continue doing the bulk of his business in barrels. What a devil's tattoo the railroad men beat on these barrels of his! They made him pay full tariff rates on every pound weight of the oil and of the barrel, but they hauled free the iron tanks, which were the barrels of his rivals, and also gave them free the use of the flat-cars on which the tanks were carried.[422] Hauling the tanks free, on trucks furnished free, was not enough. The railroads hauled free of all charge a large part, often more than half, of the oil put into the tanks. In the exact phrase of the Interstate Commerce Commission, they made out their bills for freight to the oil combination "regardless of quantity." This is called "blind-billing."

Of the 3000 tank-cars of the combination only two carried as little as 20,000 pounds; according to the official figures there were hundreds carrying more than 30,000 pounds, and the weight ran up to 44,250 pounds, but they were shipped at 20,000 pounds.[423] A statement put in evidence showed that shipments in tank-cars actually weighing 1,637,190 pounds had been given to the roads by the combination as weighing only 1,192,655 pounds. Cars whose loads weighed 44,250, 43,700, 43,500, 36,550 pounds were shipped as having on board only 20,000 pounds. At this rate more than one-quarter of the transportation was stolen.

The stockholders of the road were paying an expensive staff of inspectors to detect attempts of shippers to put more in their cars than they paid for, but these shippers paid for three car-loads and shipped from four to six regularly, and were never called to account. This "blind-billing," the Commission said, was "specially oppressive." It was done by the roads in violation of their own rule. It had been mutually agreed among them, and given out to the public, "that tank-cars shall be taken at actual weight."[424]

When Rice was trying to get the roads to allow him to use tank-cars, he asked how the charge on them was calculated. Of those that answered none answered right. None of them gave him the slightest intimation that there was any such practice as "blind-billing." On the contrary, they assured him he would have to pay for every pound he shipped. The Missouri Pacific replied with a "statement not warranted by the facts," as the Commission softly put it. They said they charged for the "actual weight," while, as the Commission shows, they made shipments "regardless of quantity." Rice asked the Newport News and Mississippi Valley Railroad for tank-car rates. "A tank-car is supposed to weigh (carry) 20,000 pounds; if it weighs more, then we will charge for it." At the same time the agent wrote Rice this, he was hauling cars containing 35,000 pounds "with no additional charge." "If this statement was made in good faith," the Commission says, "it is difficult to account for it, and it is not accounted for." "Had he (Rice) provided himself with cars for tank shipment, and been charged as he was told he would be, the discrimination against him would have put success in the traffic out of the question."

When they wanted to turn some new screw in freight rates against Rice, the railroad officials would whip themselves around the stump by printing a new tariff sheet on a type-writer, and tacking it, perhaps, as one of the Interstate Commerce Commission said, on some back door in their offices. This they called "publishing" their rates, as required by the Interstate Commerce law. To Rice, asking for tank-car rates, they would send this printed sheet, showing that if he shipped by tank-car he must pay for every pound, and they held him off with this printed, official, and apparently authentic tariff, though shipping 44,000 for 20,000 pounds for the trust. This was done after the Interstate Commerce Act went into force.[425]

One of these roads assured Rice that its rates had been fixed "by the special authority of the National Railway Commissioners." The fact was, as the Commission declares: "The Commission never investigated coal-oil rates, or gave special authority for their renewal; it never sanctioned any difference in the rates as between tank-car and barrel shipments, and had never, up to the date of this letter, had its attention called to them in any way."[426]

The representative of the combination was called as a witness before the Interstate Commerce Commission. "We pay for exactly what is put in the tanks,"[427] he testified. "In fact, this was never done," says the Commission.[428] Even the railroad officials, who could go any length in "blind-billing" for him, could not "go it blind" on the witness-stand to the extent of supporting such a statement. "Our price per tank-car was not based on any capacity or weight; they have been made simply per tank-car."[429]

"What, generally, is the object of false billing?"

"I suppose to beat the railroad company."[430]

In defence of the discrimination against the barrel shippers, a great deal has been made of danger from fire, damage to cars from leakage, and trouble of handling in the case of barrel shipments, but the best expert opinion which the Interstate Commerce Commission could get went against all these plausible pretences.[431] The manager of the tank line on the Pennsylvania roads showed that the risks were least when the transportation was in barrels. Another reason given for the lower rates on tanks was that they returned loaded with turpentine and cotton-seed oil from the South; but, as the Interstate Commerce Commission shows, this traffic was taken at rates so astonishingly low that it was of little profit;[432] and the commissioner of the Southern Railway and Steamship Association informed the Commission that the return freight business in cotton alone, brought back by the box-cars, to say nothing of other freight, was worth more than these back-loads of turpentine in the tank-cars.[433] It was, consequently, the box-car in which barrel shipments were made, and not the tanks, on which the railroad men should have given a better rate, according to their own reasoning. Turpentine and cotton-seed oil are worth three or four times more than kerosene, and it costs no more, no less, to haul one than the other; but the railroads would carry the cotton-seed oil and turpentine for one-third or one-fourth the rate they charged for kerosene. The Commission could not understand why the rates given by the roads on these back-loads of turpentine and cotton-seed oil were so low. "This charge, for some reason not satisfactorily explained to the Commission, is made astonishingly low when compared with the charge made upon petroleum, although the cotton-seed oil is much the more valuable article."[434]

The newspapers of the South have contained many items of news indicating that the men who have made the oil markets theirs have similarly appropriated the best of the turpentine trade, but nothing is known through adjudicated testimony. The trustees of oil have always denied that there was any connection between them and the Cotton-seed Oil Trust, although the latter shipped its product in the oil trust's cars. The reasons, therefore, for the "extraordinarily low" rates made on the turpentine and cotton-seed oil shipped North in its tank-cars must remain, until further developments, where the Commission leaves it—"not satisfactorily explained." The railroads said they made the rates low for tanks because of the enticing prospects of these back-loads, in which there was no profit to speak of; but they extended these special rates to points from which there was no such back-loading.[435] Rice saw how the cost of sending his oil South could be reduced by bringing back-loads of turpentine at these "astonishingly low" rates. He found there was still turpentine in the South he could buy; but the railroads would not so much as answer his application for rates.

"They absolutely refused."

"Was this refusal since the Interstate Commerce decision in your case?"

"Yes, sir; since that decision."[436]

It might have been thought this would have been enough—hauling the tank itself free; furnishing the flat-cars free for many tanks; carrying free a quarter to a half, "or more." But there was more than this. The railroads paid the combination for putting its tank-cars on their lines. For every mile these cars were hauled, loaded or empty, the roads paid it a mileage varying from ¾ to 1½ cents. This mileage was of itself a handsome revenue, enough to pay a profit of 6 per cent. on its investment in the cars. But when Rice asked what the railroads would charge him for hauling back his empty tank-cars, he was not told that he would be paid for their use, as others were. He was told that he would be charged "generally a cent and a half a mile," or, "we make the usual mileage charge on return of empty tanks." "This last statement," the Interstate Commerce Commissioners say, "was not warranted by the facts."[437] The vessel which contains the oil of the combination "receives a hire coming and going," Mr. Rice's lawyer said before the Committee of Congress on Commerce; "that which contains Rice's oil pays a tax." When Rice tried to sell his oil on the Pacific coast he found that if he shipped in tank-cars he would have to pay $95 to bring the empty car back, which others got back free.

The representative of the oil combination was questioned about all this by the Interstate Commerce Commission.

"Are you allowed mileage on tank-cars?"

"No, sir."

"Neither way?"

"Neither way."[438]

But the railroad officials again could not "blind-bill" him as far as this. Asked what mileage they paid him, they replied:

"Three-quarters of a cent a mile."[439]

When the freight agents who did these queer things at the expense of their employers—i.e., their proper employers, the stockholders—were put on the stand before the Interstate Commerce Commission to explain, they cut a sorry figure. "It was an oversight," "a mistake," said one. Another could only ring confused changes on "I think it is an error.... I cannot tell why that is so.... It is simply an error.... I cannot tell."[440] There were never any errors, suppositions, oversights for Rice.[441] Referring to this, the Commission says, caustically:

"The remarkable thing about the matter is that so many of these defendants should make the same mistake—a mistake, too, that it was antecedently so improbable any of them would make. The Louisville and Nashville, the Cincinnati, New Orleans and Texas Pacific, the Newport News and Mississippi Valley, and the Illinois Central companies are all found giving out the same erroneous information, and no one of them can tell how or why it happened to be done, much less how so many could contemporaneously, in dealing with the same subject, fall into so strange an error. It is to be noted, too, that it is not a subordinate agent or servant who makes the mistake in any instance, but it is the man at the head of the traffic department, and whose knowledge on the subject any inquirer would have a right to assume must be accurate. In no case is the error excused."[442]

The cases in which Rice prosecuted the railroads before the Interstate Commerce Commission are among the most important that have been tried by the Commission. The charges made by Rice were conclusively proved, except as to some minor roads and circumstances. The Commission declared the rates that were charged him to be illegal and unjust, and a discrimination that must be stopped. It ordered the roads to discontinue using their power as common carriers to carry Rice's property into the possession of a rival. "The conclusion is irresistible that the rate sheets were not considerately made with a view to relative justice."[443]

The facts of these discriminations—"unjust," "illegal," and "abhorrent"—are on the records as judicially and finally determined. But one of the combination said before the Pennsylvania Legislature, at Harrisburg, as reported in the Harrisburg Patriot, February 19, 1891:

"I say to you all, in good faith, that since the passage of the Interstate Commerce law, and the introduction of that system, we have never taken a rebate. I mean we have taken no advantage over what any other shipper can get. I make the statement broadly, and I challenge the statement to the very utmost, and will pay the expenses of any litigation undertaken to try it."

When it was found that this practice of charging the preferred shipper for only 20,000 pounds when it shipped 25,000, 30,000, 40,000, or 44,000, was going to be investigated by the Interstate Commerce Commission, there were intellects ready to meet the emergency. A pot of paint and a paint-brush furnished the shield of righteousness. Each car being known by its number, and only by its number, all the old numbers of the 3000 tank-cars of the oil trust were painted out, and new numbers painted on. Whether its mighty men left their luxurious palaces in New York, and stole about in person after dark, each with paint-pot and brush, or whether they asked employés to do such work, the evidence does not state. The device was simple, but it did. Rice was suing for his rights to use the highways before the Interstate Commerce Commission, and before the Supreme Court of Ohio, through the Attorney-General of the State, who had found the matter of sufficient importance to use his official power to institute suits in quo-warranto against two railroads. It was necessary that evidence should be forthcoming in these suits to prove what his rate was in comparison with the others. The only way this could be done was by comparing the actual size of the cars with the size given in the freight bills, or manifests. The cars are known in the bills only by their numbers, and without its number no car could be identified. The report of Congress reprints the following from the testimony of the representative of the trust before the Interstate Commerce Commission:

"Has there recently been any general change in the numbering of the cars?"

"Yes, sir; there has been quite a general renumbering, repainting, and overhauling."

"When did that change take place?"

"I think it was commenced some time in July; it may have been later."

The result of that renumbering made it practically impossible to identify any car as connected with any shipment made before that time. The cars were there, looking as fresh and innocent as good men who have donned robes of spotless white earned by the payment of generous pew-rent. The cars showed even to the unassisted eye, as the Interstate Commerce Commission said, how much larger they were than was pretended. There were still the accounts of the railroads, showing that these cars had been "blind-billed" as containing only 20,000 pounds, but the cars mentioned in the manifesto could no longer be identified with the cars on the tracks. The sin of "blind-billing" was washed out in paint. Rice went to the Interstate Commerce Commission with his complaint in this case in July. Immediately the repainting and renumbering took place. "It was commenced some time in July; it may have been later."[444]

In such cases time is money, and more. "Seest thou a man diligent in business, he shall stand before kings. He shall not stand before mean men."

The members of this combination have many thousand tank-cars engaged in carrying their oil, and some of them have another kind of tank-car travelling about the country. Under the head of the "Gospel Car" the Daily Statesman, of Portland, Oregon, printed the following article, Sunday, December 13, 1891: "The Gospel Car.—The mission car 'Evangel' arrived yesterday, and was side-tracked on the penitentiary switch. A song service attracted many people during the morning. There will be services at 10.30 this morning, and in the afternoon, at 3 o'clock, a Sunday-school will be organized. This will be the first Sunday-school ever organized from the gospel car, which has been on the road since last spring. The 'Evangel' is sixty feet in length, ten feet wide, and seats nearly one hundred people. It is the generous gift of"—several New York millionaires, the most important of them belonging to the oil trust—" ... to the American Baptist Publication Society. The reverend gentleman who was in charge of the 'Evangel,'" the Statesman continued, "will visit the smaller towns along the railway, and conduct evangelistic meetings in the car." One of these cars was in Chicago early in 1893, and was admiringly described by the Chicago press. Though corporations have no souls they are ready to help save the souls of others, for the railroads give these cars free hauling, and the messages and the packages of its occupants are franked by the telegraph and express companies. The contents of this tank-car are distributed by its donors to the people without money and without price. It is conceivable that by making it so "cheap" and by multiplying the "Evangel" into an evangelical tank line of thousands of cars, the donors might drive the churches, which have no tank-cars, out of the business, as they have done the tankless refiners, and ultimately add to their monopoly of the Light of the World that of the Light of the other World.

Tho effect of all this on the family co-operation at Marietta does not need to be described. Its head told Congress that if he had had no difficulty in getting the same freight as others he could have run his refinery to its full capacity, and could have increased his works largely.

"Are not your expenses less than theirs?"

"Yes, sir.... I am running very moderately now.... One-third to one-half generally."[445]

"I am virtually ruined," he says still later in a statement of his condition in a circular to the public, urging them to petition Congress to make the imperfect Interstate Commerce law operative. He is virtually ruined, though he has won his cases before the Interstate Commerce Commission, and that Federal tribunal has ordered the roads to give him his rights on the highways; but it has been a barren victory. His circular is entitled "My Experience Very Briefly Told." Its opening sentences give us in a phrase the secret of the significance of Rice's story, and dignify his appeal to the public. They show how thoroughly adversity had driven home into this plain man's mind a great civic truth which his fellow-citizens have not yet learned, probably because they have not yet had adversity enough. His solitary and fruitless, although successful, struggle taught him that the citizens of industry can no more maintain their rights acting singly than the citizens of government. He had learned that "competition," "supply and demand," "eternal laws of trade," were catchwords as impotent in the markets to give individuals their rights, if unassociated, as the incantations of royalty and loyalty, and law and order, to save people from their king until they made themselves a People. Persons fail; only a People can get and keep freedom. This Rice had begun to learn from his failure to enforce single-handed rights which all the courts declared were his, but which no court could secure. In his card to the people, he said: "I am fighting for my rights and for my existence (which happens to be in the interest of all) single-handed and alone, at my own expense and time lost.... I am here ... to do what I can to get the Interstate Commerce Act amended at this present session of the Fiftieth Congress, to cure existing evils, and all I ask is that you will take hold and assist me by your signature and approval to the enclosed petition. You are subject to the same influences, and now is your time, my fellow-countrymen, to come forward and assist a little to stop this nefarious work."

"In the interest of all." This is exactly the relation which the struggle of this common citizen bears to the general welfare. The investigation by the Ohio Legislature in 1879;[446] the removal by the United States Court of the railroad receiver who agreed to pay the oil trust $25 out of every $35 freight collected from Rice;[447] the refund ordered by the Supreme Court of Ohio from a pipe-line company which had charged Rice 15 cents extra on every barrel he shipped to pay it to his competitors;[448] the successful prosecution, by the Attorney-General of Ohio before the Supreme Court, of the railroads discriminating against Rice;[449] the cases before the Interstate Commerce Commission from its beginning till now, involving hundreds of railroads, and decided, so far as it did decide, on almost every point in Rice's favor;[450] the disruption, as far as forms go, of the oil trust in Ohio by the Supreme Court of the State ousting corporations from the right to become members of such combinations and to pool their earnings therein;[451] the investigation of the oil trust by Congress in 1888 and 1889, devoted in large part to the various aspects of Rice's experience—these are some only of the public functions which had to be invoked in the ineffectual attempt to protect this one man on the high-road and in his livelihood, and they show how little his was merely a "private affair."

When the amendment of the Interstate Commerce law was before Congress in 1889, eminent counsel were employed by Rice to explain the defects of the law to the committees, and petitions to Congress through his instrumentality were circulated all over the country, and numerously signed. Though a poor man, who could ill afford it, he gave time and money and attention, frequently spending weeks at Washington, discussing the subject with members, and presenting petitions. The act was amended in partial accordance with these petitions and recommendations.

To obtain the elementary right of a stockholder, never withheld in the course of ordinary business—to vote and receive dividends on stock in the oil trust which the trustees had sold and he had bought in the open market—Rice had to sue through all the New York courts from 1888 to 1892. The Court of Appeals decided that there had been no lawful reason for the denial of his rights, and ordered that they be accorded him. This was another barren victory. The trust had meanwhile ostensibly been dissolved; but the dissolution has every appearance of being like that of its progenitor, the South Improvement Company, a dissolution "in name" only; not in reality. In place of the old trust certificates listed on the New York Stock Exchange, new certificates have been issued which were selling in the spring of 1894 at about the same quotation as the former ones.

In this case the trust asked the New York courts to deny Rice his rights because he had in other matters, and as to other parties, appealed to other courts. His other suits had been against the railroads, not against the oil combination. He acted on the defensive, and went into court only to save himself from commercial strangulation. In all of them that went to trial he was successful, with but one or two exceptions. He was so successful that even the judges who heard his case and decided in his favor were moved to outbursts of unaffected indignation on the bench. The only result aimed at or procured was that the courts decreed that these common carriers must in the future give this citizen his legal rights on the railways; not that he must have the same rates as his opponent, but only that the difference in their favor shall not be "excessive," "illegal," "unjust."

Because of this attempt to secure the fair use of the highways side by side with it, the trust pleaded in the Supreme Court of New York that his appeal to courts as a shipper was a reason why the courts should withhold his rights as a stockholder.

In making this plea the trustees described themselves as having been for years persecuted by the independent of Marietta, and moistened the dry pages of their legal pleadings with appeals for the sympathy of the courts and the public. He has "diligently and persistently sought to become acquainted with" our "methods of business and private affairs;" "he has used efforts to injure" our "business"; "he is attempting to harass, injure, and annoy" us; "he has ever since ... 1876, when he first engaged in business, ... maintained a hostile attitude, and been engaged in hostile transactions and proceedings against" us, ... "for the purpose of injuring" us and our "business"; he "has been uninterruptedly prosecuting ... a series of litigations ... in the courts, as well as before the Interstate Commerce Commission, and before an investigating committee of Congress ... for the purpose of harassing and annoying" us.[452] And when in 1891 Rice was appealing to the Attorney-General of New York to bring suit in the name of the State against the oil combination in New York, like that which had been successfully brought in Ohio, he was publicly stigmatized in court as a "black-mailer" because he had once named a price at which he was willing to sell his refinery and quit. So the citizens of Nashville were called black-mailers for competing, and the citizens of Buffalo for bringing a criminal conspiracy to justice.

It is this dancing attendance upon State legislatures, courts, attorney-generals, Congress, the Interstate Commerce Commission, as shown in this recital, which the modern American business man must add to Thrift, Industry, and Sobriety as a condition of survival.

CHAPTER XVIII

ORDINARY SUPPLY AND DEMAND

"Do I understand you that they have not sought in any way to make the operations of refineries outside the trust so unprofitable that parties would either come into the trust or have to abandon the business—has anything of that sort been done?"

"They have not; no, sir, they have not," was the triple negative of the president.

"They" (the trustees) "have lived on good terms with what I may call their competitors?"

"They have; and have to-day very pleasant relations with those gentlemen."

"So far as you know," he was asked, "the product of the crude oil and the manufacture and sale of the refined oil has been absolutely left to the ordinary rules of supply and demand, has it not?"

"It has."[453]

In the winter of 1873 a young farmer living among the blue hills of Wyoming, in western New York, where he had been born and bred, was asked by a stranger from Rochester to help him in a search for oil lands. The old-fashioned quiet of the little community was agitated by the hope that the milk and honey of their valleys might be replaced by a more precious flow. The stranger and his son were prosperous oil refiners, but a little cloud, about the size of a "trustee's" hand, had crept into their sunshine. As they set about drilling a well on some "likely-looking" land they had leased, the stranger told the farmer why he was so anxious to strike oil for his own exclusive use. The reader is better prepared to understand his explanation than the then inexperienced agriculturist to whom he gave his confidence. It had begun to be difficult for him to get a full and regular supply of the crude petroleum for his works. There were restrictions, he said, about the shipments.[454] What that meant the young farmer was to learn for himself.

There was no oil in Wyoming, and the refiner went back to Rochester, and, as so many others have done, sold the control of his works, the Vacuum, to the "successful men" of the combination, and stepped silently into the minority place. His Wyoming friend, Charles B. Matthews, had continued in his service, and when the Vacuum was sold he and two other of its employés made up their minds to go into the business of refining in Buffalo on their own account. They were under no obligations or contract to remain, and did not suppose themselves to have been sold along with the concern. They were capable men, and showed great business sense in their arrangements. Buffalo, by its connections by rail and the lake with the market, and its nearness to the oil supply, was a much better situation than Rochester or Cleveland. An independent refining company—the Atlas—was then constructing an independent pipe line from the oil regions to Buffalo. "This made Buffalo the best point for establishing refining industries in the country, with its canal and lake transportation for the products of the factory, and with a pipe line, in the hands of independents, from the crude oil wells to the city," said the Buffalo Express. Matthews had by this time had several years' experience in the business. Of the two with him, Albert was a laborer, who had worked his way up in the Vacuum refinery until he could run the stills, and had learned how to make oil. He and his thrifty wife had saved a few thousand dollars. He was ambitious. He had learned at school and in the army and at Fourth-of-July celebrations that America is a free country for all, and that there are no classes here, and that any workman may go to the top. Farmer Matthews had fed his boyhood with stories of country boys who had gone to the city and matured into business magnates. He and Albert pooled their visions and their savings, borrowed some money, and went to work. As for competition, though they knew it was close, they were not afraid but that they could hold their own in a fair fight, and of anything but a fair fight they never dreamed.

"How are you going to get your crude oil?" Albert and Matthews were asked when they went to tell their employer what they were going to do.

"From the Atlas pipe line."

"You will wake up some day and find that there is no Atlas Oil Company.

"We have ways," he continued, "of making money you know nothing about," using, singularly enough, the phraseology employed by a greater man in the interview with another would-be competitor.[455]

"As gentlemen," he went on to say, "I respect you, but as to the Buffalo Lubricating Oil Company I shall do all in my power to injure or destroy it."[456]

Afterwards Albert alone was sent for. "Don't you think it would be better for you to leave these men, and have $20,000 deposited to your wife's credit than go with these parties?"

"I went out with them in good faith, and I propose to stay."

"It will be only a matter of a few days with the Buffalo institution at the furthest. We will crush them out, and you will lose what little you have got."

Albert was shown an elaborate statement of the cost of making oil and its selling price, proving that there was no money in oil.[457] The record of dividends was produced in court afterwards. It showed that just before this—January 18, 1881—a dividend of 50 per cent. had been paid in one month.[458] Dividends of $300,000 had been paid in 1881 on the capital of $100,000. "No wonder they did not want competition," said the New York World.

These negotiations had been with the son. Albert not yielding to this pressure, and pushing ahead with the construction of the rival stills, the father, who was in California, came back. At his request Albert again interrupted the work on the new refinery, which he alone of the partners could direct, and came from Buffalo to Rochester for an interview.

"You have made a grand mistake," said his old employer, "by going out with those fellows.... The company will not last long.... The result will be, if you stay with them, you will lose all you have got in it.... We are going to commence suits against them. We will not only sue them, but serve an injunction on them and stop their work. The result of it is that when these suits commence, if you are in it, you will be responsible, and you have got a little money, and you will lose it all.... If you come back and work with us everything will be all right, and we will make everything satisfactory to you."

"If I leave them it will leave them in bad shape," Albert urged.

"That is just exactly what I want to do,"[459] his former employer replied.

Albert began to weaken. "I had," he afterwards told in court, ... "about $6000 altogether, or a little more. They had reason to know that I had some property there."[460] This was all he had to show for the work of a lifetime, and it began to look as if it were fading away under these reiterated threats and warnings, which went on from March to June. Albert gave way. He went to his lawyer, Mr. Truesdale, of Rochester. "We have come," said his former employer, who accompanied him, "to see what disposition can be made of Al's property."

"They are going to bust the company up," said Albert to his lawyer, when asked why he was going back to the Vacuum Company. "I am an indorser on one of its notes, and if I do not come back with the Vacuum, what property and money I have will be taken away from me."