Introductory material (continued 9)

Senator Payne defended the oil trust and himself. "Even at this date," he said, "it seems that that company is represented as being guilty of all sorts of unlawful and improper things. Such allegations without proof to sustain them I regard as unworthy of an honorable man or an honorable senator.... The Standard Oil Company," he continued, "is a very remarkable and wonderful institution. It has accomplished within the last twenty years, as a commercial enterprise, what no other company or association of modern times has accomplished." He went on to declare that he "never had a dollar's interest in the company." But the charge which he and it would never allow to be investigated was that the company had a great many dollars' interest in him. "The majority of the stockholders are very liberal in their philanthropic contributions to charity and benevolent works," he pleaded; "but it contributed," he said, "not one dollar or one cent directly or indirectly to my election to this body." During the demand for investigation he uttered no such denial to be taken as a challenge.

The senator made what Senator Hoar properly called a "very remarkable admission" concerning the part taken in elections by the oil combination. "When a candidate for the other House in 1871," Senator Payne said, "no association, no combination in my district did more to bring about my defeat, and went to so large an expense in money to accomplish it, as the Standard Oil Company."

The oil trust, then, does take part in elections, and as a company spends larger sums of money than any other "institution, association, combination ... to accomplish the defeat" of candidates for Congress!

Then Mr. Payne said: "There never has been a national election at which those two gentlemen—one of them was my own son—have not contributed very liberally." He named the two men who were, as Senator Hoar showed, among the most influential and important managers of his election to the Senate.

Senator Hoar closed the debate with these unanswered and unanswerable words: "A senator who, when the governor of his State, when both branches of the Legislature of his State, complained to us that a seat in the United States Senate had been bought; when the other senator from the State rose and told us that that was the belief of a very large majority of the people of Ohio, without distinction of party, failed to rise in his place and ask for the investigation which would have put an end to those charges, if they had been unfounded, sheltering himself behind the technicalities which were found by some gentlemen on both sides of this chamber, that the investigation ought not to be made, but who could have had it by the slightest request on his part, and then remained dumb, I think should forever after hold his peace."[574]

The election of this senator was meant to be only the prelude to his nomination and election as President of the United States. This was publicly and authoritatively declared by the men who were charged with having spent money to buy the Legislature for him. One of these was the proprietor of the most influential Democratic daily in Ohio, and that journal in a leading editorial, double leaded to make it more prominent, declared this to be the purpose of Payne's friends. The New York Sun of May 27, 1884, followed, also in double-leaded editorials, under the caption in staring black type of the name of the Senator, and said: "Henry B. Payne is looming up grandly in the character of a possible and not altogether improbable successor to Mr. Tilden as the Democratic candidate for the Presidency. The fact that the Ohio delegation at Chicago in July is sure to be solid for Payne is of peculiar importance and significancy. Everybody can see what it may amount to."

Concurrently with these formal announcements came the news from all parts of Ohio that the Payne party were hard at work to control the election of the delegates who were to represent Ohio in the National Democratic Convention at Chicago in July. But the managers of this Presidential campaign found that they had gone too far. The election for senator had excited so fierce an anger over the whole country that it had become perfectly plain that Senator Payne was not "available." The education of the American public was still incomplete. It could see senatorships bought and endure it, but the Presidency—"not yet."

The use this senator made of his seat throws light where none is needed. Again, in 1887, the great question of 1876 of the control of the highways came up before Congress. The agitation of nearly twenty years had come to a point. Thirty of the States and Territories of the Union had established commissions or passed laws to regulate the railroads. Congress had before it the Interstate Commerce bill forbidding discriminations, and creating the Interstate Commerce Commission as a special tribunal to prevent and punish the crime. There had been investigation, debates, amendments, meetings of conference committees of both Houses. It was proposed to "recommit" the bill to prevent its passage for an indefinite time. Mr. Payne voted "Yes." Then the question before the Senate is, Shall the bill become a law? Senator Payne's name is called. He votes:

"No."

It is the same question as in 1876, and the same vote. Against the investigation, first, and then the legislation, his word is:

"I object."

CHAPTER XXVIII

FOR "OLD GLORY" AND AN—APPROPRIATION

In 1891 Congress passed the Postal Subsidy law for paying a higher than the market rate of compensation to capitalists who would carry the mails in vessels built in America, of American materials, and manned by Americans. No contracts were made by the Post-office Department under the law for the mails between Europe and America, for there were no such capitalists and no such boats in that quarter.

In May of the next year, 1892, a bill was whizzed through Congress almost without debate, in which the forms of the principal beneficiaries-to-be of the law of 1891 loomed into view. The subsidy law gave its bonus only to vessels that could fly the American flag because American built and manned. This new act exempted from these conditions the two principal steamers of the Inman, now the International, line—the City of New York and the City of Paris—provided the company built two other steamers that fulfilled the requirements of the subsidy law. The sequel disclosed that their owners had a well-laid plan to build more than two other steamers to get the rich rewards of the subsidy law. The steamers and the company were not named. That was not needed. The bill was drawn with such limitations as to size, speed, ownership, etc., that these were the only two vessels which could come under its provisions. The bill was introduced in the House by a prominent Democrat, and in the Senate by a prominent Republican. It was passed by both Houses regardless of party distinctions. The Secretary of the Navy urged the bill upon the naval committees of Congress. He had begun to do so in his first report to Congress and subsequent communications, in which he referred by name to the vessels which were masked in this legislation. The head of the line and other owners were members of the oil combination. The president of the steamship company has been the president of the pipe-line branch of the oil trust—its largest single interest—from the time of its organization in 1881.[575] This exemption from the law was engineered through the Senate by one who had hitherto always been conspicuously strenuous in refusing to abate his opposition to admitting to American registry any ship not built in America, of American materials, by American labor, but who now had suffered some sea change.

Ordinary citizens who want to get the profits of carrying the American mails must build their boats in American ship-yards; but the syndicate got members of Congress to grant them by law that which all others must earn.

The enactment of the Postal Subsidy law and the exemption of these steamers by special law were the first two parts of a progressive programme. The third step was the negotiation of contracts with the Postmaster-General for the prizes of subsidy. Immediately upon the passage of this special legislation the Postmaster-General went through the necessary but empty parade of advertising for bids for a service for which there could be only one possible bidder. The awarding of contracts to the steamship company so "fortunate in competing" was announced in the press in October, 1892.

The Postmaster-General dated the contracts 1895—three years ahead. They run for ten years from that time. An iron-clad, or, better than iron-clad, law-clad contract was thus secured, giving a complete monopoly of the mail business between America and Europe until A.D. 1905, five years into the twentieth century. The legislation of May contemplated the construction of two new boats. The contracts secured from the Postmaster-General showed that the line intended to build five, and obligated the government to pay subsidies to all of them, as well as to the two foreign-built steamers given by special legislation the right to fly the American flag. By these contracts the company, after the completion of its new steamers in about three years, will exclusively carry every bag of mail that leaves America for Europe. Meanwhile the mails are to be given to its two steamers now running, the Paris and the New York, whenever they are in port. This has been frequently done in the past on account of their speed, but the compensation for this, under the law and the new contracts, has been made much greater than the price hitherto paid. With but one or two exceptions the mails on all the routes where subsidy is given—to South America, Havana, China, Europe—were carried before the subsidy law on the same ships as now. Except a very trifling saving in time, the only change the law has made here is that the gains of the carriers have been swelled at the cost of the taxpayers. The American shippers carrying the mails at the regular weight rates were making a profit. The Post-office, under the new deal, gets only what it has been getting—the carriage of the mails; but the steamship company gets a great deal more. This is the "pleasure of making it cheap" applied to the postal service.

By this procession of moves the company secured profitable contracts ten years ahead on present ships, the Paris and the New York—although these had not yet done as much as fly the American flag in compliance with the special legislation in their behalf—and on future ships that were not yet built or contracted for. All was in the future—the American registry for the Paris and the New York, the building of the new steamers required by the special legislation. But one thing was got in hand, and was not in the future tense—the contract with the American Post-office, binding it to pay millions a year. The privileges conferred by this legislation were so valuable that, as Senator Frye stated in debate, its recipients to gain them were to forfeit $105,000 due them from the British Government.

The American registry would be a capital advertisement to catch the American tourist. Travelling, says Emerson, is a fool's paradise, and the shifting population of that paradise would never stop to think out the fraud in the appeal to their patriotism. Much was made in the sentimental Senate of the privilege the law would give Americans of going abroad in their own ships under their own flag. The press was used shrewdly and widely to gain the favor of the public for these incursions into their Treasury. Pages of advertising, in the dress of news-matter, were put into prominent journals, telling in glowing phrases what a great thing Congress, the Postmaster-General, and the steamship company were doing for the people. The same editorial on the promised restoration of American maritime supremacy would appear as original in journals thousands of miles apart. As the panorama of journalism moved along with its daily shift any observer could see the methodical and business-like way in which the syndicate "inspired" the press. Articles about the "great steamship line" appeared on the same date in the papers of different cities, giving the same facts in the same order, and nearly the same words, following "copy" evidently supplied from a common source. One day these chimes all sing the immeasurable superiority of Southampton over Liverpool as a port for Americans; another day the unspeakable sagacity of the Postmaster-General in giving this company the mails is the tune; and again the ding-dong tells how, but for the syndicate and its subsidy, the American flag—"Old Glory"—would be seen no more on the seas. The average citizen who reads "his" paper is no doubt duly impressed.

"Old Glory on the seas!" cried the excitable metropolitan editors. "The dear old flag!" "America again Queen of the seas!" "A new era is about to dawn on our long-neglected commerce!" Our long-absent flag is about to reappear, but not, as in the old days, as the symbol of a people's commerce. It signalizes the commerce of syndicates. The democratic idea of a chance for all has been abandoned for the aristocratic idea of the favored few. "Poor indeed in spirit must be the American," said the New York Tribune, "who will not hail with satisfaction and pride the early prospect of the reappearance of the flag in English, French, and Belgian ports." Poor, fortunately, it was replied, are many Americans in the spirit which taxes all the people out of an industry in which they once led the world, and then taxes them to give that same industry as an exclusive privilege to a syndicate—and such a syndicate!

There was a rapturous chorus from the press because American materials and American labor are to be employed in the construction and use of the new vessels to be built for subsidies. When American labor was free to employ itself and American materials with no subsidies, American boats did absolutely the whole packet business between England and America.[576]

Now American seamanship must remain content to be employed to such an extent and on such terms as may suit the interests of a few men, under whose captainship the once glorious expansion of our commerce on the seas is replaced by a system limited on every side. Limited by the expensiveness of entering the occupation: a special bill has to be passed through Congress in each case to confer the right to fly the American flag on ships bought abroad, and for this the merely legitimate expenses are heavy—trips to Washington, appearances before committees and departments, with expert representatives. Limited by their small number: instead of thousands building and running new ships, a score. Limited by their capital: great, it is still much less than the aggregate, if all had a chance. Limited by the narrowness of view and enterprise inevitable with a few, however capable: everybody knows more than anybody. Limited by the lack of diversity in opinion and interests: with many men of many minds, of varying forecasts and moods and gaits, the currents of industry are kept fuller and steadier than is possible under a clique rule. Limited by selfishness: the few will inevitably come to regard the ocean-carrying business as "belonging to us," like oil, and with their crushing wealth will treat as "black-mailers" intruders with new ships and new methods. Limited by the impossibility the subsidy system imposes upon the average citizen of competing against the government—against himself multiplied by all his fellow-citizens. Limited by corruption: when this subsidy bill was under discussion, Representative Blount, of Georgia,[577] called attention to the methods by which previous legislation of the same sort, "to build up the American merchant marine and increase the commerce of the country," had been sought from Congress. Quoting from the report made to Congress in 1874-75 by Representative Kasson, of Iowa, he showed that the Pacific Mail Company, to get a subsidy, had disbursed $703,000 among the members and officers of Congress and other persons influential in legislation. "Yankee maritime enterprise," this is called. The great captains, Bursley, Anthony, Delano, Dumaresq, Comstock, Eldridge, Nye, Marshall, Holdredge, Morgan, and other sturdy Americans who led the nautical world wherever speed, safety, and courage were called for, outsailing competition even from the land where "Blake and mighty Nelson fell"[578]—they had a manlier idea of enterprise than being supported at the public expense in floating poor-houses miscalled floating hotels.

The few men who are the beneficiaries of taxes paid by the many will be powerful and shrewd enough to get other dispensations or benefits, post-office contracts, naval contracts, or modifications of the strict terms of their agreement, and with this help from the taxpayer they can do business at a figure which, though very remunerative to themselves, will drive the unaided citizen competitor out of the business. Honest citizens cannot ask for such favors. Poor men could not get them.

It was the old spirit of rebate which sought and gave the preference. Nothing could make such legislation respectable but the extension of its benefits to all Americans owning such ships. But no such extension was contemplated. The law gave a privilege not to the American flag, but to the owners of the American flags of these two steamers. "There is little probability," Senator Frye was reported as saying, December 22, 1892, in the New York Tribune, friendly to him and to the policy of subsidy, "of the passage of any more laws giving the privilege of an American registry to vessels upon the building of which no American labor has been expended. The twin steamers City of New York and City of Paris have set a fashion of which they will be the only exponents."

There is a pool of the steamers between America and Europe called the North Atlantic Steamship Association. At its meeting in December, 1892, this association discussed plans for reducing the number of trips, increasing passenger rates, withdrawing excursion rates to the World's Fair, and discontinuing the steerage traffic. This was duly followed by the announcement in March, 1893, for which it was presumably a preparation, that steerage traffic was renewed, but at an increase of rates. Passenger rates of the higher class have also been raised. Agreements to restrict the number of ships; pools to put up rates; steamship wars to destroy competitors; the use of "pull" to procure from the admiralty, sanitary, naval, immigration, and other governmental bureaus, here and abroad, regulations ostensibly for public convenience, really to make business, as nearly as can be, impossible for others; lobbies to buy legislation for private interests—all these may be expected to replace the magnificent and manly rivalries of the days when the unbribed flag floated on its own breath in every sea.

Under the policy of subsidy—the policy of aristocracy, exclusion, scarcity, corruption, war, and loss of liberty—the contest for maritime and commercial supremacy becomes a contest between the subsidy lobbies in Washington and at Westminster, Paris, and Berlin. If the duke who is at the head of one of the great English steamship lines obtains an increase of subsidy, the maritime dukes in America will call on Congress not to shame itself by doing less for Americans than Parliament has done for Englishmen. If all the English and American lines pass under one ducal yoke—following the internationalization of other syndicated businesses of Great Britain and America—one hidden hand will manage for one purse the make-believe duel between Parliament and Congress, while the uninitiated people glare across the ocean at each other, and each inspired press calls on its government not to allow its commercial supremacy to be destroyed by vulgar and unpatriotic economy. In advocacy of subsidy—breeder of sea-dogs, naval contractors, of war, and of treasury-suckled syndicates to fan its flames—the Secretary of the Navy wrote to the Chairman of the Senate Committee on Commerce in this case, "A fleet of such cruisers would sweep an enemy's commerce from the ocean." All through the press, from New York to Texas and the Pacific coast, every possible change of phrase is rung to fire the American heart with "jingo" exhortations to subsidize private steamers so as to increase our fighting kennel.

The "American idea" is that individuals as well as corporations, poor men as well as rich ones, small towns as well as large ones, one maritime State as well as another, should be encouraged to follow the sea. The old woman who thanked God, upon her first sight of the sea, that at last she had seen something there was enough of, lived before subsidies were invented and the sea shrank to be too small for all the people.

The contracts made with the International Company bind the government to pay it $4.00 a mile for fifty-two trips a year (3162 miles each) between New York and Southampton for the ten years (1895-1905)—$657,696 a year, and $6,576,960 for the ten years; and the same rate a mile for the same number of trips a year (of 3350 miles each) between New York and Antwerp for ten years—$696,800 a year, and $6,968,000 for the ten years. This makes an income from the mails alone of $1,354,496 a year on the not-to-exceed $10,000,000 which the company will have invested. At the end of the ten years it will have received from these government contracts alone its whole investment, and more than one-third in addition. The American taxpayer will receive for his share the profit and pleasure of being forbidden to send his letters to Europe by faster and cheaper boats, when these appear, as they have already begun to do. The trial trips of new steamers of other lines show them to be faster than the vessels we have bound ourselves to. "The American principle" used to be to send all mails by the fastest ships. Now, to develop the "American merchant marine," we relieve it from all necessity of competing in speed, or anything else, with the foreign marine.

With such legislation and contracts in hand, any syndicate could go to the banks and borrow at the lowest rates every cent of the millions it needed to carry out its plans. It need not invest a dollar of its own. Good enough "collateral" for borrowing would be this privilege—practically a capital of millions got from the government for nothing. Done for favored citizens, this is "the development of our national resources"; done for the whole people, it would be "socialism" or something more dreadful. Thus guaranteed dividends by the forced contributions of the American people, this company, if threatened with competition by other lines, old or new, can lower freights and fares to rates at which others cannot live. The subsidies are a reserve fund on which it can subsist while doing other business below cost. The vision of this will deter other capitalists from building vessels, as they have been frightened out of building tank-cars. The company can, by a war of rates, force the sale to it of such vessels as it wants out of the present Atlantic fleet. The scheme, which has progressed so smoothly through the various stages of the Postal Subsidy law—the exemption by special legislation of the two steamers from their foreign disabilities, the negotiation of the contracts for subsidies until A.D. 1905 for steamers yet unborn—is an entering wedge, the broad end of which may easily grow to be a monopoly of the transatlantic—and why not transpacific?—traffic and travel.

And in future legislation, tariffs, and contracts, what bulwark of the people would avail against the Washington lobby of these combined syndicates of oil, natural gas, illuminating gas, coal, lead, linseed-oil, railroads, street-railroads, banks, ocean and lake steamships and whalebacks, iron and copper mines, steel mills, etc.? These beggars on horseback—the poor we will always have with us as long as we give such alms—are forever at the elbows of the secretaries, representatives, senators. The people who pay are at work in their fields, out of sight, scattered over thousands of miles.

Having evaded, by the complaisance of Congress, the requirements of the subsidy law in the case of its two non-American steamers, the company sought to be relieved by the Secretary of the Treasury from the necessity of manning its boats with Americans, as stipulated by the law. It was unwilling to sacrifice the foreign captains in its employ, as the despatches said, "for the untried men of American citizenship," regardless that one of the strongest promises of the subsidy givers and takers was to recall to the sea the American citizenship banished thence. The company had already driven its foreign-built boats through the law, why not its foreign captains? It applied to the Treasury Department for permission to retain them. To furnish a ground for such a ruling, the foreign captains had given notice of their "intention" to become citizens. They could not become citizens for five years, and the courts hold that such a declaration does not meet the requirements of the law that the officers of United States vessels shall be citizens of the United States. The ruling asked for was refused by Assistant Secretary of the Treasury Nettleton. The question was not dropped. Some months later (December 2, 1892) the Washington despatches of the Philadelphia Ledger and the New York Herald reported that "Secretary Foster of the Treasury is disposed to accede to the wishes of the company, if it can possibly be done within the law," and in the New York Tribune we read that "he is inclined to the view that an exception might safely be made in this case."

The raising of the American flag on these steamers—one at New York and the other at Southampton—in the spring of 1893, was made a state ceremony in both countries. The President of the United States came on specially from the capital to honor the occasion, though this had never been done before when the American flag was raised on vessels admitted to foreign registry. The American minister left the embassy at London to officiate at Southampton. The vessels were announced to be under American captains transferred from other ships owned by the same men. But the Society of American Marine Engineers and the Brotherhood of Steamboat Pilots discovered that other officers—the foreign engineers of the vessels—had been retained, though they were foreigners. The former began an agitation for the protection of their legal rights. Remonstrances from every important branch of the two societies from San Francisco to New York were forwarded to the President of the United States and the Secretary of the Treasury of the new administration which had just gone into office. Counsel were employed to present their case. It was found that one of the last official acts of the out-going Secretary of the Treasury had been the order authorizing the issue of licenses to foreign engineers. Attempts to procure a copy of this order from the department have failed. Engineers have always been considered to be officers. If they are such, this exemption was a violation of the statutes of the United States which require that officers shall be American. It reversed all the decisions which hold that declaration of an intention to become a citizen does not make one legally a citizen, for that would give foreigners, as in this case, the advantages of citizenship without its duties; and indefinitely, for the intention might never be executed. The order of the Secretary makes a precedent upon which foreign captains may be employed—the objection being the same in either case—and their reappearance may therefore be confidently looked for. The appropriation once got, "Old Glory" is hauled down.

An "American Seaman" wrote the New York World that when he offered himself for employment on the boat which had just replaced with so much pomp the British flag with the American he was almost laughed at, and was told there had been ninety men on board that morning on the same errand. All got the same answer, "We don't want you. We employ all our hands on the other side." The articles circulated throughout the country to create public opinion in favor of these subsidies dwell much on the "glory" and advantage of having Americans in command of these vessels with a full American force under them. But the subsidy secured, we see these American vessels, which may be called upon to take part in a war with Great Britain, are manned by British engineers and British seamen. The lower compensation they are accustomed to will help keep down the cost of manning the other vessels to be built for the line.

The secretary by whom this was done was he who, as president of a subordinate corporation of the oil combination, had been the commanding officer at the front in the great battle with Toledo.[579] When he was nominated for Secretary of the Treasury, Senator Payne made himself conspicuous by soliciting support among the Democrats for the confirmation of this Republican. "He could not be chosen to the Toledo Council from any ward to-day," said the New York Times, February 23, 1891, "so bitter is the feeling against him," and the same paper declared that his defeat in Ohio as a candidate for Congress in 1890 was entirely due to his connection with the oil combination. But though of so little political power that he could not command a majority of the votes in his own Congressional district, there was influence behind him which could get the head of his party and the government to put him in the seat illustrious with the memory of such men as Alexander Hamilton and Salmon P. Chase. "The objection to Governor Foster as Secretary of the Treasury, that he was an associate in business of the members of the great oil trust," said the New York Press, "President Harrison did not regard as serious enough to have any weight." It was pointed out by the Buffalo Courier editorially, February 23, 1891, and other papers, that the oil trust, which Mr. Foster had been serving, "is not only a heavy exporter but a heavy importer, especially of tin plate, and is an extensive claimant for rebates of duty on the tin of cans in which oil is exported."

An item of Associated Press news in December, 1892, says that the Secretary of the Treasury has just decided that the oil combination shall be paid by the Treasury a drawback of the duties it has paid on imported steel hoops for barrels in which it exports oil. "It isn't pleasant," said the New York World, editorially, February 23, 1891, "to have a Secretary of the Treasury who holds intimate relations with the oil trust." It is through the Secretary of the Treasury that the company receives the mail subsidies of millions a year. All the statistics and official publications with regard to the "decline of American shipping" and "foreign competition with American oil," and about the tariff, as on oil, coal, steel, tin, etc., and many other financial and commercial matters of pecuniary concern to them, are under the charge of the Secretary of the Treasury. The Treasury Department's Commissioner of Navigation, in 1892, sends circulars to the boards of trade and chambers of commerce all over the country, calling attention to the small amount of money paid by our government to American steamers for the mails, and advocating the establishment of a merchant marine and naval reserve on the principle adopted by Great Britain—i.e., the payment of subsidies.

When Senator Hoar, speaking of the oil combination in the debate on the Payne case,[580] asked, sharply: "Is it represented in the Cabinet at this moment?" he referred to the Secretary of the Navy. Subsidy had not then insinuated itself into the policy of the government; but when that came, the uses of a Secretary of the Navy were clear enough. It was by the influence of the Secretary of the Navy that the subsidies for these steamships of the oil trust were got through Congress. It is the Secretary of the Navy who passes upon the speed of the ships receiving subsidies; and his findings are binding upon the Post-office Department which awards the contracts and upon the Treasury Department which pays. In the rush of the closing hours of the session of 1889-90 of the Fifty-first Congress, upon the urgent recommendation, made in person to the Naval Committee, of the same Secretary of the Navy who had pushed through the subsidy special legislation we have described, $1,000,000 was appropriated for the purchase of nickel ore. It is an emergency, said the senator who spoke for the Naval Committee to the Senate. The nickel was to be bought by the Secretary of the Navy; when and where was at his discretion. The ore was to be used for alloying steel in the manufacture of armor plate. The same Congress took off the duty of hundreds of dollars a ton on nickel imported. The only nickel mine of importance in America was then at Sudbury, Canada. In pressing the appropriation through Congress it was stated that the mine, like the steamship company subsidized later, was owned by "our citizens." After investigation in Cleveland, New York, Washington, and Canada, the Daily News of Chicago declared that the appropriation of $1,000,000 and the abolition of the duty were done in the interest of members of the oil combination; that they were "our citizens" who were the owners of the nickel mine at Sudbury; that they had sent an able lobbyist to Washington to secure the legislation; and that, in anticipation of his success, the product of the mine had been withheld for a year from the market, until ore to the value of millions had accumulated. It was said that by April 1, 1890, there were 5000 tons on the dump, the duty on which, at the old rate, would have been $1,500,000. Whether these statements were correct or not—and in the absence of official investigation it is impossible to tell—the narrative answers fully the purpose of giving the uninitiated public an idea of the relations that may exist between public departments and private syndicates with great profit—but not to the department. The appropriation was passed September 29, 1890. The books of the Navy Department show that the Secretary thereupon made contracts with the Canadian Copper Company, by which, up to June 15th following, it sold the government $321,321.86 worth of nickel. A litigation arising among its stockholders in the spring of 1893 disclosed among them no less close a connection of the oil trust than the senator from Ohio who had served it in Congress from 1876 to 1891.

The message of a Republican President in 1892 commended the special legislation in favor of the two steamers, and urged Congress not to fail to appropriate money to pay them their subsidies. The Democratic Postmaster-General, who now stands between the United States and these carriers of the foreign mails, is one of the firm of distinguished counsel who defended the interests of some of the owners of this steamship line in the conspiracy trial at Buffalo.[581] He is to give them the vouchers upon which the millions a year of subsidies are to be paid, and he may be called upon to consider new contracts. In the Presidential campaign of 1892 the head of the oil trust was prominent on one side figuring among the officers of great political mass-meetings in New York, while the associate referred to by Senator Hoar was the active manager of the political fortunes of the other party. This is not a solitary instance. The great man who testified twenty-one years ago that he was a Republican in Republican districts, a Democrat in Democratic districts, but everywhere an Erie man, has now an army of imitators. The people had this authoritatively explained to them while they were dazedly watching the speculation in sugar-trust stock in Wall Street and the Senate rise and fall with the manipulation of the sugar tariff in committee. The president of the sugar-trust, before a special committee of the United States Senate, testified that this "politics of business" was the custom of "every individual and corporation and firm, trust, or whatever you call it."[582] Asked if he contributed to the State campaign funds, he said: "We always do that.... In the State of New York, where the Democratic majority is between 40,000 and 50,000, we throw it their way. In the State of Massachusetts, where the Republican party is doubtful, they probably have the call.... Wherever there is a dominant party, wherever the majority is very large, that is the party that gets the contribution, because that is the party which controls the local matters"—which include the elections to Congress and the Presidential election.[583] Federal judges find the sugar trust not subject to the anti-trust law.[584] The Attorney-General has not got decisions in the suits against it for refusal to answer Census questions. Congress forces the people to buy sugar of it only, and at its price. The Secretary of the Treasury drafts for a committee of Congress a tariff like that the trust needs. Our President is the head of the "dominant party that gets the contribution," and he joins the sugar lobby by recommending, unofficially, legislation in its favor.[585]

By what law gives it, and by what law does not take from it, the sugar trust can issue $85,000,000 of securities on $10,000,000 of property, and collect $28,000,000[586] a year of profits. Control of government, with its Presidents, Congress, Federal Judges, Attorney-Generals, and Cabinet Secretaries, would be a great prize. Probably none of the trust's "raw material" would be so cheaply bought as this if it could be purchased by campaign contributions of a few hundred thousand dollars. In an interview in the New York Herald of March 25, 1894, the debonair president of the trust, to shame the objections of picayune souls, cries, "Who cares for a quarter of a cent a pound?" The answer is not far to seek. He does.

CHAPTER XXIX

"THE COMMODITY IS NOT SO GOOD AS BEFORE" —Lord Coke.

Three hundred years ago Lord Coke, in the "Case of the Monopolies,"[587] declared these to be the inevitable result of monopoly: the price of the commodity will be raised; the commodity is not so good as before; it tends to the impoverishment of artisans, artificers, and others.

In 1878 and 1879, when railway presidents were saying "No" to every application of the few remaining independents for passage along the road to market,[588] and the oil combination was supreme from the well to the lamp, a concerted protest was made against its oil by commercial bodies representing trade all over Europe. An international congress was held specially to consider means for the protection of the European consumer, by the interposition of the governments of Europe and America, or by commercial measures. In the archives of the State Department at Washington are the documents in which this episode can be read.[589] At this moment of triumph over all rivals, "even what was classed as superior brands was a poor article."[590] The English trade met in London, in January, 1879, and remonstrated. One of the delegates stated that a small dealer who bought of him had written, threatening to commit suicide on account of the trouble this poor oil was giving him.[591] The American consul at Antwerp, under date of February 19, 1879, called the attention of the State Department to the congress about to be held to consider the serious complaints which had been made of late against American refined petroleums. He gave the warning that unless there was an improvement the Belgian government would interfere for the protection of the people with regulations which would greatly embarrass the export trade from America. A bill was introduced into the German Reichstag to protect the people of Germany against the flood of bad oil from America. Against those dealing in oil dangerous to human safety it provided penalties from fines to loss of citizenship and penal servitude.

At the congress which met at Bremen in February were represented all the European nations of any importance except France, which imports only crude, and does all its refining at home. It was an indignation meeting. The consul at Bremen wrote the State Department, under date of February 27, 1879, an account of it. It was "very important," he said. "Delegates were present from the chambers of commerce of Antwerp, Amsterdam, Berlin, Breslau, Christiania, Copenhagen, Danzig, Frankfort-on-Main, Hamburg, Königsberg, Lubeck, Mannheim, Nürnberg, Rostock, Rotterdam, Stettin, Trieste, Moscow, and Vienna."

The "united refiners," to explain away the faults of their oil, sent a representative to the congress who was one of the inspectors of the State of New York, in the pay of the people, but using his official prestige in behalf of a private interest. The consul at Bremen names the two chief points made in the defence: First, that the refined oil was bad because half the crude then produced in America was from the Bradford field, "and is so different in quality from the so-called Parker oil that the same quality of refined oil cannot be made—at any rate, by the ordinary processes hitherto in use." Second, that the wicks in common use were poor. That the inferior quality of the Bradford oil was not the real reason was proved by the fact that the refined oil manufactured and exported by the refineries of the combination from the crude of the other fields deteriorated at the same time and as much.[592] The Bremen congress knew this. It was at this precise moment—though this the Bremen congress did not know—that the combination was tying up a great inventor and hauling his apparatus to the junk-yard to prevent the test of a new method for making better and cheaper oil.[593] Its members would have had the benefit of it if successful, but with the spirit which men who seek exclusive control always exhibit, they did not want to change.

The congress declined to treat with any respect the excuses that were offered. It declared "that the complaints regarding the inferior quality of much of the petroleum recently received from America, and especially of the different brands of the" oil combination, were "fully justified." It consequently demanded from the American refiners, and especially from the oil combination, "First, that they give greater care to the refining of crude oil than they have recently done, in order that the petroleum may in the future be again as free as it formerly was from acids and heavy oils, that inferior qualities may no longer be shipped to Europe, and that the consumer may again receive the former customary good quality."

The superiority of its barrels was specially mentioned by the head of the oil combination to explain why all competitors failed. "All its advantages," he said in court in Cleveland, "are legitimate business advantages, due to the very large volume of supplies which it purchases, its long continuance in the business, the experience it has thereby acquired, the knowledge of all the avenues of trade, the skill of experienced employés, the possession and use of all the latest and most valuable mechanical improvements, appliances, and processes for the distillation of crude oil, and in the manufacture of its own barrels, glue, etc., by reason of which it is enabled to put the oil on the market at a cost of manufacture much less than by others not having equal advantages." But the Bremen congress made a special attack on the "barrels" and "glue." It complained that "the continental petroleum trade has suffered heavy losses on account of inferior barrels," and demanded that the oil combination should "only use barrels of well-seasoned, air-dried, split (not sawed) white oak staves and heads." It even particularized that the barrels should be "painted with blue linseed-oil paint, and supplied with double, strong head-hoops," and "more carefully glued, and not filled until the glue is thoroughly dry."

"They were substantially without competition," was said in explanation of the poor quality of the product sent to Europe, and also "to all parts of this country. The quality of the oil which they sent was not a matter of first-class importance for them to retain their business." It was "a negligence which came in a great measure from the absence of competition." This witness was asked by the lawyer of the combination if he meant the committee to understand that it "was committing suicide by furnishing a continuously deteriorating article of oil to the consumer."

"They were not committing suicide, because they had the business in their own hands almost exclusively at that time."[594]

This was in 1879, and the complaints of the quality of American oil sent abroad continue to this day. Export oil, the Interstate Commerce Commission say, in 1892, "is an inferior oil."[595]

One of the means by which a market was found for American oil in Scotland was the lowering of the British requirements in 1879 as to quality, from a flash-test of 100° to one of 73°, so that the more explosive American oil, until then debarred, could be legally sold to the people of Great Britain. The oil made in Scotland was "a very superior article—very good indeed."[596] There were two ways of getting the market: to meet the Scotch manufacturer with as good an oil, or to induce the government to permit the sale of something inferior. The latter policy was adopted. The government was induced to permit the sale to private consumers of oil that would give off an inflammable gas at a temperature of 73°—a lower temperature than often exists in living-rooms. Meanwhile the government continued to insist upon oil that would stand a test of 105° for its own use in the navy and 145° in its light-houses. The absurdity of this legal test was proved by Mr. T. Graham Young, son of Mr. James Young, founder of the Scotch oil industry, in a letter to the Glasgow Herald of May 12, 1894. He showed by the records that the year before there had been sixty days in London in which the temperature had gone above 73°. The government, that is, gave its sanction to the sale of oil which might explode at a heat below that ordinarily reached in an English summer! Commenting on the strange fact that the Scotch oil companies did not move against the change of test which had put them and the British consumer at the mercy of this explosive American oil, Mr. Young said: "It is generally understood that they are precluded from doing so by an agreement with the foreign producers. I hold a letter from one of the interested parties ... stating that for the above reason he could not discuss the matter." In discussing this matter, the Glasgow Herald notes that even patient and poverty-struck India complains of the "very poor quality" of the oil sent there.

The Scotch papers are continually printing indignant comments on this action of the British government, and wondering inquiries as to the influence by which so injurious a change in the regulations for public protection could have been effected. The Scotch manufacturers are continually agitating to have the coroners in England and Ireland, and the procurators-fiscal in Scotland, make particular inquiry in all cases of fatal lamp explosions into the flash-point of the oil and its origin—whether American or Scotch. At the December, 1892, meeting of the Society of Chemical Industry of Great Britain it was declared that about three hundred deaths a year occurred in England and Wales from lamp accidents, due to the explosiveness of the American oil sold under this reduction of the test.

The agitation against this dangerous oil has been increasing in Great Britain year by year. The subject has been investigated by the Glasgow Chamber of Commerce, which found that many serious accidents to life and property had resulted from the use of this oil, and at its meeting of May 14, 1894, the chamber voted to petition the government to raise the test again to 100°. The Manchester and Edinburgh chambers of commerce took similar action. A number of other bodies have taken the subject up, and the government has had to promise to make an inquiry.

The statistics show that last year nearly one in five (19.3 per cent.) of the fires in London and more than one in eight (13.24 per cent.) of the fires in Liverpool came from kerosene. The oil used in those cities is principally the cheap American article sold under the lowered test of the English law. But in Glasgow, where most of the oil burned is that of the Scotch manufacturers, who, by agreement, sell no lower quality than 100° test, the number of fires from kerosene is less than two in a hundred (1.7 per cent.). At a meeting of representatives of the leading insurance companies of Edinburgh and Glasgow, June 20, 1894, experiments were made with the American, Russian, and Scotch oils. The American was found to be the most explosive, and some of it flashed at 69°. A lighted match thrown into this oil heated to 88° started an instantaneous blaze; thrown into Scotch oil it was extinguished. Experts testified that the cost of making the oil safe would be about a farthing a gallon, and that if the Americans, whose "self-interest" and "private enterprise" are not equal to a voluntary effort, were compelled by law to furnish a better illuminant, their profits would be greater, not less.

A rich field for investigation is concealed beneath the elaborate system of State inspection, by which the people have sought to protect themselves from being tempted by deceptive prices to buy a sure death. We have seen in several places how the State inspectors are in the employ, at the same time, of the State and the seller, whom it is their duty to watch for the State.[597] Evidence abounds at every turn of the use of inspectors and inspection laws to embarrass and even suppress the smaller refiners. One of the latest instances is a new law in Tennessee, which puts special difficulties in the way of oil reaching the State by river, the avenue to which independent refiners are forced by the discriminations of the railroad. We saw an inspector of the State of New York appear at the Bremen congress as the avowed representative of the "united refineries," complaints of whose bad oils occasioned the congress.

By one of those coincidences in which the world of cause and effect abounds, the Fire Marshal of Boston, in the same year in which Joshua Merrill described his fruitless efforts to continue the manufacture of a first-class oil,[598] found it necessary to warn the people against the dangerous stuff they were burning in their lamps. In his report in 1888 he called attention to the fact that one-tenth, nearly, of all the fires in Boston the preceding year had been caused by the explosion of kerosene or by its accidental combustion. He got samples of the oil used in a number of the places where fires had occurred from explosion, and had them analyzed by professors of the Institute of Technology in Boston and of the School of Mines of Columbia College in New York. They found them to be below the quality required by the State. Singularly enough, one of the State oil inspectors, examining similar samples, declared them to be above the standard of the State. The Boston Herald, discussing the matter, pointed out that the oil inspectors were paid by the owner of the oil. This, it said, placed inspectors practically under the oil combination, which has ways, it continued, of making things unpleasant for inspectors who make reports unsatisfactory to it. The fire marshal's conclusion in all the cases he investigated of these fires by explosion was: "I have felt warranted in every instance in attributing the blame to the inferior quality of kerosene used."[599]

The European protest of 1879 followed close upon the success of the comprehensive campaign of 1878[600] "to overcome competition." The warning from the Fire Marshal of Boston in 1888 and the success of the movement, begun in 1885,[601] to shut the independents of Oil City and Titusville out of Boston and New England came close together. These are not coincidences merely. They are cause and effect.

It is known that a practice has grown up among the oil inspectors of the States of allowing certain refiners to brand their own oil as they please, or letting it go to market unbranded. This permits the sale of unbranded and therefore illicit and presumably dangerous oil. Charges that inspectors in Iowa loaned their stencils to the oil combination to do its own branding were made formally in writing, in 1890, by one of the deputy inspectors, in the form required by law, to the governor of the State. The law provides that charges so made shall be investigated by the governor. No investigation was made, but the inspector was removed just as he was about to lay before a grand-jury documentary evidence of this and other violations of the law. This inspector declared publicly that inspectors were in the habit of leaving their official stencils with companies in the oil combination, and allowing them to put any brand they chose on any oil. He refused to continue this practice, nor would he brand barrels until they were filled. The representative of the combination in that State used every device except force, the inspector says, to induce him to conform to the practice. "Don't you know," this representative said, "that if you leave us your brand and get into trouble you will have the oil combination back of you? You will be taken care of." In his formal complaint to the governor, this inspector declared that this representative said in substance to him: "You are the only fool among the inspectors. We have the stencils of the inspectors at every other point where we want them."

The law put upon the governor the duty to investigate upon receiving written complaint. But when written complaint was formally made, and that not by an ordinary citizen, but by one of the sworn officials of the State, the governor demanded that the inspector back up his charges with the affidavits of witnesses—that is, the governor demanded that the inspector, who had no power, should make the investigation. This put an end to the whole matter. The inspector could not make the investigation, and the governor would not. The same governor refused to allow the written charges to be seen, although they are public documents, and they remained invisible as long as he held office. Only a few weeks after the removal of this inspector, the State oil inspector was sued for heavy damages by the owner of a barn which had been burned down through the explosion of bad oil. The ground of the suit was that the inspector, having failed to inspect and condemn this oil, as he should have done, was liable on his bond to the State. The press of Iowa commented freely on the probable connection between destructive fires, like this one, and the custom of allowing the oil ring to inspect itself, by which it was given the opportunity to put inferior and dangerous oils on the market with the brand of the State on them as good. As far as the case has been carried, up to date, the Iowa courts have sustained the claim and held the inspector in damages.

That which is an uninvestigated charge in Iowa is an officially ascertained fact in Minnesota. The demonstration in the latter case amounts practically to confirmation for the former, since the parties in interest, the motive, and the opportunity are identical. An investigation was made of the conduct of the State oil inspector by the Committee on Illuminating Oils of the Minnesota Senate, in 1891. The committee say in their report, which was adopted by the Senate:

"The testimony further shows that stencils were left with different oil companies by the State inspector or his deputy, by which the companies caused their barrels containing oil to be branded by their own employés, without the supervision of any State official. It appears that after the arrangement for the payment of the inspectors' and deputies' salaries by the oil companies was made, the attitude of the inspector towards his duties may be summed up in a few words of his testimony: 'I am under no obligation to the State of Minnesota. The Standard Oil Company paid me.'"[602]

The methods covered by the general phrases of the Minnesota Senate Committee were described in detail by a "commissioner" of the Omaha Daily Bee, which found the same things being done in Nebraska. The Bee in 1891 made an elaborate investigation of the manner in which the oil inspection of Nebraska was executed. Its reporter passed incognito by the guardians of the portals of the warehouse of companies belonging to the oil trust in Omaha, and stood by while barrels were filled with uninspected oil and loaded on the cars for shipment to various points. That the people who bought the oil might know their lives were safe, each barrel bore the brand of approval provided by law, as follows:

Approved. Flash Test 105° ........................... State Inspector of Nebraska. By ........................ Deputy.

But there was no inspector present, and the barrels were all branded beforehand and while empty, in defiance of the law and public safety. The reporter stayed until the cars were loaded, the doors closed, and saw the trains pull out. It is from this warehouse that the greater part of the barrelled oil consumed in Nebraska is forwarded. At the warehouse of the same company in Nebraska City the reporter found the same thing going on, and there, too, he found the official stencil-plates of several of the State oil inspectors lying at hand on the tanks, waiting to be used at the pleasure of the employés of the company to brand the desired government guarantee on any oil, regardless of what it was. The Illinois State Journal found the same practice permitted in Springfield by the oil inspector in February, 1894. The Bee reporter describes how tanks, once branded, came and went, were filled and emptied and filled again for months, with no inspection of the oil in them. Often the tanks were not even branded.

The Omaha Daily Bee of November 24, 1891, gives a careful analysis of the recently amended inspection law of Nebraska. It shows that in many important points the law has been changed so as to put the safety of the people in the power of the combination which supplies almost all the oil used in the State. The standard required has been lowered. The liability to a charge of manslaughter for death resulting from bad oil has been changed to a liability for damages. The method of making the tests has been changed for the worse. No provision has been made for the protection of travellers by the inspection of oil used by the railroads, although accidents and serious ones, from the use of dangerous oil were frequent in the trains and at stations.[603] The Bee said editorially of the oil combination that it had "managed, by its shrewdness in enacting this law, to make Nebraska the refuse tank for its rejected Eastern oil, and at the same time to crowd out of the State about all opposition." By means of this lowering of the test, oil that was too poor to pass in Iowa could be sent on to Nebraska and sold there. The Bee gives instances where this was done.

The Bee continued its investigations in 1893. It declared, December 5, 1893, that the inspection law, imperfect at best, was "being still further annulled by the open defiance of the leading oil companies." It declared "the leading violator" to be one of the principal companies in the oil combination. In a later issue the Bee printed the result of tests made for it of oils purchased in the principal towns of the State. In almost every such case these showed that oils which were below the test were being sold to the people as good under the guarantee of the State. Some of them were "as safe for household use as dynamite," the Bee stated. It said editorially, December 15, 1893, that it had in its possession a letter from the secretary of the Iowa State Board of Health affirming that oil condemned by the State of Iowa is shipped to Nebraska. The oil inspector of the State made a vigorous denial, but the Bee refused to withdraw its statements. Its tests, it said, had been made by competent chemists. A suit is now pending in San Francisco, brought by the New Zealand Fire Insurance Company against the oil combination. It is charged that it sold low-test oil, that its inflammability caused fire and destruction of a dwelling insured by the insurance company, which was compelled to pay the loss. Some power, certainly not originating among the people, has for years, in States where the inspection laws required a high quality of oil, been at work procuring a reduction of the test. In some cases this has been accomplished only after persistent lobbying for years, as in Michigan. The test in Michigan has been lowered by legislation, as in Nebraska, and with similar results. The reports of the Michigan State Board of Health show that as the standard was lowered, fires and deaths from explosions increased. The Detroit Tribune of December 27, 1891, says that the reduction of the test in Michigan and Nebraska is due to the avarice of the producers (refiners) and nothing less than criminal carelessness of the legislators. The dangerous constituents of petroleum, such as naphtha and gasolene, are indistinguishable by the eye of the buyer from kerosene. They can be as easily mixed with it as hot and warm water with cold. These reductions of the test in various States permit mixtures more hazardous than dynamite to be sold to the people, lulled into reliance upon the State inspectors. "The advantage to the oil company," says the Detroit (Michigan) Times of April 30, 1891, "is obvious. Naphtha and gasolene are worth, perhaps, three cents a gallon. Kerosene is worth three times as much. A test which allows one quart of kerosene and three quarts of gasolene to constitute a gallon of merchantable illuminating oil will enable a few more colleges to be endowed, though increasing the death-roll in a notable degree."

One of the demands of those who are conducting the agitation, noticed elsewhere, for the admission of American oils free into Canada is that the standard of Canadian oil inspection be lowered. This, says the Hamilton (Ontario) Spectator, will open the Canadian market to the low-test and dangerous oils made by the American combination, and "restore the old order of lamp explosions, with the consequent loss of life and property."

An unwritten chapter of this story is the experience of the Ohio oil producers, and the use of the inferior oil of the Ohio field to adulterate oils made from Pennsylvania petroleums.

Lord Coke's dictum about the decrease of quality never had a more spectacular illustration than was given at Oil City and Titusville on Sunday, June 5, 1892. Oil Creek was high with rains. A dam burst and made the creek a flood. Its waters ate away the insufficient foundations of tanks, and rivers of naphtha and gasolene and kerosene overran the river of water for miles. A spark did the rest. Oil refineries took fire, tanks exploded. There were two raging seas—water beneath, fire above. Men, women, children, animals, property were swept along in their intermingled waves. From every overturned tank and blazing refinery fresh streams of oil flowed into the sea of flame, which climbed the hills for the victims the other sea could not reach. Those who escaped drowning breathed in a more dreadful death. It was a volcano and deluge in one. It was one of the most terrible catastrophes of our times. Even the scare-heads of the newspapers could not exaggerate its horrors. The governor of the State made a public appeal for help. The coroner's jury held an inquest at Oil City upon fifty-five bodies at one sitting. It declared the cause of the calamity to have been the gross carelessness of the owners and custodians of a tank of naphtha, in permitting it, while filled with 15,000 barrels of naphtha, to stand without proper protection from fire and water. The tank was shown, by the testimony, to have stood on sand within a few feet of the creek and without safeguard. It was shown that complaints had been made to the managers of the refinery, which was one of the subsidiary companies of the oil trust, about this tank and others before the disaster, but without avail. The coroner's jury laid the blame where it belonged—upon the company whose tank gave way. Its verdict said: "The naphtha which caused this awful destruction of life and property ... was stored in a tank located on the bank of Oil Creek, on the Cornplanter Farm, near McClintockville, where it was built about four years previous to this time. At the time of its construction the tank was from twenty to thirty feet from ordinary high-water mark in the creek, but this distance has been gradually reduced by the action of the water prior to this flood to between six and ten feet, and this flood further washed away the ground up to and under the tank, a distance of from fifteen to twenty feet. A part of the tank bottom, thus being left without support, tore out, allowing the naphtha to escape into the creek. The evidence of the watchman, James Marsh, shows that he realized danger from the undermining of the tank, for he made a feeble effort previous to this flood to protect it by throwing loose stones between the tank and the creek. The jury find from the evidence that all persons owning and having in custody this tank and its contents were guilty of gross carelessness in permitting it, while filled with naphtha, to stand without proper protection from fire and water."

The company which owned this tank belonged to the oil combination. It was, strange to say, one of the tanks of the Keystone refinery, to which Matthews, the Buffalo independent, had turned for a supply of crude oil when all other sources failed,[604] and which had been thereupon bankrupted and taken into the combination seven years before. Here was one fruit of that victory over competition. The coroner's jury at Titusville reprobated in the strongest terms the folly of storing oil in tanks within reach of high-water. It called upon "citizens and officials, ... for the common good of all," to do what it said was "entirely practicable: to so locate and guard and construct oil-tanks and other receptacles of inflammable petroleum products that they cannot be floated away, or the contents floated out of them by water," and that "in case of flood and fire lives and private property cannot be endangered by them." Although here and all over the oil regions the business was under the control of one combination, and had been so since early in the seventies, the Titusville jury, less courageous than that of Oil City, declared that it could "attach no blame to any one in particular for the present loss of life," because this "custom of storing and manufacturing oil and its products, regardless of endangering the lives and property of others, had been allowed to grow up here as well as all over the oil regions." These verdicts have been followed by suits now pending in the Pennsylvania courts, claiming heavy damages from the oil combination as responsible for the disaster and the loss of life and property.

The Oil City and Titusville disaster is but a provincial affair compared with the metropolitan avalanche of ruin which is all ready to move upon the cities on New York Bay from the refineries and tanks along its shores. Several condensed oceans of unignited fire are waiting for such accident as happens almost every day to some gas-works or refinery or tank-car. On creeks running into the East River, on bays opening from the New Jersey shore into the greater bay, in tanks whose contents would overlay the whole sheet of water from the Narrows to Hell Gate and Spuyten Duyvil, these volcanoes are dozing, and they are light sleepers.

CHAPTER XXX

"TO GET ALL WE CAN"

Are the combinations, trusts, syndicates of modern industry organized scarcity or organized plenty? Dearness or cheapness? "They are doing their work cheaper," said one of the oil combination of himself and his associates, "than any rival organization can afford to do it, and that is their policy, and by that only will they survive."[605]

"We think our American petroleum is a very cheap light. It is our pleasure to try to make it so," said its head.[606]

"Our object has always been to reduce rates, and cheapen the product, and increase its consumption by making the lowest price possible to the consumer," said another.[607]

Even if this were true— But is it true?

The then president of the United Pipe Lines of the oil combination, who was also president of a subordinate corporation, was a witness in 1879 in the suit brought by the Commonwealth of Pennsylvania. His refinery, he stated, did nothing but make the oil. "It is taken and sold by another organization"—the oil combination. "We agree to take the same prices that they take for their oil. It is kind of pooled—the sale of the oil." The "agreement," he said, is "simply to hold up the price of refined oil, ... to get all we can for it ... under some arrangement by which they keep the price up to make a profit." Not only was the price fixed under the agreement "to get all we can," but the combination, as at Cleveland,[608] fixed the amount to be produced. The subordinate company was allowed to have nothing to do with the business—except to do the work, and to do only as much as its superior chose to permit. Other refiners, in the same investigation, were shown to be sufferers from the same kind of "grip." Asked what other concerns besides his of Oil City were in this arrangement, he named the principal ones of Titusville, Pittsburg, Philadelphia, and New York.

"These companies were all acting in concert, were they?"

"So far as sales of refined oil were concerned, I think they were."

Capitalists are usually supposed to be hard of heart and head, suspicious, great sticklers for "black and white," and careful to have all that is due them "nominated in the bond." This arrangement, by which this witness and his associates put themselves entirely at the disposal of others—as to how much they should manufacture, what freight they should pay, what price they should receive, etc.—was not in writing.

"It is a verbal one."[609]

The purchase of the refineries at Baltimore by the oil combination in 1877, under the name of the Baltimore United Oil Company, was immediately followed by an advance in price. The Baltimore Sun, in December, 1877, said: "The combination has already begun to exert its influence on the market. Oil for home consumption was yesterday quoted at 14 cents, having raised from 11½ cents, the quotation on Wednesday. The combination will not make contracts ahead, which might be interpreted to mean an intended advance in price." In Buffalo the manager of one of the properties of the oil combination said in evidence: "My son is on a committee, he told me, that regulates the price of oil."[610] While the trust had the trade of Buffalo to itself, it held the price of oil at a high rate. "In Buffalo there were then no rival works," said State's Attorney Quinby to the jury who were trying its representatives for conspiracy against a competing refinery, "and we were paying for kerosene 18 cents a gallon. To-day, with the little Buffalo company in the market making kerosene, you can get it for 6 cents a gallon."

This Buffalo competitor was a very modest affair, insignificant in capital and resources, but it cut down the price of oil as far away as Boston. It established there an agent who "went around" and "cut the prices down," and then the agent of the combination "went around and cut the prices further," as its Boston employé described it. He was instructed, he said, "to follow them down, ... only not to sell at a loss." Before this competitor came he had been selling oil as high as 20 cents a gallon. "We got the price down to 18 cents, and got down then, I believe, to 8 cents, so that I have been selling them since then at 8 cents."[611] Eight cents, then, was not at a loss—since he had been told "not to sell at a loss"—and yet these passionate pilgrims of cheapness had been making the Boston buyer pay 20 cents! "I have been selling since at 8 cents," he says. This testimony was given in 1886; the reduction to 8 cents from 20 was made in 1882. Four years' consumption of this oil had been given to the buyer in Boston at 8 cents a gallon instead of 20, in consequence of the entrance of so insignificant a competitor.

When a member of the trust was testifying before the New York courts, he referred to the competition of the independent of Marietta as "his power for evil." Asked to define what he meant by his phrase "power for evil," he said, "It was to make prices that would be vexatious and harassing." He was asked if it harassed the oil trust, and the corporations connected with it, to have prices in any part of the country lower than they fixed.

"Lower than a reasonable basis."

"What they consider a reasonable basis?"

"Yes."[612]

That we can understand. But we cannot understand what the president of the trust meant when he said, "We like competition," for that would imply a natural proclivity for fellowship with the power of evil.

"Who fixes the price of oil in New York?" was asked of one of the witnesses before the Interstate Commerce Commission at Washington. That was done, he said, by the selling agent of the oil combination. He "has the price marked in the New York Produce Exchange daily—the price at which they will sell oil."[613] When the vice-president of the company representing the trust in St. Louis and the Southwest was on the stand before the Interstate Commerce Commission, he was asked what was the price of oil in the territory in which he was operating. The price of oil in tank-cars, in Arkansas, he said, "is now and has been during about three years or more—since Mr. Rice commenced shipping by water to Little Rock—10 cents per gallon. The average price, independent of competition, which I suppose is what you want, in the State of Texas is about 13 cents per gallon in bulk, covering the whole State of Texas. The average price per barrel would be about 17 cents, and the average price in cases about 20 cents."[614]

"Since Mr. Rice commenced shipping by water to Little Rock;" "the average price independent of competition in Texas"—these are telltale phrases. Where the combination was "independent of competition" the price was one-third greater.

The committee of Congress which investigated trusts in 1889 gathered a great deal of sworn evidence—the details of which remained uncontradicted, and which were met only by general statements like those quoted at the head of this chapter—showing how extortionate prices had been charged until competition appeared, that in all cases a war of extermination had been made upon those competitors, and that when their business was destroyed prices were put up again. Losses in competitive wars were merely investments from which to draw dividends in perpetuity. The "cheapness" of the combination followed the cheapness of competitors, and was merely a feint, one of the approaches in a siege to overcome the inner citadel of cheapness, a strategic cheapness to-day on which to build dearness forever. This battle of prices is shown in a table covering fifty towns in Texas, Mississippi, Louisiana, Alabama, Tennessee, Georgia, Kentucky, for three to five years. The appearance of competitive oil, for instance, cut the prices of oil from 15 cents a gallon down to 10 in Paris, Texas; from 25 to 15 in Calvert, Texas; from 22 cents to 10 in Austin, Texas; from 16 to 5 in Little Rock, Arkansas—evidently a war price; from 16 to 8½ in Huntsville, Alabama; from 16 to 8 in Memphis, Tennessee, and so on.[615] The committee of Congress submit pages of evidence of the reimposition of high prices the moment competition was killed off. If the combination found a rival dealer out of oil for only a day it "popped the prices up 3½ cents."[616] "One day," wrote one of the dealers, "oil is up to 20 cents and over, and when any person attempts to import here, other than the vassals 'of the oil combination,' it is put down to 7 cents a gallon."[617]

Prices were frequently put higher after the war than before. In the debate in the Canadian Parliament last year on the proposal to reduce the Canadian tariff, supported by a strong lobby from the American oil trust, it was shown by affidavits that at Selma, Alabama, oil was reduced during the "war" against outside refiners to 8 from 15 cents. After "competition was overcome," in the language of the South Improvement Company contract, the price was put up, not to 15 cents where it had been, but to 25 cents. In the same debate a large number of affidavits were exhibited showing how the price charged by the oil trust in America varied in places near each other in arbitrary and extraordinary ways, as 7 cents a gallon at Port Huron, Michigan, and 14½ cents at Bay City, only a few miles distant. Under the rule of the trust prices are on a mechanical basis everywhere, from the retail markets to the seaboard, where the refined, the manufactured article, is quoted at a lower price than the crude, its raw material.[618]

In the report of the tenth United States census in 1886, on the necessaries of life, the retail price of kerosene is given for thirty-five places. At a few of these there was competition; there the price was 12½ to 15 cents a gallon. At all other points it ranged from 20 to 25 cents. Such a tax on the 400,000,000 gallons of oil consumed in this country is the only kind of income-tax that is "American."

Application was made in May, 1894, by the Central Labor Union of New York City to the Attorney-General of the State to vacate the charter of the principal corporation in the oil trust. In the argument to support it, it was shown that New York consumers were then paying twice as much for their lamp-oil as the people of Philadelphia, and three times as much as the foreign consumer buying in New York for export.

The trust, notwithstanding its powers of "producing the very best oil at the lowest possible price," compels dealers to sign away their rights to buy oil where they can buy it the cheapest or best. When opposition is encountered from any of the retailers in a town the plan of campaign of its "war" is very simple. Some one is found who is willing for hire to sell his oils at a cut price until the rest are made sick enough to surrender. Then contracts are made with all the dealers, binding them to buy of no one else, and prices are put up to a point at which a handsome profit is assured. After this competitors can find no dealer through whom to sell, and the consumer can get no oil but that of the monopoly. Price and quality are both thenceforth such as the combination chooses to make them. There are bargains in oil, but one party makes both sides of them. "We do not wish to ruin you without giving you another chance," said an agent of the combination gently to a merchant who persisted in selling opposition oil. "Look at this map; we have the country divided into districts. If you insist on war we will cut the prices in your territory to any necessary extent to destroy you, but we lose nothing. We simply make a corresponding advance in some other district. You lose everything. We cannot by any possibility lose anything."

Only by thus contracting themselves out of their rights could these "free" merchants get oil with which to supply their customers. "Their agent," wrote a dealer of Hot Springs, Arkansas, "has made threats to some of our merchants that they must or shall buy oil from them and no one else, or if otherwise they would come here and ruin them—by fair means if they could, by underhand ways if necessary." Another firm in Pine Bluff, Arkansas, wrote that the agent of the combination had called upon them and several of the other large dealers to make a "contract, ... and, failing to do so, in a short time he threatens opening a retail house," as at Columbus.[619] Another wrote, December 13, 1886, from Navasota that the monopoly "will not sell unless you sign an obligation to buy from them and them only."[620]

This maintenance of prices until some "power for evil" appears with lower rates, then wars to kill, and raising of prices if the war ends in victory—these phenomena of cheapness continue to date. Many chapters could be filled with accounts of these wars of which record has been kept. To merely name the battle-fields would require pages. When the combination, through its agents, attacked Toledo in the courts for undertaking the municipal supply of natural gas, it "urged," as it is quoted in the language of the decision, "that the main object and primary purpose of the act is to enable the city to supply its individual inhabitants with fuel for private use and consumption at a cheaper rate than they can obtain it from other sources." The act of the Legislature gave Toledo "a power for evil." At Denver oil was sold at 25 cents a gallon until an independent company began refining the petroleum which abounds in the Rocky Mountain basin. During the Colorado war of 1892 all the familiar tactics—cut rates, espionage, and all—were employed. This continued after the dissolution of the trust as before, showing that its change of name and form meant no real change. In Pueblo and Colorado Springs the price was put down to 5 cents a gallon from 25 cents. In Denver the price was made 7 cents. Spotters followed the wagons of the independent company to spy out its customers, and get them, by threats or bribes, to sign away their right to buy where they could buy cheapest. The comments of the local press did credit to the inspiriting mountain air of the American Switzerland. The complaint recently filed with the Interstate Commerce Commission by a dealer of the Pacific coast charges that, among other discriminations injurious to the public, the rates between the Pacific coast and Colorado were so manipulated that the oil found in the Rocky Mountains and refined in Colorado could not be shipped to California and the other Pacific states. Consumers there had to buy the oil of the trust hauled all the way from Cleveland or Chicago. When an independent refiner ran the blockade into New York, in 1892, and began selling to the people from tank wagons, the price fell in New York, Brooklyn, and Jersey City from 8 and 8½ to 4 and 4½ cents. The St. Louis Chronicle of May 19, 1892, reports a reduction of the price of the best grade of oil to 5 cents a gallon—"the fortieth reduction," it says, made since an independent company "entered the field three years ago, at which time the price was 14½ cents," as it would be still but for competition.

War has been made on poor men, paralytics, boys, cripples, widows, any one who had the "business that belongs to us." An instance taken from abroad will be the last. The combination between the American and the Scotch refiners, formed several years ago, fixed the price of the principal product, scale, at threepence a pound in 1892. The break-up in that year was followed at once by a decline from threepence to twopence. This is a saving to the public of $1,000,000 a year. "All the relative products," says the London Economist, November 12, 1892, "have practically collapsed in value." Candles, for instance, declined 20 cents a dozen, "and the finer qualities were sold at the same rate as the commoner sorts."

These are the facts, to fit the phrase of one of the monopoly who described to Congress how it "bridges it to the consumer at the lowest reasonable rate." The "bridge to the consumer" spans 1872 to 1894 and Europe and America, but it is not a bridge of cheapness.[621]

To prove that oil is cheaper than it was is not to prove that it is cheap.

Anything begins to be dear the moment the power to fix the price has been allowed to vest in one. The question whether our monopolies have made things cheap or dear in the past pales before the exciting query, What will they do in the future, when their power has become still greater, or has passed by death, descent, or sale into hands less shrewd and greedier? Such power never moves backward. Says President Andrews, of Brown University, in the article quoted below: "When a commodity is turned out under such conditions, cost no longer regulates the price. This is done quite arbitrarily for a time, the seller's whim being perhaps sobered a little by his memory of old competitive rates. Slowly caprice gives way to law; but it is a new law—that of man's need. Prices go higher and higher till demand, and hence profit, begins to fall off; and they then play about the line of what the market will bear, just as they used to about that of cost. The producer can be more or less exacting, according to the nature of the product. If it is a luxury, the new law may not greatly elevate prices above the old notch. If it is a necessity, he may bleed people to death."

"At any reasonable price, say three or four times the present selling price of refined oil, it is the cheapest light in the world, and if the prices were advanced to 20 cents a gallon the sales would be as large as they are now at 7½ cents," wrote Vice-president Cassatt, of the Pennsylvania Railroad, to the Pennsylvania Legislature, in 1881, opposing the Free Pipe Line bill. The possibilities here were touched upon by the New York committee of 1888: "What the trust's course would have been if, instead of increased production, it had been required to deal with the problem of a constantly diminishing or stationary volume of oil, is an interesting subject for speculation. Certain it is that the trust has the power to put up prices, even if it fails to exercise it. If, in the future, the field producing the commodity manufactured and sold by this combination of corporations shall fail to increase its present product, or shall return a diminished quantity, the oil trust will be able to fix the price of the product of its refineries in this country, if not in the world."[622]

It was not great capital which put this industry in the possession of these enthusiasts for "all the little economies." The same universal forces of cheapness which have been at work everywhere have been at work upon the cost of the instrumentalities of production, and put machinery, transportation, raw material, and market agencies within reach of moderate capital. Such great capital is wasteful capital. It operates through agents at great distances, attenuating incentives to energy and care. Many practical men, real refiners, who have been forced to give up their business to refiners of railroad privileges, have testified to the same effect as the manufacturer who said to Congress in 1872: "I believe a refinery of 100 barrels can be run cheaper than the larger establishments."[623]

If production on a natural scale, directed by the eye of the owner, were not more economical than production mobilized from the metropolis by salaried men hundreds of miles away, the independent refiners and producers of Pennsylvania, New York, and Ohio would not have been able to survive at all. It was said in one of the Buffalo papers by one of these independent refiners: "There are several well-equipped independent refineries in operation at the present time in Pennsylvania and Ohio oil-fields where the refiner has his own crude oil, his own pipe line, and produces his own natural gas for fuel purposes. It is needless to say that an experienced and skilful refiner operating under such favorable conditions can manufacture at less cost per barrel than any trust with a long list of pensioners and burdened with the control of two political parties and the maintenance of numerous city mansions, stock farms, and theological seminaries."

Note.—The claims of the oil combination to the credit of having cheapened oil have been subjected by competent men to statistical tests. President Andrews, of Brown University, shows that from 1861 to 1872, inclusive—i.e., before any combination whatever existed—the net annual percentage of decrease in the price of refining oil and carrying it to tide-water—that is, the difference between the cost of the petroleum at the wells and of the refined at New York—was 10-4332/10000 cents; from 1873 to 1881, inclusive, the trust's infirm and formative period, the decrease was 7-8897/10000 cents; from 1882 to 1887, inclusive, the years of its full maturity and vigor, the decrease was only 2-2879/10000 cents.[624]

The New York Daily Commercial Bulletin (April 4, 1892) made a similar study with similar results. It finds that under competition in the refining of oil the difference between crude at the wells and refined oil at New York was reduced from 13.45 cents per gallon in 1872 to 6.02 cents per gallon in 1881; under the reign of the trust the difference was 5.84 in 1891—greater than in 1882, when the trust began operations, when it was only 5.77. It concludes: "It has been claimed that the oil trust has been a benefit to this county; that the economies which it has introduced in the transportation and refining of oil have been shared with the consumer, and that the enormous wealth which it has accumulated during the past ten years has been widely distributed. Not one of these claims has any substantial basis in fact."

The comparisons of cheapness are made on the wholesale price at New York of "export oil"—an inferior, almost a refuse product. Its price must meet that made by the Russians. These comparisons, therefore, really shed no light on the price movements of oil going into consumption throughout the country. But the trust really gets the retail price on all its domestic output. A full statistical statement of the price movement in retail markets cannot be had; nor even of the wholesale, for the combination has lately adopted a policy of suppressing the wholesale quotations of the higher grades of oil for domestic consumption. Comparisons, therefore, built on the export price of this poor oil at New York, though good as far as they go, are of oils of a low illuminating power. Comparisons that would really show the part played by the combination as a true merchant—one who discovers and distributes abundance for all at a fair price for his service—can only be made by such illustrations as we have been giving from its utterances, plans, and actions. But for monopoly an average price of 5 cents a gallon could prevail throughout the United States, with a saving of hundreds of millions to the people.

Trust prices are artificial prices, independent of supply and demand, and in their perfection superior even to panic. This is illustrated by the comparison below, made by Mr. Byron W. Holt:

COMPARATIVE PRICES OF STAPLES DURING THE CURRENT DEPRESSION

April 28, 1893 July 20, 1894 Per cent. of Decline since April 28, 1893

Wheat, No. 2, red $ 0.76-³/₈ $ 0.56½ 26

Corn, No. 2, mixed .50 .47½ 5

Cotton, middling upland .07-¹³/₁₆ .07-¹/₁₆ 10

Wool, Ohio and Pennsylvania, X. .28 .18 36

Pork, mess, new 21.00 14.00 @ 14.25 33

Butter, creamery .30 @ 33 .17 45

Sugar, raw, 96° .03-¹⁵/₁₆ @ 4 .03-³/₁₆ 18

Sugar, granulated .05-¹/₁₆ .04-⁵/₁₆ 15

Petroleum, refined, gal. .0555 .0515 7

Pig Iron, Bessemer, Chicago 14.50 @ 15.00 11.25 @ 11.50 23

Steel Rails, Chicago 30.00 @ 32.00 25.00 @ 27.00 16

Steel Beams, Chicago .02 .01½ 25

June 30, 1892 June 30, 1894 June 30, 1892

Coal, Bituminous, Pittsburg $ 1.07 $ 0.86 20

Coal, Anthracite, New York 4.15 4.1500

The prices of four of these products—granulated sugar, petroleum, steel rails, and anthracite coal—are controlled by strong trusts. These prices have declined, since the beginning of the depression—about May 1, 1893—not quite 10 per cent. Prices of the other ten products have declined 24 per cent.

Under free conditions prices of manufactured articles would decline faster than prices of farm products. Cost of production can be lowered faster in machine or factory products than in farm products. Under the influence of trusts the natural order is not only reversed, but prices of farm products have declined more than twice as fast as prices of factory or trust products. Trust influence is conspicuous in the cases of sugar and coal. The price of raw sugar, in which there is no trust, has declined 5 per cent. since June 30, 1891. The price of granulated has advanced 4 per cent. The president of the trust admitted to Congress in 1894 that it had advanced the price 3/8 of a cent a pound. Cost of refining has declined since 1891. There being no well-defined trust in bituminous coal, its price has declined 30 per cent. since 1891. The price of anthracite coal has advanced 2 per cent. in the same time, because the producers have "regulated" production.

CHAPTER XXXI

ALL THE WORLD UNDER ONE HAT

"This business belongs to us." This was the reply the president of the oil combination made to a neighbor who was begging to be allowed to continue the refinery which he had successfully established before his tardier but more fortunate competitors had left their produce stores, lumber-yards, and book-keepers' stools. He could remember, the neighbor told the New York Legislature, before there was any such company as theirs, and when the president of the poor man's light was still in the commission business opposite him and his refinery. He described how the president left this commission business, and "commenced to build a refinery there of a small capacity.... He used to say to me, 'What is a good time to sell?' and 'What is a good time to hold?' as he said he thought I knew." The day came when the neighbor who had been first found that the last was to be first. He was making $21,000 to $22,000 a year, but he had "to sell or squeeze." He had several conversations with the new-comer who had been so successful in learning when it was "a good time to hold." To save his livelihood, "I did almost condescend to tease him," he testifies. But the only reply he could get was: We have freighting facilities no one else can get.[625] This business belongs to us. Any concern that starts in this business we have sufficient money to lay aside a fund to wipe it out. "They went on just as if it did belong to them, and there were others started before he did in it which I thought it belonged to quite as much as it did to him.... I am wiped out and made a poor man.... I think they are making a profit out of my ruin."