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Title: Wealth against commonwealth
Author: Lloyd, Henry Demarest
Language: English
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Copyright Status: Not copyrighted in the United States. If you live elsewhere check the laws of your country before downloading this ebook. See comments about copyright issues at end of book.

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 WEALTH AGAINST COMMONWEALTH


 BY

 HENRY DEMAREST LLOYD


 [Illustration]


 NEW YORK
 HARPER & BROTHERS PUBLISHERS
 1894



 Copyright, 1894, by Henry Demarest Lloyd.

 _All rights reserved._



CONTENTS


  CHAPTER                                                       PAGE

  I. "THERE ARE NONE"--"THEY ARE LEGION"                           1

  II. CUT OFF FROM FIRE                                            9

  III. PROHIBITION THAT PROHIBITS                                 20

  IV. "SQUARE EATERS"                                             30

  V. STRIKING OIL                                                 38

  VI. "NOT TO EXCEED HALF"                                        61

  VII. "YOU ARE NOT TO REFINE"                                    73

  VIII. "NO!"                                                     84

  IX. WHO PIPED AND WHO DANCED                                   104

  X. CHEAPENING TRANSPORTATION                                   118

  XI. SONG OF THE BARREL                                         128

  XII. UNFINISHED MARCH TO THE SEA                               152

  XIII. PURCHASE OF PEACE                                        166

  XIV. "I WANT TO MAKE OIL"                                      182

  XV. SYMPATHETICAL CO-OPERATION                                 199

  XVI. "TURN ANOTHER SCREW"                                      212

  XVII. IN THE INTEREST OF ALL                                   227

  XVIII. ORDINARY SUPPLY AND DEMAND                              243

  XIX. THROUGH THE WOMAN'S EYES                                  257

  XX. TAKEN FROM THE JURY BY THE JUDGE                           272

  XXI. CRIME CHEAPER THAN COMPETITION                            285

  XXII. ANOTHER TALE OF TWO CITIES                               299

  XXIII. FREEDOM OF THE CITY                                     313

  XXIV. HIGH FINANCE                                             326

  XXV. A SUNDAY IN JUNE                                          341

  XXVI. TOLEDO VICTOR                                            352

  XXVII. "YOU ARE A--SENATOR"                                    369

  XXVIII. FOR "OLD GLORY" AND AN--APPROPRIATION                  389

  XXIX. "THE COMMODITY IS NOT SO GOOD AS BEFORE"--_Coke_         405

  XXX. "TO GET ALL WE CAN"                                       420

  XXXI. ALL THE WORLD UNDER ONE HAT                              432

  XXXII. "NOT BUSINESS"                                          455

  XXXIII. THE SMOKELESS REBATE                                   474

  XXXIV. THE OLD SELF-INTEREST                                   494

  XXXV. AND THE NEW                                              516

  APPENDIX--PARTIAL LIST OF TRADE COMBINATIONS, OR TRUSTS        537

  INDEX                                                          545



WEALTH AGAINST COMMONWEALTH



CHAPTER I

"THERE ARE NONE"--"THEY ARE LEGION"


Nature is rich; but everywhere man, the heir of nature, is poor. Never
in this happy country or elsewhere--except in the Land of Miracle,
where "they did all eat and were filled"--has there been enough of
anything for the people. Never since time began have all the sons
and daughters of men been all warm, and all filled, and all shod and
roofed. Never yet have all the virgins, wise or foolish, been able to
fill their lamps with oil.

The world, enriched by thousands of generations of toilers and
thinkers, has reached a fertility which can give every human being
a plenty undreamed of even in the Utopias. But between this plenty
ripening on the boughs of our civilization and the people hungering for
it step the "cornerers," the syndicates, trusts, combinations, with
the cry of "over-production"--too much of everything. Holding back the
riches of earth, sea, and sky from their fellows who famish and freeze
in the dark, they declare to them that there is too much light and
warmth and food. They assert the right, for their private profit, to
regulate the consumption by the people of the necessaries of life, and
to control production, not by the needs of humanity, but by the desires
of a few for dividends. The coal syndicate thinks there is too much
coal. There is too much iron, too much lumber, too much flour--for this
or that syndicate.

The majority have never been able to buy enough of anything; but this
minority have too much of everything to sell.

Liberty produces wealth, and wealth destroys liberty. "The splendid
empire of Charles V.," says Motley, "was erected upon the grave of
liberty." Our bignesses, cities, factories, monopolies, fortunes,
which are our empires, are the obesities of an age gluttonous beyond
its powers of digestion. Mankind are crowding upon each other in the
centres, and struggling to keep each other out of the feast set by the
new sciences and the new fellowships. Our size has got beyond both our
science and our conscience. The vision of the railroad stockholder is
not far-sighted enough to see into the office of the General Manager;
the people cannot reach across even a ward of a city to rule their
rulers; Captains of Industry "do not know" whether the men in the
ranks are dying from lack of food and shelter; we cannot clean our
cities nor our politics; the locomotive has more man-power than all the
ballot-boxes, and mill-wheels wear out the hearts of workers unable to
keep up beating time to their whirl. If mankind had gone on pursuing
the ideals of the fighter, the time would necessarily have come when
there would have been only a few, then only one, and then none left.
This is what we are witnessing in the world of livelihoods. Our ideals
of livelihood are ideals of mutual deglutition. We are rapidly reaching
the stage where in each province only a few are left; that is the
key to our times. Beyond the deep is another deep. This era is but a
passing phase in the evolution of industrial Cæsars, and these Cæsars
will be of a new type--corporate Cæsars.

For those who like the perpetual motion of a debate in which neither
of the disputants is looking at the same side of the shield, there are
infinite satisfactions in the current controversy as to whether there
is any such thing as "monopoly." "There are none," says one side.
"They are legion," says the other. "The idea that there can be such a
thing is absurd," says one, who with half a dozen associates controls
the source, the price, the quality, the quantity of nine-tenths of a
great necessary of life. But "There will soon be a trust for every
production, and a master to fix the price for every necessity of
life," said the Senator who framed the United States Anti-Trust Law.
This difference as to facts is due to a difference in the definitions
through which the facts are regarded. Those who say "there are none"
hold with the Attorney-General of the United States and the decision
he quotes from the highest Federal court which has yet passed on this
question[1] that no one has a monopoly unless there is a "disability"
or "restriction" imposed by law on all who would compete. A syndicate
that had succeeded in bottling for sale all the air of the earth
would not have a monopoly in this view, unless there were on the
statute-books a law forbidding every one else from selling air. No
others could get air to sell; the people could not get air to breathe,
but there would be no monopoly because there is no "legal restriction"
on breathing or selling the atmosphere.

Excepting in the manufacture of postage-stamps, gold dollars, and a
few other such cases of a "legal restriction," there are no monopolies
according to this definition. It excludes the whole body of facts
which the people include in their definition, and dismisses a great
public question by a mere play on words. The other side of the shield
was described by Judge Barrett, of the Supreme Court of New York. A
monopoly he declared to be "any combination the tendency of which is
to prevent competition in its broad and general sense, and to control
and thus at will enhance prices to the detriment of the public.... Nor
need it be permanent or complete. It is enough that it may be even
temporarily and partially successful. The question in the end is, Does
it inevitably tend to public injury?"[2]

Those who insist that "there are none" are the fortunate ones who came
up to the shield on its golden side. But common usage agrees with
the language of Judge Barrett, because it exactly fits a fact which
presses on common people heavily, and will grow heavier before it grows
lighter.

The committee of Congress investigating trusts in 1889 did not report
any list of these combinations to control markets, "for the reason
that new ones are constantly forming, and that old ones are constantly
extending their relations so as to cover new branches of the business
and invade new territories."

It is true that such a list, like a dictionary, would begin to be
wrong the moment it began to appear. But though only an instantaneous
photograph of the whirlwind, it would give an idea, to be gained
in no other way, of a movement shadowing two hemispheres. In an
incredible number of the necessaries and luxuries of life, from meat
to tombstones, some inner circle of the "fittest" has sought, and very
often obtained, the sweet power which Judge Barrett found the sugar
trust had: It "can close every refinery at will, close some and open
others, limit the purchases of raw material (thus jeopardizing, and in
a considerable degree controlling, its production), artificially limit
the production of refined sugar, enhance the price to enrich themselves
and their associates at the public expense, and depress the price when
necessary to crush out and impoverish a foolhardy rival."

Corners are "acute" attacks of that which combinations exhibit as
chronic. First a corner, then a pool, then a trust, has often been
the genesis. The last stage, when the trust throws off the forms of
combination and returns to the simpler dress of corporations, is
already well along. Some of the "sympathetical co-operations" on record
have no doubt ceased to exist. But that they should have been attempted
is one of the signs of the time, and these attempts are repeated again
and again until success is reached.

The line of development is from local to national, and from national
to international. The amount of capital changes continually with the
recrystallizations in progress. Not less than five hundred million
dollars is in the coal combination, which our evidence shows to have
flourished twenty-two years; that in oil has nearly if not quite two
hundred millions; and the other combinations in which its members are
leaders foot up hundreds of millions more. Hundreds of millions of
dollars are united in the railroads and elevators of the Northwest
against the wheat-growers. In cattle and meat there are not less than
one hundred millions; in whiskey, thirty-five millions; and in beer
a great deal more than that; in sugar, seventy-five millions; in
leather, over a hundred millions; in gas, hundreds of millions. At
this writing a union is being negotiated of all the piano-makers in
the United States, to have a capital of fifty millions. Quite beyond
ordinary comprehension is the magnitude of the syndicates, if there is
more than one, which are going from city to city, consolidating all
the gas-works, electric-lighting companies, street-railways in each
into single properties, and consolidating these into vast estates for
central corporations of capitalists, controlling from metropolitan
offices the transportation of the people of scores of cities. Such
a syndicate negotiating in December, 1892, for the control of the
street-railways of Brooklyn, was said by the New York _Times_, "on
absolute authority, to have subscribed $23,000,000 towards that end,
before a single move had been made or a price set on a single share
of stock." It was in the same hands as those busy later in gathering
together the coal-mines of Nova Scotia and putting them under American
control. There are in round numbers ten thousand millions of dollars
claiming dividends and interest in the railroads of the United
States. Every year they are more closely pooled. The public saw them
marshalled, as by one hand, in the maintenance of the high passenger
rates to the World's Fair in the summer of 1893.

Many thousands of millions of dollars are represented in these
centralizations. It is a vast sum, and yet is but a minority of our
wealth.

Laws against these combinations have been passed by Congress and by
many of the States. There have been prosecutions under them by the
State and Federal governments. The laws and the lawsuits have alike
been futile.

In a few cases names and form of organization have been changed, in
consequence of legal pursuit. The whiskey, sugar, and oil trusts had
to hang out new signs. But the thing itself, the will and the power to
control markets, livelihoods, and liberties, and the toleration of this
by the public--this remains unimpaired; in truth, facilitated by the
greater secrecy and compactness which have been the only results of the
appeal to law.

The Attorney-General of the national government gives a large part of
his annual report for 1893 to showing "what small basis there is for
the popular impression" "that the aim and effect of this statute" (the
Anti-Trust Law) "are to prohibit and prevent those aggregations of
capital which are so common at the present day, and which sometimes
are on so large a scale as to practically control all the branches
of an extensive industry." This executive says of the action of the
"co-ordinate" Legislature: "It would not be useful, even if it were
possible, to ascertain the precise purposes of the framers of the
statute." He is the officer charged with the duty of directing the
prosecutions to enforce the law; but he declares that since, among
other reasons, "all ownership of property is a monopoly, ... any
literal application of the provisions of the statute is out of the
question." Nothing has been accomplished by all these appeals to the
legislatures and the courts, except to prove that the evil lies deeper
than any public sentiment or public intelligence yet existent, and is
stronger than any public power yet at call.

What we call Monopoly is Business at the end of its journey. The
concentration of wealth, the wiping out of the middle classes, are
other names for it. To get it is, in the world of affairs, the chief
end of man.

There are no solitary truths, Goethe says, and monopoly--as the
greatest business fact of our civilization, which gives to business
what other ages gave to war and religion--is our greatest social,
political, and moral fact.

The men and women who do the work of the world have the right to the
floor. Everywhere they are rising to "a point of information." They
want to know how our labor and the gifts of nature are being ordered
by those whom our ideals and consent have made Captains of Industry
over us; how it is that we, who profess the religion of the Golden Rule
and the political economy of service for service, come to divide our
produce into incalculable power and pleasure for a few, and partial
existence for the many who are the fountains of these powers and
pleasures. This book is an attempt to help the people answer these
questions. It has been quarried out of official records, and it is a
venture in realism in the world of realities. Decisions of courts and
of special tribunals like the Interstate Commerce Commission, verdicts
of juries in civil and criminal cases, reports of committees of the
State Legislatures and of Congress, oath-sworn testimony given in legal
proceedings and in official inquiries, corrected by rebutting testimony
and by cross-examination--such are the sources of information.

One important exception is in the description of the operations of
a great international combination in England, Germany, Holland, and
elsewhere in Europe; this has had to be made from unofficial material.
The people there are neither economically nor politically developed
to the point we have reached in America, of using the legislative
investigation and the powers of the courts to defend livelihoods and
market rights, and enforce the social responsibilities of industrial
power. Full and exact references are given throughout for the guidance
of the investigator. The language of witnesses, judges, and official
reports has been repeated verbatim, except for the avoidance of the
surplusage and reduplication usual in such literature, and that, to
permit the use of the dialogue form, the construction has been changed
from the third person to the first in quotations from evidence. With
these qualifications, wherever quotation marks have been used, the
transcription is word for word. Evidence from such sources is more
exact, circumstantial, and accurate than that upon which the mass of
historical literature is founded.

To give the full and official history of numbers of these
combinations, which are nearly identical in inspiration, method, and
result, would be repetition. Only one of them, therefore, has been
treated in full--the oil trust. It is the most successful of all the
attempts to put gifts of nature, entire industries, and world markets
under one hat. Its originators claim this precedence. It was, one of
its spokesmen says, "the parent of the trust system."[3] It is the best
illustration of a movement which is itself but an illustration of the
spirit of the age.



CHAPTER II

CUT OFF FROM FIRE


Rome banished those who had been found to be public enemies by
forbidding every one to give them fire and water. That was done by
all to a few. In America it is done by a few to all. A small number
of men are obtaining the power to forbid any but themselves to supply
the people with fire in nearly every form known to modern life and
industry, from matches to locomotives and electricity. They control
our hard coal and much of the soft,[4] and stoves, furnaces, and steam
and hot-water heaters; the governors on steam-boilers and the boilers;
gas and gas-fixtures; natural gas and gas-pipes; electric lighting,
and all the appurtenances. You cannot free yourself by changing from
electricity to gas, or from the gas of the city to the gas of the
fields. If you fly from kerosene to candles, you are still under the
ban.

The report adopted by the National Association of Stove Manufacturers,
at the Thirteenth Annual Convention, 1884, said: "While it is true
that iron is a dollar or two lower than last year, and that the cost
of labor has also been reduced, your committee is confident that there
is not a manufacturer present who can truthfully say he can afford to
reduce the price of his goods." "It is a chronic case," the President
said in 1888, "of too many stoves, and not enough people to buy them."

The match company, by whose consent all the fires in the United States
and Canada are lighted, was organized, as stated, by the Supreme Court
of Michigan, for the purpose of controlling the manufacture and trade.
Thirty-one manufacturers, owning substantially all the factories
where matches were made in the United States, either went into the
combination, or were purchased by the match company, and out of this
number all were closed except about thirteen.

One of the company, who has been a conspicuous candidate for a
nomination to the presidency of the United States, testified that the
price of matches was kept up to pay the large sums of money expended
to exclude others from the match business, remove competition, buy up
machinery and patents, and purchase other match factories. This was
told in a suit between two stockholders on a question of their relative
rights; but the court, of its own motion, declared the combination
illegal, and took notice of the public interests involved.[5]

"Such a vast combination is a menace to the public," said the court.
"It is no answer to say that this monopoly has, in fact, reduced the
price of friction-matches. That policy may have been necessary to
crush competition. The fact exists that it rests in the discretion of
this company at any time to raise the price to an exorbitant degree."
"Indeed, it is doubtful if free government can long exist in a country
where such enormous amounts of money are allowed to be accumulated in
the vaults of corporations, to be used at discretion in controlling the
property and business of the country against the interest of the public
and that of the people, for the personal gain and aggrandizement of a
few individuals."

Within the last thirty years, 95 per cent. of the anthracite coal of
America--practically the entire supply, it was reported by Congress in
1893--has passed from the ownership of private citizens, many thousands
in number, into the possession of the railroads controlling the
highways of the coal-fields.

These railroads have been undergoing a similar process of
consolidation, and are now the property of eight great corporations.
This surrender of their property by the individual coal-mine owners is
a continuing process, in operation at this moment, for the complete
extinction of the "individual" and the independents in this field. It
is destined, according to the report of Congress of 1893,[6] to end
"in the entire absorption ... of the entire anthracite coal-fields and
collieries by ... the common carriers."

Anthracite coal is geographically a natural monopoly contained in three
contiguous fields which, if laid close together, would not cover more
than eight miles by sixty. But bituminous coal, although scattered
in exhaustless measures all over the continent, is being similarly
appropriated by the railroads, and its area is being similarly limited
artificially by their interference.

"Railroad syndicates," says the investigation of 1888,[7] "are buying
all the best bituminous coal lands along their lines in Missouri,
Kansas, Colorado, Arkansas, Tennessee, Alabama, and other Western
States and Territories, no doubt with a view of levying tribute upon
the people's fuel and the industrial fires of the country."

Canada remains unannexed politically, but its best coal deposits
have become a part of the United States. In 1892 a syndicate of
American capitalists obtained the control of the principal bituminous
coal-mines of Nova Scotia. Among them were men connected both with the
anthracite pool and with the combination which seeks control of the oil
market of Canada and of the United States.

The process of consolidation is shown by official and judicial
investigations to have been in progress in the bituminous fields at
least as far back as 1871, with the same purposes, methods, and results
as in the anthracite fields, though more slowly, on account of the
greater number and vastness of the deposits. From Pennsylvania to the
Pacific coast these are narrowed to the territory along the railroads,
and narrowed there again to the mines owned or favored by the railroad
managers.

The investigations by Congress in 1888 and 1893 both state that the
railroads of the country are similarly becoming the owners of our iron
and timber lands, and both call upon the people to save themselves. A
new law of industry is rising into view. Ownership of the highways ends
in ownership of everything and everybody that must use the highways.

The railroads compel private owners to sell them their mines or all the
product by refusing to supply cars for their business, and by charging
rates for the transportation of coal so high that every one but
themselves loses money on every ton sent to market. When the railroads
elect to have the output large, they furnish many cars; when they elect
to have the output small, they furnish few cars; and when they elect
that there shall be no output whatever, they furnish no cars.

One of the few surviving independent coal producers, who is losing
heavily on every ton he sends to market, but keeps on in the hope that
the law will give him redress, was asked by a committee of Congress why
he did not sell out and give up the business? He was willing, he said,
to abide the time when his rights on the railroad could be judicially
determined. There was another reason. "It might be considered a very
sentimental one. I have spent, sir, considerable time and a large
amount of energy and skill in building up my business, and I rather
like to continue it."

"In other words, you don't want to be forced to sell out?"

"No, sir; I don't want to be forced to sell my product, any more than I
want to be forced to sell my collieries."[8]

Though coal is an article of commerce greater in volume than any other
natural product in the United States carried on railroads, amounting to
not less than 130,000,000 tons a year; and though the appliances for
its transportation have been improved, and the cost cheapened every
year, so that it can be handled with less cost and risk than almost any
other class of freight, the startling fact appears in the litigations
before the Interstate Commerce Commission and the investigations by
Congress, that anthracite freight rates have been advanced instead of
being decreased, are higher now than they were in 1879, and that coal
is made by these confederated railroads to pay rates vastly higher
than the average of all other high and low class freight, nearly
double the rate on wheat or cotton. These high freight rates serve
the double purpose of seeming to justify the high price of coal, and
of killing off year by year the independent coal-producers. What the
railroad coal-miner pays for freight returns to its other self, the
railroad. What the independent coal-producer pays goes also to the
railroad, his competitor. "This excess over just and reasonable rates
of transportation constitutes an available fund by which they (the
railroads) are enabled to crush out the competition of independent
coal-producers."[9]

By these means, as Congress found in 1888,[10] the railroad managers
have forced the independent miners to sell to them or their friends
at the price they chose to pay. They were the only possible buyers,
because only they were sure of a supply of cars, and of freight rates
at which they could live.

The private operators thus being frozen out are able, as the
investigation by the New York Legislature in 1878 showed, to produce
coal more economically than the great companies, because not burdened
with extravagant salaries, royalties, and leases, interest on
fictitious bonded debts, and dividends on false capitalization of
watered stock. By the laws of supply and demand they would compete out
the unwieldy corporations, but these administer a superior political
economy in their supply and demand of cars and freight rates. The
unfittest, economically, survives.

"The railroad companies engaged in mining and transporting coal
are practically in a combination to control the output and fix the
price.... They have a practical monopoly of the production, the
transportation, and sale of anthracite coal."[11] This has been the
finding in all the investigations for twenty years. "More than one, if
not all, of the anthracite monopolies," Congress reported in 1888, "run
several of their mines in the name of private operators to quiet the
general clamor against carrying companies having a monopoly of mining
also."

The anthracite collieries of Pennsylvania could now produce 50,000,000
tons a year. The railroads restrict them to 40,000,000 or 41,000,000
tons,[12] nine or ten million tons less than they could furnish to ward
off the frosts of winter and to speed the wheels of the world, and this
creation of artificial winter has been in progress from the beginning
of the combination.

In the ten months between February and November, 1892, the price of
coal in the East, as investigated by Congress in 1893,[13] was advanced
by the coal railroads as much as $1.25 and $1.35 a ton on the kinds
used by house-keepers, and the combinations, the report of Congress
says, "exercise even a more baleful influence on the production and
transportation of coal for the Western market." The extortion in the
price fixed by the coal railroads was found by Congress, in 1888, to
be an average of one dollar a ton--"considerably more than a dollar
a ton"--on all consumed in the United States, or $39,000,000 in that
year, and now $40,000,000 to $41,000,000 a year. The same investigation
found that between 1873 and 1886 $200,000,000 more than a fair market
price was taken from the public by this combination.[14]

This in anthracite alone. How many hundreds, perhaps thousands, of
millions more have been taken by the railroads which control the
bituminous coal-fields from Pennsylvania to the Pacific, there are no
adjudicated means of estimating.

By the same power which has crushed out the independent coal-miner,
the retailer in the cities has been reduced from a free man to
an instrument to despoil his neighbors--with whom he is often a
fellow-victim--for the benefit of absentee capitalists; he is hounded
by detectives; by threats of cutting off his supply, is made a
compulsory member of a secret oath-bound society to "maintain prices."
"Combinations exist," says the Canadian report, "among coal-dealers
in Toronto, Ottawa, Montreal, and London. Detectives are employed
and the dealers placed under surveillance.... Oaths of fidelity to
the constitution and rules are required not only of the members, but
also of their salesmen, and the oaths in the cases of these employés
are made in some instances retroactive as well as prospective. All
violations of oaths are adjudicated upon by the executive committee
referred to, the penalties being heavy fines or expulsion.... In
accordance with arrangements made with the American coal-dealers, those
who were in default in membership, either from inability to pay fines
or from other causes, were prevented from purchasing coal in the United
States."[15]

The retailer dare not tell his wrongs even in the committee-rooms
of Congress. "Your committee," says the report of 1893 to Congress,
"experienced great difficulty in obtaining testimony from retail
coal-dealers, who apparently labor under fears of injury to their
business in case they should appear and give evidence."

"During the first forty years," Congress reported in 1888, "the
mines were worked by individuals, just as are farms. The hundreds of
employers were in active competition with each other for labor. The
fundamental law of supply and demand alike governed all parties. As to
engagement, employer and employé stood upon a common level of equality
and manhood. Skill and industry upon the part of the miner assured to
him steady work, fair wages, honest measurement, and humane treatment.
Should these be denied by one employer many other employers were ready
to give them. The miner had the same freedom as to engagement, the same
reward for faithful service, and protection against injustice that
the farm-hand possesses because of the competition between farmers
employing hands.... This virtual combination of all employers into one
syndicate has practically abolished competition between them as to
wages; and gradually, but inexorably, the workmen have found themselves
encoiled as by an anaconda until now they are powerless."[16]

There was an investigation of the coal combination by the Pennsylvania
Legislature in 1871, the testimony taken in which showed that when,
after a thirty days' strike by the men, a number of private coal-mine
owners acceded to their terms, and wished to reopen their mines and
send coal again to market, the railroads, by which alone they could get
to market, raised their freights, as their men were still on strike,
to three times the previous figures. These great corporations had
determined not to yield to their men, and as they were mine-owners and
coal-sellers as well as carriers, they refused to take coal for their
competitors.... The result was that the price of coal was doubled,
rising to $12 a ton; the resumption by the private mine-owners was
stopped; and they, the workmen, and the consumer were all delivered
over to the tender mercies of the six great companies.[17]

The coal companies in the anthracite regions keep thousands of
surplus laborers on hand to underbid each other for employment and
for submission to all exactions; hold them purposely ignorant when
the mines are to be worked and when closed, so that they cannot
seek employment elsewhere; bind them as tenants by compulsion in the
companies' houses, so that rent shall run against them, whether wages
run on or not, and under leases by which they can be turned out with
their wives and children on the mountain-side in midwinter if they
strike; compel them to fill cars of larger capacity than agreed upon;
make them buy their powder and other working outfit of the companies at
an enormous advance on the cost; compel them to buy coal of the company
at the company's price, and in many cases to buy a fixed quantity,
more than they need; compel them to employ the doctor named by the
company, and to pay him whether sick or well; "pluck" them at the
company's stores, so that when pay-day comes around the company owes
the men nothing, there being authentic cases where "sober, hard-working
miners toiled for years or even a lifetime without having been able to
draw a single dollar, or but a few dollars, in actual cash," in "debt
until the day they died;" refuse to fix the wages in advance, but pay
them upon some hocus-pocus sliding scale, varying with the selling
price in New York, which the railroad slides to suit itself; and, most
extraordinary of all, refuse to let the miners know the prices on which
their living slides--a fraud, says the report of Congress, "on its
face."[18]

The companies dock the miners' output arbitrarily for slate and other
impurities, and so can take from their men five to fifty tons more in
every hundred than they pay for.[19]

In order to keep the miners disciplined and the coal-market
under-supplied, the railroads restrict work so that the miners often
have to live for a month on what they can earn in six or eight days;
and these restrictions are enforced upon their miners by withholding
cars from them to fill, as upon competitors by withholding cars to go
to market.[20]

Labor organizations are forbidden, and the men intentionally provoked
to strike, to affect the coal-market.

The laboring population of the coal regions, finally, is kept
"down" by special policemen enrolled under special laws, and often
in violation of law, by the railroads and coal and iron companies
practically when and in what numbers these companies choose. These
coal and iron policemen are practically without responsibility to any
one but their employers, are armed as the corporations see fit with
army revolvers, or Winchester rifles, or both, are made detectives
by statute, and not required to wear their shields. They provoke the
people to riot, and then shoot them legally.[21]

"By the percentage of wages," says the report of Congress, "by false
measurements, by rents, stores, and other methods, the workman is
virtually a chattel of the operator." It says, to summarize: "The
carrier drives out both operator and owner, obtains the property, works
the mine, 'disciplines' the miner, lowers wages by the importation of
Huns and Italians, restricts the output, and advances the price of coal
to the public. It is enabled to commit such wrongs upon individuals
and the public by virtue of exercising absolute control of a public
highway."[22]

The people of Pennsylvania, in 1873, adopted a new Constitution. To
put an end to the consolidation of all the anthracite coal lands into
the hands of the railroads, this Constitution forbade common carriers
to mine or manufacture articles for transportation over their lines,
or to buy land except for carrying purposes. These provisions of the
Constitution have been disobeyed "defiantly." "The railroads have
defiantly gone on acquiring title to hundreds of thousands of acres of
coal, as well as of neighboring agricultural lands." They have been
"aggressively pursuing the joint business of carrying and mining coal."
So far from quitting it, they "have increased their mining operations
by extracting bituminous as well as anthracite."[23]

Instead of enacting "appropriate legislation," as commanded by the
new Constitution, to effectuate its prohibitions, the Legislature has
passed laws to nullify the Constitution by preventing forever any
escheat to the State of the immense area of lands unlawfully held by
the railroads. Every effort breaking down to meet the evil by State
action, failure was finally confessed by the passage in 1878, by the
Pennsylvania Legislature, of a joint resolution asking Congress to
legislate "for equity in the rates of freight."

In 1887 Congress passed the Interstate Commerce Law, and established
the Interstate Commerce Commission to enforce justice on the railway
highways. The independent mine-owners of Pennsylvania appealed to
it. Two years and a half were consumed in the proceedings. The
Commission decided that the rates the railroad charged were unjust
and unreasonable, and ordered them reduced.[24] But the decision has
remained unenforced, and cannot be enforced. The railroads treat the
Commission with the same contumely they visit on the Constitution of
Pennsylvania, and two years after the decision Congress in 1893 found
their rates to be 50 cents a ton higher than what the Commission had
declared to be just and equitable.[25] The Interstate Commerce Law
provides for the imprisonment in the penitentiary of those guilty of
the crimes it covers. But the only conviction had under it has been of
a shipper for discriminating against a railroad.



CHAPTER III

PROHIBITION THAT PROHIBITS


That which governments have not yet been equal to has been accomplished
by the private co-operation of a few citizens. They decree at their
pleasure that in this town or that State no one shall manufacture
alcohol, and they enforce the decree. Theirs is the only prohibition
that prohibits.

From the famous whiskey ring of 1874 to the pool of 1881 and the
trust of 1887, and from the abandonment of that "trust" dress and
the reorganization into one corporation in 1890 down to the present,
this private regulation of the liquor traffic has gone on. It is
a regulation of a good deal more than the liquor traffic. Through
its control of alcohol it is a power over the arts and sciences,
the manufacture and the preparation of medicines, and a power
over politics. More than one chapter of our history exhibits the
government itself holding to these rectifiers relations suggestive
of anything but rectification. The report of the investigation by
Congress in 1893 notes the fact that on the strength of a rumor that
the internal-revenue tax was to be increased by Congress, the Trust
raised its prices 25 cents a gallon. This would amount to a profit of
$12,500,000 on its yearly output.

By February, 1888, all the important distilleries in the Northern
States--nearly eighty--were in the Trust, excepting two, the larger of
which was in Chicago. The cases of these irreconcilable competitors
were set for consideration, according to the _Chicago Tribune's_
report, at a private meeting of the trustees February 3d. In April
the Chicago distillery firm published the fact that they had caught a
spy of the Trust in their works. He had given them a confession in
writing. In September it was discovered that the valve of a vat in this
distillery had been tampered with in such a way as to have caused an
explosion had it not been found out in time. The next month its owners
made known that they had been offered and refused $1,000,000 from the
Trust for their works. In December the country was startled by the
news that this distillery had been the scene of an awful explosion of
dynamite. All the buildings in the neighborhood were shaken and many
panes of glass were broken. A jagged hole about three feet square was
torn in the roof. There were 15,000 barrels of whiskey stored under
the roof that was torn open, and if these had been ignited a terrible
fire would have been added to the effect of the explosion. A package of
dynamite which had failed to explode, though the fuse had been lighted,
was found on the premises by the Chicago police.

The Chicago representative of the whiskey combination ridiculed the
idea that the Trust had had anything to do with this. "Such a thing,"
he said, "is contrary to the genius of a trust."

The wholesale liquor-dealers threatened, at a conference in 1890
with the president of the Trust, to manufacture for themselves, to
escape the advance which had been made in the price of high-wines. The
president said, as reported in the _Wine and Spirit Gazette_:

"I do not believe there is a spirits distillery in the country that you
can buy. We own nearly all of them, and have at present seventy-eight
idle distilleries."

February 11, 1891, the explosion of December, 1888, was recalled by
the unexpected arrest of the secretary of the combination in Chicago
by the United States authorities. The Grand Jury of Cook County found
an indictment, February 17th, against the prisoner. April 20th he was
indicted by the Federal Grand Jury. The crime of which he was charged
was attempting to bribe a government gauger to blow up the troublesome
distillery. The gauger whom the secretary endeavored to enlist had
been loyal to his trust, the government, and had made known to his
superiors the offer and purpose of the bribe.

If the explosion had been carried out 150 men at work in the distillery
would have been destroyed. The evidence given Congress afterwards
tended to show that part of the plan was that the bribed gauger who
was to set and explode the infernal-machine was not to be allowed to
survive to claim his reward and perhaps repent and tell. The fuse was
fixed so that the explosion would be instantaneous instead of giving
the time promised him to get out of the way.

In a statement to the press, February 15th, the president of the Trust
said, as the result of a conference of the trustees:

"We have unanimously agreed to stand by the secretary."

Early in June rumors were in circulation in New York that the Chicago
independent had sold out; and soon after the confirmation of the
report, with full details, was authoritatively published.

June 8th the judge of the United States Court in Chicago quashed the
Federal indictment, on the ground that it is not a crime under any of
the United States laws for an internal-revenue officer to set fire to
a distillery of his own volition and impulse, and that it is not a
crime against the United States for another person to bribe him to do
such an act. He held that the offender could be punished only through
the State courts. The United States had property in the distillery
to the extent of $800,000 due for taxes, which was a legal lien on
the property; but the United States District Attorney and the judge
could find no Federal law under which, for the gauger to destroy this
property of the United States, or for the Whiskey Trust to bribe him
to do so, it was a crime. When the indictments framed by the State
Attorney of Chicago came before the State courts, three of the four
were found defective and were quashed. The Chicago correspondent of
the New York _World_ telegraphed that he had been told by the State
Attorney, at the time the Federal proceedings were quashed, that of his
four indictments he relied most upon that for conspiracy; "but in court
yesterday the State Attorney let the charge of conspiracy fall to the
ground because, as he said, there was not evidence enough to secure a
conviction."

"We haven't the evidence of the gauger; I don't know where he is," the
State Attorney said.

But this witness declared in a public letter in February, 1893, "Myself
and others with positive evidence were always ready to testify, and I
have the facts to-day."

The judge of the State court held the motion to quash until July, and
then announced that he would make no decision until August. He withheld
his ruling until October. Then he held the secretary for trial on
two counts, charging conspiracy to bribe the gauger and destroy the
independent distillery; but remarked "informally," the newspapers said,
that conviction would be difficult.

When the case was called March 22, 1892, a delay was granted "until
next Monday," to enable the prisoner's counsel to read the "bill of
particulars" to find out what he was charged with. The secretary did
not trouble himself to attend court. His case was not heard of again
until June 24th, when he was released on a nolle prosequi entered by
the State Attorney because the evidence was insufficient, and became a
free man. That was the end.

Owing to this success of State and United States attorneys in being
unsuccessful, the people have never had an opportunity of hearing in
court the evidence on which the Government acted in making the arrest,
and on which the grand juries found the indictments. But the gauger
through whom the secretary of the Trust had attempted to execute his
plans was called as a witness before the Committee of Congress which
investigated the Trust in 1893, and he told again the story of the
infernal-machine. It was as follows, in his own words, omitting names
and unnecessary details:

"I was United States internal-revenue gauger from 1879 until after
Mr. Cleveland's election, and I was reappointed in 1889, and have
been continuously since that time. Late in December, 1890, I received
a letter from the secretary of the whiskey combination at Peoria,
telling me that he would like to meet me at the Grand Pacific Hotel on
New-year's Day. I met him. He said, 'You may be able to do considerable
good here; not only for us, but of considerable advantage to yourself.
Your $1500 a year is nothing to what you would get by helping us. You
can get $10,000 by assisting us in this thing; in fact, to make matters
right, you could get in three months $25,000.'" The gauger reported
this to his superiors, who told him to go on. "Be particular, and
after every interview with him make a note of everything that passes
between you while it is fresh in your mind." "I did that," the witness
continued, "and I have the original notes in my pocket. There are the
original notes," exhibiting them to the committee. "They have never
left my possession. I have kept them on my person right along." After
some correspondence and another interview, he met the secretary again
January 25th. "Now," said the latter, "I can give you something which,
if put under a cistern, will in three or four hours go off, and no
person know what it was or who did it, and all the trouble that has
been caused us will be stopped at once, the sufferings of many people
stopped, and no loss to those folks, as they are well insured." "When I
recovered from my surprise I asked if it was an explosive. He replied,
'No; a simple but effective thing which would shoot a ball into a tub
through the bottom. You will have $10,000 for your work of placing
this under a cistern of high-proof, either alcohol or spirits, or what
is better than cash, 200 shares of stock.' I asked at what they sold.
He said, 'Forty-seven, but it would be up ten points at once,' and I
could profit by the raise. 'This will raise a big row.' 'Yes,' he said,
'one cistern well caught, all would go, and it would be right into the
warehouse and stop everything at once. It is the most effective way to
help us and make a clean job, and you having access to all parts of the
distillery and unsuspected is why you could do it so easily.' He had
then, in room 35, powder and four steel elongated balls, solid, turned,
and with long points. The principal article, however, was a kind of
yellowish liquid, which when exposed to sixty-five degrees temperature
would produce a flame caused by evaporation. I remarked that there
was probably no hurry about this thing, and he said, 'The sooner the
better; you may be ordered away from here, and I am come all prepared;
everything is ready to load, and that can be done quickly.'"

The gauger reported all this to his superior and told him that "I
proposed to take the infernal apparatus." His superior said, "Of
course." "I then returned to Grand Pacific, room 35; found loading just
completed and much material scattered about, oakum in can saturated
slightly with kerosene and alcohol to give good start. The secretary
said that three fuses were attached to the gun, one of which would go
off under water. He had one steel shell which had been shot through
three inches of wood in experimenting. He showed me particularly
how to place can; to feel underneath for timbers; put it where ball
will enter tub. Also, that in stopping over to meet the president
of the combination to-morrow he would have a chance to buy up stock
reasonably before our work caused the raise. He expected to buy 1000
shares. Friday, the 30th of January, I rather anticipated a visit from
the secretary at my hotel, but I received a letter from him instead
of a visit, and Judge Hart, the solicitor of the Internal-Revenue
Department, who was there in Chicago, when he read the letter thought
that the evidence was certainly conclusive." On Sunday, the 8th, the
gauger surrendered the box containing the infernal-machine, which was
sealed, to a high official who had come on from New York. "The reason
why he came on is that the authorities would not believe my testimony.
They did not think it was possible a gentleman in the secretary's
position would undertake so heinous a crime, and they did not know
but what I was a crank. On Monday, the 9th, I was instructed to write
a letter. The thing was to arrest in a proper way. The next day I
received a despatch: 'Will be at Pacific to-morrow (Wednesday) morning.'

"Wednesday morning the secretary was arrested, as he was about to enter
the hotel, by a deputy marshal, and conducted to the Marshal's office
in the Government building. There was a bottle of this composition
found in his grip. He had told me it would go off in three or four
hours. I was in the anteroom of the city grand jury after the chemist
had given his testimony. The chemist said that it was his opinion
it would have or might have gone off in three seconds. Fire would
cause the shooting of the ball, and the ball making a hole in the
tub--alcohol or high-proof spirits--coming down, of course all would
have gone up. It could not have helped it, and the explosion would
have followed at once, not from the machine, but from the contents of
the cistern. They are very explosive indeed, alcohol and high-proof
spirits."[26]

What the Government authorities thought of all this is shown in a
letter which is spread upon the records of the Treasury Department. It
is addressed by the Commissioner of Internal-Revenue to the gauger.
After thanking him for his "highly commendable" conduct in relation to
the bribe the Commissioner says to Mr. Thomas S. Dewar:

 "While your rejection of the offer was just what was expected
 from you, considering your official and personal standing, yet I
 realize that you have done more than simply reject the offer. You so
 conducted the affair as to place the guilty party, it is hoped, in a
 position in which he will be punished for this violation of law. The
 proposition was not only to attempt to corrupt an honest officer of
 the Government, but was to induce you, by the offer of a large sum of
 money, to commit a most heinous and inhuman act."

No attempt was made by the representatives of the Trust before
the committee to deny this testimony. They simply disclaimed any
responsibility for what their associate and employé had done. "Whatever
there was in that," testified the president of the Whiskey Trust, "was
with the former secretary of this company, if there be anything of
it."[27]

The Trust increased the number of plants under its control from
"nearly eighty" to eighty-one or eighty-two, the number reported by
the investigation of Congress in 1893. Its annual production was then
50,000,000 gallons; about 7,500,000 gallons of it alcohol, 42,500,000
spirits. It is evident, says the report, that the company will soon
have within its grasp the entire trade, and be able to dictate prices
to consumers at pleasure.

"How do you account for spirits going up and corn going down at the
same time in two or three instances?" the treasurer was asked.

"Simply because the distillers were getting in a position whereby they
ran less than their capacity."[28]

The experience of mankind has always found, as Lord Coke pointed out,
that monopoly adulterates.

The report of Congress states that unquestionably the largest part of
the product of the combination finds its way into the open markets in
the form of "compounded"--or artificial--bourbon and rye whiskeys,
brandies, rums, gins, cordials. The testimony establishes the fact
that about one half of the whiskey consumed in the country is of
this compound product. These compounded liquors are supplied from
the drug-stores to the sick as medicine. One of the expert witnesses
summoned to explain the process of this adulteration appeared before
the committee with two demijohns, one containing pure alcohol and the
other spirits, and a number of bottles containing essential oils,
essences, etc., with which he proposed to make some experiments. "The
basis here, this white product, is what is known as 'spirits' in the
trade. With the use of these essential oils and essences now before
you any kind of imitation liquor can be produced at almost a moment's
notice. My first experiment will be with Jamaica rum. I put a drop of
Jamaica-rum essence into this white spirits, a few drops of coloring
matter, and some sugar syrup. Try of it and smell of it. Does it
smell like rum and taste like it? If they want to make it cheaper,
they reduce it with water. I will reduce it with water, and you will
now notice that the bead has disappeared from it. I will reproduce
the bead by the use of bead oil. I put one drop in, and here is the
result. Now, using rye-whiskey essence instead of Jamaica-rum essence,
I will flavor this spirits. I will now put some prune juice into it to
tone it. I will put some raisin oil in it to age it, and I will now
commence to color it. This first exhibit" (holding it up before the
committee) "is about the color of one-year-old whiskey that has been
properly bonded. I will now color it so it will imitate a two-year-old
whiskey. This is about the three-year-old now" (exhibiting it). "I will
now give this the color of 'velvet whiskey,' which is sold as high as
$4 a gallon" (exhibiting it). "The present price of spirits, to-day,
I think, is $1.30 a gallon. The utilization of any of these essential
oils and essences and coloring matter to make the transfer does not
exceed a cost of one and a half cents a gallon. I am prepared to make
imitations of any of these liquors at any time with this spirits
basis--all the different whiskeys, Scotch and Irish whiskeys, the
foreign gins and rums and brandies, after-dinner cordials and liqueurs.
These materials as you have them exhibited before you of essential oils
and essences are part and parcel of the stock in trade of every man
in the United States of America who has got a rectifying license as a
wholesale liquor dealer.... They are very generally and extensively in
use throughout our entire country, in every hamlet and village, in all
the branches of trade, the wholesale liquor dealer, the grocer having
a liquor dealer's license, and retail druggists.... When a doctor
prescribes French brandy, he expects to get a production which is a
distillation of wine made from the grape. In that imitation brandy made
from spirits and cognac oil he gets a crude product of corn, defeating
entirely his purpose in the prescription. The same applies to gin, rum,
and other articles wherever the imitations are found."[29]

Some of the substances named by witnesses as occurring in the oils and
essences used for this adulteration are sulphuric acid, prussic acid,
fusel oil, creosote, nitro-benzol--all poisons, and some of them so
virulent that a teaspoonful would kill.

"I have been warned when in the employ of these people not to take
the crude material into my mouth," said one of the witnesses. Another
witness denied that there was any danger in the infinitesimal portions
used of the flavoring matter.

"The only result," said one of the members of the committee, "of the
testimony and hearing of the committee will be to educate the public to
the Trust methods. It will have no effect on the Trust."



CHAPTER IV

"SQUARE EATERS"

"By Heaven, square eaters, more meat I say!"

 --_Beaumont and Fletcher._


A delegate to one of the millers' national conventions said, "We want
cheaper wheat and dearer flour."

The Canadian Parliament reports that "the Biscuit Association,"
which had been in existence six years, had kept up the prices of its
products, "although the prices of the ingredients used have in that
time very materially decreased."

An Associated Press despatch from Chicago announced that at "a joint
meeting of all the cracker bakers between Pittsburg and the Rocky
Mountains, held this morning, it was unanimously agreed to advance the
price of crackers."

A "Bread Union" has been formed in London for the amalgamation of
concerns controlling hundreds of shops. Its chairman instructed the
stockholders that by concentrating a large number of shops under one
management in any district it could "quickly stifle the opposition of
any small unprincipled trader bent on reducing prices for competition
purposes." The Dominion Parliament, in condemning the Grocers' Guild as
"obnoxious to the public interest in limiting competition, in enhancing
prices," pointed out that "no reasonable excuse exists for many of its
arbitrary acts and agreements. The wholesale grocery trade had been for
many years in a flourishing condition; failures were almost unknown."

But though prosperous the grocers formed this guild, admitting some,
proscribing others, and established by private legislation the profits
they desired. The profits were "afterwards increased, and in no
instance lowered, though values generally had fallen."

At Minneapolis, the seat of the greatest flour-manufacturing industry
in the world, the elevators and railroads have united against the
wheat-growers in a way which does much to realize the dream of the
miller, of "cheaper wheat and dearer flour." A committee of the
Minnesota legislature investigated this combination in 1892. The
majority stopped short of reporting that it fixed the prices of wheat,
but admitted that some of the testimony tended that way, and that
the evidence "would seem to establish" that one of the most powerful
railroads had done so, and "had attempted to coerce compliance with
its requirements in the matter of prices by threats to embarrass the
business of local buyers."[30] A report from a minority of the same
committee was more outspoken. It summarizes the evidence, which shows
that the railroads and the elevator companies united to enforce a
uniform price for wheat. This price was six and a quarter cents below
what it should be. All the railroads adjusted their freight rates to
the artificial "list-price," and though rivals, they all charged the
same rates. The elevator companies, owning an aggregate of fifteen
hundred elevators, had a common agent who sent word daily, by telegram
and letter, to all wheat-buyers as to the price to be paid the farmers.
The report calculates the amount thereby taken from the wheat-growers
by the elevators at from four to five millions of dollars a year.

The findings of this report were ratified by the adoption of its
suggestions for a remedy. "There is," it said, "no agency but the State
itself adequate to protect, now, the producer of wheat in Minnesota
and the Northwest from the influence of this combine." It therefore
recommended the erection and operation of elevators by the State. This
was approved by the Legislature and by the Governor, appropriations
were made, and the officials of the State went forward with the plan
until the Supreme Court of the State stopped them on the ground of
"unconstitutionality."

That which we see the national associations of winter-wheat millers and
spring-wheat millers, and the fish, and the egg, and the fruit, and the
salt, and the preserves, and other combinations reaching out to do for
a "free breakfast table," to put the "square meal" out of the reach of
the "square eater," has been achieved to the last detail in sugar and
meat. Every half-cent up or down in the price of sugar makes a loss or
gain to the sugar combination at the rate of $20,000,000 a year. When
it was capitalized for $50,000,000 it paid dividends of $5,000,000 a
year. The value of the refineries in the combination was put by the New
York Legislative Investigation of 1891 at $7,000,000.

The Hon. Wm. Wilson, of the committee of Congress investigating trusts
in 1888, and the framer of the tariff bill of 1893, in a public
communication quoted figures showing that this Trust had a surplus of
$10,000,000 at the end of 1888, after paying its 10 per cent. dividend.
The profits for the next five and a half months were $13,000,000. This
surplus of one year and net profits of less than half a year together
amount to $23,000,000, nearly half the then nominal capital, and
several times more than the real value of all the concerns, as given
above. These profits so conservative a paper as the New York _Daily
Commercial Bulletin_ called "plunder," and it reaffirmed that epithet
when called to account. Stock was issued for this "fabulous valuation"
of $50,000,000, put on this $7,000,000 of original value, and was made
one of the specialties of the stock market.

"There has been an enormous and widespread speculation in the
certificates of the trust," says the report of the New York Senate. "It
was plainly one of the chief purposes of the trust to provide for the
issue of these certificates, affording thereby an opportunity for great
speculation in them, obviously to the advantage of the persons managing
the trust. The issue of $50,000,000 certificates was amply sufficient
for a speculation of many hundreds of millions of dollars."[31]

Since this investigation by the New York Legislature, the Sugar Trust
has been reorganized into a single corporation. The capital of this
is $75,000,000, all "water," since the value of the plants is fully
covered by the bonds to the amount of $10,000,000. The actual value of
the refineries in the Trust, excluding those which have been closed or
dismantled, was investigated by the New York _World_, January 8, 1894,
and put at $7,740,000. On this actual value of $7,740,000 in operation
the Trust paid in regular and extra dividends in 1893 no less than
$10,875,000, and acknowledged that there was in addition a surplus of
$5,000,000 in the treasury. This was in addition to the interest on the
$10,000,000 of bonds.

When a farmer sells a steer, a lamb, or a hog, and the house-keeper
buys a chop or roast, they enter a market which for the whole
continent, and for all kinds of cattle and meats, is controlled by the
combination of packers at Chicago known as "the Big Four."[32] This had
its origin in the "evening" arrangement, made in 1873 by the railroads
with preferred shippers, on the ostensible ground that these shippers
could equalize or even the cattle traffic of the roads. They received
$15 as "a commission" on every car-load of cattle shipped from the West
to New York, no matter by whom shipped, whether they shipped it or had
anything to do with it or not. The commission was later reduced to
$10. They soon became large shippers of cattle; and with these margins
in their favor "evening" was not difficult business.[33] By 1878 the
dressed-beef business had become important. As the Evener Combine had
concentrated the cattle trade at Chicago, the dressed-beef interest
necessarily had its home at the same place. It is a curious fact that
the Evener Combine ceased about the time the dressed-beef interest
began its phenomenal career.[34]

The committee appointed by the United States Senate to investigate
the condition of the meat and cattle markets fixed upon St. Louis,
Mo., and November 20, 1888, as the time and place of meeting, because
the International Cattle Range Association and the Butchers' National
Protective Association assembled at the same time and place. It was
supposed that prominent members of these associations would avail
themselves of the opportunity to appear before the committee. Some of
them did testify frankly, but the presence of antagonistic influences,
especially in the International Cattle Range Association, immediately
became apparent, and industrious efforts were made to prevent the
inquiries of the committee from affecting injuriously the dressed-beef
interest at Chicago. The committee found that under the influence
of the combination the price of cattle had gone down heavily. For
instance: In January, 1884, the best grade of beef cattle sold at
Chicago for $7.15 per hundred pounds, and in January, 1889, for $5.40;
Northwestern range and Texas cattle sold in January, 1884, at $5.60,
and in January, 1889, at $3.75; Texas and Indian cattle sold in 1884 at
$4.75, the price declining to $2.50 in December, 1889. These are the
highest Chicago prices for the months named.

"So far has the centralizing process continued that for all practical
purposes," the report says, "the market of that city dominates
absolutely the price of beef cattle in the whole country. Kansas
City, St. Louis, Omaha, Cincinnati, and Pittsburg are subsidiary to
the Chicago market, and their prices are regulated and fixed by the
great market on the lake."[35] This great business is practically in
the hands of four establishments at Chicago. The largest houses have
a capacity for slaughtering 3,500 cattle, 3,000 sheep, and 12,000
hogs every ten hours. When the Senate committee visited Chicago,
it was found impossible to obtain the frank and full testimony of
either the commission men doing business at the Union Stock Yards, or
of the employés of the packing and dressed-beef houses. The former
testified reluctantly, and were unquestionably under some sort of
constraint as to their public declarations. In private they stated
to the members of the committee that a combination certainly existed
between the "Big Four;" but when put on the stand as witnesses they
shuffled and prevaricated to such a degree as, in many cases, to excite
commiseration. The committee reported that the overwhelming weight of
testimony from witnesses of the highest character, and from all parts
of the West, is to the effect that cattle-owners going with their
cattle to the Chicago and Kansas City markets find no competition among
buyers, and if they refuse to take the first bid are generally forced
to accept a lower one.

As to the effect upon retailers, local butchers, and consumers, it was
admitted by the biggest of the Big Four "that they combined to fix
the price of beef to the purchaser and consumer, so as to keep up the
cost in their own interest."[36] They combined in opening shops and
underselling the butchers of cattle at places all over the country, in
order to force them to buy dressed meat. They combined in refusing to
sell any meat to butchers at Washington, D.C., because the butchers
had bid against them for contracts to supply with meats the Government
institutions in the District of Columbia.

The compulsion put upon local butchers is illustrated in the S----
case. The following telegram was sent from the office of one of the
combination at Chicago to an agent in Pennsylvania: "Cannot allow
S---- to continue killing live cattle. If he will not stop, make other
arrangements, and make prices so can get his trade."

S---- was a local butcher. He testified that he was approached by
the agent with a proposition that he should sell dressed-beef. He
refused, and was then informed that he would be broken up in business.
Notwithstanding this threat, he continued to butcher, and made his
purchases of cattle at Buffalo. From the time of his refusal to sell
dressed-beef as proposed, he could not buy any meat from Chicago,
and could not get any cars from the Erie Railroad to ship his cattle
from Buffalo. He was boycotted for his refusal to discontinue killing
cattle.[37] One of the combination, when testifying to this matter,
disclaimed responsibility for the despatch, but stated that he did not
think a butcher should be permitted to kill cattle and at the same time
sell dressed-beef. "He could not serve both interests." "We have no
hesitation in stating as our conclusion, from all the facts," says the
report, "that a combination exists at Chicago between the principal
dressed-beef and packing houses, which controls the market and fixes
the price of beef cattle in their own interest."

When pork is cheap, less beef is eaten. Beef monopoly must therefore
widen into pork monopoly. This has happened. There is a combination
between the pork-packers at Chicago and the large beef-packers. It
began in 1886. The existence of such an arrangement was admitted by its
most important member; and it is found to have seriously affected the
prices of beef cattle, both to the producer and consumer. It was shown
that one of the companies of the Big Four made in 1889 profits equal
to 29 per cent. on its capital stock--which may, or may not, have been
paid in--and this was not the largest of the companies. As to the idea
that other capitalists might enter into competition with those now in
possession, the report says: "The enormous capital of the great houses
now dominating the market, which each year becomes larger, enables them
to buy off all rivals."

The favoritism on the highways, in which this power had its origin in
1873, has continued throughout to be its main stay. The railroads give
rates to the dressed-beef men which they refuse to shippers of cattle,
even though they ship by the train-load--"an unjust and indefensible
discrimination by the railroads against the shipper of live cattle."
The report says: "This is the spirit and controlling idea of the great
monopolies which dominate the country.... No one factor has been more
potent and active in effecting an entire revolution in the methods
of marketing the meat supply of the United States than the railway
transportation."[38] There have been discriminations by the common
carriers of the ocean as well as by the railroads. The steamship
companies exclude all other shippers, by selling all their capacity to
the members of the beef combine, sometimes for months in advance. It is
useless for any other shipper to apply.

Property is monopoly, the Attorney-General of the United States says.
Those who own the bread, meat, sugar, salt, can fix the price at which
they will sell. They can refuse to sell. It is to these fellow-men we
must pray, "Give us this day our daily bread." And when we have broken
bread for the last time, we can get entrance to our "long home" only
by paying "exorbitant" toll for our shrouds and our coffins to the
"Undertakers'" and the "National Burial Case" associations.[39]



CHAPTER V

STRIKING OIL


It was an American idea to "strike oil." Those who knew it as the
"slime" of Genesis, or used it to stick together the bricks of the
Tower of Babel, or knelt to it in the fire temples, were content to
take it as it rose, the easy gift of nature, oozing forth on brook or
spring. But the American struck it.

The world, going into partial eclipse on account of the failing supply
of whale oil, had its lamps all ready for the new light, and industries
beyond number needed only an expansion of the supply.

De Witt Clinton, with the same genius that gave us the Erie Canal,
suggested as early as 1814 the use of petroleum for light. Reichenbach,
the great German chemist, predicted in 1830 that petroleum would yield
an illuminating oil equal to the finest. Inventors and money-makers
kept up close with scientific investigators in France, Great Britain,
and America.

As early as 1845 the manufacture of coal-oil, both for light and
other purposes, had become important in France. Selligue had made
himself master of the secrets of petroleum. His name, says one of his
chroniclers, "must forever remain inseparably connected with that of
the manufacture of light from oil, and to his researches few have been
able to add."[40]

The name of this genius and benefactor of humanity has remained almost
unknown, except within a small scientific world. He was a member of the
French Academy, and almost every year between 1834 and 1848 he came to
it with some new discovery. On one occasion he reminds his associates
that he holds a patent, granted in 1832, for making illuminating oil
from coal, and declares that the business can be developed to any
extent which commerce or the arts may require. By 1845 he had unlocked
nearly every one of the hidden places in which this extraordinary
product has stored its wonders. He found out how to make illuminating
oil, illuminating gas, lubricating oil, colors, paraffine for candles,
fertilizers, solvents for resin for painters, healing washes,
chemicals. He had three refineries in operation in the Department
Saône-et-Loire, as described in the report of a committee of the French
Academy in 1840. He exhibited his oils in the London Exhibition of
1851, and twelve years before, in the Parisian Industrial Exhibition of
1839, he had crude and refined oils and paraffine to show. "Among the
most important objects of the exhibition," said its German historian,
Von Hermann, "if they can be prepared economically." This Selligue
accomplished. Between 1837 and 1843 he refined more than 4,000,000
pounds of oil, and 50 per cent. of his product was good illuminating
oil.

Before 1850, the Scotch had succeeded in getting petroleum, called
shale oil, out of bituminous coal, had found how to refine it, and had
perfected lamps in which it would burn. Joshua Merrill, the pioneer of
oil refining in this country, with his partners, successfully refined
petroleum at Waltham, Mass., where they established themselves in 1853.
The American manufacturers were making kerosene as early as 1856 from
Scotch coal,[41] imported at a cost of $20 to $25 a ton, and getting
experts like Silliman to analyze petroleum, in the hope that somehow
a supply of it might be got. By 1860 there were sixty-four of these
manufactories in the United States. "A crowd of obscure inventors,"
says Felix Foucon, in the _Revue des Deux Mondes_, "with unremitting
labors perfected the lamp--when it was premature to dream that
illumination by mineral oil should become universal." All was ready,
as the eminent English geologist, Binney, said, "for the start of the
vast American petroleum trade." It was not a lack of knowledge, but
a lack of petroleum, that hampered the American manufacturer before
1860.[42] The market, the capital, the consumer, the skilled labor, the
inventions, and science were all waiting for "Colonel" Drake.

With Drake's success in "striking oil" came to an end the period,
lasting thousands of years, of fire temples, sweep and bucket, Seneca
oil; and came to an end, also, the Arcadian simplicity of the old
times--old though so recent--in which Professor Silliman could say, "It
is not monopolized by any one, but is carried away freely by all who
care to collect it."

The oil age begins characteristically. As soon as Drake's well had
made known its precious contents, horses began running, and telegrams
flying, and money passing to get possession of the oil lands for the
few who knew from those who did not know. The primitive days when "it
was not monopolized by any one" were over. Thousands of derricks rose
all over the territory, and oil scouts pushed with their compasses
through the forests of the wilderness in all directions. Wells were
bored all over Europe, as well as America, wherever traces of oil
showed themselves, sometimes so close together that when one was pumped
it would suck air from the other.

As soon as the petroleum began to flow out of the ground, refineries
started up at every available place. They were built near the wells,
as at Titusville and Oil City, and near the centres of transportation,
such as Pittsburg and Buffalo, and near the points of export, as
Philadelphia, Baltimore, New York. Numbers of little establishments
appeared on the Jersey flats opposite New York.

There was plenty of oil for every one; at one time in 1862 it was only
ten cents a barrel. The means of refining it had long before been
found by science and were open to all; and even poor men building
little stills could year by year add on to their works, increase their
capital, and acquire the self-confidence and independence of successful
men. The business was one of the most attractive possible to capital.
"There is no handsomer business than this is," said one of the great
merchants of New York. "You can buy the (crude) oil one week, and sell
it the next week refined, and you can imagine the quantity of business
that can be done." Men who understood the business, he said, "if they
had not the capital could get all of the money they wanted."[43]

Whatever new processes and contrivances were needed the fertile
American mind set about supplying. To carry the oil in bulk on the
railroads tubs on flat cars were first used; but it was not long before
the tub was made of iron instead of wood, and, laid on its side instead
of bottom, became the tank of the cylinder car now so familiar.

The fluid which lubricates so many other things on their way through
the world is easily made to slip itself along to market. General S.D.
Karns was the author,[44] in 1860, of the first suggestion of a pipe
line. He planned only for oil to run down hill. Then Hutchinson, the
inventor of the Hutchinson rotary pump, saw that oil could be forced
through by pressure, and the idea of the pipe line was complete.
The first successful pipe line, put down by Samuel Van Syckel,[45]
of Titusville, in 1865, from Pithole to Miller's Farm, four miles,
has grown into a net-work of thousands of miles, running through the
streets of towns, across fields and door-yards, under and over and
beside roads, with trunk lines which extend from the oil regions to
Pittsburg, Cleveland, Buffalo, Baltimore, New York, Williamsport,
Chicago, and the Ohio River.

There was a free market for the oil as it came out of the wells
and out of the refineries, and free competition between buyers and
sellers, producers and consumers, manufacturers and traders. Industries
auxiliary to the main ones flourished. Everywhere the scene was of
expanding prosperity, with, of course, the inevitable percentage of
ill-luck and miscalculation; but with the balance, on the whole, of
such happy growth as freedom and the bounty of nature have always
yielded when in partnership. The valleys of Pennsylvania changed into
busy towns and oil fields. The highways were crowded, labor was well
employed at good wages, new industries were starting up on all sides,
and everything betokened the permanent creation of a new prosperity for
the whole community, like that which came to California and the world
with the discovery of gold.

But shadows of sunset began to creep over the field in its morning
time, and the strange spectacle came of widespread ruin in an industry
prospering by great leaps. Wherever men moved to discover oil lands, to
dig wells, to build refineries or pipe lines, to buy and sell the oil,
or to move it to market, a blight fell upon them.

The oil age began in 1860. As early as 1865 strange perturbations were
felt, showing that some undiscovered body was pulling the others out of
their regular orbits.

Before the panic of 1873--days of buoyant general prosperity, with
no commercial revulsion for a cause--the citizens of this industry
began to suffer a wholesale loss of property and business among the
refineries in New York, Pittsburg, Cleveland, and elsewhere, the wells
of the oil valleys, and the markets at home and abroad.

To the building of refineries succeeded the spectacle--a strange one
for so new a business--of the abandonment and dismantling of refineries
by the score. The market for oil, crude and refined, which had been a
natural one, began to move erratically, by incalculable influences. It
went down when it should have gone up according to all the known facts
of the situation, and went up when it should have gone down. This sort
of experience, defying ordinary calculations and virtues, made business
men gamblers.

"We began speculating in the hope that there would be a change some
time or other for the better," testified one who had gone into the
business among the first, and with ample capital and expert skill.[46]

The fright among the people was proportionate to the work they had
done and the value of what they were losing. Since the first well was
sunk the wilderness had become a busy region, teeming with activity
and endowed with wealth. In ten years the business had sprung up from
nothing to a net product of 6,000,000 barrels of oil a year, using a
capital of $200,000,000 and supporting a population of 60,000 people.
The people were drilling one hundred new wells per month, at an average
cost of $6000 each. They had devised the forms, and provided the
financial institutions needed in a new business. They invented many
new and ingenious mechanical contrivances. They had built up towns and
cities, with schools, churches, lyceums, theatres, libraries, boards of
trade. There were nine daily and eighteen weekly newspapers published
in the region and supported by it. All this had been created in ten
years, at a cost of untold millions in experiments and failures, and
the more precious cost of sacrifice, suffering, toil, and life.

The ripe fruit of all this wonderful development the men of the oil
country saw being snatched away from them.[47]

More than once during these lean years, as more than once later, the
public alarm went to the verge of violent outbreak. This ruinous
prosperity brought stolid Pennsylvania within sight of civil war
in 1872, which was the principal subject before the Pennsylvania
Legislature of that year, and forced Congress to make an official
investigation.

The New York Legislature followed Congress and the Pennsylvania
Legislature with an investigation in 1873.

"There was great popular excitement.... It raged like a violent fever,"
was the description it heard of the state of things in Pennsylvania.[48]

There were panics in oil speculation, bank failures, defalcations.
Many committed suicide. Hundreds were driven into bankruptcy and insane
asylums.

Where every one else failed, out of this havoc and social disorder
one little group of half a dozen men were rising to the power and
wealth which have become the marvel of the world. The first of them
came tardily into the field about 1862. He started a little refinery
in Cleveland, hundreds of miles from the oil wells. The sixty and
more manufacturers who had been able to plant themselves before 1860,
when they had to distil coal into petroleum before they could refine
petroleum into kerosene, had been multiplied into hundreds by the
arrival of petroleum ready made from below. Some of the richest and
most successful business men of the country had preceded him and were
flourishing.[49] He had been a book-keeper, and then a partner, in a
very small country-produce store in Cleveland. As described by his
counsel some years later, he was a "man of brains and energy without
money." With him were his brother and an English mechanic. The mechanic
was bought out later, as all the expert skill needed could be got for
wages, which were cheaper than dividends.[50] Two or three years later
another partner was added, who began life as "a clerk in a country
store,"[51] and had been in salt and lumber in the West. A young
man, who had been in the oil region only eleven years, and for two
of the eleven had been errand-boy and book-keeper in a mixed oil and
merchandise business,[52] a lawyer, a railroad man, a cotton broker,
a farm laborer who had become refiner, were admitted at various times
into the ruling coterie.

The revolution which revolved all the freemen of this industry down
a vortex had no sooner begun than the public began to show its
agitation through every organ. The spectacle of a few men at the
centre of things, in offices rich with plate glass and velvet plush,
singing a siren song which drew all their competitors to bankruptcy
or insanity or other forms of "co-operation," did not progress, as it
might have done a hundred years ago, unnoticed save by those who were
the immediate sufferers. The new democracy began questioning the new
wealth. Town meetings, organizations of trades and special interests,
grand juries, committees of State legislatures and of the United States
Senate and House of Representatives, the civil and criminal courts,
have been in almost constant action and inquiry since and because.

It was before the Committee of Commerce of the National House of
Representatives in 1872 that the first authentic evidence was obtained
of the cause of the singular ruin which was overwhelming so fair a
field. This investigation in 1872 was suppressed after it had gone
a little way. Congress said, Investigate. Another power said, Don't
investigate. But it was not stopped until the people had found out that
they and the production, refining, and transportation of their oil--the
whole oil industry, not alone of the valleys where the petroleum was
found, but of the districts where it was manufactured, and the markets
where it was bought and sold, and the ports from which it was shipped
abroad--had been made the subject of a secret "contract"[53] between
certain citizens. The high contracting parties to this treaty for the
disposal of an industrial province were, on one side, all the great
railroad companies, without whose services the oil, crude or refined,
could not be moved to refineries, markets, or ports of shipment on
river, lake, or ocean. On the other side was a body of thirteen men,
"not one of whom lived in the oil regions, or was an owner of oil wells
or oil lands," who had associated themselves for the control of the oil
business under the winning name of the South Improvement Company.[54]

By this contract the railroads had agreed with this company of citizens
as follows:

1. To double freight rates.

2. Not to charge them the increase.

3. To give them the increase collected from all competitors.

4. To make any other changes of rates necessary to guarantee their
success in business.

5. To destroy their competitors by high freight rates.

6. To spy out the details of their competitors' business.

The increase in rates in some cases was to be more than double.[55]
These higher rates were to be ostensibly charged to all shippers,
including the thirteen members of the South Improvement Company; but
that fraternity only did not have to pay them really. All, or nearly
all, the increase it paid was to be paid back again--a "rebate."[56]
The increase paid by every one else--"on all transported by other
parties"--was not paid back. It was to be kept, but not by the
railroads. These were to hand that, too, over to the South Improvement
Company.

This secret arrangement made the actual rate of the South Improvement
Company much lower--sometimes half, sometimes less than half, what all
others paid. The railroad officials were not to collect these enhanced
freight rates from the unsuspecting subjects of this "contract" to
turn them into the treasury of the railroads. They were to give
them over to the gentlemen who called themselves "South Improvement
Company." The "principle" was that the railroad was not to get the
benefit of the additional charge it made to the people. No matter how
high the railroads put the rates to the community, not the railroads,
but the Improvement Company, was to get the gain. The railroads
bound themselves to charge every one else the highest nominal rates
mentioned. "They shall not be less," was the stipulation. They might be
more up to any point; but less they must not be.[57]

The rate for carrying petroleum to Cleveland to be refined was to be
advanced, for instance, to 80 cents a barrel. When paid by the South
Improvement Company, 40 cents of the 80 were to be refunded to it; when
paid by any one else, the 40 cents were not merely not to be refunded,
but to be paid over to his competitor, this aspiring self-improvement
company.[58] The charge on refined oil to Boston was increased to
$3.07; and, in the same way, the South Improvement Company was to get
back a rebate of $1.32 on every barrel it sent to Boston, and on every
barrel any one else sent. The South Improvement Company was to receive
sums ranging from 40 cents to $1.32, and averaging a dollar a barrel on
all shipments, whether made by itself or by others. This would give the
company an income of a dollar a day on every one of the 18,000 barrels
then being produced daily, whether its members drilled for it, or piped
it, or stored it, or refined it, or not.

To pay money to the railroads for them to pay back was seen to be a
waste of time, and it was agreed that the South Improvement Company
for its members should deduct from the ostensible rate the amount to
be refunded, and pay the railroads only the difference. Simplification
could not go further. The South Improvement Company was not even to be
put to the inconvenience of waiting for the railroads to collect and
render to it the tribute exacted for its benefit from all the other
shippers. It was given the right to figure out for its members what the
tribute would amount to, and pay it to them out of the money they owed
the railroads for freight, and then pay the railroad what was left,
if there was any left.[59] The railroads agreed to supply them with
all the information needed for thus figuring out the amount of this
tribute, and to spy out for them besides other important details of
their competitors' business. They agreed to make reports every day to
the South Improvement Company of all the shipments by other persons,
with full particulars as to how much was shipped, who shipped, and to
whom, and so on.[60]

The detective agency thus established by the railroads to spy out
the business of a whole trade was to send its reports "daily to
the principal office" of the thirteen gentlemen. If the railroads,
forgetting their obligations to the thirteen disciples, made any
reduction in any manner to anybody else, the company, as soon as it was
found out, could deduct the same amount from its secret rate.[61] If
the open rate to the public went down, the secret rate was to go down
as much. For the looks of things, it was stipulated that any one else
who could furnish an equal amount of transportation should have the
same rates;[62] but the possibility that any one should ever be able to
furnish an equal amount of transportation was fully taken care of in
another section clinching it all.

The railway managers, made kings of the road by the grant to them of
the sovereign powers of the State, covenanted, in order to make their
friends kings of light, that they would "maintain the business" of the
South Improvement Company "against loss or injury by competition," so
that it should be "a remunerative" and "a full and regular business,"
and pledged themselves to put the rates of freight up or down, as
might be "necessary to overcome such competition."[63] Contracts to
this effect, giving the South Improvement Company the sole right for
five years to do business between the oil wells and the rest of the
world, were made with it by the Erie, the New York Central, the Lake
Shore and Michigan Southern, the Pennsylvania, the Atlantic and Great
Western, and their connections, thus controlling the industry north,
south, east, west, and abroad. The contracts in every case bound all
the roads owned or leased by the railroads concerned.[64] The contracts
were duly signed, sealed, and delivered. On the oil business of that
year, as one of the members of the committee of Congress figured out
from the testimony, the railroad managers could collect an increase of
$7,500,000 in freights, of which they were to hand over to the South
Improvement Company $6,000,000, and pay into the treasury of their
employers--the railways--only $1,500,000.

The contract was signed for the New York Central and Hudson River
Railroad by its vice-president, but this agreement to kill off a whole
trade was too little or too usual to make any impression on his mind.
When publicly interrogated about it he could not remember having seen
or signed it.[65]

"The effect of this contract," the vice-president of the Erie Railway
Company was asked, "would have been a complete monopoly in the
oil-carrying trade?"

"Yes, sir; a complete monopoly."[66]

Of the thirteen members of the South Improvement Company which was to
be given this "complete monopoly," ten were found later to be active
members of the oil trust. They were then seeking that control of the
light of the world which it has obtained. Among these ten were the
president, vice-president, treasurer, secretary, and a majority of
the directors of the oil trust into which the improvement company
afterwards passed by transmigration. Any closer connection there could
not be. One was the other.

The ablest and most painstaking investigation which has ever been
had in this country into the management of the railroads found and
officially reported to the same effect:

"The controlling spirits of both organizations being the same."[67]

The freight rates were raised as agreed and without notice. Rumors had
been heard of what was coming. The public would not believe anything so
incredible. But the oil regions were electrified by the news, February
26, that telegrams had been sent from railroad headquarters to their
freight agents advising them of new rates, to take effect immediately,
making the cost of shipping oil as much again as it had been. The
popular excitement which broke out on the same day and "raged like a
violent fever" became a national sensation. The Titusville _Morning
Herald_ of March 20, 1872, announces that "the railroads to the oil
regions have already put up their New York freight from $1.25 to
$2.84, an advance of over one hundred per cent." Asked what reason
the railroads gave for increasing their rates, a shipper said, "They
gave no reason; they telegraphed the local roads to put up the rates
immediately." This advance, the superintendents of the railroads told
complaining shippers, had been made under the direction of the South
Improvement Company, and they had been instructed to make their monthly
collections of oil freights from that concern.

The evidence even seems to show that the South Improvement Company was
so anxious for the dance of death to begin that it got the freight
agents by personal influence to order the increased rates before the
time agreed upon with the higher officials. Strenuous efforts were
made to have the public believe that the contracts, though sealed,
signed, delivered, and put into effect, as the advance in rates most
practically demonstrated, had really not been put into effect. The
quibbles with which the president of the South Improvement Company
sought to give that impossible color to the affair before the committee
of Congress drew upon him more than one stinging rebuke from the
chairman of the committee.

"During your whole examination there has not been a direct answer given
to a question." "I wish to say to you," said the chairman, "that such
equivocation is unworthy of you."

The plea needs no answer, but if it did, the language of the
railroad men themselves supplies one that cannot be bettered. To the
representatives of the people, who had telegraphed them for information
"at once, as the excitement is intense, and we fear violence and
destruction of property," General McClellan, of the Atlantic and Great
Western, replied that the contract was "cancelled;" President Clark,
of the Lake Shore, that it was "formally abrogated and cancelled;"
Chairman Homer Ramsdell, of the Erie, that it was "abrogated;"
Vice-president Thomas Scott, of the Pennsylvania Railroad, that it was
"terminated officially;"[68] Vice-president Vanderbilt, of the New York
Central and Hudson River Railroad, that it was "cancelled with all the
railroads."

Contracts that were not complete and in force would not need to be
"cancelled" and "abrogated" and "terminated." These announcements were
backed up by a telegram from the future head of the oil trust then
incubating, in which he said of his company: "This company holds no
contracts with the railroad companies."[69] But in 1879 its secretary,
called upon by the Ohio Legislature to produce the contracts the
company had with the railroads, showed, among others, one covering the
very date of this denial in 1872.[70]

Before Congress the South Improvement Company sought to shelter
themselves behind the plea that "their calculation was to get all the
refineries in the country into the company. There was no difference
made, as far as we were concerned, in favor of or against any refinery;
they were all to come in alike."

How they "were all to be taken in" the contract itself showed. It bound
the South Improvement Company "to expend large sums of money in the
purchase of works for refining," and one of the reasons given by the
railroads for making the contract was "to encourage the outlay." Upon
what footing buyer and seller would meet in these purchases when the
buyer had a secret arrangement like this with the owners of the sole
way to and from wells, refineries, and markets, one does not need to
be "a business man" to see. The would-be owners had a power to pry the
property of the real owners out of their hands.

One of the Cleveland manufacturers who had sold was asked why he did so
by the New York Legislature. They had been very prosperous, he said;
their profits had been $30,000 to $45,000 a year; but their prosperity
had come to a sudden stop.[71]

"From the time that it was well understood in the trade that the South
Improvement Company had ... grappled the entire transportation of
oil from the West to the seaboard ... we were all kind of paralyzed,
perfectly paralyzed; we could not operate.... The South Improvement
Company, or some one representing them, had a drawback of a dollar,
sometimes seventy cents, sometimes more, sometimes less, and we were
working against that difference."[72]

It was a difference, he said, which destroyed their business.

He went to the officials of the Erie and of the New York Central to try
to get freight rates that would permit him to continue in business.
"I got no satisfaction at all," he said; "I am too good a friend of
yours," said the representative of the New York Central, "to advise you
to have anything further to do with this oil trade."

"Do you pretend that you won't carry for me at as cheap a rate as you
will carry for anybody else?"

"I am but human," the freight agent replied.

He saw the man who was then busily organizing the South Improvement
Company. He was non-committal. "I got no satisfaction, except 'You
better sell, you better get clear.' Kind of _sub rosa_: 'Better sell
out, no help for it.'"

His firm was outside the charmed circle, and had to choose between
selling and dying. Last of all, he had an interview with the president
of the all-conquering oil company, in relation to the purchase of their
works. "He was the only party that would buy. He offered me fifty cents
on the dollar, on the construction account, and we sold out.... He made
this expression, I remember: 'I have ways of making money that you know
nothing of.'"

For the works, which were producing $30,000 to $45,000 a year profit,
and which they considered worth $150,000, they received $65,000.

"Did you ascertain in the trade," he was asked, "what was the average
rate that was paid for refineries?"

"That was about the figure.... Fifty cents on the dollar."

"It was that or nothing, was it not?"

"That or nothing."

The freight rates had been raised in February. This sale followed in
three weeks.

"I would not have sold out," he told the Legislature, "if I could have
got a fair show with the railways. My business, instead of being an
enterprise to buy and sell, became degraded into running after the
railways and getting an equal chance with others."[73]

"The only party that would buy" gave his explanation a few years later
of the centralization of this business.

"Some time in the year 1872," he swore, "when the refining business of
the city of Cleveland was in the hands of a number of small refiners,
and was unproductive of profit,[74] it was deemed advisable by many of
the persons engaged therein, for the sake of economy, to concentrate
the business, and associate their joint capital therein. The state
of the business was such at that time that it could not be retained
profitably at the city of Cleveland, by reason of the fact that points
nearer the oil regions were enjoying privileges not shared by refiners
at Cleveland, and could produce refined oil at a much less rate than
could be done at this point. It was a well-understood fact at that
time among refiners that some arrangement would have to be made to
economize and concentrate the business, or ruinous losses would not
only occur to the refiners themselves, but ultimately Cleveland, as a
point of refining oil, would have to be abandoned. At that time those
most prominently engaged in the business here consulted together, and
as a result thereof several of the refiners conveyed" to his company,
then as always the centre of the centralization, "their refineries, and
had the option, in pay therefor, to take stock" in this company, "at
par, or to take cash." This company, he continued, "had no agency in
creating this state of things which made that change in the refining
business necessary at that time, but the same was the natural result
of the trade, nor did it in the negotiations which followed use any
undue or unfair means, but in all cases, to the general satisfaction of
those whose refineries were acquired, the full value thereof, either in
stock or cash, was paid as the parties preferred."[75]

The producers were not to fare any better than the refiners. The
president of the South Improvement Company said to a representative of
the oil regions substantially: "We want you producers to make out a
correct statement of the average production of each well, and the exact
cost per barrel to produce the oil. Then we propose to allow you a fair
price for the oil."

Within forty-eight hours after the freight rates were raised, according
to programme, "the entire business of the oil regions," the Titusville
_Herald_, March 20, 1872, reported, "became paralyzed. Oil went down
to a point seventy cents below the cost of production. The boring of
new wells is suspended, existing wells were shut down. The business in
Cleveland stopped almost altogether. Thousands of men were thrown out
of work."

The people rose. Their uprising and its justification were described
to the Pennsylvania Constitutional Convention of 1873 by a brilliant
"anti-monopolist," "a rising lawyer" of Franklin, Venango Co.
The principal subject to which he called the attention of his
fellow-members was the South Improvement Company, and the light it
threw on the problems of livelihood and liberty. Quoting the decision
of the Pennsylvania Supreme Court in the Sanford case,[76] he said:

 "That is the law in Pennsylvania to-day. But in spite of this
 decision, and in spite of the law, we well know that almost every
 railroad in this State has been in the habit, and is to-day in the
 habit, of granting special privileges to individuals, to companies in
 which the directors of such railroads are interested, to particular
 business, and to particular localities. We well know that it is their
 habit to break down certain localities, and build up others, to break
 down certain men in business and to build up others, to monopolize
 certain business themselves by means of the numerous corporations
 which they own and control, and all this in spite of the law, in
 defiance of the law.

 "The South Improvement Company's scheme would give that corporation
 the monopoly of the entire oil business of this State, amounting to
 $20,000,000 a year. That corporation was created by the Pennsylvania
 Legislature along with at least twenty others, under the name
 of improvement companies, within a few years past, all of which
 corporations contain the names as original corporators of men who may
 be found in and about the office of the Pennsylvania Railroad Company,
 in Philadelphia, when not lobbying at Harrisburg. The railroads
 took but one of those charters which they got from the Legislature,
 and by means of that struck a deadly blow at one of the greatest
 interests of the State. Their scheme was contrary to law, but before
 the legal remedy could have been applied, the oil business would
 have lain prostrate at their feet, had it not been prevented by an
 uprising of the people, by the threatenings of a mob, if you please,
 by threatening to destroy property, and by actually commencing to
 destroy the property of the railroad company, and had the companies
 not cancelled the contract which Scott and Vanderbilt and others had
 entered into, I venture to say there would not have been one mile of
 railroad track left in the County of Venango--the people had come to
 that pitch of desperation.... Unless we can give the people a remedy
 for this evil of discriminations in freight, they will sooner or later
 take the remedy into their own hands."[77]

Soon after this attorney for the people was promoted from the poor
pay of patriotism to a salary equal to that of the President of the
United States, and to the place of counsel for the principal members of
the combination, whose inwardness he had descried with such hawk-eye
powers of vision. Later, as their counsel, he drafted the famous trust
agreement of 1882.

The South Improvement Company was formed January 2d. The agreement
with the railroads was evidently already worked out in its principal
details, for the complicated contracts were formally signed, sealed,
and delivered January 18th. The agreed increase of freights went into
effect February 26th. The pacific insurrection of the people began
with an impromptu mass-meeting at Titusville the next day, February
27th. Influential delegations, or committees, on transportation,
legislation, conference with press, pipe lines, arresting of drilling,
etc., were set to work by the organization thus spontaneously formed
by the people. A complete embargo was placed on sales of oil at any
price to the men who had made the hateful bargain with the railroads.
The oil country was divided into sixteen districts, in each of which
the producers elected a local committee, and over all these was
an executive committee composed of representatives from the local
committees--one from each. No oil was sold to be used within any
district except to those buyers whom the local committee recommended;
no oil was sold to be exported or refined outside the district, except
to such buyers as the executive committee permitted. One cent a barrel
was paid by each producer into a general fund for the expenses of the
organization.

Steps were taken to form a company with a capital of $1,000,000,
subscribed by the producers, to advance money, on the security of their
oil, to those producers who did not want to sell.

Able lawyers were employed and sent with the committees to all the
important capitals--Harrisburg, Washington, the offices of the railway
companies. The flow of oil was checked, the activities of the oil world
brought near a stop.

Monday, March 15th, by the influence of the Washington committee,
a resolution was introduced into the House of Representatives by
Representative Scofield, ordering an investigation of the South
Improvement Company. Immediately upon this the frightened participants
cancelled the contracts. By the 26th of March the representatives
of the people had secured a pledge in writing from the five great
railroads concerned of "perfect equality," and "no rebates, drawbacks,
or other arrangements," in favor of any one thereafter. March 30th,
Congress began the investigation which brought to light the evidence
of the contracts, and meanwhile the committees on legislation and pipe
lines were securing from the Pennsylvania Legislature the repeal of
the South Improvement Company charter, and the passage of a "so-called"
Free Pipe Line law, discovered afterwards to be worthless on account of
amendments shrewdly inserted by the enemy.

It was an uprising of the people, passionate but intelligent and
irresistible, if the virtue of the members held good. Until April 9th
the non-intercourse policy was stiffly and successfully maintained. But
by that time one man had been found among the people who was willing
to betray the movement. This man, in consideration of an extra price,
violating his producer's pledge, sold to some of those concerned in
the South Improvement Company a large quantity of oil, as they at once
took pains to let the people know. The seller hoped to ship it quietly,
but, of course, the object in buying and paying this additional price
was to have it shipped openly, and the members of the South Improvement
Company insisted that it should be done so.[78]

This treachery had the effect planned. Every one became suspicious
that his neighbor would be the next deserter, and would get the price
he would like to have for himself. To prevent a stampede, the leaders
called a mass-meeting. Reports were made to it of what had been done in
Congress, the Legislature, and the other railway offices; the telegrams
already referred to were read affirming the cancellation of the
contracts. Amid manifestations of tumultuous approbation and delight
the embargo on the sale of oil was declared raised.

"We do what we must," says Emerson, "and call it by the best name
possible." The people, as every day since has shown, grasped the shell
of victory to find within the kernel of defeat.

The committee of Congress noticed when the contracts were afterwards
shown to it, that though they had been so widely declared to be
"cancelled," they had not been cancelled, but were as fresh--seals,
stamps, signatures and all--as the day they were made. This little
circumstance is descriptive of the whole proceeding. Both parties
to this scheme to give the use of the highways as a privilege to a
few, and through this privilege to make the pursuit of livelihood a
privilege, theirs exclusively--the railroad officials on one side, and
their beneficiaries of the South Improvement Company on the other--were
resolute in their determination to carry out their purpose. All that
follows of this story is but the recital of the sleuth-like tenacity
with which this trail of fabulous wealth has been followed.

The chorus of cancellation from the railroads came from those who
had meant never to cancel, really. In their negotiations with the
representatives of the people they had contested to the last the
abandonment of the scheme. "Their friendliness" to it "was so
apparent," the Committee of the Producers reported, "that we could
expect little consideration at their hands,"[79] and the committee
became satisfied that the railroads had made a new contract among
themselves like that of the South Improvement Company, and to take
its place. Its head frankly avowed before the Investigating Committee
of Congress their intention of going ahead with the plan. "They are
all convinced that, sooner or later, it will be necessary to organize
upon the basis on which the South Improvement Company was organized,
including both producers and refiners."

This conviction has been faithfully lived up to. Under the name of the
South Improvement Company the arrangement was ostentatiously abandoned,
because to persist in it meant civil war in the oil country as the
rising young anti-monopolist lawyer pointed out in the Constitutional
Convention. Mark Twain, in describing the labors of the missionaries
in the Sandwich Islands, says they were so successful that the vices
of the natives no longer exist in name--only in reality. As every page
will show, this contract no longer exists in name--only in reality.
In the oil world, and in every other important department of our
industrial life--in food, fuel, shelter, clothing, transportation,[80]
this contract, in its various new shapes, has been kept steadily at
work gerrymandering the livelihoods of the people.

The men who had organized the South Improvement Company paid the public
revolt the deference of denial, though not of desistance. The company
had got a charter, organized under it, collected twenty per cent. of
the subscription for stock, made contracts with the railroads, held
meetings of the directors, who approved of the contracts and had
received the benefits of the increase of freights made in pursuance of
the agreement. This was shown by the testimony of its own officers.[81]

But "the company never did a dollar's worth of business," the Secretary
of the Light of the World told Congress,[82] and "there was never the
slightest connection between the South Improvement Company and the
Standard Oil Company," the president of the latter and the principal
member of both said in an interview in the New York _World_, of March
29, 1890. "The South Improvement Company died in embryo. It was never
completely organized, and never did any business. It was partly born,
died, and was buried in 1872," etc.

Still later, before a committee of the Legislature of New York, in
1888, he was asked about "the Southern Improvement Company."

"There was such a company?"

"I have heard of such a company."

"Were you not in it?"

"I was not."[83]

So help me God!

At almost the moment of this denial in New York, an associate in this
and all his other kindred enterprises, asked before Congress who made
up the South Improvement Company, named as among them the principal
members of the great oil company, and most conspicuous of them all was
the name of this denier.[84]

The efficiency with which this "partly born" innocent lived his little
hour, "not doing a dollar's worth of business," was told in a summary
phrase by one of the managers of the Pennsylvania Railroad, describing
the condition of the oil business in 1873:[85]

"All other of our largest customers had failed."

When the people of the oil regions made peace after their uprising it
was, as they say, with "full assurance from the Washington committee
that the throwing off the restrictions from trade will not embarrass
their investigation (by Congress), but that the Sub-Committee of
Commerce will, nevertheless, continue, as the principle involved, and
not this particular case alone, is the object of the investigation."[86]

The Committee of Commerce did not "continue." The principal witness,
who had negotiated the contracts by which the railroads gave over
the business of the oil regions to a few, refused in effect, beyond
producing copies of the contract, to be a witness. Permission was given
by the Committee of Congress during its first zeal to the Committee
of Producers from Pennsylvania to copy the testimony as it was taken,
but no official record of its discoveries exists. This transcript was
published by the producers, and copies are possessed by a few fortunate
collectors. The committee did not report, and in the archives of the
national Capitol no scrap of the evidence taken is to be found. All has
vanished into the bottomless darkness in which the monopoly of light
loves to dwell.



CHAPTER VI

"NOT TO EXCEED HALF"


Notwithstanding the ceremonial treaty of equal rights on the railroads
to all, which had been secured by the uprising of the people against
the South Improvement Company in 1872, the independents, one after the
other, continued to be side-tracked by an unseen power. Four years
later, on the 20th of July, 1876, their only two important survivors in
Cleveland, frightened by the high death-rate of the business, and by
a deepening pressure on themselves, answered a summons to come to the
palace of the President of the Light of the World. The contract which
was then made was afterwards produced in court.[87] It was called an
"Agreement for an Adventure," in something like "the merry sport" in
which the good Antonio gave a bond for a pound of his flesh.

A few years after this "adventure" with his competitors and his efforts
to have them closed by the courts, the President was asked if his trust
had sought in any way to diminish the production of refineries in
competition with it.

"Oh no, sir," he replied.

"Nothing of the kind?"

"Oh no, sir."[88]

He was asked the question again, and again the denial was repeated.

"Done nothing of the sort?"

"Not at all."

But now he said, You must bind yourselves for ten years to refine only
85,000 barrels of oil a year.[89]

They had refined 120,000 barrels the year before, and could have done
180,000, and were growing up with the country. "The prospects were much
better for the future."[90]

But they agreed.

You must give me and my associates all the profits you make during this
period above $35,000 a year, until we too have got $35,000 a year out
of your business, and we will guarantee you $35,000 a year, if we let
you run.

They had made $41,000 the year before, but they agreed.

You must divide with "us," after each has got $35,000 a year, all the
additional profits.

They had to put into this "adventure" all their buildings and
machinery, valued at $61,760.42, all their time and attention, and
$10,000 in cash, while their conquerors put in only $10,000 cash and no
plant and no time. But they agreed to this demand for "half."

You must stop refining altogether, and let us take out our $10,000
whenever we send you notice that through competition, or a decrease or
change in the production of petroleum, Cleveland can "barely compete"
with other places. You must sell the kerosene you manufacture, and buy
the petroleum you make it of at the prices we fix.

The combination could make the business unprofitable whenever it chose,
and under the previous stipulation could close them up at its own
pleasure, until the ten years had rolled by. But they agreed.

You must resume again after any such suspension, and let us take half
the profits whenever we give you notice. You must let us enter or
withdraw, throw our $10,000 in or out, suspend or resume, again and
again, as we choose! They agreed.

You must make us monthly reports of all your transactions. You must not
enlarge nor contract your works without our consent. They agreed.

You must not go into the manufacture of petroleum, nor any other new
business anywhere else in the world during this adventure! You must
ship your products by such routes as we direct! They agreed.

You must keep this adventure secret. Our name must not appear, and even
if you all die, you must agree that we may continue the business in
your name, or any other name we choose.

"The firm name," as their counsel pointed out, "was to be kept up even
when the members were mouldering in their graves. But the public were
to understand that the business of that firm, as it had been conducted
in the lifetime of those men, was still being carried on."

You are to be thus tied up for ten years, limited at the best to half
the profit on half your capacity, with a right in us to close you up
altogether, or to close and resume whenever we choose, with no right in
you to start or stop or withdraw. But we are to be left free, in our
own refineries, to refine all the oil the market will take, and keep
all the profit, and enlarge our works and extend our business.

And, finally, you must put your hand and seal to a statement that you
do this to "reconcile interests that have seemed to conflict" and
"equalize the business," and that this agreement gives you your "due
proportion thereof."

This "free contract" two of the three men who were to make it knew
nothing of until their consent was demanded.

One of the partners had secretly been won over. Through him all
preliminary negotiations had been conducted.

"I was not consulted," testified one of the other two, until after the
contract was "all drawn and prepared," and at first he refused to sign
it. The plan was concocted "secretly and unknown to me."

"I was at first opposed to the arrangement," declared the other.[91]

But this was not all the contract. The President, who, as he
testified, "conducted most of the negotiations," and "had been familiar
with the dealings thereunder," supplemented the written documents with
oral instructions:[92]

You must not seem to be prosperous. You must not put on style,[93] he
cautioned them; above all, you must not drive fast horses or have fine
rigs; you must not even let your wives know of this arrangement.[94]

A false account was opened on the books to conceal the nature and
origin of this transaction from their own book-keepers. In the name of
that account false and fictitious checks were drawn, bills made out,
balances struck. A box was taken out at the Cleveland post-office--box
125--in the name of an imaginary "Mr. G.A. Mason," and through this
box the correspondence of the "adventure" was carried on. Each of the
three parties to the "adventure" continued to march and fight under
its own flag as before. All possible pains were taken to conceal the
fact that they had ceased competition with each other. They kept up
every appearance to the public of being actively engaged in competitive
business. The inevitable spy appears in this scene as in every other
in the play. The "reconciler," to enforce the provisions that the
"reconcilees" should not engage in business elsewhere, extended a
system of espionage over them, and followed their movements, and kept
watch what they did with their money, and made oath to the courts of
the results of these "inquiries and investigations." The espionage
continued after this.

A year or two after this contract had been broken by the help of
the courts, the then secretary of the great oil company, through an
intermediary, approached the book-keeper of the firm which had been
freed from the trust.

"Would you not like to make some money?"

"He inclined to let him believe he did want to make some money," his
employer afterwards told Congress. "He came and told me about it. I
requested that he continue and find out what information they wanted.
He was to have had so much per year, but he was to have been paid a
down payment; he got $25."

"What service was he to render for that?"

"I have a memorandum. There were so many things he was to do that I
cannot carry it in my head."

"One of the questions was, 'What was the result of last year's
business?' The other was, 'A transcript of the daily shipments, with
net prices received from the same; what is the cost for manufacturing
outside of the crude; the kind of gasoline and naphtha made, and
the net prices received for the same; what they do with tar and the
percentages of the same; what per cent. of water white and what per
cent. of Michigan water white; how much oil exported last year?' This
information, as fast as received, to be mailed to Box 164, Cleveland
post-office.... He (the book-keeper) made an affidavit of it, and I
took the money back myself personally."[95]

When orders came in for more oil than the limit put upon them, the
"reconcilees," asserting their commercial manhood, went on refining
to supply the demands of the public instead of the commands of the
clique. They contended that they were not bound by the limitation, and
in this were afterwards upheld by the court; but, meanwhile, they were
called to account and frightened into another "reconciliation." He was
present, the chief reconciler told the court, at the interview in which
they "agreed to diminish their manufacture ... to bring the entire
amount within the terms" of the contract.

But again they began to refine to supply the needs of the people
evidenced by the market demand. Then their supply of crude was shut
off. Their suzerain owned the pipe line to Cleveland. When its escaping
victims got around that difficulty, it took its "contract" to the
courts.

To shut these competitors down to half their capacity, and to reconcile
and equalize interests by taking half of all they made on that was
merely an incident, collateral to the grander plan, the vaster
"adventure," of getting all the profits of that greater field out
of which these competitors were barred altogether. Such contracts as
these, its counsel said, were made with refiners all over the country.
The chief profit of the adventure lay, not in the divided profits of
the picayune business it let the vassals do, but in the undivided
profits of the empire kept for itself. Why should the reconciler hurry
with expensive lawyers into court for a summary injunction to prevent a
"reconcilee" from making more oil, when the reconciler, who toiled not
nor spun, was to get half of the gain of $2.05 on every barrel of it?
Why, but that every "co-operative" barrel so made would displace in the
markets a barrel, all the profits of which went to it.

The "reconcilees" were called into court. A judge was asked to issue
an injunction forbidding them to depart from the strict letter of the
contract.

They have been refining more than 85,000 barrels of oil a year, was the
complaint.

They "threaten to distil crude petroleum without regard to
quantity."[96] They are "parties in rebellion," said the lawyers. The
judge said, No. This is a contract in restraint of trade, and released
those who were in its toils.

The immediate effect of this "equalization" was an advance in the rates
of profit. The year before the independent refiners had made a profit
of only 34 cents a barrel.[97]

The first year of the "adventure" the profits jumped up to $2.52
a barrel. The dividends rose from $41,000 to $222,047, while the
production fell from 120,000 to 88,085 barrels. For the four years the
average profit was $2.05 a barrel, or 500 per cent. advance. The lowest
profit was $1.37.

"Refined oil advanced to an average of $8 per barrel for that year"
(1876), says the counsel of the trust.[98]

These great winnings were made in the depth of the depression following
the panic of 1873.

While a world-compelling decline not only of prices but of profits,
was in progress, the authors of this arrangement kept up kerosene to a
point at which $630,691 was made in four years out of an investment of
$81,000, half of which went to those who put in $10,000 and their power
over freight agents.

This "adventure," as was said by the Hon. Stanley Matthews, who
appeared as counsel for the victimized refiners, was better than a
gold-mine. It was a mint. Without giving any personal supervision or
any time, without any expenditure except the insignificant investment
of $10,000, made as a mere stalking-horse, these men took a share of
the profits of "the party of the second part," which is not to be
calculated by ordinary percentage, but by multiplications, over and
over again, every year, of the money they put in it.

By reducing the volume of business one-half, by increasing the profit
from 34 cents a barrel to $2.05, the reconcilers pocketed $315,345.58
in four years, on an investment of $10,000, with no work. This was the
fact. The theory with which the fact was hidden from the people is
given to the New York Legislature in 1888. The principle on which the
trust did business, its president said, was:

"At a limited profit; a very small profit on an extremely large volume
of business."[99]

When its secretary was before Congress, he was asked about the
operations of himself and his associates in these years, 1876, 1877, of
wonderful profits. He had been participating during that time in not
only this profit of $2.05 a barrel, but in divided profits rising to
$3,000,000 in a year on $3,000,000 of capital, and in undivided profits
which rolled up $3,500,000 of capital into $70,000,000 in five years.
But he said:

"The business during those years was so very close as to leave scarcely
any margin of profit under the most advantageous circumstances."[100]

The effect on the consumer appears from the statement in this case of
one of the best-known producers and refiners in the oil regions, one
intimately associated with the members of the combination. He showed
that oil which was selling at twenty cents a gallon retail could be
sold at a large profit at twelve cents a gallon.

As to the effect on the working-man, the demand for labor declined,
wages went down, and the number of unemployed increased.

When there was competition in Cleveland the great company could not
afford to have its skilled workmen idle, because they would seek
employment with the other refineries; but now, having the refining
business all in its own hands, when it was temporarily to its advantage
to refine oil in Pittsburg, Oil City, or other points, in preference
to Cleveland, it could with impunity let its hands remain idle in
Cleveland, knowing that when it wanted them it could easily secure
them, as there are no other refineries in Cleveland to employ them, and
"that has been a very serious injury to working-men."[101]

There was no pretence that the design of this contract was not to make
oil scarce--_i.e._, dear.

In the affidavit which was made in support of the injunction the
principal reconciler showed that his company had restricted itself
as much as it restricted these competitors. He urged as the reason
why the contract had been made and why the courts should sustain it,
that "the capacity of all the refineries in the United States is
more than sufficient to supply the markets of the world, and if all
the refineries were run to their full capacity they would refine at
least twice as much oil as the markets of the world require; that
this difference between the capacity of refineries and the demands of
the market has existed for at least seven years past, and during that
period the refineries" of his company "have not been run to ... exceed
one-half of their capacity."

When these surviving independents of Cleveland were forced into this
adventure, in 1876, the source of the power which could compel "free"
citizens in this age of individualism to execute such a bond was not
known. The appalling mortality among the independents showed that
something was seriously wrong. There was something, however, in this
"Agreement for an Adventure" which pointed straight to it. That was
a clause which guaranteed those who became vassals that they should
have the same freight rates and get back the same rebates as the
monopoly.[102] "Had the monopoly the power," said the Hon. Stanley
Matthews, "to procure freights on better and more advantageous terms
than the rest of the public engaged in the same business?... And
if they had such power, how did it get it?... If this or any other
corporation is allowed to exalt itself in this way and by these means
above competition, it is also exalted above the law."

The great lawyer, who soon afterwards became a justice of the Supreme
Court of the United States, could not answer the questions he raised.
The facts were hidden in secret contracts with the railroads. As
regards Cleveland, they did not come out until five years later, in
1885. It then became an adjudicated fact that in 1875, the year before
this "Agreement for an Adventure," the Lake Shore Railroad had made
a contract with the oil combination to drive these very competitors
and all others out of business, just as the same road had done for
the South Improvement Company in 1872. When they escaped from their
"reconciler," they brought this railroad and the contract into court.
The case was fought up to the Supreme Court.

That tribunal found that the Lake Shore road had contracted with this
company to carry its products ten cents per barrel cheaper than for any
other customers. It showed that this made a difference to the victims
of the "Adventure" equal to more than 21 per cent. a year on their
capital.

"The understanding," the court said, "was to keep the price _down_ for
the favored customers, but _up_ for all the others, and the inevitable
tendency and effect of this contract was to enable the Standard Oil
Company to establish and maintain an overshadowing monopoly, to ruin
all other operators, and drive them out of business." The course of the
railroad the court declared to be one of "active participation in the
unlawful purposes" of the oil company. The Lake Shore was to have all
its business out of Cleveland, but, a competing railroad being built,
the Lake Shore made a contract to give this new line a part of the
plum, to induce it to unite in the policy of keeping freights _down_
for the favored customer, and _up_ for all others. When the President
of the trust was asked afterwards by the New York Legislature if there
had been no arrangement by which it got its transportation cheaper than
others could, he replied, "No, sir." And later he reiterated that in
their arrangements for freight there was "nothing peculiar."[103]

But the Supreme Court of Ohio, in describing this arrangement,
diversify the staid rhetoric of their legal deliverance with the
unaffected exclamation:

"How peculiar!"

They declared the contract between the two railroads "void," and "not
only contrary to a sound public policy, but to the lax demands of
the commercial honesty and ordinary methods of business." They also
pronounced the contract between the railroad and the oil company as
"made to build up a monopoly," and as "unlawful."[104]

The great lawyer, we have said, could not answer the questions he
asked. The facts, we have said, were hidden in a secret contract. And
yet the answers to the questions, the facts, had been all brought to
the verge of disclosure by the investigation by Congress early in the
same year, 1876.

Although the investigation, in consequence of the "I object" of the
Hon. Henry B. Payne, of Cleveland,[105] had been referred to the
Committee of Commerce, and though the railroad and oil clique men
would not answer, and the committee would not press them, there was a
volunteer witness from Cleveland, who began to upset all the plans to
smother. This willing witness was a Cleveland refiner, a shrewd man,
as would easily be believed by those who knew that he was the brother
of an organizer of the oil combination. He, too, had been a member of
it, but for some reasons was now "out," and was one of the swimmers
who felt themselves being drawn down. He betook himself for relief to
Congress. He dodged no subpoenas, but, going before the Committee of
Commerce, he began to tell more fully than any other witness had ever
done, or had ever been able to do, the story of the relations between
the combination and the railroads, which he knew of his personal
knowledge. When he began talking in this free way to the public
authorities, his former associates saw that they had underestimated
his abilities as a refiner. They began to feel that it might be well
to make some concessions to this particular brother, though not to the
Brotherhood of Man.

The investigation was summarily suspended,[106] and his testimony
was spirited away. With the only power that could have interfered
thus silenced, the surviving independents were corralled as we have
described. This was done two short months after the first move was
made, May 16th, for the investigation which might have saved the
independents at Cleveland and elsewhere from the duress which drove men
to death or adventures of reconciliation.

All over the oil regions the combination has followed this policy of
"not to exceed half."[107]

Nineteen pages of the testimony of a member in the suit begun by the
Commonwealth of Pennsylvania are taken up with the operations of one
of its constituent companies in the purchase or leasing of competing
refineries, many of which were shut down or pulled down.

This witness could name only one refinery out of the score of
independent concerns once flourishing in Pittsburg, which was not under
its control.[108]

"Dismantled," was the monotonous refrain of many of his answers to the
questions as to what had been done with the refineries thus got under
control. Asked why these works had been thus dismantled or shut down,
he explained it variously as due to unfavorable location or worn-out
machinery or some such disadvantage.

If these works were so badly situated and so illy fitted for the
business and so old, why did it purchase them? "Can you give good
commercial reasons why it would buy all unprofitable junk?" he was
asked.[109]

"I cannot give any reason why they bought the works," was the helpless
answer.

From the beginning to the end the language used by the founders of
the combination proves scarcity to have been their object. "There is
a large number of refineries in the country--a great deal larger than
is required for the manufacture of the oil produced in the country, or
for the wants of the consumers in Europe and America," said one of the
principal members in 1872.[110]

This is almost identical with the language used in 1880 in the effort
to enjoin Cleveland refiners who "threatened to distil."

In 1887 we will see the same power putting its hand and seal to an
agreement to enforce the doctrine that there was too much oil in the
earth.

In 1872 there were more refineries than were needed for the oil; in
1887 there was too much oil. The progression is significant. And down
to the present pool with the Scotch refiners we will see the same men
enforcing abroad, year by year, the same gospel of want.[111]

"The producers in America are quite alive to the wisdom of not
producing too much paraffine, and are already adopting measures to
restrict it," said the chairman at the annual meeting of one of the
principal Scotch companies.[112]



CHAPTER VII

"YOU ARE NOT TO REFINE"


In the obituary column of the Cleveland _Herald_, of June 6, 1874, was
given the news of the death of one of the pioneer manufacturers of
Cleveland. He began the refining of petroleum in that city in 1860,
several years before any of those who afterwards became the sovereigns
of the business had left their railroad platforms, book-keeping stools,
and lawyers' desks. He was married in the same year, and from that
time until his death, in 1874, gave his whole life to his refinery and
his family, and was successful with both. The _Herald_ said of him
editorially:

 "He was well known in Cleveland and elsewhere as a business man of
 high character. He was a prominent member of the First Presbyterian
 Church, was at one time President of the Young Men's Christian
 Association, and was active in all enterprises of a religious and
 benevolent character. He was about forty years of age, and leaves a
 wife and three children."

His enterprise had been "very profitable," his wife said afterwards
in court, in narrating how she and her children fared after the death
of the husband, father, and bread-winner. "My husband devoted his
entire energies and life to the business from about 1860 to the time
of his death, and had acquired through his name a large patronage. My
husband went into debt just before his death," she continued, "for the
first time in his life. For the interest of my fatherless children, as
well as myself, I thought it my duty to continue the business. I took
$75,000 of the $100,000 of stock, and continued from that time, 1874,
until November, 1878, making handsome profits, during perhaps the
hardest business years of the time since my husband had begun."[113]

The business received from her the most thorough and faithful
attention, and she maintained the prosperity her husband had founded by
making a profit of about $25,000 a year.

A representative of one of the oil combination came to her, she
continued, "with a proposition that I should sell to them." This
agent was "a brother manufacturer," who, but a short time before in
a conference with her, had agreed that in view of the dangers which
seemed to threaten them, he and she should mutually watch out for each
other, and that no arrangement should be made by either without letting
the other know. The next she saw of her ally he pounced upon her in her
office with the news that he was in the oil combination, that the head
of it had told him he meant to have control of the refining business
if it took him ten years, but he hoped to have it in two. He went on
to warm the woman's heart by the declaration that since he had become
acquainted with the secrets of the organization he wondered that he and
she had been able to hold out so long. After which preliminaries he
proposed that she, too, should sell to it. With sagacity and spirit she
declined point-blank to have any negotiation with him.

She declined to deal with subordinates, and said she did not want to
sell. The principal then called upon her at her residence. This was
in 1878, and these were dark days for "outside" refiners. One by one
they were sinking out of sight, and slipping under the yoke like the
victims of the "reconciliation" and "equalization" described in the
last chapter.

For six years word had been passing from one frightened lip to
another that they were all destined for the maw or the morgue, and
the fulfilment of the word had been appalling. He knew the members of
the oil combination, one of the best-known veterans of the oil region
testified in this case, naming them; "I have heard some of them say, in
substance, 'that they intended to wipe out all the refineries in the
country except their own, and to control the entire refining business
of the United States.'"

"The big fish are going to eat the little fish," one of the big fish
told a neighbor and competitor. When one of the little fish said he
"would not sell and was not afraid," he was told, "You may not be
afraid to have your head cut off, but your body will suffer!"

The woman was brave with love and enthusiasm for the memory of her
husband and the future of her children. She had had a great success,
but she knew the sea she was swimming. She saw strong men going down on
every side. She herself afterwards told in court of her great anxiety
as she would hear of one refinery after another surrendering, feeling
sure that that would eventually be the fate of her company.

All that the witnesses just quoted had reported, all that was said
of the same tenor by the witnesses before Congress in 1876, and much
more, had been filling the hearts of the business men of Cleveland,
Pittsburg, Titusville, New York, with a reign of terror ever since
1872. It was with a full realization of all this that she went down
to her parlor to receive the great man of commerce, who passes the
contribution-box for widows' mites outside the church as well as
within. This gentleman was in her house in pursuance, practically, of
his own motion. She did not want to sell; the suggestion of a sale had
come from the other side. "I told him," the widow said to the judge,
"that I realized that my company was entirely in the power" of his
company. "All I can do," I said to him, "is to appeal to your honor
as a gentleman, and to your sympathy, to do the best with me that you
can. I beg of you to consider your wife in my position, left with this
business and with fatherless children, and with a large indebtedness
that my husband had just contracted for the first time in his life. I
felt that I could not do without the income arising from this business,
and I have taken it up and gone on, and been successful in the hardest
years since my husband commenced." "I am aware," he replied, "of what
you have done. My wife could never have accomplished so much." She had
become alarmed, the woman of business resumed, because his company was
"getting control of all the refineries in the country."

He promised, with tears in his eyes, that he would stand by her. It
should never be said, he cried, that he had wronged the widow of his
fellow-refiner. "He agreed that I might retain whatever amount of stock
I desired. He seemed to want only the control. I thought his feelings
were such that I could trust him, and that he would deal honorably
with me." This was the last she saw of him. He promised to come to
see her during the negotiations, but did not do so. He promised to
assist and advise her, but did not do so. He declined to conduct the
negotiations with her in person as she requested, "stating to her,"
he said, in giving his version of the affair to the court, "that I
knew nothing about her business or the mechanical appliances used in
the same, and that I could not pursue any negotiations with her with
reference to the same; but that if, after reflection, she desired to
do so, some of our people familiar with the lubricating-oil business
would take up the question with her.... When she responded, expressing
her fears about the future of the business, stating that she could
not get cars to transport sufficient oil, and other similar remarks,
I stated to her that though we were using our cars, and required them
in our own business, yet we would loan her any number she required, or
do anything else in reason to assist her, and I saw no reason why she
could not prosecute her business just as successfully in the future
as in the past." This assurance to his widow-competitor that he would
let her have cars was, of itself, enough to justify all her alarm, and
show that there was no hope for her but in making the best surrender
possible. It was proof positive that he did control the transportation,
that the well-defined report that no one but he and his could get
their business done by the railroad was true. Permission to go upon
the highways by the favor of a competitor is too thin a plank for even
a woman to be got to walk. Withdrawing from direct connection, but
managing the affair to the end as he testifies, he sent back to her the
agent she had refused to talk with.

Negotiations were accordingly resumed perforce with this agent. He
submitted to his principals a statement in her behalf of the value of
the property, but did not waste time over the form of letting her see
it, or consulting with her before submitting it in her name.

This statement she never authorized, never heard of, and never read
until it was produced in court against her.[114]

One interesting feature of the contract which was the subject of the
"adventure" described in the chapter "Not to Exceed Half" was repeated
here. The representative who "took up this matter" with the widow
carried on his bargaining in great part with the minor stockholders,
one of whom claimed afterwards that all he had done was under her
directions, and "to her entire satisfaction." But she was entirely
unaware of either her "directions" or her "satisfaction." "He never
had the slightest authority from me to represent me in any way in the
sale."[115]

Another of the minor stockholders also busied himself in representing
her without her knowledge. On behalf of the widow agents were making
figures, though she knew nothing of their agency or the figures.
By these combined efforts a sale was finally concluded at figures
which, though she owned seven-tenths of the property, she had never
authorized, and were far below the only figures she had given as those
she was willing to take.

Compelled to deal with a subordinate against her will, fearing to
remain in so hazardous an occupation, and yet needing for her children
the income it brought her, this woman manufacturer's position was most
harassing. All through, as her cashier and treasurer told the court,
she was dissatisfied, felt that she was compelled to sell though she
wanted to retain her property.

"In my hearing," her confidential clerk said, "she declared she sold
because she was compelled to do so."

She told her fellow-stockholders that she had been informed by the
agent who was dealing with her, that if they did not sell out it would
only be a question of time before they would be forced to sell out, as
he intended to place oil like that made by her company in the hands of
all their agents, to undersell them and close them out. This decided
them to sell.

"Inasmuch as the managers of the Standard Oil Company appeared to have
made up their minds to obtain this property, and not to give them the
chance they had before in competition," the stockholders, as one of
them testified, "concluded it better to sell the property at such price
as they could then get, rather than to run the risk of a still greater
loss in the future, not one of the stockholders desiring to part with
the property at all, but rather choosing with fair competition to
retain their interest in the property."[116]

She had made 15 per cent. in the last six months, and, aside from
these threats, the business looked prosperous, for the orders were
becoming more numerous every day. But the widow could refuse to sell
only by braving threats which had broken more than two out of three
of all the men about her. She put upon the property a price warranted
by its income, $200,000, which was adopted by the directors of the
company in a formal motion authorizing a sale at that figure. But in
her name a proposition was made by the agent to sell for $71,000. "I
never heard of the figure of $71,000," she says, "and cannot imagine
where it originated. The only proposition that was ever made was that
of $200,000." What the stock was worth in her estimation and that
of her employés who had inside knowledge is seen in the evidence of
her confidential clerk. Though he was her nephew also, he had with
difficulty, he says, bought stock at par.

She had refused to sell at par to others. Now the only offer she could
get was $60,000 for the works and good-will, the purchasers paying in
addition the cash value of the material in stock, and at that price she
had to let them go. She asked to be allowed to remain an owner to the
extent of $15,000 in the business into which she and her husband had
built their lives. "No outsider can have any interest in this concern,"
was the reply. The combination "has dallied as long as it will over
this matter," its agent continued. "It must be settled up to-day or go."

The power of this business to produce a profit of $25,000 a year was
worth almost $400,000, according to the valuations maintained for
the stock of the oil trust on the New York Stock Exchange by the men
who bought out the widow. One hundred dollars in oil trust stock
producing $12 a year has sold as high as $185. If $12 a year was
worth $185, $25,000 a year was worth nearly $400,000. It was part of
the agreement that the oil company should go on as before. "It was
particularly enjoined," testified the cashier and treasurer, "that the
sale should be kept a profound secret."[117] It was intended that the
company should go on as before as far as the public was concerned. The
purchasers agreed to continue to employ the hands already at work, but
stipulated that not a word should be said to any one of them to reveal
that the company was not as independent as it had been.[118]

"And you are not to engage in the refining business," is the concluding
phrase of an agreement between the oil combination and a once
competitor whom it had forced to sell out in 1876.[119]

"You are not to engage in refining," the same power said in 1877 to the
Pennsylvania Railroad, and now to this widow: You must sign this bond
not to go into business again for ten years.

The bond is given in full in the record of the case. It put the widow
under a forfeit of five thousand dollars for ten years, that--

 "I will not directly, or indirectly, in any way, either alone or in
 company with any person, or as a share-holder in any corporation,
 engage in or in any way concern myself or allow knowingly any capital
 or moneys to be employed in the business or trade of refining,
 manufacturing, producing, piping, or dealing in petroleum, or any of
 its products, within the county of Cuyahoga, and State of Ohio, nor at
 any other place whatsoever."[120]

Their secret of success, the president swore in this very case, is "the
very large volume" of purchases, "long continuance in the business,"
"experience," "knowledge of all the avenues of trade," "skill of
experienced employés," and so forth. But with all this they did not
dare leave this middle-aged woman free to challenge them again on
the field of competition. The purchase was made in the name of three
members of the great oil company, and it was paid for by the check of
that concern.

Of these men one was among the "trustees" indicted and tried in 1885
for complicity in the plot to blow up a rival refinery, but let go by
the judge.

At the time the sale was concluded the widow refiner declared, "The
obtaining of her stock was no better than stealing." When the papers
were brought to her to sign she "hesitated," and said, "It is like
signing my death-warrant. I believe it will prove my death-warrant."
"The promises made by the president," she testifies, "were none of them
fulfilled."

Being only a woman, and not understanding "business," for all her
brilliant success in stepping into her husband's place, and doing
the double work of home-maker and bread-winner, the widow could not
restrain herself from giving a most uncommercial piece of her mind
to those who had got possession of her property for a sum which they
would recover out of its profits in two or three years. She sent the
following letter:

 "November 11, 1878, Monday Morning.

 "SIR,--When you left me at the time of our interview the other
 morning, after promising me so much, you said you had simply dropped
 the remarks you had for my thought. I can assure you I have thought
 much and long as I have waited and watched daily to see you fulfil
 those promises, and it is impossible for me to tell you how utterly
 astonished I am at the course you have pursued with me. Were it not
 for the knowledge I have that there is a God in heaven, and that you
 will be compelled to give an account for all the deeds done here, and
 there, in the presence of my husband, will have to confess whether you
 have wronged me and his fatherless children or not--were it not for
 this knowledge I could not endure it for a moment, the fact that a
 man, possessed of the millions that you are, will permit to be taken
 from a widow a business that had been the hard life work and pride
 of herself and husband, one that was paying the handsome profit of
 nearly twenty-five thousand dollars per annum, and give me in return
 what a paltry sum, that will net me less than three thousand dollars;
 and it is done in a manner that says, Take this or we will crush you
 out. And when, on account of the sacred associations connected with
 the business, and also the family name it bears, I plead that I may be
 permitted to retain a slight interest (you having promised the same
 at our interview), you then, in your cold, heartless manner, send
 me word that no outsider can hold a dollar's worth of stock in that
 concern. It seems strange to be called an outsider in a business that
 has been almost entirely our own and built up at the _cost_ it has to
 ourselves. It is impossible for us to find language to express our
 perfect indignation at such proceedings. We do not envy you in the
 least when this is made known in all its detail to the public. One of
 your own number admits that it is a great _moral_ wrong, but says as
 long as you can cover the points legally you think you are all right.
 I doubt, myself, very much the legality of all these things. But do
 not forget, my dear sir, that God will judge us morally, not legally,
 and should you offer him your entire monopoly, it will not make it
 any easier for you. I should not feel that I had done my entire duty
 unless, before I close, I drop a remark for your thoughts. In my poor
 way I have tried, by my life and example, with all those I have come
 in contact with in a business way, to persuade them to a higher,
 purer, and better life. I think there is no place in the world that
 one has such opportunities to work for good or evil as in a business
 life. I cannot tell you the sorrow it has caused me to have one of
 those in whom I have had the greatest hopes tell me, within the last
 few days, that it was enough to drive _honest_ men away from the
 Church of God, when professing Christians do as you have done by me."

In reply to this she received a letter in which her charge that her
business had been taken from her was repelled as "a most grievous
wrong," and "a great injustice." She was reminded that two years
before she had consulted with the writer and another member of the
oil combination "as to selling out your interest, at which time you
were desirous of selling at _considerably less price_, and upon time,
than you have now received in cash, and which sale you would have been
glad to have closed if you could have obtained satisfactory security
for the deferred payments. As to the price paid for the property, it
is certainly three times greater than the cost at which we could now
construct equal or better facilities."

The letter concluded with an offer to return the works upon the return
of the money, or, if she preferred, to sell her one hundred, or two
hundred, or three hundred shares of the stock at the price that had
been paid her. These propositions were left open to her for three days.

The "cost of the works" is not the standard of value in such
transactions. Six millions of dollars, according to a member of the
committee of Congress which investigated the oil trust in 1888, is the
value of the "works" on which they issued $90,000,000 of stock, which
sold in the stock market at a valuation of $160,000,000.

The offer to sell back the refinery was like the offer to let her have
cars. To accept it was to pass openly and consciously into slavery.
Two years before, when she was weak with grief, inexperience, and the
fear that she might not succeed in her gallant task of paying her
husband's debts and saving the livelihood of the children, she had
thought of selling out at a sacrifice. They knew this because she had
asked their advice, and now cheapened her down by reference to the
valuation of that moment of despair. All the life energies of herself
and her husband, the various advantages of position, the benefit of
their pioneership since 1860, and of having established a place in so
lucrative a business, all the good-will of customers, all the elements
that contributed to the ability to earn the nearly $25,000 a year she
was making, were brushed out of the bargain by the mere assertion of
a figure at which it was alleged better works could be built. By the
time the offer was made she had, moreover, put the sum she had received
into such investments, she told the court, as she had been able to
find, and the money to accept the offer was no longer in her hands.
Indignant with these thoughts, and the massacred troop of hopes and
ambitions that her brave heart had given birth to, she threw the letter
into the fire, where it curled up into flames like those from which
a Dives once begged for a drop of water. She never reappeared in the
world of business, where she had found no chivalry to help a woman save
her home, her husband's life-work, and her children. But when the men
who had divided her property among them invoked the assistance of the
law to complete the "equalization" told of in the previous chapter,
she went into court and told her story to save her friends from ruin.
There, under the gathering dust of years, this incident has remained
buried in the document-room of the Court of Common Pleas of Cuyahoga
County, until now brought forth to give the people a glimpse into what
the real things are which our professors of market philosophy cover
with their glittering generalities about the cost of production and the
survival of the fittest.

This episode and that of the "Agreement for an Adventure" in the
preceding chapter have been written up by the author from the original
papers on file in the Court of Common Pleas at Cleveland, which he
visited for that purpose in 1891. Certified copies of the documents
were procured from the clerk of the court. Lately, the astounding fact
was ascertained that all the documents except two or three formal
pleadings were gone from the records of the court. But for these
certified copies there would now be no authentic record of these cases.
This disappearance bears a strong likeness to the suppression of the
investigation by the Committee of Commerce of Congress in 1872, and the
theft of the testimony taken by the House Committee of Commerce[121]
in 1876, and the mutilation of the transcript submitted to Congress in
1888 of the evidence taken in the Buffalo Explosion Case.[122]



CHAPTER VIII

"NO!"


There has never been any real break in the plans revealed, "partly
born," "and buried" in 1872. From then till now, in 1893, every fact
that has come to the surface has shown them in full career. If they
were buried, it was as seed is--for a larger crop of the same thing.

The people had made peace, in 1872, on the pledge of "perfect equality"
on the highways. Hardly had they got back to their work when they
began to feel the pinch of privilege again. The Pennsylvania road
alone is credited with any attempt to keep faith, and that only "for
some months." "Gradually," as a committee of the people wrote to the
managers of the Pennsylvania Railroad, "the persons constituting the
South Improvement Company were placed by the roads in as favorable
a position as to rates and facilities as had been stipulated in the
original contract with that company."[123]

As soon as pipe lines were proved practicable they were built as
rapidly as pipes and men to put them in the ground could be had, but
there was some lubricant by which they kept constantly slipping into
bankruptcy.

They were "frozen out," as one of their builders said, "summer as well
as winter."

By 1874, twenty pipe lines had been laid in the oil country. Eighty per
cent. of them died off in that and the following year.[124] The mere
pipes did not die, they are there yet; but the ownership of the many
who had built them died.

There were conservatives in the field to whom competition was as
distasteful as to the socialists. To "overcome such competition," and
to insure them "a full and regular" and "remunerative business" in
pipe lines, in the language of the South Improvement Company contract,
all that was needed was to put into operation the machinery of that
contract which no longer existed--in name. The decease of the name was
not an insuperable obstacle.

In exact reproduction of the plan of 1872, the railroads, in October,
1874, advanced rates to the general ruin, but to the pool of lines
owned by their old friends of the South Improvement Company they paid
back a large rebate. That those who had such a railroad Lord Bountiful
to fill their pockets should grow rich fast was a matter of course.[125]

Getting this refund they got all the business. Oil, like other things,
follows the line of least resistance, and will not flow through pipes
where it has to pay when it can run free and get something to boot.
Nobody could afford to buy oil except those who were in this deal. They
could go into the market, and out of these bonuses could bid higher
than any one else. They "could overbid in the producing regions, and
undersell in the markets of the world."[126]

This was not all. In the circular which announced the bounty to the
pet pipes there was another surprise. It showed that the roads had
agreed to carry crude oil to their friends' refineries at Pittsburg and
Cleveland without charge from the wells, and to charge them no more for
carrying back refined oil to the seaboard for export than was charged
to refineries next door to the wells and hundreds of miles nearer the
market. "Outside" refiners who had put themselves near the wells and
the seaboard were to be denied the benefit of their business sagacity.
The Cleveland refiners, whose location was superior only for the
Western trade, were to be forced into a position of unnatural equality
in the foreign trade. In short, the railroads undertook to pay, instead
of being paid, for what they carried for these friends, and force them
into an equality with manufacturers who had builded better than they.

Evidently they who had contrived all this had their despondent moments,
when they feared that its full beneficence would not be understood by a
public unfamiliar with the "science of transportation."

To the new rules was attached an explanation which asserted the right
of the railroads to prevent persons and localities from enjoying the
advantage of any facility they may possess, no matter how "real."

"You will observe that under this system the rate is even and fair to
all parties, preventing one locality taking advantage of its neighbor
by reason of some alleged or real facility it may possess."[127]

Meanwhile good society was shuddering at its reformers, and declaring
that they meant to stop competition and "divide up property."

"Do you do that in any business except oil?" the most distinguished
railroad man of that day was asked. "Do you carry a raw product to
a place 150 miles distant and back again to another point like that
without charge, so as to put them on an equality?"

To which he replied--it was he who could not remember that he had ever
seen the South Improvement Company contract he signed in 1872--"I don't
know."[128]

"Could any more flagrant violation of every principle of railroad
economy and natural justice be imagined than this?" the report of the
New York Legislature asks.[129]

An expert introduced by the railroads defended this arrangement. He
insisted that all pipe lines had a chance to enter the pool and get the
same refund.[130] But a witness from the pipe-line country, who was
brought to New York to testify to the relations of the railroads and
the oil combination, let out the truth.

"Why didn't they go into the pool?" he was asked, in reference to one
of the most important pipe lines.

"Because they were not allowed to. They wanted to freeze them out. They
were shut out from the market practically."[131]

For these enterprises, as they failed one after the other, there was
but one buyer--the group of gentlemen who called themselves the South
Improvement Company in 1872, but now in the field of pipe-line activity
had taken the name of United Pipe Line, since known as the National
Transit Company, and then and now a part of the oil trust.

"The United Pipe Line bought up the pipes as they became bankrupt one
after another," testified the same friendly witness.[132]

Then came a great railroad war in 1877. A fierce onslaught was made on
the Pennsylvania Railroad by all the other trunk lines.

In this affair, as in all dynastic wars, the public knew really nothing
about what was being done or why. The newspapers were filled with the
smoke of the battles of the railroad kings; but the newspapers did not
tell, for they did not then know, that the railroads were but tools of
conquest in the hands of greater men.

The cause of the trouble was that the managers of the Pennsylvania
Railroad had begun to reach out for the control of the oil trade.
They had joined in the agreement in 1872 to give it to the oil
combination, but now they wanted it for themselves. Through a mistletoe
corporation--the Empire Transportation Company--they set to work
building up a great business in oil cars, pipe lines, refineries.

"We like competition; we like our competitors; we are neighbors and
friends, and have been all these years," the president of the oil
trust testified to the New York Legislature,[133] but he served notice
upon this competitor to abandon the field.[134] He and his associates
determined to do more than compel the great railroad to cease its
competition. They determined to possess themselves of its entire oil
outfit, though it was the greatest corporation then in America. This,
the boldest stroke yet attempted, could be done only with the help of
the other trunk lines, and that was got.

The ruling officials of the New York Central, the Erie, the Baltimore
and Ohio, the Lehigh Valley, the Reading, the Atlantic and Great
Western, the Lake Shore railroads, and their connections, were made to
believe, or pretended to believe, that it was their duty to make an
attack upon the Pennsylvania Railroad to force it to surrender.[135]
"A demand," says the New York Legislative Committee of 1879, "which
they"--the railroads--"joined hands with the Standard Oil Company and
proceeded to enforce by a war of rates, which terminated successfully
in October of that year" (1877).[136]

The war was very bitter. Oil was carried at eight cents a barrel less
than nothing by the Pennsylvania.[137] How low the rates were made by
the railroads on the other side is not known. The Pennsylvania was the
first to sue for peace. Twice its vice-president "went to Canossa,"
which was Cleveland. It got peace and absolution only by selling its
refineries and pipe lines and mortgaging its oil cars to the oil
combination. It "was left without the control of a foot of pipe line to
gather, a tank to receive, or a still to refine a barrel of petroleum,
and without the ability to secure the transportation of one, except
at the will of men who live and whose interests lie in Ohio and New
York."[138]

It was only seven years since the buyers had organized with a
capital of $1,000,000. Now they were able to give their check for
over $3,000,000 for this one purchase. "I was surprised," said Mr.
Vanderbilt to the New York Legislative Committee of 1878, speaking
of this transaction, "at the amount of ready cash they were able to
provide." They secured, in addition to the valuable pipe lines, oil
cars, and refineries in New York and Pennsylvania, the more valuable
pledge given by the Pennsylvania Railroad that it would never again
enter the field of competition in refining, and also a contract
giving the oil combination one-tenth of all the oil freights received
by the Pennsylvania Railroad, whether from the combination or its
competitors--an arrangement it succeeded in making as well with the New
York Central, Lake Shore, and other railroads.[139]

One of the earliest members of the oil combination was present at the
meeting to consummate this purchase. Something over $3,000,000 of his
and his associates' cash changed hands. The meeting was important
enough to command the presence of a brigade of lawyers for the great
corporations, and of the president, vice-president, and several
directors of the Pennsylvania Railroad, and, representing the Poor
Man's Light, the vice-president, the secretary, and five of the leading
members of the combination, besides himself.[140]

But when asked in court about it he could not remember any such
meeting. Finally, he recalled "being at a meeting," but he could not
remember when it was, or who was there, or what it was for, or whether
any money was paid.[141]

Three years later this transaction having been quoted against the
combination in a way likely to affect the decision of a case in
court,[142] the treasurer denied it likewise. "It is not true as stated
... directly or indirectly...."[143]

Eight years later, when the exigencies of this suit of 1880, in
Cleveland, had passed away, and a new exigency demanded a "revised
version," the secretary of the combination told Congress that it was
true.[144]

"The pleasures of memory" are evidently for poets, not for such
millionaires. That appears to be the only indulgence they cannot
afford.

The managers of the Pennsylvania road went back with the zeal of
backsliders reconverted to their yoke in the service of the men who had
given them this terrific whipping. They sent word to the independent
refiners, whom they had secured as shippers by the pledge of 1872 of
equal treatment, that equal rates and facilities could be given no
longer. The producers and refiners did not sit down dumb under the
death sentence. They begged for audience of their masters, masters of
them because masters of the highway.

The third vice-president, the official in charge of the freight
business, was sent to meet them.

"As you know," they began by reminding him, "we have been for the past
year the largest shippers of petroleum the Pennsylvania Railroad has
had."

He acknowledged it.

"Shall we, after the 1st of May, have as low a rate of freight as
anybody else?" they then asked.

"No," he said; "after the 1st of May we shall give the Standard Oil
Company lower rates than to you."

"How much discrimination will we have to submit to?" the poor
"outsiders" asked.

"I decline to tell you," was the reply.

"How much business must we bring your road to get as good rates as the
combination?" they then asked, and again--

"I decline to tell you," was the only answer they got.

"If we will ship as much, will you give us as low freight rates?"

"No."

"We have been shipping over the Pennsylvania Railroad a year," they
persisted, "why can we not continue?"

"It would make them mad; they are the only people who can make peace
between the railroads."

"I think," said he, "you ought to fix it up with them. I am going over
there this afternoon to talk with those people about this matter, and,"
he continued, "you will all be happy, and everything will work along
very smoothly."

"We gave him very distinctly to understand that we did not propose to
enter into any 'fix up' where we would lose our identity, or sell out,
or be under anybody else's thumb; we are willing to pay as high a rate
of freight as anybody, and we want it as low as anybody has it," they
told him.

But the reply to all of it was, "You cannot have the same rate of
freight."

As the magnate of the railroad seemed to be determined not to permit
them to move to market along his rails, one of the independents
referred to a plan for a new pipe line then under consideration by
them, the Equitable, as perhaps promising them the relief he refused.

"Lay all the pipe lines you like," the vice-president retorted, with
feeling, "and we will buy them up for old iron."

The independents appealed from the third vice-president to the
president; they had to beg repeatedly for a hearing before they got
it. They came together in the June following, the independents coming
on from New York for the purpose. Since their interview with the third
vice-president rates had been advanced upon them, and not only that,
but when they had oil ready to ship at those high freight rates, the
railroad on one pretext or another refused them cars. One of them had
contracts to deliver oil from his refinery in New York to go abroad.
When he ordered the cars that were needed to take the crude oil to New
York to be refined they were refused him. The ships lay idle at the
docks, charging him heavy damages for every day of delay; at the wells
his oil was running on the ground.

"You had better go and arrange with the Standard Oil Company; I don't
want to get into any trouble with them," the president said. "If you
are business men, you will make an arrangement with them. I will do all
in my power to bring it about."

"We will never take our freight rates from them," they replied; "we are
not willing to enter into any such arrangement."

"Why don't you go to the other roads?" the president asked his
suppliants.

"We have done so. It's of no use. On the New York Central the cars are
owned by the combination, and the Erie is in a like position. We have
been shippers on the Pennsylvania Railroad a long, long while, and
you ought to take care of us and give us all the cars we need. We are
suffering very greatly for the want of them. Can we have the same rate
that other shippers get?"

"No."

"If we ship the same amount of oil?"

"No."

"If you have not cars enough, will you, if we build cars, haul them?"

"No. You will not have any peace or prosperity," continued the
president, "until you make terms with the combination."

Like the third vice-president he offered to intercede with them to get
transportation over his own road for his own customers. Like men they
refused the offer.

"We were, of course, very indignant," one of them said, in relating
this experience in court.[145]

A little later a rich and expert refiner, who had sold out in 1876,
made up his mind to try again. The Pennsylvania road had a new
president by this time, but the old "no" was still in force.

"When I was compelled to succumb I thought it was only temporarily,
that the time would come when I could go into the business I was
devoted to. I was in love with the business. I took a run across the
water; I was tired and discouraged and used up in 1878, and was gone
three or four months. I came back ready for work, and had the plan,
specifications and estimates made for a refinery that would handle
ten thousand barrels of oil in a day. I selected a site near three
railroads and a river; I would have spent about five hundred thousand
dollars, and probably a couple of hundred thousand more. I believed the
time had arrived when the Pennsylvania Railroad would see their true
interest as common carriers, and the interest of their stockholders,
and the business interest of the City of Philadelphia. I called on the
President of the Pennsylvania Railroad; I laid the plans before him,
and told him I wanted to build a refinery of ten thousand barrels'
capacity a day. I was almost on my knees begging him to allow me to do
that.

"'What is it you want?' he said.

"'Simply to be put upon an equality with everybody else--especially the
Standard Oil Company. I want you to agree with me that you will give me
transportation of crude oil as low as you give it to anybody else for
ten years, and then I will give you a written assurance that I will do
this refining of ten thousand barrels of oil a day for ten years. Is
not that an honest position for us to be in? I as a manufacturer, you
the president of a railroad.'

"'I cannot go into any such agreement.'

"I saw the third vice-president. He said, in his frank way, 'That is
not practicable, and you know the reason why.'"[146]

After their interviews with the President and Vice-President of the
Pennsylvania Railroad, these outsiders went to the officials of the
other roads, only to hear the same "No!" from all.[147]

At one time, to get oil to carry out their contracts and fill the
vessels which were waiting at the docks and charging them damages for
the delay, these refiners telegraphed to the oil regions offering the
producers there ten cents above the market price if they could get oil
to them over any of the roads to New York. They answered they could not
get the cars, and none of them accepted the offer.[148]

All the roads--as in 1872--were in league to "overcome" them.

Thus, at a time when the entire movement of oil was at the rate of
only 25,000 or 30,000 barrels a day, and the roads had cars enough to
move 60,000 barrels a day, these independent refiners found themselves
shut completely off from the highway.[149] The Pennsylvania Railroad,
the New York Central, the Erie, and their branches and connections in
and out of the oil regions, east and west, were as entirely closed to
them as if a foreign enemy had seized the country and laid an embargo
on their business--which was, indeed, just what had happened. The only
difference between that kind of invasion and what had really come
was, that "the dear people," as the president of the trust called
them,[150] would have known they were in the hands of an enemy if he
had come beating his drums loud enough, and firing off his two-thousand
pounders often enough, and pricking them deep enough with his bayonets;
but their wits are not yet up to knowing him when he comes among them
disguised as an American citizen, although they see property destroyed
and life lost and liberty thrown wherever he moves.

There was enough virtue in Pennsylvania to begin a suit in the name
of the State against the men who were using its franchises for such
purposes, though there was not enough to push it to a decision. The
Third Vice-President of the Pennsylvania Railroad, when examined as a
witness in this suit, confirmed these statements about the interviews
with himself and the president of the road in every particular about
which he was questioned.

"We stated to the outside refiners that we would make lower rates to
the Standard Oil Company than they got; we declined to allow them to
put cars of their own on the road."[151]

His evidence fills seventy-six pages, closely printed, in the report of
testimony. It was clear, full, and candid; remarkably so, considering
that it supplied officially from the company's own records the facts,
item by item, which proved that the management of the Pennsylvania
Railroad had violated the Constitution of Pennsylvania and the common
law, and had taken many millions of dollars from the people and
from the corporation which employed them, and secretly, and for no
consideration, had given them to strangers.

This testimony is so important that it was reprinted substantially
in full both by the "Hepburn" committee of the New York Legislature
in 1879[152] and the Trust Investigating Committee of Congress in
1888.[153] As instances, it showed that in one case where the rate to
the public was $1.15, this favored shipper was charged only 38 cents.
In another case the trade generally had to pay $1.40 a barrel on crude
petroleum, but the oil combination paid 88-1/2 cents.

"And then the refined rate was 80 cents?"

"80 cents net to the Standard."

"And to all others?"

"$1.44-1/2."

"But there were no other outside shippers," he pleaded--how could there
be?

There was only one important member in Pennsylvania of the oil
combination who could be caught with a subpoena. At his first
appearance in court, on the witness stand, he took lofty ground.

"I decline to answer."[154]

Put on the stand again, he was asked:

"Were you allowed a rebate amounting to 64-1/2 cents per barrel?"

"No, sir; not to my knowledge."[155]

Put on the third time and compelled to produce his books, he had to
read aloud in court the entries showing the payment he had thus denied
under oath.

"There was a total allowance of 64-1/2 cents per barrel."[156]

And then he shut up again--but too late; and to all other questions
about his rebates said, gloomily, "I decline to answer."

When the president of the oil trust was asked afterwards by the New
York Legislature if some company or companies embraced within it had
not enjoyed from railroads more favorable freight rates than outside
refineries, he replied:

"I do not recall anything of that kind."

"You have heard of such things?"

"I have heard much in the papers about it."[157]

But at the time these rates were being made, one of his principal
associates admitted that the president was the person who attended to
the freight rates.[158] This was also put beyond a doubt in the Ohio
investigation by the evidence of his first partner in the little oil
refinery at Cleveland which had grown so great, he who had furnished
the only mechanical and refining knowledge it had started with, and who
had, until within a year, been a fellow-stockholder and director.

"Do these contracts contain anything of the nature that would
discriminate against the small refiners of the State?"

"I think they did.... Up to the time I left the company the open rate
was $1.40 to the seaboard. They"--the oil combination--"ship for 80
cents.... The president told me it was the rate at that time."[159]

With every known avenue to the sea thus closed to them it certainly
looked as if all was up with the "outsiders." But the men, who had
too much American spunk to buy peace with dishonor by consenting to
a "fix-up" under compulsion, had the wit to find out a loop-hole
of temporary escape. They built tank boats for the canal, and thus
succeeded in getting 200,000 barrels of oil to New York that summer
before the canal closed.[160]

Since then all chance of escape by the canal has been cut off. The
railroads made a war of freight rates against it, and the only canal
that connected the oil regions with the Erie canal route to the sea was
dried up, and turned into a way for a railroad by a special act of the
New York Legislature. The railroad so built has ever since been managed
as one of the most diligent promoters of the policy of excluding the
common people from the oil business.

According to the funeral notices given out by the railroad officials
and the members of the South Improvement Company this concern was dead,
but in the quaint phrase of the producers it was really alive and hard
at work, but "with a new suit of clothes and no name." These interviews
between the independent refiners and the railroad officials of the
three trunk lines form one of the most extraordinary scenes which have
taken place between a government and its subjects since the era of
modern democratic liberty.

The railway officials are, in the world of the highway, the government.
They hold their supreme power to tax commerce, and to open and close
the highways, solely and altogether by grant of the State, and under
the law of the common carrier. It is only by the exercise of the
sovereign power of eminent domain to take the property of a private
individual by force, without his consent, for public use--never for
any other than public use--and only by the grant of the right to cross
city streets and country roads that the railroads come into existence
at all. This says nothing of the actual cash given to the railroad
projectors by the government, which, in New York State alone, amounts
to upwards of $40,000,000.[161]

The independent refiners represent the people, claiming of the highway
department of their government those equal rights which all citizens
have as a birthright, and the government informs these citizens that
their rights on the highways have been given as a private estate to
certain friends of the ruling administration, much as William the
Conqueror would give this rich abbey or that fertile manor to one of
his pets.

"We have no franchise that is not open to all," say the "trustees." "It
is a free open market." "There is nothing peculiar to our companies."
"It is as free as air."

In truth they have had no less a franchise than, as in 1872, the
excluding possession of all the great trunk-lines out of the oil
country, and all their connections east and west, and this franchise
has since widened until, in 1893, it reaches from ocean to ocean, and
from gulf to gulf.

Their franchise was meant to be as exclusive as if they had had from
the government letters-patent in the old royal fashion of close
monopolies in East Indian trade, or salt, or tobacco at home, giving
them by name the sole right to use the roads, and forbidding all
others, under pain of business death, from setting their foot on the
highway. But with this difference: the exclusive franchise in the
latter case would exist by law; but in this case it was created in
defiance of law, exists in contempt of the law, and in its living the
law dies daily.

The refiners and producers who were pleading in this way with the
railroads for a chance to live after May 1, never doubted but that,
as they were told, and as their arrangements with the Pennsylvania
road guaranteed, they were having and were to have at worst until that
date, equal and impartial rates and facilities. Under this safe-conduct
they parleyed for the future. But the Pennsylvania Railroad was at
that moment negotiating with the oil combination to collect from the
independents, under the guise of freight, 20 to 22-1/2 cents a barrel
on all they sent to market, and pay it over to the combination. The
payments were made to one of the rings within the oil ring, called the
American Transfer Company. "It is the same instrumentality under a
different name," said the counsel of the New York Chamber of Commerce
before the New York Legislature. The official of the Pennsylvania road
who issued the order to take this money out of the treasury pleaded
in excuse that proof had been given him that other roads were doing
the same thing.[162] Receipted bills were brought to him, showing that
the New York Central and the Erie had been "for many months" paying
these men who called themselves American Transfer Company for having
"protected" their oil business, sums ranging from 20 cents to 35 cents
a barrel on all the oil those roads transported.[163] So deeply was
the watch-dog of the Pennsylvania road's treasury affected by the
proof that his company was doing less than the other roads, that he
instructed the comptroller to give these men three months' back pay,
which was done. Twenty cents a barrel was sent them out of all the oil
freights collected by the Pennsylvania for the three months preceding,
and thereafter the tribute was paid them monthly. Then it was increased
to 22-1/2 cents a barrel. The same amount per barrel was refunded to
them out of their own freight. They received this on all oil shipped
by them, and also on all shipped by their competitors.[164] They who
received this tribute pretended to the railroad officials that they
"protected" the roads from losing business. The railroad men pretended
to believe it.

The way in which this revenue was given and got shows what a simple
and easy thing modern business really is--not in any way the
brain-racker political economists have persuaded themselves and us.
The representative of the oil combination writes a bright, cheery
letter; the representative of the Pennsylvania answers it, and there
you are; 22-1/2 cents a barrel on millions of barrels flows out of
the cash-box of the railroad into the cash-box of the combination.
In one year, 1878, this tribute, at the rate of 22-1/2 cents on the
13,750,000 barrels of oil shipped by the three trunk-lines, must have
amounted to $3,093,750. The American Transfer Company had a little
capital of $100,000, and its receipts from this rebate in this one year
would amount to dividends of 3093 per cent. annually; the capital of
the oil combination which owned this Transfer Company was at this time
$3,500,000.

There are reasons to believe that some of the very railroad men who
turned the money of the railroads over to the American Transfer Company
were among its members. But if all the profit went to the combination,
and none of it was for the railway officials through whom they got
it, their revenue from that source alone would have paid in 1878 a
dividend nearly equal to this capital of $3,500,000. In this device of
the American Transfer Company we again see reappear in 1878, in high
working vitality, the supposed corpse of the South Improvement Company
of 1872. The American Transfer Company was ostensibly a pipe line, and
the railroad officials met the exposure of their "nothing peculiar"
dealings with it by asserting that the payment to it of 22-1/2 cents a
barrel and more was for its service in collecting oil and delivering
it to them; but the Third Vice-President of the Pennsylvania Railroad
admits that his road paid the money on oil which the American Transfer
Company never handled.

"This 22-1/2 cents (a barrel) paid the American Transfer Company is not
restricted to oil that passed through their lines?"

"No, sir; it is paid on all oil received and transported by us."[165]

The American Transfer Company was not even a pipe line. By the
Pennsylvania laws all incorporated pipe lines must report their
operations and condition monthly to the State. But the publisher of the
petroleum trade reports, and organizer of a bureau of information about
petroleum, with offices in Oil City, London, and New York, issuing
daily reports, testified that the American Transfer Company was not
known in the oil regions at all as a pipe line. It published none of
the statements required by law. "They do not," he said, "make any runs
from the oil-wells." It had once been a pipe line, but "years ago it
was merged in with other lines," and consolidated into the United Pipe
Line, owned and operated by the combination.[166]

When this arrangement was exposed to public view by the New York
legislative investigation, the "expert" who appeared to explain it away
in behalf of the railroads and their beneficiaries, paraded a false map
of the pipe-line system, drawn and colored to make it seem that the
American Transfer Company was a very important pipe-line.[167] This was
the same "expert" who, as we saw, defended the pipe-line holocaust of
1874 by asserting that "all were to be taken in alike."

There are three kinds of liars, an eminent judge of New York is fond of
saying--liars, damned liars, and experts.

When the assistant secretary of the oil combination was asked about
this "transfer" company, he replied, "I don't know anything about
the organization."[168] He had described himself to the committee as
"a clamorer for dividends"; but he declared he knew nothing about an
organization which was "transferring" him dividends at the rate of
$3,093,750 a year on $100,000 of capital. Almost at the very moment
of this denial, receipts were being produced in court in Pennsylvania
which had been given by the cashier of himself and his associates to
the railroads for this money.[169]

Even if the independents succeeded in saving their oil from wasting on
the ground, and got it into pipe lines, and had it refined, and were
lucky enough to be given cars to carry it to the seaboard, they found
that in leaving the oil regions they had not left behind the "no." Up
to the very edge of the sea were the nets spread for them.

Part of the bargain of 1872 had been that the brothers of the South
Improvement Company should provide the terminal facilities at the
seaboard.[170] Railroad companies are usually supposed to have their
own yards, storehouses, wharves, and the like, and, as a matter of
fact, the railroads had these. The agreement of 1872 that the South
Improvement Company should furnish the terminal facilities meant--it
was discovered by the New York Legislature in 1879--that such terminals
as the road already had should be turned over to that concern, and that
thereafter nobody should be allowed to build or use terminals except as
it permitted.

The New York Legislature found, in 1879, that the oil combination
thus owned and controlled the oil terminal facilities of the four
trunk-lines at New York, Philadelphia, and Baltimore.

"They can use the power here given, and have used it to crush out
opposition."[171]

"Of course, there is in the Erie contract a statement that every
shipper of oil over the road shall be treated with 'fairness' by the
Standard Oil Company, and our attention was drawn to that," the counsel
of the Chamber of Commerce said.... "In the first place, they have the
exclusive shipment of oil, and therefore nobody could ship oil, and
there was no oil handled for anybody else; but if the Erie Company
should send some for somebody else, why, the sloop could not get to the
dock, and the machinery at the dock would not and could not work by
any possibility so as to get that oil out of that dock and into a ship
(except at the end of a lawsuit)."[172]

Evidently the "cancellation" of 1872 had not cancelled anything of
substance. Indeed, the "no" of 1878 was wider than the embargo of 1872,
for the fourth great trunk-line, the Baltimore and Ohio, was not one of
the signatories then; but by 1878 it had, like all the others, closed
its port to the people--farming it out as the old régime farmed out the
right to tax provinces.

He used to meet the president of the oil combination "frequently in the
Erie office," a friend and subordinate has recalled.[173] Railroad
offices are pleasant places to visit when such plums are to be gathered
there as this of the sole right to the freedom of all ports and control
of the commerce of three continents.

Down to this writing, when the little group of independents who remain
masters of their own refineries along Oil Creek seek to send their oil
in bulk abroad, or to transship it at any one of the principal ports
for other points on the coast, the same power still says the same "no"
as twenty years ago.[174]



CHAPTER IX

WHO PIPED AND WHO DANCED


Thus, by 1878, the independent producers and refiners found themselves
caught in a battue like rabbits driven in for the sport of a Prince of
Wales.

If the richest person then in America--that artificial but very real
person the Pennsylvania Railroad--could not keep its pipe lines, nobody
could. The war for the union, which ended with its surrender in 1877,
closed the pipe-line industry to the people. The unanimous "no" of all
the railroads which followed completed the corral.

Oil, when it got to market, found that those who had become the owners
of the pipe lines were also the owners of most of the refineries, and
so the only large buyers.[175] "Practically to-day there is but one
buyer of crude oil for us.... We take our commodity to one buyer; we
take the price he chooses to give us without redress, with no right of
appeal."[176]

Then the sole carrier--the pipe-line company--refused to take the oil
into its pipes--the oil as it came out of the wells--unless first sold
to its other self, the oil combination. This was called "immediate
shipment." Forced to waste or sell his oil, the producer, under this
compulsion, had to take what he could get.[177] The Hon. Lewis Emery,
Jr., a member of the State Senate of Pennsylvania, gave the authorities
of the State an account of the "immediate shipment" evolution of
American market liberty. "We go down," he said, "to the office and
stand in a line, sometimes half a day--people in a line reaching out
into the street--sixty and seventy of us. When our turn comes we go in
and ask them to buy, and they graciously will take it. I am an owner in
six different companies, and we all suffer the same."

To educate the producer to sell "always below the market," the Pipe
Line let his oil spill itself on the ground for a few days. "We lost a
considerable amount of oil, probably several thousand barrels," another
producer said.

"Will you state at what price as compared with the market price,
whether above or below, you sold that oil?"

"It was always below."

Asked why he sold it below the market, he said:

"Because the line would not run it until it was sold."[178]

The hills of Pennsylvania began to growl and redden as in 1872.

The Secretary of Internal Affairs was hung in effigy. Mass meetings
were held--some tumultuous, others quiet; processions of masked men
marched the streets, and groaned and hooted in front of the newspaper
offices and the business places of the combination. In the morning the
streets and sidewalks were frequently found placarded with cabalistic
signs and letters, and occasionally printed proclamations and warnings.
Most of the lending newspapers of the region had been either absolutely
purchased by the oil combination or paid to keep silence. Others
occasionally broke forth in violent articles advising the use of
force.[179]

In the McKean County field the people rose in rebellion. They got up a
Phantom Party, in its provocation and spirit much like a phantom party
which, contrary to law and order, boarded some ships in Boston harbor a
century before. One thousand men, wrapped in white sheets, marched by
night from Tarport to Bradford, the headquarters in that province of
the sole buyer. Not a word was spoken.

It was not enough to make the people sell under compulsion. A day
came when the only buyer would not buy and the only piper would not
pipe. This brought the Parker district to the verge of civil war. The
citizens were in a state of terrible excitement; the pipe lines would
not run oil unless it was sold; the only buyers--viz., the agents of
the oil combination--would not buy oil, stating that they could not get
cars; hundreds of wells were stopped to their great injury. Thousands
more, whose owners were afraid to stop them for fear of damage by salt
water, were pumping the oil on the ground. The leaders used all the
influence they had to prevent an outbreak and destruction of railroad
and pipe lines. The most important of them went over to the Allegheny
Valley Railroad office and telegraphed to the president: "The refusal
to run oil unless sold upon immediate shipment and of the railroad to
furnish cars has created such a degree of excitement here that the
most conservative part of the citizens will not be able to control the
peace, and I fear that the scenes of last July will be repeated on an
aggravated scale."[180]

Three of the highest officials of the road sought an immediate
interview with this leader of the producers. He warned them, and the
Pennsylvania road which controlled their oil business, that unless
immediate relief were furnished there would be an outbreak in the
oil regions, because, as he told them, "The idea of a scarcity of
cars on daily shipments of less than 30,000 barrels a day was such an
absurd, barefaced pretence, that he could not expect men of ordinary
intelligence to accept any excuses for the absence of cars, as the
preceding fall, when business required, the railroads could carry day
after day from 50,000 to 60,000 barrels of oil."[181] The warning was
heeded. Thousands of empty cars, which the combination and its railroad
allies had said couldn't be had anywhere, suddenly appeared hastening
to Parker, blocking up the tracks in all directions, deranging the
passenger business of the road. "They looked like mosquitoes coming
out of a swamp." The sole buyer began buying again, and for the whole
week, after having declared themselves unable to buy or move any, the
railroads moved 50,000 barrels a day.[182] Producers under such rule
saw their prices decrease and their land pass out of their possession,
as was inevitable.

Ten years later in the Ohio oil-field all the substantial features
of the plan we saw culminate at Parker are to be found in full play.
There, also, the oil combination, Congress was told, is the only
purchaser, and it fixes the price to suit itself. The production of
the Ohio fields was between 18,000 and 20,000 barrels a day, but it
could easily produce between 30,000 and 32,000. Because the only buyer
refused to take care of the oil, wells have been shut back. Wells,
which if opened up would run 1000 or 2000 or even more, were shut in
four days out of the week.[183]

This culmination of 1878 made the people act. The producers were being
ground to powder by the fact that an enemy had possession of their
local pipes, their tankage, and their railways. "I am the unfortunate
owner," said one of them, "of interests in nearly one hundred pumping
wells. I have produced over half a million barrels of oil."[184] Oil
was running out of the ground at the rate of 15,000,000 barrels a year,
but the New York refiners who were in command of plenty of capital,
said:

"We don't dare build large refineries, for we don't know where we could
get the oil."[185]

At last the people organized the Tidewater Pipe Line. This was the
first successful attempt to realize the idea often broached of a pipe
line to the seaboard. It was the last hope of the "outsiders"--the
"independents." "Nothing short of the ingenuity that is born of
necessity and desperation" produced that pipe line. It was well
contrived and well manned, and had plenty of money. It was organized in
1878, with a capital of $1,000,000, which increased in a few years to
$5,000,000. It built a pipe from the oil regions to Williamsport--105
miles--on the Philadelphia and Reading Railroad, whence the oil
was carried in cars by that company and over the Jersey Central to
Philadelphia and New York.

Unlimited capital and strategy did all that could be done against the
Tidewater. At one place, to head it off, a strip of land barring its
progress was bought entirely across a valley. It escaped by climbing
the hills. At another point it had to cross under a railroad. The
railroad officers forbade. Riding around, almost in despair, its
engineer saw a culvert where there was no watercourse. It was for a
right of passage which a farmer, whose land was cut in two by the
railroad, had reserved in perpetuity for driving his cattle in safety
to pasture. It did not take long to make a bargain with the farmer for
permission to lay the pipe there.

The pipe line was finished and ready to move oil about the 1st of June,
1879. On June 5th a meeting was held at Saratoga of representatives
of the four trunk-line railroads and of members of the oil trust. The
meeting decided that the new competitor should be fought to the death.
The rate on oil, which had been $1.15 a barrel, was reduced to 80,
then to 30, to 20, to 15 cents by the railroads, to make the business
unprofitable enough to ruin this first attempt to pipe oil to the
seaboard. Finally the roads carried a barrel, weighing 390 pounds, 400
miles for the combination for 10 cents or less.[186] The representative
of the Tidewater offered to prove to Congress, in 1880, if it would
order an investigation--which it would not--that "the announced and
ostensible object of the conference at Saratoga was to destroy the
credit of the Tidewater, and to enable the oil combination to buy up
the new pipe line, and that a time was fixed by the combination within
which it promised to secure the control of the pipe line--provided
the trunk-lines would make the rates for carrying oil so low that all
concerned in transportation would lose money.[187] There can be no
doubt," he continued, "that, taking the avowed and ostensible object of
the Saratoga meeting as the true one, it constituted, on the part of
the willing participants, a criminal conspiracy of the most dangerous
character."

One of the chief officials of the Pennsylvania Railroad testified to
the competition which his road had carried on with the Tidewater.
"It certainly was fought," he said; "the rates were considerably
reduced."[188] Rates were put down to points so low that the railroad
men would never tell what they were. I have no knowledge--I have no
recollection--was all the president and general freight agent of the
Pennsylvania Railroad could be got to say, when before the Interstate
Commerce Commission.[189] "Not enough to pay for the wheel grease,"
said the general freight agent.[190] The oil trust also cut the prices
of pipeage by its local lines from 20 cents to 5 cents a barrel,
turning cheapness into the enemy of cheapness.

But the Tidewater was strong enough to withstand even so formidable
an assault as this. As its business was small, its losses were small;
but the railroads, making this war on it for the benefit of others,
suffered heavily. The trunk-lines, it has been calculated, wilfully
threw away profits equal to $10,000,000 a year for the sake of
inflicting a loss of $100,000 on the pipe lines.[191] Enough revenue
was lost to pay dividends of 2-1/2 to 5 per cent. on the total capital
of the roads.

One effect that followed this reduction in rates was a corresponding
decline in the price of oil at New York, in which the cost of freight
is a constant element. The Committee of the New York Legislature found
in the testimony it heard reason to believe that the members of the oil
trust took advantage of their advance knowledge to sell at high prices,
to those who did not know, all they would buy for future delivery.

The "Hepburn" report of the New York Legislature of 1879 gives special
prominence to the computations that $1,500,000 were the profits of this
speculative deal.[192]

The customers of the Tidewater, the independent refiners in
Philadelphia, were charged by the Pennsylvania Railroad on oil
that came through the Tidewater 15 cents a barrel for one mile of
hauling. The utmost the law allowed them was half a cent a mile, and
they were carrying oil 500 miles to New York for the same charge of
15 cents a barrel, and less. Under such pressure these independent
refineries, which the Tidewater had been built to supply, sold out
one after another. The Tidewater was then in the position of a great
transporting company, that had spent a large amount of money to
bring a great product to its Philadelphia terminus, and found that
refining establishments which had been begging it to give them oil had
become the cohorts of its opponent. To meet this the Tidewater built
refineries of its own at Chester, and at Bayonne, New Jersey, on New
York waters.

When asked for a rate to another point, the Pennsylvania gave one that
was three and four times as much as they would charge the oil trust,
but added, "we cannot make a rate on the empty cars returning." That
is, as it was interpreted, "we will carry the oil, but we will not
permit the empty cars to come over the roads to get the oil. They must
be taken on a wheelbarrow, or by canal, or by balloon."[193] The war
went on. Attempts were made to seduce the officials of the Tidewater.
A stockholder, who had been too poor to pay for his stock, received a
large sum from the oil combination and began a vexatious suit for a
receivership.[194] A minority forced their way into the offices of the
company, and took violent possession of it by a "farcical, fraudulent,
and void" election, as the court decided in annulling it. Its financial
credit was attacked in the money market and by injunctions against its
bonds.

Affidavits were offered from members of the oil combination denying
that they had had anything to do with these proceedings. In reference
to these affidavits, the representative of the Tidewater reminded the
court that that combination was a multifarious body. "One-half of
them," he said, "do a thing, and the other half swear they know nothing
about it. In pursuance of this Machiavelian policy, they have eight or
ten gentlemen to conduct negotiations, and eight or ten to say they do
not know anything about them."

Then, with no visible cause, the capacity of the pipe fell below the
demands upon it. This insufficient capacity was pleaded in court as
one of the reasons why the pipe should be taken out of the hands of
its owners. One day the cause was discovered--a plug of wood. Some
mysterious hand had been set to drive a square block of wood into the
pipe so as to cut down its capacity to one-third. The representative
of the Tidewater declared in court his belief that this plug had been
placed by "people on the other side who have made affidavits in this
case." A similar deed, but much worse, as it might have cost many
lives, was done during the contest with Toledo, nine years later.[195]

The Tidewater was successful, but not successful enough. It owned 400
miles of pipe, including the 105 miles of the trunk-line, and had
control of nearly 3,000,000 barrels of tankage. It did a great work
for the people. "It was," the Philadelphia _Press_ said, in 1883,
"the child of war. It has been a barrier between the producers and
the monopoly which would crush them if it dared." While these words
of exultation were being penned, a surrender was under negotiation.
The Tidewater's managers were nearly worn out. These tactics of
corrupting their officers, slandering their credit, buying up their
customers, stealing their elections, garroting them with lawsuits
founded on falsehoods, shutting them off the railroads, and plugging
up their pipe in the dark, were too much. They entered into a pool.
The two companies in the summer of 1883 "recognized" each other, as
the trunk lines do, and agreed to divide the business in proportions,
which would net the Tidewater $500,000 a year. The announcement that
this pool had been forced on the Tidewater fell like a death-blow
on the people of the oil regions. "The Tidewater," the Philadelphia
_Press_ said, editorially, "will probably retain a nominal identity
as a corporation, but its usefulness to the public and its claim to
popular confidence and encouragement were extinguished the instant it
consented to enter into alliance with the unscrupulous monopoly which
resorts to that means of conciliating and bribing what it had failed
to destroy." As was anticipated by the _Press_, the Tidewater retained
its nominal identity, but that was all. Its surrender was admitted by
its principal organizer, Mr. Franklin B. Gowen. The officials of the
Pennsylvania Railroad have testified to it. "They made an arrangement
of some kind, the conditions of which I never knew; one swallowed the
other or both swallowed the other, or something, and settled up their
difficulties,"[196] said the general freight agent. The president said:
"The competition between these pipe lines ceased."[197]

The attorney of the Tidewater was asked if there were any negotiations
which resulted in a compromise of the differences with the oil
combination.

"If by differences," he replied, "you mean competition in trade, I
answer the question, yes. That resulted in a written contract.... The
purpose of the contract was to settle the rivalry in business between
the two companies, each company to take a percentage of transportation
and gathering, and each to do with the oil as it saw fit."[198]

The treasurer of the Tidewater, who had been in its service since 1880,
corroborated its attorney. A contract had been made between the two;
the date of it was October 9, 1883. Copies of the contracts are in the
author's possession.

The Interstate Commerce Commission in 1892 judicially found the same
fact. It says: "About December, 1883, the pipe lines, with the view of
getting better rates, adjusted their differences, and the competition
between them ceased. The pipe-line business appears then to have passed
into the control of the National Transit Company."[199] All but 6
per cent. of the National Transit Company is owned by the oil trust.
It formed practically one-third the imposing bulk of the $70,000,000
of the trust of 1882.[200] If anything can be made certain by human
testimony this evidence proves that these pipe lines stopped competing
in 1883. The witnesses are the men who negotiated the contract,
and upon whose approval it depended. But when the president of the
trust was asked under oath, in 1888, if there were any pipe lines to
tide-water competing with it, he named, as "a competing company," "the
Tidewater Pipe Line."

"The Tidewater Company? Does that compete with your company?"

"It does."

"It is in opposition to it?"

"It is in opposition to it."[201]

In the same spirit he denied, in 1883, that he had anything to do with
the company which had represented the oil trust in this "swallowing or
something" of the Tidewater. This, the National Transit Company, was
the most important member of the trust. Under its cover, by means like
those described, from New York to West Virginia and Ohio, almost all
the pipes for gathering and distributing oil have been brought into one
ownership. Millions yearly of the earnings of this company were pooled
with all the others in the trust, and the president was receiving
his share of them four times a year. He was the sole attorney[202]
authorized to sign contracts for the trustees, who thus held all the
combined companies in a common control. These trustees, of whom he was
the chief, not only controlled but owned as their personal property
more than half the stock of every company represented. But these facts
were not then known to the public. It was not intended that they should
be known, as the struggle to conceal them from the New York Legislature
five years later--in 1888--showed.

"Have you any connection with the National Transit Company?" he was
asked, after taking the oath.

"I have not."[203]

When the Tidewater passed under this alien control, Mr. Franklin B.
Gowen severed all his connection with it. He did not hold himself
for sale to any man who had money to pay fees. He stood at a height
where the profession of law was immeasurably above prostitution in the
temples of justice--the odious aspect in which the sacrifice of purity
in the ancient temples of Aphrodite is reproduced in our courts. It
would have been impossible for him to combine the functions of a great
law reformer and procurer of judicial virtue for railroad corporation
wreckers. He never forgot what some successful lawyers seem never to
remember--that the lawyer is, as much as the judge, an officer of the
court and of justice. While he lived he was proud to be recognized
as the chief defender in the courts of the rights of those whom it
was sought to crush in this industry, although he thus allied himself
with the poor and heavy laden. He could have used his anti-monopoly
eloquence as an advertisement of his value to monopoly; but he would
not sell his soul to fill his stomach. His heart revolted against the
wicked cruelty with which he saw the strong misuse the weak, and his
penetrating vision saw clearly the ruin to which overgrown power and
conscienceless greed were hurrying the liberties of his country. In his
speech before the Pennsylvania Legislature in 1883, advocating a law to
prevent the use of railway power by railway officials to redistribute
the property of the people among their favorites, he said, speaking of
what had been done in the oil regions of Pennsylvania: "If such a state
of facts as I now call your attention to had been permitted by any
government in Europe or Asia for a six months, instead of the sixteen
years it has existed in this Commonwealth, the crown and sceptre of
its ruler would have been ground into the dust, and yet the good,
honest, patient, long-suffering people have submitted to it in this
Commonwealth until the time has come that if we hold our peace the very
stones will cry out.

"I for one intend to submit to it no longer. You may say it is unwise
for me to attack this wrong, but I have attacked it before and I will
attack it again. If I could only throw off the other burdens that rest
upon my shoulders, I would feel it to be my duty to preach resistance
to this great wrong, as Peter the Hermit preached the crusade. I would
go through this State from Lake Erie to the Delaware; I would go into
every part of this Commonwealth and endeavor, by the plain recital
of the facts, to raise up such a feeling and such a power as would
make itself heard and felt, and by the fair, open, honest, and proper
enforcement of the law, right the wrong, and teach the guilty authors
of this infamous tyranny

   "'That truth remembered long:
 When once their slumbering passions waked,
     The peaceful are the strong.'"

Mr. Gowen bravely fulfilled his pledge not to submit. His principal
occupation became the championship in the courts and the Interstate
Commerce Commission of those who were oppressed by this crushing
power. His incorruptible lance was always in place, until the morning
he was found dead in his room in Washington.

The oil combination had, up to this time, sent all its oil east by
rail as it had no pipe line, and its faithful fools, the railroads,
therefore burned their fingers with joy to roast the Tidewater for so
good a customer. But while the railroad officials were wasting their
employers' property to destroy the combination's new competitor, its
astute managers, seeing how good a thing pipe lines were, quietly
built a system of their own to the seaboard. The railroads had helped
them get hold of the pipe lines--had in repeated cases, as the Erie,
the Atlantic and Great Western, the Pennsylvania, the Cleveland and
Marietta did, allowed them to lay their pipes on the lands of the
railroads--and were now to see the pipe lines used to replace the
railroads in the transportation of oil. These oil men saw what the
railroad men had not the wit to see--or else lacked the virtue to live
up to--that the pipe line is an oil railway. It requires no cars and
no locomotives; it moves oil without risk of fire or loss; it is very
much cheaper than the ordinary railway, for this freight moves itself
after being lifted up by pumps. The pipe line was the sure competitor
of the railway, fated to be either its servant or master, as the
railroad chose to use it or lose it. The railways sentimentally helped
the trust to gather these rival transportation lines into its hands;
then the trust, with the real genius of conquest, threw the railroads
to one side. A system of trunk-line pipes was at once pushed vigorously
to completion in all directions. While the members of the oil trust
were building these pipe lines to take away the oil business of the
railroads, the officials of the latter were giving them by rebates the
money to do it with. At the expense of their own employers, the owners
of the railroads, these freight agents and general managers presented
to the monopoly, out of the freight earnings of the oil business, the
money with which to build the pipe lines that would destroy that branch
of the business of the roads.

It was the Tidewater that proved the feasibility of trunk pipe lines.
The trunk pipe lines the combination has built were in imitation.
Extraordinary pains have been taken to sophisticate public opinion
with regard to all these matters--for the ignorance of the public is
the real capital of monopoly--and with great success. The history we
have transcribed from the public records is refined by one of the
combination into the following illuminant:

"About 1879 or 1880 it was discovered that railways were inadequate to
the task of getting oil to the seaboard as rapidly as needed. Combined
capital and energy were equal to the emergency. No need to detail how
it was done. To-day there reaches,"[204] etc., etc. It must have been
on some such authority that this, from one of our leading religious
journals, was founded: "Only by such union"--of the refiners--"could
pipe lines have been laid from the oil wells to the tide-water,
reducing to the smallest amount the cost of transportation."[205] An
account of the pipe-line system in the New York _Sun_, of December 14,
1887, describing the operations of the great pumps that force the oil
through the pipes, says: "Every time the piston of the engine passes
forward and back a barrel of oil is sent seaward. A barrel of oil is
forced on its way every seven seconds of every hour of the twenty-four.
Every pulsation of the gigantic pumps that are throbbing ceaselessly
day and night is known and numbered at headquarters in New York at the
close of each day's business." This heart of a machine, beating at the
headquarters in New York, and numbering its beats day and night, stands
for thousands of hearts whose throbs of hope have been transmuted into
this metallic substitute. This heart counts out a gold dollar for every
drop of blood that used to run through the living breasts of the men
who divined, projected, accomplished, and lost.



CHAPTER X

CHEAPENING TRANSPORTATION


Through all the tangle of this piping and dancing one thread runs
clear. The oil combination had up to this time been dependent on the
railroads for transportation, but it emerged out of the fracas the
principal transporter of oil, made so by the railroads. It now had two
trunk pipe lines to the sea-coast--the one it had conquered and the one
it had built--and the railroads had made it a present of both of them.

The Tidewater--the first seaboard pipe line--had been built only
because the Pennsylvania and other trunk lines had said "no" to every
entreaty and demand of the oil regions for a road to the sea. That line
the railroads had conquered for the combination, as they conquered for
it the pipe lines of the Pennsylvania Railroad in 1877. The second
seaboard pipe line was built by the combination with the railroads'
money to take away the railroads' business, and best--or worst--of all,
while the railroads were hard at work driving the Tidewater into its
net. Such is the business genius of our "railroad kings."

This campaign closed, the duty of the hour for the oil ring was to get
rates advanced by rail as well as pipe.

"Then they"--the pipe lines--"were anxious to get good paying
rates,"[206] so that they could make a good thing out of the business
of their own pipe and of the Tidewater which they had guaranteed
$500,000 a year. The advent of the independent Tidewater had brought
rates down. The restoration of exclusive control by its capture put
rates up. But it was not enough for the oil combination to advance
their own rates. It must induce the railroads to do the same. The
railroads had furnished the means for the acquisition of both pipes,
and they must now be got to drive business away from themselves to
these competing oil railways. This would seem to be a delicate matter
to achieve, but there was no trouble about it.

"It is our pleasure to try to make oil cheap,"[207] the president of
the oil trust told Congress, but it did not use its new facilities
to take in hand at reduced cost the carriage of all oil, and give
the industry the economic advantage of the pipe-line idea. Quite the
contrary. It united with the railroads to increase the cost. Under this
new blow the independent refiners and producers whom the Tidewater
had been built to keep afloat grounded again. Then the railroads--the
Pennsylvania especially--repented of what they had done to these their
oldest customers, and sent ambassadors to them to renew the broken
promises of 1872, that if they would rebuild they should forever
have equal rates and fair treatment. One of the highest officials of
the Pennsylvania was sent to them to say: We recognize our error in
permitting your refineries to be abandoned and the traffic destroyed.
We wish to build up and maintain independent refining in the oil
regions. We will give you every encouragement. We will insure you equal
rates, on which you can ship and live.[208]

These invitations and guarantees were repeated and pressed. They were
renewed by the officials of the Erie also: "You need have no hesitation
in building up your business," said the officials of the Erie; "You
shall have living rates."[209]

The independents listened and believed. They rebuilt their works and
prospered.[210] This meant the return of cheapness--cheapness of
transportation over the railroads, to enable the refiners they had
invited back to life to compete in the market--cheapness of light.
Thereupon, incredible as it seems, the Pennsylvania and the other
railroads were influenced to declare war again upon the men who had
reinvested their money and their life energy in response to these
solicitations. This new war began with a secret contract, in 1885, for
an advance in rates against the independent refiners, who, in trustful
reliance on the pledged faith of the railroads, had developed their
capacity to 2,000,000 barrels a year.[211]

This campaign has lasted from 1885 until the present writing, 1894. In
it the pipe lines, the oil combination, the Pennsylvania Railroad, and
all the other great carriers between the independents and their markets
in New England, Europe, and Asia, have been mobilized into a fighting
corps for the annihilation of the independents. This case illustrates
nearly every phase of the story of our great monopoly: dearness instead
of cheapness; willingness of the managers of transportation to deny
transportation to whole trades and sections; administration of great
properties like the Pennsylvania Railroad in direct opposition to
the interests of the owners--to their great loss--for the benefit
of favorites of the officials; great wealth thereby procured by
destruction, as if by physical force, of wealth of others, not at
all by creation of new wealth to be added to the general store;
impossibility of survival in modern business of men who are merely
honest, hard-working, competent, even though they have skill, capital,
and customers; subjection of the majority of citizens and dollars to
a small minority in numbers and riches; subservience of rulers of the
people to a faction; last and most disheartening, the impotence of the
special tribunal created to enforce the rights of the people on their
highways.

This secret contract of 1885 was thus described by the counsel of the
refiners before the Interstate Commerce Commission: "It is a contract,"
he said, "so vicious and illegal that the Pennsylvania Railroad
refuses to bring it into court for fear a disclosure of its terms might
subject it to a criminal prosecution."

The courts have never been allowed to see it, but its provisions are
known. Some of them were admitted before the Interstate Commerce
Commission to be what was charged, and others were described on the
trial by the counsel of the independents from personal knowledge. By
this contract the railroad and the oil combination bound themselves to
advance rates, and to keep them the same by pipe and rail. In return
for this pledge by the railroad not to compete it was guaranteed
one-quarter--26 per cent.--of the oil business to the seaboard. The
Pennsylvania Railroad made no attempt to deny that it had made this
contract. It admitted that it had an arrangement "substantially the
same as stated."[212]

The combination was the largest shipper of oil, and yet it wanted
freight rates advanced. It had pipe lines which could easily take to
the seaboard all the oil that went thither, and yet it gave up a large
part of the business to the Pennsylvania Railroad. The Pennsylvania
Railroad knew that the pipe line was a competitor for the carriage of
oil, and yet allowed it to dictate an arrangement by which the railroad
got only one-quarter of the business, and signed away its rights to win
a larger share if it could.

The railroad had persuaded the independent refiners to settle along its
line by solemnly promising them fair and living rates, and yet now put
its corporate seal to an agreement to make those rates whatever their
enemy wanted them to be. Such was its honor. As for its shrewdness,
that had at last brought it to this humiliation in a business where
it had once been chief, of confining itself to this insignificant
quarter of a restricted traffic instead of a competitive share of a
traffic enlarged by freedom to the widest correspondence to the wants
of the people. The mastery of the railroad men by the oil people was
thorough. The latter did not agree to give the railroad one-quarter
of their business. Not at all. All the traffic that came of itself to
the railroad, or which its freight solicitors drummed up, must be put
to the credit of the guarantee. All that was promised the railroad was
that its total should amount to one-quarter of the whole traffic. All
the rest the oil combination kept for itself.

The contract went at once into vigorous operation. Freight rates to
the seaboard, which had been 34 cents, and, as was proved before the
Interstate Commerce Commission, were profitable, were advanced to 52
cents a barrel--an increase of one-half. The railroad and the pipe line
made the raise in concert, as had been agreed, and when the rates were
changed again it was to still higher figures. Why should the clique,
which had its principal refineries at the seaboard--to which it had
to transport large quantities of oil--scheme in this way to raise the
rates of transportation? Because it paid this excessive rate on only a
small part of its own shipments, and compelled its rivals to pay it on
all of theirs. The independents had no pipe line of their own, but the
combination sent its own oil east by its own pipe line, excepting only
the quantity it needed to add to the shipments over the Pennsylvania to
make good its guarantee to that railroad of one-quarter of the traffic.

The cost of the pipe-line service to its owners is very small. When the
manager of the pipe lines was before the Interstate Commerce Commission
the lawyers of the railroads, as zealous for the oil combination,
though it was not a party in the case, as for their own clients, fought
through eleven pages of argument against having him compelled to tell
the cost of pumping oil through the pipe to the seaboard; and when
the Commission finally said, "Go on," all the general manager of the
pipe lines had to say was, "I do not believe that it is possible to
know."[213]

Finally, he was cornered into an estimate that the cost of pumping was
6 or 7 cents a barrel. His questioner, who had been the organizer and
manager of a great pipe line--the Tidewater--knew that oil had been
pumped through for 4 cents a barrel, but he could not get his witness,
who, no doubt, had done it still cheaper, to admit anything of the kind.

The net effect of this pool with the railroad was that the oil
combination succeeded in making its rivals pay 64 cents a barrel to
reach the East and the seaboard, while it paid only 16[214]--except on
the traffic guaranteed the Pennsylvania Railroad--a difference against
competition of 48 cents a barrel, a difference not for cheapness. "It
only costs the pipe line 7 cents," the independents explained to the
Interstate Commerce Commission, "and the published rate is 52. They are
willing to pay 52 or even 70 cents on some of their product if they can
make the other people pay 52 upon the whole of theirs."

So much of the contract as we have referred to was admitted. Why was
it, then, the counsel for the railroad fought against showing it, even
to the point of pleading that it might incriminate his client?[215]
It was asserted, as of his personal knowledge, by the counsel of the
independents that this was because another part of the bargain gave the
proof that the rates which had been made under the agreement to put
them up and keep them up were extortionate; that by a bargain within
the bargain the oil combination carried oil for the railroad for the
280 miles for which they ran practically side by side, and for this
charged it only 8 cents a barrel. The public, shipping either by the
railroad or by the pipe line, had to pay 52 cents a barrel for 500
miles; but by this arrangement between themselves the two carriers
would do business at 8 cents a barrel for 280 miles, at which rate the
charge to the public to the seaboard should have been not quite 15
cents instead of 52 cents.

The statement was also made that the oil combination, instead of
giving the railroads the business it has guaranteed them, makes its
obligation good by turning over to them periodically a check for the
profits they would have had on hauling that amount of traffic. As the
guarantee was made as a consideration for the maintenance of high
freight rates, such a payment by it would amount, in cold fact, to
paying those in charge of the highways a large bribe to deny the use of
them to the people.

This declaration of the provisions of the bargain was made by the
counsel for the refiners seeking relief from the Interstate Commerce
Commission. In his argument demanding the production of the document
he said: "I have had it in my hand and read every word of it, and know
exactly what it contains."[216]

The sharpest legal struggle of the case was made on the demand that
this paper be produced. The Commission decided that it was "wholly
immaterial," although the chairman had previously said: "It seems to us
that we cannot exclude this evidence." It was a document establishing
interstate rates, and these are required by law to be published, and
the Commission had always before this been liberal in compelling the
production of papers which related to the making of rates.[217] The
Commission had shortly before been threatened in this case by the
counsel for the Pennsylvania Railroad with extinction if it insisted
upon evidence of the cost of piping oil which the oil combination
refused to give.

"It is possible that the powers of this Commission may be tested,"[218]
bullied the counsel of the railroad. The members of the Commission
laughed ostentatiously, but, for whatever reason, they gave the
powerful corporations on trial no cause thereafter to "test their
powers," which have slept while justice tarried, and the victims of
this "contract" were kept under its harrow for three long years more,
where they still lie.

The tax levied upon the consumers of oil by this agreement for high
freights amounts to millions a year. This agreement is at this writing
still in force. There is reason to believe that similar arrangements
exist with the other trunk-lines. The result is the surprising fact
that "oil rates are very much higher than they were twelve years ago,
and when there was no pipe-line competition!"[219] This is true also
in the field of local pipeage--the transportation of the oil from the
wells to refineries and railroads. Under the caption of "cheapening
transportation" the counsel of the oil trust said, before the New York
Legislature in 1888: "In 1872 the pipe-line system was in its infancy.
A number of local lines existed. Their service was inefficient and
expensive. There was no uniform rate. The united refiners undertook to
unite and systemize this business. They purchased and consolidated the
various little companies into what was long known as the United Pipe
Line System. The first effect of this combination was a reduction of
price of all local transportation to a uniform rate of at first 30, and
soon after 20 cents per barrel."[220]

"The united refiners" and "to unite and systemize" are smooth phrases,
full of the unction of good-fellowship and political economy. When
the "united refiners" took possession of the pipe lines which had
been forced into bankruptcy or "co-operation," they did not reduce
rates--they advanced them. "The uniform rate of 20 cents," for
instance, is an advance of 300 per cent. on the rate of 5 cents made
by the trust's pipe-line system during the war with the Tidewater,
and over the similar rates made during the earlier pipe-line
competition.[221] The nominal rate, Congress learned from one of the
oil-country men, was 30 cents for that service, but by competition the
actual rate was down to 5 or 10 cents. "They consolidated and placed it
at 20 cents, and it has remained at 20 cents, I think, since the year
1876.... The whole process of transportation has been cheapened. Pipe
that cost 45 cents a foot has in that time been got for 10 cents. The
quality of the pipe was improved, so that there is not the leakage or
the wastage. There are all those improvements and inventions that have
cheapened it. We pay the same now as we did fifteen years ago. We have
reduced the cost of our wells at least 50 per cent. They have reduced
nothing."[222] From other sources, once in a while, facts have come to
light showing how much less than cheap the local charge of 20 cents
a barrel is. For instance, it was shown before Congress that a line
which, with its feeders, had fifty miles of pipe, and cost $70,000,
made a clear profit in its first six months of $40,000, charging
sometimes less than this rate of 20 cents a barrel.[223]

It is impossible to compute how much the defeat of legislation to
regulate charges, or to allow the construction of competing lines, has
cost the people. The Burdick Bill alone, to regulate prices of pipeage
and storage in Pennsylvania, it was calculated by conservative men,
would have saved at least $4,000,000 a year. The killing of it was in
the interest of keeping up the high prices of the pipe lines, which
finally rest in the price of oil.

When the combination got possession of the pipe line to Buffalo, which
others had built in spite of every obstacle it could interpose, it
raised the rates of pipeage to 25 cents a barrel from 10 cents,[224]
and as happened in Pennsylvania in 1885, the railroads to Buffalo in
1882 raised their rates simultaneously with the pipe line. Pittsburg
had the same experience. When its independent pipe line was "united
and systemized" by being torn up and converted into "old iron," as the
Vice-President of the Pennsylvania Railroad had told its projectors
it would be, the rates of transportation for oil went up.[225] The
same thing happened at Cleveland. At the rate at which the Lake Shore
road carries oil from Cleveland to Chicago--357 miles for 38 cents a
barrel--it should charge less than 15 cents for the 140 miles between
Oil City and Cleveland; but as late as 1888 it charged 25 cents.
Why? The effect of the railroad charge is that little oil comes by
rail to Cleveland from the oil regions; it goes by the pipe line of
those whom the Lake Shore has been "protecting" ever since the South
Improvement contract of 1872. There have been 3,000,000 barrels of
this business yearly. The railroad officials exercise their powers to
drive traffic from the railroad to a competing line. Why? We can see
why the combination, which, by the possession of this pipe line, is a
competitor of the Lake Shore, should desire such an arrangement; but
it exists by the act of the Lake Shore Railroad. Why? The theories of
self-interest would lead one to expect that the stockholders of the
road would find out why.[226]

The pipe lines are the largest single item in the property of the oil
combination. Here its control has been the most complete; and here the
reduction of price has been least. This is a telltale fact, soon told
and soon understood.



CHAPTER XI

SONG OF THE BARREL


Genius could take so unspeakable a thing as a shirt and sing it
into an immortal song, but a barrel--and an oil-barrel, greasy and
ill-smelling--even genius could do nothing with that. But the barrel
plays a leading rôle in the drama of the great monopoly. Out of it
have flown shapes of evil that have infected private fortunes, the
prosperity of more than one industry, the fiduciary honor of great
men, the faithfulness of the Government to its citizens. Perhaps
a part of what genius could do for the shirt--force a hearing for
the wronged--may be done for this homely vessel of the struggling
independent by the kindly solicitude of the people to learn every
secret spring of the ruin of their brothers.

The market--the barrel that went to market--the freight rate that
stopped the barrel that went to market--the railway king who made the
rate that stopped the barrel that went to market--the greater king who
whispered behind to the railway king to make the rate that stopped the
barrel that went to market--this is the house that Jack unbuilt.

Such is the superiority of a simple business organization, where
"evolution" has not carried the details of the industry out of sight
of the owner, and where the master and man, buyer and seller, are in
touch, that the independent refiners could overcome the tax imposed
on them by this pooling of the pipe line and the railroads, and not
only survive but prosper moderately. During the three years--from
1885 to 1888--following the first attack upon them under the contract
just described, they state, in their appeal to the Interstate
Commerce Commission in 1888, they were "enabled by their advantages
in the local markets to keep up, maintain, and even increase their
business."[227] These "outsiders" shipped their oil largely in barrels
because the trunk-lines had made it as nearly impossible as they
could for them to ship in tank-cars. They, like all in the trade,
could not live without access to the European market. Out of every
hundred barrels of various kinds of products from the distillation
of petroleum, forty are of an illuminating oil not good enough to be
burned in this country. It must be sold in Europe or not sold at all;
and a manufacturer who cannot get rid of 40 per cent. of his product
must give up manufacturing. To destroy the barrel method of shipment
would destroy those who could use no other; and to close their outlet
to Europe would make it impossible for them to continue to manufacture
for the home supply. The barrel was the only life-raft left to the
sinking independent.

They who had planned the secret pool of 1885 between the pipe line
and the railroads, and the further advance of rates by both in 1888,
now called upon the railroads to deliver a final stroke against the
independents.[228] The railroads, when directed in previous years to
say "no" to applications for transportation, and "no" to those who
wanted the right to put their own tank-cars on the road, had obeyed;
they obeyed again.

A pretext for the suppression of the barrel was easily found. It was
a poor one, but poor pretexts are better than none. When the future
"trustees" of the "light of the world" were doing a small fraction
of the business, they got the contract of 1872 from the railroads to
"overcome" all their competitors, on the pretext of "increasing the
trade."[229] When by this contract and those that followed it they had
secured nine-tenths of the trade, they got the railroads to say "no"
to the remaining one-tenth, on the pretext that they could not ship as
much.[230] When the Interstate Commerce law declared it to be a crime
for railroads to forbid persons the road because they could not ship as
much as others, the combination had the railroads shut out its rivals,
on the pretext that they did not use tank-cars,[231] although tank-cars
"are worse than powder." When regular tank-cars were offered by its
competitors for shipment--as to the Pacific coast--the combination
introduced an inferior tank-car, of which it claimed, without warrant,
as the courts afterwards held, that it owned the patent, and so
obtained the sole right of way across the continent, on the pretext
that other shippers did not use this poor car.[232]

The pretext now used against the refiners of Pennsylvania was the
passing phrase, "He must pay freight on barrels," in a decision of
the Interstate Commerce Commission concerning Southern traffic. This
decision had no relevancy to the oil business of the North. Six months
went by after it was given with no intimation from any one that it
related in any way to the situation in Pennsylvania, and to be so
applied it had to be turned inside out and upside down. In the Rice
case the Commission had decided that freight rates must be reduced on
barrel shipments. This was, in the sharp language of the decision, to
put an end to "the most unjust and injurious discrimination against
barrel shippers in favor of tank shippers," a discrimination which the
Commission has elsewhere said "inured mostly to the benefit of one
powerful combination."

In ordering this reduction it said: "Even then the shipper in barrels
is at some disadvantage, for he must pay freight on barrels as well as
on oil."

By "must pay" the Commission meant "was paying." It was, as it
afterwards protested, "rather a statement of a prevailing practice
than a ruling."[233] And the remark furthermore concerned the trade in
the South and Southwest alone, where special circumstances existed not
found at the North.

Six months after this decision the Pennsylvania and other Northern
roads made these words, "He must pay freight on the barrels," the
occasion of an increase of rates, which stopped the refineries of
the independents. They were carrying free the heavy tanks--"the
most undesirable business we do," in the language of their freight
agent. They had been carrying the barrels of the independents free
for twenty years. Now, continuing to carry the tank-cars free, they
levied a prohibitory transportation tax on the barrels. To cap it all,
they declared, in announcing the new rule, that it had been forced
upon them by the Interstate Commerce Commission. But the President
of the Pennsylvania Railroad is found admitting that it was the oil
combination that dictated the move--"the seaboard refiners insisted."
"Upon your decision" (in the Rice case) "being promulgated," he wrote
the Interstate Commerce Commission, "the seaboard refiners insisted
that we were bound to charge for packages," barrels, not tanks, "as
well as for the oil."[234]

The seaboard refiners were the members of the oil trust; the others
at the seaboard had been wiped out years before by the help of the
railroads. Though the Pennsylvania Railroad was not a party to the case
before the Commission, though it had not been called upon to change
its practice, which was what it ought to be, it did now change it from
right to wrong. The Commission had ordered that discrimination between
the barrel and the tank should cease. The Pennsylvania, which had not,
strange to say, been practising that forbidden kind of discrimination,
immediately resorted to it, and, stranger still, gave as its reason the
order of the Commission against it. It must have been a keen eye that
could find in a "qualified and incidental remark," as the Interstate
Commerce Commission styles it, in such a decision, a command to charge
for the weight of the barrels and increase freight rates; but such
an eye there was--an eye that will never sleep as long as Naboth's
vineyard belongs to Naboth.

All the trunk-line railroads to the East took part in the new
regulation--September 3, 1888--that freight must be paid thereafter
on the weight of the barrels as well as on the oil itself, and at the
same rate. This increased the cost of transportation to New York to
66 cents from 52 cents, and to other points proportionately. Freight
rates on the oil of "the seaboard refiners" who shipped in tanks were
left untouched. In the circulars announcing the change it was said to
be done "in accordance with the directions of the Interstate Commerce
Commission."[235] When the refiners whom this advance threatened
with ruin wrote to expostulate, they got the same reply from all the
railroad officials as from President Roberts of the Pennsylvania
Railroad: "The advance in rates ... has been forced upon us by the
Interstate Commerce Commission."[236]

The Commission immediately called the responsible official of the
Pennsylvania Railroad, which was the leader in this move, "to a
personal interview," "expressed their surprise," and suggested the
withdrawal of the circular and of the increased rates. This was in
August.[237] No attention was paid to this by the road. The Commission
waited until October 10th, and then sent a formal communication to
the President of the Pennsylvania Railroad, which was followed by
correspondence and personal conferences with him. The Commission
pointed out that the statement of the circular was "misleading," "not
true," "decidedly objectionable"; that the Commission had made no
decision with reference to the rates of the Pennsylvania Railroad or
the other Eastern lines; that its decision, applicable solely to the
roads of the South or Southwest, had been that rates on barrels must
be reduced, and that it was not right to use this as an excuse for
increasing the rates on barrels. Finally, the Commission said that
if it had made any ruling applicable to the Pennsylvania Railroad it
would have been compelled to hold that its practice, of twenty years'
standing, of carrying the barrels free, since it carried tanks free,
was "just and proper," and that there was nothing to show that an
advance in its rates was called for.[238]

The Interstate Commerce Commission was the body specially created by
Congress to interpret the Interstate Commerce Law. The Pennsylvania
Railroad was one of the common carriers under the orders of the
Commission, and its managers were subjects of jurisdiction, not judges.
But its method of running the Supreme Court of Pennsylvania, as if it
were one of its limited trains, was now applied with equal confidence
to the Interstate Commerce Commission. It insisted that it was itself,
not the Commission, which was the judge of what the latter meant by
its own decisions. The road continued the rates against which the
Commission protested. The Commission demanded that the assertions that
the new rule of charging for the barrels and the advance of rates was
made "in accordance with the directions" of the Interstate Commerce
Commission be withdrawn. The Pennsylvania road responded with another
circular, in which it changed the form but repeated the substance. "The
action referred to was taken for the purpose of conforming the practice
of this company to the principles decided by the Interstate Commerce
Commission." The Commission protested that it was not laying down any
such "principles" but the corporation declared that that was what it
"understood," and held to the advance made on that understanding.[239]

To the almost weeping expostulations of the Commission in interviews
and letters, to show that it had said nothing which could justify the
action of the roads, the officials made not the slightest concession.
"I did not consider it in that way," said one of them.[240] "That
was their (the Commission's) view of the case, but it was not shared
by us," said the President of the Pennsylvania Railroad. "It was
considered best to continue the practice," he said.[241]

"Why did you not rescind the order?" he was asked before the Interstate
Commerce Commission.

"We understood their ruling to be a ruling for the whole country," he
incorrigibly replied.

The railway president studiously withheld any assurance that he would
obey if the Commission issued a direct command, which it had not done,
though it had the authority.

"We would then take the subject up," he said.

Change the order to comply with the ruling of the Interstate Commerce
Commission the roads would not and did not.[242]

All the roads to the seaboard and New England had made the order in
concert, and together they maintained it. It was one hand, evidently,
that moved them all, and though that hand moved them, for the benefit
of a carrier rival of theirs--the pipe line of the trust--against their
own customers, against their own employers, against the authority of
the United States Government, all these railroad presidents and freight
agents obeyed it with the docility of domestic animals.

These officials were the loyal subjects of a higher power than that of
the United States, higher even than that of their railway corporations.
They serve the greatest sovereign of the modern world--the concentrated
wealth, in whose court the presidents of railways and republics, kings,
parliaments, and congresses are but lords in waiting.

Thanks to the superior enterprise of their greater need, the
independents of Oil City and Titusville had been able to survive the
blows that had preceded, but this was too much. They had weathered
the surrender in 1883 of the Tidewater Pipe Line, which had promised
them freedom forever. Even the "contract" which made the allied pipe
lines and the railroads in 1885 one, to tax them half as much again
for transportation, had not broken them down. In spite of it they had
been able "to maintain and increase their business."[243] But now they
closed their works. The new attack had been shrewdly timed to spoil
for them in that year--1888--the season of greatest activity in the
export to Europe and Asia. They appealed to the Interstate Commerce
Commission. "The greater proportion of our refineries are idle."[244]
"I have not a customer in the entire New England States. I have not had
since the advance of last September."

"How was it before the advance?"

"I had a number of customers."[245]

Labor, though, as always, the most silent, suffered the most. Three
hundred coopers were thrown out of work in Titusville alone within a
short time, and the loss of employment to the workmen in the refineries
was still more serious. This was not because trade was bad. Exports
were never greater than in 1889. Government statistics reveal as in a
mirror what was being done.

The exports of refined petroleum increased 21 per cent. in 1889 over
1888. But Perth Amboy, from which the independents shipped for the
most part, showed a decrease of over 18-1/2 per cent. By the stroke of
a freight agent's pen the business of these men was being taken from
them, to be given to others. The general tide was rising, but their
feet were sinking in a quicksand.

The export business of Boston in oil was given to the "seaboard
refiners" by the same stroke. Freights that had been $100 were now $174
to Boston, and $188 to New York. These rates were so high as to stop
oil from going through. "The Nova Scotia trade," it was testified,
"goes to New York, and from there by water, whereas they used to buy
in Boston. Boston brokers will ship oil from New York and get it to
Nova Scotia cheaper than if it went from Boston, whereas when we had
the export rate we could compete in that market."[246] Two months
later most of what remained of the business of the independents in
New England was added to the gift of their foreign trade, which had
already been made to the "seaboard refiners." By an order of October
25, 1888, the railroads made it known to these "pestilences," as the
lawyers of the railroads called the independent refiners in court,[247]
that they would not be allowed to send any more through shipments into
New England. This was done, as in Ohio in 1879,[248] without the notice
required by law, though in the meantime a Federal law had been passed
requiring notice.[249]

This order was the finishing touch in the task of using the freight
tariff to prevent freight shipment. It shut the independents--the
hunted shippers--out of over 150 towns in New Hampshire, Vermont,
Maine, Massachusetts, including Manchester, Burlington, Portland,
Salem, in which they had built up a good business, and it made
it impossible to reach these places except by paying high local
rates--from station to station--which were not required of their
competitor, who shipped on through rates. The railroads would take the
oil of the independents for shipment, but would not tell them what the
rates would be. In this, as in all the moves of this game, we see the
railroad managers of a score of different roads, at points thousands
of miles apart, taking the same step at the same time, like a hundred
electric clocks ticking all over a great city to the tune of the clock
at headquarters that makes and breaks their circuit.

The independents were saved by a Canadian railroad from the destruction
which American railroads had planned for them. The Grand Trunk gave
them a rate by which they could still do some business in the upper
part of New England, though to do this they had to ship the oil into
Canada and back into the United States. The effect of this abolition of
through rates in "cheapening" oil was that the people of Vermont, for
instance, had to pay 2 cents a gallon more than any other place in New
England.[250]

While all access for others to New England was cut off, the "seaboard
refiners," sending the oil in free tanks to the seaboard, transshipping
it there into vessels by the facilities of "which they have a
monopoly,"[251] easily made their own the business of their rivals in
the 150 towns from which the latter were thus cut off. No one has been
able to move all the railroads in this way, as one interlocking switch,
to obey a law or accommodate the public. But it was done easily enough
for this kind of work. Possession was got of the railway managers at
the initial points, as was done so successfully in another case,[252]
and all the other railway managers, as far as Boston, followed in their
trail. Reproducing the tactics in Ohio in 1879, it was only against oil
that this attack of the tariff was made. Other freight for export, of
which there was a vast variety, continued to be carried to Boston at
the same rate as before.[253]

All the freight agent of the initial road had to do with the oil on its
way to Europe was to pass it along to the next line. Whether, after
leaving his road, it went by the way of Boston or that of New York made
no difference to his road, and was in no way his affair. But it made a
great deal of difference to those who wanted all the business of Europe
and America for themselves, and we consequently find him serving them,
and dis-serving his employer (the railroad), by charging 21 cents a
barrel if the oil was going to Boston after leaving his line, but only
15-56/100 cents if it was going to New York. When asked if he thought
he was justified as a railroad man under the law in making the charges
for what he did vary according to what was done by the business after
it left his hands, he refused to answer.

"You will not answer?"

"Not at present."[254]

All the connecting and following roads are on record as having
protested against the measures in which they followed the lead of
the initial lines.[255] The freight agent of the West Shore Railroad
declared that the prohibition of through shipments to the towns of
Massachusetts, Vermont, New Hampshire, and Maine "occurred simply
through mistake;" but the mistake, he acknowledged, had never been
corrected.[256] This "mistake" and that of September, which preceded
it, put an end to a large business, amounting in 1888 to 900,000
barrels. The men, whom the railroads began to massacre after having
pledged them full protection, saved a fraction of their trade in
New England, as we have seen, only by taking refuge with a foreign
railroad. The railroads against their will, as they swore, lost
business as well as honor, but the mistake was not corrected.

It would tax the imagination of a Cervantes to dream out a more
fantastic tangle of sense and nonsense in quixotic combat than that
which these highwaymen spun out of the principles of "scientific
railroading." All that highway control could do to destroy the barrel
shippers for the benefit of the tank shippers was done; and yet the
barrel method is the safer and more profitable for the railroads.[257]
The cars that carry oil in barrels can return loaded; the railroads
have to haul the tank-cars back empty and pay mileage on them.[258] For
a series of years on the Pennsylvania Railroad the damage from carrying
oil in barrels was less than half the damage from the carrying of oil
in tanks.[259] The general freight agent of the Pennsylvania Railroad
Company tells the Interstate Commerce Commission that the carriage of
oil in tank-cars "is the most undesirable business we do." He described
a smash-up at New Brunswick where there was a collision with a line of
tank-cars. The oil got on fire; it ran two squares, got into a sewer,
overflowed the canal, which was then frozen over, and followed the ice
a square or two beyond. Besides having to pay nearly five hundred
thousand dollars damages for the destruction done, the railroad lost
its bridge, which cost two or three hundred thousand dollars. It lost
more money than it could make carrying oil for ten years. "I regard
it," he said, "as worse than powder to carry; I would rather carry
anything else than oil in tanks."[260] Barrel shipments being the best
for the railroads, these princes of topsy-turvydom move heaven and
earth to destroy them.[261]

There was no end to the "mistakes" made by the railroads for the
"self-renunciation" of their business, though this was in favor of
those whose pipe line made them rivals. They charged more for kerosene
in barrels than for other articles of more value, contradicting
their own rule of charging what the traffic will bear. They let the
combination carry sixty-two gallons in every tank free on the theory
of leakage in transportation. "The practice," said the Commission, "is
so obvious and palpable a discrimination that no discussion of it is
necessary;" and they ordered it discontinued.[262]

Though the railroads brought back the tanks free, for the return of
the empty barrels they never forgot to charge. This charge was made so
high that at one time it prohibited the return from all points.[263]
"The monopoly uses a large number of barrels in New York City," the
independents said to the Commission; "it is to its interest that empty
second-hand barrels should not be returned to the inland refiner." When
this was brought out the Pennsylvania and other railroads promised to
make reparation, but had not done so years later when the case was
still "hung up" in the Interstate Commerce Commission.

It was not lack of capital or of diligence that made the independents
use barrels instead of tanks; tanks were useless to them. All the
oil terminal facilities of the railroads at the seaboard had been
surrendered to the combination for its exclusive use.[264] These were
the only places where tank-cars could be unloaded into steamers. "There
are no facilities to which we, as outside refiners, have access to load
bulk oil into vessels," and none where these refiners could send oil in
tank-cars to be barrelled for shipment abroad.[265] No matter how many
tank-cars and tank-vessels the independents might have provided, they
could not have got them together. Between the two were the docks in the
unrelenting grip which held solely for its private use the shipping
facilities of these public carriers. Not even oil in barrels could the
independents get through these oil docks.

The Weehawken oil docks of the Erie road on New York harbor are the
best in the world. The Erie Railroad has $920,760 invested in them, but
only one shipper can use them either for tanks or barrels.

The Western traffic manager of the Erie was asked:

"Would you take a shipment there over the Erie road of independent oil
consigned to the New York docks?"

"No, sir."[266]

The Pennsylvania Railroad refuses to haul tank-cars for the
independents to any other point at New York than the terminals so
controlled by the combination. It will not haul them to other docks of
its own. It will not let oil be shipped over its line to the points
at which it connects with other roads for other harbors, though it
will take shipments of anything else than oil.[267] This amounts to a
refusal to allow the independents to use tank-cars or tank-steamers.
Practically the same policy is pursued by all the main trunk-lines.
These independents could get rid of their export oil only by selling
to the combination. Through its other self--the company which controls
the terminals--it has kept an agent in the oil regions for years to
buy for export this refined oil which its owners and makers could not
export themselves. This is the "immediate shipment" of 1878 in another
phase.[268]

"You have to sell to the Standard Oil Company in order to get your oil
shipped in bulk from Communipaw?"

"Yes, sir."

"The independent cannot get his oil into a bulk vessel at Communipaw?"

"No, sir."[269]

To meet these disclosures the Pennsylvania presented two affidavits.
One was from its general freight agent that its tank-cars were offered
freely to all; but it did not deny, for it could not deny, any of
these facts about terminals, which explained why the flies did not
walk into its parlor. The other affidavit was from the secretary of
the corporation controlling the terminals for the oil combination, and
it similarly declared that its accommodations were furnished "upon
exactly the same terms to all." How long it had been doing so, or how
long it would continue to do so, it did not state, as the independents
pointed out to the Commission. If this were the truth instead of
being, as the independents hinted, "evidently a situation that has
been recently arranged for the purposes of this application"--to the
Interstate Commerce Commission for further delay--why had none of the
independents, dying for want of export facilities, resorted to it? This
was not explained, for it could not be. The independents explained the
situation to the Interstate Commerce Commission: "The inland refiner
who intrusts his oil to a storage company at the seaboard with a view
to exporting, puts himself completely into the power of such concern.
The exactions that may be unfairly imposed in individual cases for
'loss by leakage,' 'dumping and mixing for off-color or off-test,'
'cost of water white oil for mixing,' 'tares,' 'tares guarantee,'
'commissions on sales,' 'interest on goods until loaded and paid for,'
'incidental expenses,' and many other known matters of charge, may
amount to a partial confiscation of the cargo."

The corporation which manages this monopoly of the terminals at
Communipaw is a mysterious concern. Who own its stock, and what its
relations with the railroad are, the Interstate Commerce Commission
could not find out. Its president and treasurer were summoned to
testify, but refused to attend. The manager of the oil combination's
pipe lines stated that he knew of stock in the company that was owned
by a member of the trust, though he afterwards qualified that he
did not know it "positively."[270] The charge that this company was
controlled by the monopoly was specifically made before the Interstate
Commerce Commission and was not denied, and the Commission found
that the oil combination "have a monopoly of those facilities to the
exclusion of complainants."[271] It thus reported the same state of
facts in 1892 as the New York Legislature in 1879.

The barrel was therefore the fountain of life for the independent.
Without barrels he could not get his oil on board ship for export, and
without exporting he could not live and refine for the home market.
The oil combination ships in barrels also. According to the figures
given in this case by one of its "assistant managers" its shipments by
barrel are very large. This testimony was introduced to make it appear
cruel to insinuate that the difference between barrels and tanks was
made by the railroads to favor it, since it as well as the independents
used barrels. The Commission openly expressed its dissatisfaction with
this evidence, and dismissed the subject by the conclusive observation
that the combination gains more by the low tank-car rates than it
loses by the high barrel rates.[272] For the independent, however, the
difference in rates was almost all loss, for he at that time shipped
mostly in barrels. The high prices it made for oil and for freights at
Titusville and Oil City did not hurt the combination. It had only to
close its refineries there and transfer their business for the time to
its establishments elsewhere. This it did, keeping some of them idle
for years.[273]

Such was the story told to the Interstate Commerce Commission, in many
hundred pages of testimony, by the refiners of Oil City and Titusville,
who appealed to it for the justice "without expense, without delay, and
without litigation" promised the people when the Interstate Commerce
Commission was created.[274] The game, of which you have perhaps
been able to get a dim idea from the printed page, the Commissioners
saw played before them like chess with living figures. For years
the principal subject of their official investigations had been the
manoeuvres of the oil ring. They had been compelled by the law and
the facts to condemn its relation with the railroads in language of
stinging severity, as every court has done before which it has been
brought. Better than any other men in the country, except the men in
the ring, the Commissioners knew what was being done. They comprehended
perfectly who the "seaboard refiners" were whose demand that their
competitors should be shut out of Europe and New England was better law
with the Pennsylvania Railroad than the decisions of the Commission.
They needed no enlightenment as to the purpose of the secret contract
between the members of the oil trust and the Pennsylvania, nor any
instruction that the "pool" between the pipe line and the railroad was
as hostile to the public interest as any pool between common carriers.

The chairman of the Commission had openly hinted that the relations of
the oil trust and the railroads were collusive, and that the spring
from which they flowed was a secret contract.[275] It was shown to the
Commission that at the same time the railroads advanced their rates the
oil combination bid up the price of the raw material of the Titusville
and Oil City refineries. This is called "advancing the premium."[276]
The raise of the freight rate added 14 cents a barrel to the cost of
production, and the increased price of oil put on 12 cents more, either
item large enough to embarrass competition. The Interstate Commerce
Commission in its decision recognized the practical simultaneity of
the three movements to the disadvantage of the independent refiners:
(1) the bidding up of the price of crude oil against them; (2) the new
rule of charging for the weight of the barrel; and (3) the abrogation
of the through rates to New England. These three things occurred in a
period of about two months. This, the Commission says, lends color to
the charge that there was concert of action between the combination and
the railroad.

The Commissioners in their sittings had seen that the counsel for the
railroads did not pretend to bring forward any evidence to prove that
their attack on the barrel shippers was just or proper. Although "the
seaboard refiners," for whose pecuniary profit these things had been
done, were not on trial, their witnesses, agents, and attorneys were
in constant attendance, and kept close watch of the testimony and
arguments. The Commission had its attention called specifically to the
fact that the defence of the railroads on trial was being directed by
the same "seaboard refiners" who had "insisted" that the railroads
should violate the law. The counsel for the Erie road was frank
enough to admit that it was they who had prompted that carrier in its
litigation before the Commission. When the Erie appeared before the
Commission to give "further testimony," its representative could not
tell at whose request its application therefor had been made, and said
he had known nothing about the matter until the day before. Three of
the six witnesses then examined were from the offices of the oil trust,
whose members had refused to come when summoned. The only subpoenas
they obey are those issued from their own headquarters.

The president of the oil combination's pipe lines--who is also
the president of the steamship line in which its members are
interested--and the vice-president of the pipe lines, and the president
and the treasurer of the company which holds for the trust the monopoly
of the terminal facilities, and the President of the New York, Lake
Erie, and Western Railroad, and its vice-president, were all served
with official notice to come and testify. But these gentlemen refused
to appear. "It is for your honors," said the counsel for the refiners,
suggestively, "to determine what obedience shall be paid to your
subpoenas."[277] But the Commission did nothing.

The defendant corporations, and their lawyers, officers, and witnesses,
made no pretence of treating the Interstate Commerce Commission with
anything more than a physical respect. The representatives of the
railroad companies practically told the Commission that its decisions
were subordinate to theirs, and that they knew better than it what
its rulings meant. Witnesses refused to answer questions they found
awkward, and the lawyers gave the court to understand that if it did
what they did not like they would snuff it out. The Commission heard
one of the refiners who was a petitioner before it assailed with
coarse vituperation, described in open court as a "pestilence,"[278]
because he had dared to write more than once to the railroads for the
reduction of rates which would save him from destruction, and which the
Commission had, not once, but half a dozen times, said the railroads
ought to give to all.

The Commission had itself, outrunning the complainants, been the first
to "pointedly disapprove" the attempt to destroy the barrel shippers,
and to call upon the railroads to rescind their action. This protest
it had made repeatedly--first with the subalterns, then with the chief
of the Pennsylvania Railroad, in personal interviews, letters, and
finally in an official pamphlet, which was an appeal to the public to
judge between it and the corporation. It had reiterated its protest
in a formal decision rendered September 5, 1890, after deliberating
seven months on the evidence and arguments. In this "they recalled
the fact, now almost ancient history, that" the change was "pointedly
disapproved by the Commission" when first made, and with lamentations
noted that, though almost two years had passed, "the carriers have
failed to comply with the suggestions there made. In charging for
the weight of the barrels as well as the oil, the carriers that make
use of both modes of transportation have disregarded the principles
plainly and emphatically laid down by the Commission in the cases
cited, and have paid no attention to the subsequent official memorandum
explanatory of the decisions in those cases, but have persisted
in maintaining a discrimination against barrel shippers. An order
requiring the discontinuance of the discrimination has therefore become
necessary."[279]

An order has therefore become necessary. The Commission then ordered
one road concerned in this separate case to "cease and desist" within
thirty days. Although several cases affecting a number of refiners and
a number of roads had been heard and submitted together, as practically
one in traffic, territory, circumstances, and the main question, it
confined its decision to the case which involved only one road, and
that a subordinate. There the Commission stopped; and there it stuck
for more than two years, from September 5, 1890, to November 14, 1892,
refraining from a decision in the case of the principal offender, the
Pennsylvania Railroad.

The Pennsylvania Railroad is the representative carrier in the oil
traffic. It controls all the oil business that passes over its lines,
no matter how far away it originates. The initial road which led
the attack on the barrel shippers is subsidiary to the Pennsylvania
in the oil business, and the Pennsylvania controls its rates and
regulations.[280] The Pennsylvania has been the head and front of the
railroad attack on these men, and has been the open nullifier of the
law and the Commission in this matter. It was the principal defendant
on trial, and its case was identical with that of the others, except
that it was the most flagrant; but no order would the Commission issue
against it for two years. Wendell Phillips says: "There is no power
in one State to resist such a giant as the Pennsylvania road. We have
thirty-eight one-horse legislatures in this country; and we have a man
like Tom Scott with three hundred and fifty millions in his hands, and
if he walks through the States they have no power. Why, he need not
move at all; if he smokes, as Grant does, a puff of the waste smoke
out of his mouth upsets the legislatures." When the Commission had
ordered a change of rates on barrels in the South, the Pennsylvania did
the Commission the double disrespect of declaring that that order was
binding upon itself against the protest of the Commission, and of using
an order to reduce rates as an excuse for raising them. But now when
the Commission, September 5, 1890, made a decision on the same point in
a case arising in the territory and traffic in which the Pennsylvania
was the chief carrier--a case, too, of a bunch of cases in which the
Pennsylvania was a defendant--that road ignored it. The Commission,
in the Rice, Robinson and Witherop case, in 1890, promulgated the
very rule which the Pennsylvania Railroad established, which it had
been following for twenty years, and which its officers before the
Commission swore was the correct one, but the Pennsylvania refused
now to accept and follow it. The road which was now ordered to go
back to the correct practice, and which had perforce done so, was the
initial road. The Pennsylvania had followed its initiative in adopting
a "false" and "misleading" and "unwarranted" practice, but would not
follow it in changing to the good.

The attitude in which the Pennsylvania road and the Commission were
thus placed towards each other was this: Shall the Pennsylvania
Railroad be allowed to make a charge which the Commission volunteered
to rebuke it for making, and which it had decided, in the parallel
case of another road in the same situation, was altogether unwarranted
and must cease? They stood thus facing each other more than two years.
There was apparently no excuse for delay the Commission would not
accept. At one time it granted postponement on the plea of a lawyer
that his father was sick. More than the lawyer's father were sick; a
whole community of business men were sick; the entire country was sick,
its industry, law, politics, morals--all. The administration of justice
was sick. If the facts had been uncertain, or the law undetermined,
the course of justice would still have seemed cruelly sluggish; but
here was a matter in which the facts and the law in question had been
settled, and by the Commission itself, over and over again. The only
thing remaining was that the Pennsylvania Railroad, as well as the road
which was its next neighbor, must obey the law. The railroad against
which the Interstate Commerce Commission decided in 1890 on this point
joined the Pennsylvania at Irvineton and Corry. The Commission put the
law into force on one side of those points, but for two years gave
the Pennsylvania Railroad and others "rehearings" and other means of
delay, and did not open its lips to say that the same law must reign on
the other. The conduct of this corporation meant that it intended to
respect neither the Interstate Commerce Commission nor the Interstate
Commerce law; that it recognized the will of cliqued wealth as the
supreme law; that the protestations of loyalty to the law and the
Commission with which it accompanied its defiance of both were not
offered as a disguise of respect, but were chosen as a method which
would most embarrass the people's tribunal in upholding itself and the
rights of the citizens. All that was needed by those who had contrived
and were continuing the wrong was time--they had everything else. Time
they got, and plenty of it.

July 15, 1891, the refiners said to the Commission: "Two and one-half
years have elapsed since these complaints were filed, and the end
is not yet. We earnestly hoped that we had succeeded in convincing
this Commission that this respondent was inflicting on complainants a
great and unnecessary wrong, which merited the most speedy remedy and
redress possible. If we have failed in this we are unable to ascribe
the failure to a lack of evidence or promptness in presenting it.
It was not thought possible that all this great length of time would
be required to reach a conclusion in these matters, under all these
circumstances, especially after the decision in the Rice, Robinson,
and Witherop case (September 5, 1890). The enemies of the complainants
could scarcely have found or wished for any more effectual way of
injuring complainants than by a long delay of their cause. Further
delay simply means further injury to complainants." The two years
and a half have gone on to more than five years. A decision has been
made, but the end is not yet. The delay prevented the injured men from
going to any other tribunal with their complaint. They have succeeded
in keeping alive, though barely alive, because the price of their raw
material has declined a little, and given them a margin to cling to.
This delay has denied them justice in the special tribunal they were
invited to attend, and has also denied them the relief they could have
got from other courts.

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

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

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

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

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



CHAPTER XII

UNFINISHED MARCH TO THE SEA


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

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

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

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

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

"Was the rig destroyed?" he was asked.

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

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

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

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

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

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

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

The shut-down was a great disappointment in prices. The average price
of petroleum at the wells for October, the month before the shut-down,
was 70-7/8 cents a barrel. The highest monthly price reached during
the restriction was 93-5/8, in March, 1888. The average for October,
1888, the last month of the year originally agreed upon, was 90-5/8.
By a subsequent understanding the restriction was continued until
July, 1889. The price then was 95-1/8. At no time during the shut-down
was the coveted dollar mark maintained, and it was barely touched
in March, 1888, after which there was a sharp decline to 71-3/8 in
June, with savage losses to "the lambs." High prices did not come
until the accumulation of 6,000,000 barrels set aside "for the use"
of the producers had been sold out. After that there were in the
winter following--1889-90--a few months in which the price rose, as to
$1.12-1/2 in November, 1889, but it sank the year following to 60-3/4
in December, 1890, and it continued to go down until crude oil reached
50 cents in October, 1892, the lowest point known since there was an
oil market.[293]

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

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

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

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

"Yes, sir."[294]

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

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

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

"And no attempt to do that?"

"No, sir."[295]

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

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

"Yes, sir."[297]

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

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

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

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

"Yes, sir."

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

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

"For what did you pay them?"

"For charity's sake."

"Did you give them any occupation?"

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

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

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

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

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

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

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

"Did you pay anything for that to them?"

"No, sir."

"Nothing?"

"Nothing."[306]

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

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

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

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

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

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

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



CHAPTER XIII

PURCHASE OF PEACE


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

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

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

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

No word of reply came.

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

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

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

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

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

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

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

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

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

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

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

"To get another trial?"

"Anything."

"Another hearing?"

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

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

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

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

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

"Why did you not?"

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

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

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

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

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

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

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

"Then why did you pay him the money?"

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

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

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

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

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

"Precisely."

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

"I should say not."

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

"Certainly."

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

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

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

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

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

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

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

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

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



CHAPTER XIV

"I WANT TO MAKE OIL"


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

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

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

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

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

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

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

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

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

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

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

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

"What has become of it?"

"We have recently dismantled it."[346]

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

His firm had their own tank-cars, in which their crude oil came from
Pennsylvania. From Olean to Boston his freight cost him the last few
years 50 cents a barrel. From the depot in Boston, to get it over two
miles of track to his refinery, cost him $10 a car, or about $1.25 a
barrel. This was at the rate of about 42-1/2 cents a ton a mile. The
average freight rate for the United States is about half a cent a ton
a mile. His rate was an advance of 8400 per cent. on the average. He
appealed to the Railroad Commission of Massachusetts.

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

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

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

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

The dismantled witness's experience had made him timid.

"I do not know."

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

"Yes, sir."[348]

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

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

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

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

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

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

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

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

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

"And it actually ran that length of time?"

"Yes, sir."

"What became of these works?"

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

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

"Yes, sir."

"What became of those?"

"They eventually went the same way."

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

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

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

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

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

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

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

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

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

"The result was much beyond my expectation."

"How long did you run the works?"

"I think about two weeks."

"What was the cause of it stopping?"

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

"Was there a mortgage upon your property?"

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



CHAPTER XV

SYMPATHETICAL CO-OPERATION


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

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

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

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

"No, sir."[361]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This compelled him to turn to the Macksburg, Ohio, field for most of
his petroleum. He had one tank-car, and he ran this back and forth
faster than ever. Then came the next blow. The railroad over which he
ran his tank-car doubled his freight to 35 cents a barrel, from 17-1/2.
That was not all. The same railroad brought oil to the combination's
Marietta refineries at 10 cents a barrel, while they charged him 35.
That was not all. The railroad paid over to the combination 25 cents
out of every 35 cents he paid for freight. If he had done all the oil
business at Marietta, and his rival had put out all its fires and let
its works stand empty, it would still have made 25 cents a barrel on
the whole output. Rice found a just judge when he took this thing into
court. "Abhorrent," "dangerous," "gross," "illegal and inexcusable
abuse by a public trust," "an unparalleled wrong," are the terms in
which Judge Baxter gave voice to his indignation as he ordered the
removal of the receiver of the railroad who had made this arrangement
with the combination, to enable it, as the judge said, "to crush Rice
and his business."[375]

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

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

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

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

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

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

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

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

Where the dealers were found too independent to accept dictation,
belligerent and tactical cuts in price were proclaimed, not to make
oil cheap, but to prevent its becoming permanently cheaper through
free competition and an open market. Rice submitted to Congress
letters covering pages of the Trust Report,[382] showing how he had
been tracked through Tennessee, Missouri, Nebraska, Georgia, Kansas,
Kentucky, Iowa, Mississippi, Louisiana, Texas, Arkansas, Alabama.
The railroads had been got to side-track and delay his cars, and the
dealers terrorized into refusing to buy his oils, although they were
cheaper. If the merchants in any place persisted in buying his oil
they were undersold until they surrendered. When Rice was driven out
prices were put back. So close was the watch kept of the battle by the
generals of "co-operation" that when one of his agents got out of oil
for a day or two, prices would be run up to bleed the public during
the temporary opportunity. "On the strength of my not having any oil
to-day," wrote one of Rice's dealers, "I am told they have popped up
the price 3-1/2 cents."[383]

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

"Could you stand such competition as that?"

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

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

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

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

"Infinitely better."[384]



CHAPTER XVI

"TURN ANOTHER SCREW"


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

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

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

"See it arrive at the depot."

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

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

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

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

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

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

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

"Sent in monthly, I think."

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

"Yes, sir."

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

"Yes, sir."[385]

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

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

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

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

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

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

"One was sufficient."[387]

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

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

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

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

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

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

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

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

"Yes, sir."[396]

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

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

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

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

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

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

"Your company pays full rates?"

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

"Pays what are known as open rates?"

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

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

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

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

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

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

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

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

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

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

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

"If I have not made myself clear, I--"

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

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

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

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

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



CHAPTER XVII

IN THE INTEREST OF ALL


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"They absolutely refused."

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

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

It might have been thought this would have been enough--hauling the
tank itself free; furnishing the flat-cars free for many tanks;
carrying free a quarter to a half, "or more." But there was more than
this. The railroads paid the combination for putting its tank-cars on
their lines. For every mile these cars were hauled, loaded or empty,
the roads paid it a mileage varying from 3/4 to 1-1/2 cents. This
mileage was of itself a handsome revenue, enough to pay a profit of 6
per cent. on its investment in the cars. But when Rice asked what the
railroads would charge him for hauling back his empty tank-cars, he was
not told that he would be paid for their use, as others were. He was
told that he would be charged "generally a cent and a half a mile,"
or, "we make the usual mileage charge on return of empty tanks." "This
last statement," the Interstate Commerce Commissioners say, "was not
warranted by the facts."[437] The vessel which contains the oil of the
combination "receives a hire coming and going," Mr. Rice's lawyer said
before the Committee of Congress on Commerce; "that which contains
Rice's oil pays a tax." When Rice tried to sell his oil on the Pacific
coast he found that if he shipped in tank-cars he would have to pay $95
to bring the empty car back, which others got back free.

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

"Are you allowed mileage on tank-cars?"

"No, sir."

"Neither way?"

"Neither way."[438]

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

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

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

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

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

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

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

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

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

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

"When did that change take place?"

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

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

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

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

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

"Are not your expenses less than theirs?"

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

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

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

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

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

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

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

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

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



CHAPTER XVIII

ORDINARY SUPPLY AND DEMAND


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

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

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

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

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

"It has."[453]

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

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

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

"From the Atlas pipe line."

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

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

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

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

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

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

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

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

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

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

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

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

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

The lawyer was pressed to tell how Albert could get out of his
arrangement with his company. They could not get along without him, and
were not likely to discharge him.

"If they won't release him or buy him out, the only other way," said
the lawyer, "is to leave them, and take the consequences. If he has
entered into a contract and violated it, I presume there will be a
liability for damages as well as for the debts."

"I think there is other ways for Albert to get out of it," said the
representative of the Vacuum method in commerce and morals.

"I see no way except to back out or sell out; no other honorable way,"
persisted the lawyer.

"Suppose he should arrange the machinery so it would bust up or smash
up, what would the consequences be?"

"If negligently, carelessly, not purposely done, he would be only
civilly liable for damages caused by his negligence; but if it was
wilfully done, there would be a further criminal liability for
malicious injury to the property of the company."

"You wouldn't want me, would you," said the poor man to his late
employer and friend, "to do anything to lay myself liable?"

"You have been police justice," said the Vacuum man to the lawyer, "and
have had some experience in criminal law. I would like to have you look
up the law carefully on that point, and we will see you again."[461]
Or, in effect: "See about how much crime we can commit," District
Attorney Quinby paraphrased it afterwards to the jury.

In a day or so the two managers of the Vacuum--father and son--came
back again with Albert.

"Have you looked up that matter, Mr. Truesdale?" asked they.

"Yes, I have looked it up."

"What do you think about it?"

"My impression has not changed. Such a course would involve him in a
criminal liability if he did it on purpose. Everybody who advised or
counselled him in such a course would be equally liable with him. The
consequences, if you follow that course, would be that you would get
into State's prison. If he is an honest man he won't think of taking
any such action as that. I advise him to keep out of any such thing."

"Such things will have to be found out before they can be punished,"
was the Vacuum reply. "They will have to find him before they can do
anything to him. We will take care of him." "Having in mind," said
District Attorney Quinby to the jury, "what happened afterwards--that
they should spirit him away."

"The suggestion is altogether wrong," persisted the lawyer. "The action
would certainly be very hazardous as well as wrong."

On leaving, the elder of the two, evidently persisting in his plan,
said to the lawyer, "If you want to communicate with Albert, you can do
so through C.M."[462]--his son.

These men were too careless to note that the lawyer they were talking
to was not their lawyer, but Albert's. When they were brought to trial
for the crime that followed, and Albert, repentant, told the truth,
the lawyer was free to testify against them. "I am entirely willing,"
said Albert in court, "that Mr. George Truesdale shall state what took
place. I withdraw any legal objections I might have."

The accident which has let us see how the employés of a trust coolly
debated with lawyers the policy of blowing up a competitor's works,
is one of the few glimpses the American public will ever get into the
relations of great legal lights and law-reformers with the mighty
capitalists who wreck railroads and execute wholesale corruption of
courts, legislatures, and trustees, and evade and transgress the laws
with the sure march of those who know that indictments and bail-bonds
and verdicts of "guilty" and the penitentiary are only for men not
rich enough to plan crime "by advice of counsel." When such men went
marauding through the treasury of a great railroad and the courts of
an Empire State, we saw the greatest of law-reformers, with a host
of legal luminaries, picketing and scouting for them. Every sound in
nature is phonographed somewhere, as its waves strike, and Judgment Day
will be rich with the revelations from these invisible rolls of the
confidential conversations between "trustees" and counsel, who are not
honorable lawyers as George Truesdale was, prostituting their functions
as "officers of courts" into those of officers of crime.

All these trips from Buffalo to Rochester for these interviews made bad
breaks in the construction of the works of the new company at Buffalo.
The partners, who were wholly dependent upon Albert's knowledge and
experience for the building of the refinery, and running it when built,
were mystified and alarmed. Time and again he ran away without a word
to them, and all work would stop until he came back. When he was on
hand his task did not prosper as if his heart were still in it. When
one of the three stills of the refinery had been set up ready for use,
and before any oil was run, Albert went up to Rochester again. At this
rendezvous the sinister suggestion of "doing something" was repeated.
"You go back to Buffalo and construct the pipes and stills so that they
cannot make good oil, and then if you would give them a little scare
... they not knowing anything about the business ... you know how to
do it." Swearing he would not consent, but already succumbing to this
temptation, as he had given way to the threat of ruin, he replied as
before: "I don't propose to do anything to make myself criminally
liable."[463] At their suggestion he took a man they sent all through
the new works, showing him how the stills had been constructed, how the
oil was to be made, and all the details of the refinery.[464]

The day came at last--long expected, delayed by these unaccountable
absences--when the members of the new company were to have the
happiness of seeing their enterprise set going. The one still that
was ready was filled with crude oil. The morning of the start Albert
weighted down the safety-valve with heavy iron, and packed it with
plaster of Paris. "Fire this still," he said to his fireman, "as heavy
as you possibly can." The fireman did as he was ordered. During the
forenoon Albert came to him. "Damn it!" he said, "you ain't firing this
still half. Fire this still! I want you to fire this still! You ain't
got no fire under it!" He took the shovel himself and threw some coal
in, although there was, as the fireman expressed it, "an inordinary
fire." The fire-box grew cherry red.[465]

Albert knew well enough what the next chapter in the history of his
associates was likely to be. He had carried a dark-lantern into the
still-room one day when he was superintendent of the Vacuum. "I was
badly burned by the explosion," he testified before the coroner's jury
investigating the explosion in Rochester, in 1887. There were four
explosions in the Vacuum works while he was there. In the second, four
men were burned. As one of them ran to get water, with his clothes
burning, he set fire to the gas coming out of the sewer. Flames flashed
all about him. "There's hell all around!" he exclaimed. The third
explosion came from an overheated condensing-pipe, and destroyed one of
the buildings. The fourth burned up three tanks. Remembering all this,
he now took himself off to the grounds of the Atlas Company, out of
harm's reach. The brickwork about the still cracked apart with the heat.

But the "smash-up or something" had not been thoroughly arranged.
Despite the heavy weight and the packing of plaster, the safety-valve
lifted itself under the unusual pressure, and was a safety-valve yet.
It was blown open, and a large mass of vapor rose and spread. This
was the real accident: that the safety-valve broke loose instead of
keeping the gases in to explode, as had been planned. The spreading
vapor was not steam, as that had not been admitted to the still, but
the gas of distilling petroleum, as inflammable as gunpowder. There was
danger still, as great almost as that of explosion. A spark of fire,
and it would have wrapped all within its reach in flames. The boiler
fires were but twenty feet distant; not far from them the distilled oil
was being gathered in the "tail-house"; near the tail-house stood the
tanks of crude oil, hundreds of barrels of the fuel that conflagration
loves--the kind of fuel the cooks use who, beginning with kerosene for
kindling, make the whole house into a stove, and cook themselves and
the family with the breakfast.

The kindly wind of a June day carried the cloud of gas away from the
fire until it passed out of sight. The unsuspecting, inexperienced
men, whose lives and property had been at the mercy of explosion, knew
nothing of their peril until years afterwards. The worst they knew
then was that the "batch" of 200 barrels of petroleum was spoiled,
and that Albert, the only practical man among them, was gone, leaving
them crippled for a year. They waited for him, but he did not come.
They looked for him, but could not find him. Matthews went to the
depot night after night, sometimes at midnight, or later, to watch the
trains, but Albert never came.

"What would be the consequences?" Albert was asked afterwards in court,
when he was telling about "the pretty heavy fires" he had made under
the still--"what would be the consequences in case too hot fires were
applied, and the gas should blow off the pipes and become ignited?"

"The consequences would be that, if ignited, there would be a
fire."[466]

An Associated Press despatch from Louisville, Kentucky, June 30, 1890,
describing an explosion in an oil refinery there, and the "five acres
of fire" that followed, reproduces for us the picture which it had been
planned to paint at Buffalo as part of the panorama of "the ordinary
rules of supply and demand." A tank-car had been opened to run some oil
out. As the workmen lifted the cap from the manhead of the tank a cloud
of gas poured forth. It had been generated simply by the heat of the
summer sun, without the aid of an "inordinary" hot fire. The men jumped
and ran. Before they had taken a dozen steps the vapor, spreading over
the ground and moving with the wind, had reached one of the sheds near
by in which there was a fire. There was a flash. The men were bathed in
a lake of fire. They ran with the flames streaming from them. At the
infirmary their bodies were found to be charred in spots, literally
roasted alive, and the flesh dropped off as their clothing was removed.
Three men died and several were injured.

Several years after the Buffalo explosion, when those convicted for
their part in it were fighting for stay of proceedings, new trial,
anything to escape sentence, and were trying by every means in their
power to impress upon the public the altogether innocent character of
the little incident at the works of their rival, something happened
at their own works--the Vacuum in Rochester--which gave the people
an appalling sense of the terrors of the new school of supply and
demand. Naphtha is one of the by-products of petroleum distillation,
and is used by the gas companies in the manufacture of the greased
air they furnish under the name of gas. The Vacuum Company were
selling their naphtha to the Rochester Gas Company. It was delivered
to the gas company through a pipe line. On the afternoon of December
21, 1887, there was an explosion on Platt Street, Rochester, tearing
away the pavement, shattering the basement of a building, and filling
the air with missiles. In a few seconds another explosion occurred
a short distance away, making a hole in the street several feet in
diameter, from which came large volumes of smoke and flame. A third
and fourth "bust-up" rapidly followed, and then a fifth, in the
Clinton Flouring Mill, tearing away a considerable portion of the
building, blowing off the roof and upper stories of the Jefferson
Mill adjoining, and shattering the Washington Mill. The Jefferson and
Clinton and Washington mills were burned to the ground. People were
killed by flying débris, burned to death, smashed by falling walls,
crippled by jumping from the upper stories of factories and mills on
fire. "There is probably no chemical product," says Professor Joy, of
Columbia College, "which has occasioned the loss of so many lives and
the destruction of so much property as naphtha.... From its highly
explosive and inflammable nature it has proved little better in the
hands of ignorant people than so much gunpowder."

"The counsel for the defence," said District Attorney Quinby, in
summing up the case before the jury, "laughed at the idea of Matthews
and his associates coming to Buffalo with a little money to compete.
I congratulate him that instead of defending for conspiracy he is
not here to-day pleading for the defendants' lives. If a person had
been killed, and it had been under the advice and instruction of his
clients, he would have been differently situated from what he is
to-day. How well you men may be thankful that the gases from this still
did not flow down and, becoming ignited, explode and kill the fireman!
You ought to get down on your knees and thank your God that Providence
prevented any such terrible thing as that for you."

After the "bust-up" had been planned, and before it was done, one of
the Vacuum managers went to New York, where the "trustees" for whom
he was managing the company were. After the "bust-up" Albert heard by
telegram from New York, as had been arranged, and went to meet his
old employer. "What do you say to going down to Boston?" he was asked
on his arrival. Later a man came in and was introduced by the name
of one of the three trustees who purchased and directed the Vacuum.
On leaving, this "trustee" said: "I will see you again if you do not
go to Boston." He thus showed that he knew of the plan that Albert
should be taken away, and that they should go to Boston. The manager
of the Vacuum now gave the world a genuine illustration of the harmony
of labor and capital. He couldn't let Albert out of his sight. They
went to Boston on the Fall River boat. The representative of a hundred
millions took the laborer into his own state-room, and at Boston
carried him into the splendors of Young's Hotel, where he registered,
naming himself "and friend," and they shared one bedroom. They went to
church together, and to Nantasket Beach, his friend introducing Albert
to those whom they met under an assumed name. "You don't want to be
known here," he said, "and I will introduce you by the name of Milner."

"That is the name I was known by while I was there."

"Albert has nothing to fear," said District Attorney Quinby on his
trial. "He had never been in Boston before in his life. He had no
acquaintance there. There was no reason why he should be registered
'and friend' at the hotel. There was no reason, so far as he was
concerned, that he should be introduced under a fictitious name, except
that his employer had been schooled in the wonderful university known
as" the oil combination. In Boston, on a Monday, on the Common, within
sight of the equestrian statue of the Father of his Country, his former
employer made a contract with Albert to pay him $1500 a year for doing
nothing except staying away from Buffalo.

"You won't have much to do, and you can stay here in Boston, and keep
away from those fellows, and we will protect you."

"Who's going to make up if those fellows come on and sue me for
damages? Who will make up this loss that I have been going to by
sacrificing my property?"

"Leave that to me; I will fix that all right. You do just as I tell
you, and you will come out all right.... Go wherever you like, stop
where you like, and we will pay all your expenses while you are
here."[467]

Albert loafed about Boston several weeks, sometimes helping to roll
a barrel of oil in the Vacuum's store. When he wanted money he asked
for it and got it. He had once been a hard drinker. Destruction was
as carelessly invited upon the soul of a poor brother as upon the
lives and property of competitors. He hung around Boston and Rochester
nearly a year. Then his old employer, who was in California, sent for
him to come there to help in a fruit cannery, his salary continuing
as before. From the moment he deserted his partners, as Judge Edward
Hatch, the counsel for Matthews, stated in the civil suit for damages
in this conspiracy, Albert "never earned enough to cover the end of
your knife-blade with salt at your dinner. But they pay him, in salary
and bonus, over $4000. Why? To get him away, and to stifle lawful,
legitimate, and honest competition; to stifle that which brings into
every poor man's home an article of necessity at a cheaper rate."
He stayed in California a few months, and, finally, sickened of the
disgraceful part he was playing, turned at bay, and gave notice that
he was going to leave. "This is kind of sudden," the agent of his
employers replied, but said he would write to the principal director in
New York and advise that he release him. "You will give me time, won't
you? You know it takes a couple of weeks or longer to do business from
here to New York." Albert waited, and in time the word came from New
York. "I have heard from these parties, and they are willing to release
you."[468]

Albert, who had put himself into the extraordinary position in which
he was on the repeated pledges of the tempters that they would make it
"all right" with him, and protect him from loss and harm, found that
he had put his "trust in princes." When he came to settle he expected
that those for whom he had sacrificed his honor, his property, and his
career would make him some compensation. In answer to the question how
much they ought to make up to him, he named $5000 or $10,000, which
was certainly little enough, in view of the fact that the business
he had sacrificed to them was one in which, as the Vacuum's career
showed, $100 shares came to be worth $2666 each. But the representative
of the trust declared he could not think of such a thing, and in full
of all obligations gave him nothing but the balance due of the wages
agreed on. Then he asked Albert to hold himself still further at their
service. As they parted, he said: "Now we have settled up; now we are
good friends.... If anything ever comes up in this matter I would like
to have you stand by us.... We will see that you are paid all right,
and give you $25 a day while we need your services." Albert replied
that he did not feel under any obligations to the oil combination.
"I do not know as my interest lays that way. I do not think I shall
do anything to benefit them; they have injured me all that they can;
they have switched me all around, all over the country; they have got
me out of employ, not given me anything to do, which I sought to have
them do. I do not think they have used me right, and I have sacrificed
considerable money by this transaction, and you have always promised
that it would be made good, and you have not done so."[469]



CHAPTER XIX

THROUGH THE WOMAN'S EYES


Matthews knew nothing and suspected nothing about the worst part of
the plot against him until Albert's lawyer, Mr. Truesdale, nearly four
years later, was called upon to testify in the suit Matthews brought
for damages against the Vacuum people. This suit was to recover from
them for having enticed Albert away, and having persecuted Matthews
with false and malicious suits; but Truesdale's evidence at once
revealed that there had been a deeper damnation still in the conspiracy
against him. Mr. Matthews, one day on the street in Buffalo, ran across
Albert, who had just come back from California.

"No man ever used another meaner than I have you," said the now
repentant man to him, volunteering all the information he had,
and agreeing to testify if called on. This revelation made the
farmer-refiner a reformer. This was the public's business. If such
things could be plotted and done with impunity by one man against
another, there was an end forthwith of every liberty the republic
boasted. Especially menacing was such a conspiracy when concerted by
the rich fanatic of business against the poorer citizen to prevent
the latter from disputing the claim that a great market was a private
preserve, and that the right to trade in it is a privilege which
"belongs to us."[470] Matthews could have used his discovery as an
irresistible weapon to force his enemy to his knees, but he laid his
evidence before the district attorney. This official presented it to
the grand-jury, which found that the facts warranted indictments.
When the first indictment was quashed on technical grounds a second
grand-jury, sifting the facts, agreed with the first that the accused
should be held to answer in the criminal courts. This was six years
after the crime. The five persons indicted were the two former owners
of the Vacuum, now the resident managers of it for the combination,
and the three members of the oil trust, as the combination then called
itself, who had bought the Vacuum for it, and had been elected by the
trustees directors to manage it for them, and had so managed it even
to the most picayune details. The case caught the ears of the world,
not because crime was charged against men who had dazzled even the
gold-filmed eyes of their epoch by the meteor-like flash of their
flight from poverty into a larger share of "property"--the property
of others--than any other group of millionaires had assimilated in an
equal period; not for that, but because the charges of crime against
these quickest-richest men were to be brought to trial. Members of the
combination had been often accused; they had been indicted. This was
the first time, as District Attorney Quinby said in his speech to the
jury, that they had found a citizen honest enough and brave enough to
stand up against them--the only one. "There is no man," he said, "so
respected to-day in Buffalo as he for the method he has used to bring
these men to justice." He succeeded in doing alone what the united
producers of the oil regions failed to do, although their resources
were infinitely greater. The people of the entire oil country failed
utterly to do so much as get the members of the oil combination, when
indicted for conspiracy in 1879, to come into court to be tried. All
its principal men were indicted--the president, the vice-president,
the secretary, the cashier, and others. They could not even be got to
give bail. One of them had said when the indictments were found, that
the case would never be tried, and it never has been. The Governor
would not move to have those of the accused who were non-residents
extradited, as he would have done, does daily, in the case of poor
men, and the courts so tangled up the questions of procedure that the
people withdrew, and left the indictments, as they remain to this day,
on file in the Clarion County court, swinging like the body of some
martyr on a road-side gibbet in the pagan days, polluting the air and
mocking justice.[471]

That the trust was thoroughly alarmed, and saw the necessity of
rallying all its resources to save itself, was apparent from the
formidable display with which it appeared in the court-room. Present
with the five defendants, as if also on trial--a solid phalanx--were
its president, the vice-president, the manager of its pipe-line system,
the principal representatives of the trust in Buffalo, and many others.
Their regular attorney of New York was present with two of the leading
lawyers of Buffalo. Besides these there was a distinguished man from
Rochester, reputed the ablest lawyer in western New York, whose voice
is often heard in the Supreme Court at Washington. He had two important
members of the Rochester bar as assistants, one of them in the summing
up unmercifully scored by the District Attorney for fixing witnesses;
and, not least, a well-known United States District Attorney, who made
the convention speeches by which a distinguished citizen of Buffalo
was nominated, successively and successfully, for Sheriff, Mayor,
Governor, and President. The defendants come here, said the people's
attorney, with the best legal talent the country affords, the best
the profession can furnish; for the trust--"they are practically the
defendants in this action--with its great wealth, has the choice of
legal talent." Other eminent lawyers were also consulted, but were not
present. Never was a weak defence made the most of with more skill
than these gentlemen exhibited upon the trial.... But great as was the
ability of the defence, Mr. George T. Quinby, the District Attorney,
and his assistant, William L. Marcy, proved a match for them. Every
political and moneyed influence that could be brought to bear was used
to mislead the District Attorney, but all to no purpose. The jury
could see that the complainant, Charles B. Matthews, did not get the
indictment to sell out, otherwise he would have sold it out and not
have insisted upon a trial. The fact that the case was on trial, at a
cost of many thousands of dollars to the defendants, was conclusive
upon that point. An emissary, trying to get Matthews to call off the
District Attorney and to hush up this criminal prosecution, said the
oil trust could "give him anything, even to being governor of a Western
territory."[472] "You will have a chance," Matthews told the District
Attorney, "to line the street from your house to the City Hall with
gold bricks." But this public prosecutor had no price. He grasped the
full scope of this extraordinary case, which involved not only a crime
against persons and against the people, but against that true commerce
of reciprocal and equal service on which alone the new civilization of
humanity can rest.

The room in the Buffalo court-house, where the case was being heard,
was bright with the sunshine of a May day, putting out the shadows of
indictments and verdicts lurking in corners and pigeon-holes. Although
it was a criminal case, the on-looker saw, strange as it seemed, that
whatever strain there was in the situation appeared to be felt least
by the accused, and most by the public and the jury. The nearer the
eyes of the on-looker travelled towards the prisoners, the lighter
and brighter was the scene. Close to the accused sat a bench full of
notables, evidently friends lending moral support. That the bench was
occupied by men of importance was evident. They were supported by
platoons of eminent counsel and detectives. Only the judge betrayed
no consciousness of the presence of the herd of millionaires. The
whisperings and pointings and namings by one spectator to another
showed that the people's curiosity was greatly excited by the
sight of the richest men in the country, if not in the world, with
attendant millionaire esquires in or about the dock of a criminal
court. On this particular day the notables and their suite had come
in specially good-humor. Nods of kindly recognition went about and
smiles rippled everywhere as, settled into their seats, they listened
to the recital by the witnesses. It had been as good as a play to hear
the working-man, Albert, tell on the stand how he had been bribed and
threatened with ruin until he yielded to the suggestion that he should
"bust up" the works of his friends, partners, and employers, and run
away. There had been nothing funny to Albert in those threats: "We will
ruin you," "We will crush you," "You will lose what little you have got
left."[473]

"Then the compensation you got was $300 and the pleasure of selling
out your friends?" Albert was asked by one of the great lawyers.[474]
Albert did not smile, but "they seemed to enjoy hugely," reported
the press, "the idea that men could be bought so cheap." The eminent
counsel of the prisoners took the cue from their clients, and treated
the proceedings as a farce. When the State's Attorney was questioning
his witnesses, they objected to his questions with laughs and sneers
until he became indignant, and asked, with considerable emphasis, to
have the joke explained to him--a need the jury also felt, as their
verdict showed. When the Boston agent of the trust told that his
instructions from headquarters were that if there was to be any selling
at a loss to let the new competitor have the loss,[475] they all
laughed again.

So all the morning there had been fine sport in the court-room, and
the good-humor had risen higher with every fresh incident in the
entertainment until Albert's wife took her place in the witness-box.
She, too, raised a laugh, but it was not she who laughed. Serious
enough she was when taking her place on the witness-stand. She had to
face these gentlemen, before whose hundreds of millions her husband's
little venture had withered, but, as she herself afterwards said: "I
wasn't afraid of them, but I was nervous. But as soon as I got talking
I didn't care anything for them, although they all sat there in front,
in a row, looking straight at me."

The wife's story to the jury showed how such an adventure appeared
when looked at and experienced from the woman's stand-point--the
home-maker's and the home-keeper's--which the smiling row before her
were as little able to grasp as the participants in a pigeon-shooting
match to look upon that vision of flames, demons, and death-dealing
thunder from the point of view of the hapless birds. A bright-faced,
brown-eyed, pleasant-looking woman, as she took the stand she looked
what she was--an artisan's honest wife. "My husband," she said, "had
been employed in the Vacuum oil works at Rochester thirteen or fourteen
years, and we had accumulated some property--mortgages and money
and real estate. We moved to Buffalo, April 5, 1881, where he was
superintending the building of the Buffalo works."[476] After Albert
had yielded to the threats and the temptation, and had fixed the stills
and the fires for an explosion, he fled without a word to his wife
or his associates, hid, under an assumed name, in Boston, and then
travelled over the continent for a year--from Buffalo to Boston, to
Rochester, to San Francisco.

"When you left Buffalo did you leave any word with Matthews where you
were going?"

"No, sir."

"Or your wife?"

"No, sir."

While the wife was in Buffalo wondering what had become of her husband,
he was in New York with his venerable ex-employer, getting lessons
like the following in the secrets of building up a great commercial
enterprise:

"The best thing you can do, Albert," said the latter, "is to go and
write a telegram, and tell your wife to go back to Rochester."

"You'd better write it; I am a poor writer," said Albert.

"No," he said; "I do not want to appear in this case at all. Write it
so," he continued, "that she can move on the Fourth of July, and they
can't attach her things."[477]

The first word she got from her husband was this telegram to move
between two days, and back to Rochester the dutiful woman packed
herself and her things.

"It was two or three weeks before I heard from him direct or knew just
where he was," she said.

"I asked Charles"--one of the two managers--"how Al was, and he said Al
was all right."

"Would he tell you where he was?" the State's Attorney asked.

"No, sir; when I wrote to my husband I left the direction blank, and
gave the letter to Charley. I got an answer through Charley."[478]

For three weeks they would not let her know where her husband was.
"Think of that," said the District Attorney. "She had to go and take
her poor little letter to her husband, thinking, perhaps, if he was
away from her tender care he might get to drinking, because he does
drink some; but when with his wife they lived year in and year out
without his tasting a drop; ... afraid that he might get to drinking,
and that she could not watch over him.... It was a cruel thing to do."

"C. told me to go to the real-estate agents," Albert's wife continued,
"and try to sell our property and get it into money. He made out a list
of real-estate agents from the city directory. I guess that is all he
did about assisting me in the sale of the property."

"I asked C. if my husband could not come home from Boston. I was sick.
He said 'Yes.' Al came home and stayed a week or two. Then he went back
to Boston. C. told me they did not want the Buffalo company to know
where Al was."[479]

Albert was a man infirm under temptation. The employer knew, by
fourteen years' acquaintance, the weakness this man had acquired in his
service in the army. He gave him idleness, money, temptation, and an
assumed name to go to the devil with, if that agent of the trust was to
be found in Boston.

"You want to take good care of Al," said the good old man to his clerk
in Boston, "and not let him get homesick. If he wants any money, let
him have it." Albert travelled the broad way made smooth for him.

"Of course I never went around with him," said the clerk, in a
deposition; "a porter that I had was the party that went around with
him in the evening. I would hear what was going on, and I could judge
about the size of Al's head when he came around in the morning."

With all Albert's faults he kept one dignity to the end which makes
him tower above his seducers--the dignity of the laborer. A life's
discipline in daily toil had made his whole fibre too honest to enjoy
idleness, even at the rate of $1500 a year. He was free to come and go
amid the gaudy joys of a great city, as irresponsible under the assumed
name given him as if he wore the ring of Gyges. He had money for the
asking, and boon companions. But the habit of a lifetime of honest,
hard manual work was too deeply ingrained into the very substance of
his nature for him to become a cheap American Faust, revelling in
a pinchbeck paradise. This simple son of poverty had all his life
handled only real things, and had at every point had the mind's native
wantonness and riot checked by the hard surface which had calloused
his hands, and the outer air which had cooled him as he worked. His
were dreams of honest rest earned by honest work, and of family joys.
The self-indulgence that was revealed by the "size of his head in the
morning" was an animal exuberance that, as the result showed, did but
stain the "rose-mesh of his flesh," and went no deeper. Albert could
not stand the idleness of his Boston life. He went back to Rochester.

"I want something to do."

"What brings you here?" said his employer. "Go back."

After hanging around the office in Boston a few weeks longer, the
workman's nature reasserted itself again. He went back again to
Rochester. "I want something to do." "We have not got anything for you
to do just now," he was told. "You are all right."[480]

Months of idleness were interrupted only by odd jobs, like
superintending the digging of a ditch or the sinking of a salt-well.
Time and again, though he was drawing his pay of $125 a month, he went,
as he told the story in court, to repeat the plea for "something to
do." Finally, the elder of the managers, who was in California, sent
for him. He was to be made "an independent man," the new promise ran,
but really, as the sequel showed, was, if possible, to be kept out of
the way of too inquisitive juries and prosecuting attorneys. The wife,
treated as a mere pawn in the game, protested vehemently. "I went down
to the Vacuum Oil Company's office, and asked C. to give Al something
else to do. I didn't want him to go to California. He said that there
was not anything that he knew that he could do."

"I don't want Al to go. I won't go. Give him something else to do."

"I have nothing else."[481]

She had to yield, and her husband left her to go to California. His
employer persuaded Albert to buy a piece of land in California. "He
seemed to be very anxious to locate me there."[482] Albert sent to
his wife for the money, but the shrewd little woman sent only half.
"I thought I would let him pay it out of his pay." With the same good
sense the wife had not sold all the property when sent out alone among
the real-estate men. "I did not sell the real estate," she said; "I
thought there was too much expense."[483] She was not with her husband
when the rupture came in California. The first news the anxious wife
had of a change in her husband's affairs was when "Charley" came to
her, as she was sitting one summer evening on the porch of a neighbor's
house, and told her "Al" had quit them. "I do not know what to make of
it," he continued: "I think he must be crazy or something."[484]

It was not until his return that she learned the details of the painful
experience he had been through. When it was heard that Albert, upon
his return from California, had made restitution as far as he was able,
by telling what he knew to the authorities, to aid them in bringing
the principals in the crime to justice, there was consternation in the
trust. One of its detectives had been captain of the company Albert
was in during the Civil War. The captain now presented himself before
Albert as he went to his work in Corry, Pennsylvania, where he had
gone after his return from California, and became sociable rapidly.
He had great plans for Albert, and came to the house to discuss them
confidentially. Albert and his wife had been simple folks to start
with, but they had learned a thing or two by this time. The captain's
desire for confidential talk with his old comrade was so intense that
it would have been rude in Albert's wife to thwart it. She packed off
her daughter on an errand, and announced that she had a call up the
street, and would leave them to themselves; but she did not add, as she
might have done, that during her absence she would be represented by
the Chief of Police, whose appetite for confidential communications was
as keen as the captain's, but whose retiring disposition kept him in
the dark seclusion of an adjoining room, with his ear to the crack of
the door.

"Wouldn't Albert like to go to Russia?" the captain asked his dear
friend the private, whose existence he had never personally recognized
when they were so close together during the Civil War. "If the Court
will allow me to show by this witness," said the prosecuting attorney,
"that the captain came there as a detective for the oil trust, and made
a proposition, after the indictments were found, to Albert to flee the
country, and go with him to Russia." One of the army of trust lawyers
was instantly on his feet with "I object." The judge sustained him, and
the testimony was shut out.

Albert's wife kept close to his side, and held him steady. No, Albert
did not care to go to Russia. Advertisements of an alum-mine in Corry
then began to appear in newspapers where Albert's attention could
be called to them. By a lucky chance the captain happened to know
the capitalists whose boundless powers of enterprise could find
full outlet only by developing the hitherto unsuspected resources of
Corry for supplying the nations of the earth with alum. By a joyful
coincidence, these capitalists wanted for superintendent of their
bottomless alum-mines just such a man as the captain knew his dear
Albert to be. Would Albert like to go to Italy to learn the true
science of alum manufacture, and to show the effete monarchies how
an American could disembowel the earth of its alum? Salary, $5000
and expenses. No, Albert had no unslaked ambition to go to Italy as
superintendent of mines of alum, or green cheese, or any other lunar
commodity.

At least, Albert would take a drink? That poor Albert would do; and
when he failed to come home at night his wife went up and down the
streets seeking him. "A persistent effort had been made" by the trust,
Mr. Matthews testified, "to get Albert out of the country. I was afraid
they would get him away, as he might not be used in this case. Men
had been sent there to get him drunk, and had debauched him."[485]
Money was potent enough to persuade lawyers to make it a part of their
professional duty to help in this. One of the trust's lawyers sat with
Albert and its detective in the stall of a cheap saloon, and plied him
with liquor to get from him some letters of Matthews' they wanted.
"There they sat," said the keeper of the saloon; " ... they got what
they called for, probably.... I couldn't tell how many drinks they got
into Albert on that occasion; I think they drank there."[486]

While this courtship was in progress with Albert in Pennsylvania, wires
were being pulled to get him indicted in New York. The grand-jury of
Rochester was asked to indict him for receiving stolen property in a
watch trade he had made seven years before. This would have ruined him
as a witness in the forthcoming criminal case against the members of
the oil trust, but the grand-jury decided that there was no evidence
on which to indict. When Adam Cleber, a stolid-looking German laborer,
who worked in the same place with Albert in Corry, took the stand for
the State at the close, an eager excitement filled the court-room.
The State's Attorney was known to have his darkest sensation still in
reserve. What it was he would not, of course, disclose in advance, but
those hardly less familiar than he with the evidence hinted that the
fertile genius of the captain, having exhausted itself in the ideas
of the trips to Russia and Italy, had fallen back upon the genius of
his superiors, and had arranged to have Albert go a-hunting, and get
a "bust-up" as much as possible like the one he had been induced to
attempt upon his employers and partners.

"Did the captain tell you what he wanted you to do to Albert?" Cleber
was asked.

"Yes--" That was as far as Cleber got.

"I object!" screamed one of the lawyers.

"I propose to show that the captain made a request of this witness in
regard to what he should do to Albert, and what he should come and
swear to about Albert, there being no truth in the matter he wanted
Cleber to swear to," the State's Attorney urged to the Court. The judge
took the matter home for consideration over-night, and announced in the
morning that he would not admit the evidence. It was acknowledged by
one of the lawyers for the members of the trust on trial that he had
employed the captain to get evidence for them; but the judge, instead
of admitting Cleber's testimony, and leaving the question of its value
to be settled by the jury, excluded it.

In his closing speech District Attorney Quinby said: "Why, in Heaven's
name, my friends, didn't you place the captain on this witness-stand?
He would have been a feast for you and a feast for me. His ways
have been curious and sinuous, his methods have been peculiar and
corrupting, and they did not dare to put him on the stand because if
they did he would have left it to go to prison. That is the reason.
They know it."

The brave and steadfast woman told her part of this story on the
witness-stand. Her home had been broken up again and again. As she
herself said afterwards: "I had to live with my carpets packed, and
moved around like a gypsy." Her husband had been tempted to commit a
crime which compelled him to lead the life of a fugitive. He had been
spirited away and secreted; she had not been allowed to know where
he was, and could communicate with him only through a third person;
they had moved around, in her expressive phrase, until they had moved
into two rooms; the savings of fifteen years' hard work were all gone,
and the independent business, in which her husband had just got his
footing, swept away. He and she faced the world with no other assets
than their child and the palms of their hard-working hands.

"Well, it's taken all we had," she says; "we've lost it all, but I'd
rather it would be so than to have the money they have, and go about
hiding and sneaking. I'd like money, but not so well as that. When I
said to 'Charley,' 'I shall have to sell all my furniture'--'Oh, that's
nothing.' And when I told him it had cost us $100 to pay the expenses
of selling real estate--'That isn't much.' It wasn't much to them, but
it was to us, who had made every dollar by hard work. Well, we'll have
to do without the money, and just live along by honest work. We can
live that way. We have had all this trouble and lost our money, and
haven't made money enough to buy a calico dress."

All the good that had come of this loss of savings and home and honor
had gone to those at the bar of justice and their associates sitting
in the tickled row before her. On the cross-examination, which was
to crush the witness and her damaging testimony, the distinguished
counsel, not content with all the suffering and loss already inflicted
on this wife, tried to humiliate her still further, but the woman's wit
of truth was too much for the lawyer's wit of wile.

"Don't you recollect," the lawyer asked, "that you went to the house
of the manager of the Vacuum, and that you saw him in the parlor, and
that you asked him to take your husband back?"

"I never asked him to take my husband back."

"Then you did not ask him at the time and place I spoke of?"

"I never asked him anywhere to take him back."

"Don't you recollect upon that occasion being considerably affected,
and asking him to take your husband back, and his speaking of the way
in which he had left the company, which he characterized as shameful,
and that you cried--shed tears?"

"I never asked him to take him back. I recollect going there. I
recollect I felt bad, because I was talked to so much about it. I had
reason to feel bad. I am trying to tell the truth as near as I can."

"Then what was the occasion of your bad feeling?"

"It was because I thought we were going to lose everything, and would
not have nothing left. That is what I felt bad for--was shedding tears
for, if I did. I don't know as I did."[487]

Then came the laugh. From millionaire to lesser millionaire went
the enlarging laugh. The mighty cortege of the retained ex-judges,
famous constitutional and criminal lawyers, detectives, camp-followers
laughed. It was the laugh of hundreds of millions, and it clinked and
tinkled and rang. As if every mouth were a bagful of gold, and as if
every bag had burst, the golden notes of mirth filled the air, and
struck the ceiling, and rolled over the floor, rebounded and fell and
rose in mellow chimes of sound, and the golden rain dripped everywhere.
Millions on millions, tens of millions, hundreds of millions of the
coin of the republic, and in every coin a cackle.

"Yes, they all laughed at me," the little woman told her friends; "it
looked like such a great joke to them. Perhaps I did not tell it very
well, but I told the truth."

In closing the case the State's Attorney said to the jury: "A sorrow
was placed on that woman's heart that can never be removed. One of the
pathetic things in this case was that when this woman was on the stand,
telling her little story, how they were afraid they might lose the
few thousand dollars they had saved, the $6000 or $7000 they had been
struggling for for fifteen years, these New York gentlemen with their
millions laughed in her face at the idea of her being sorry to lose the
pittance of $6000 or $7000. It was the only time in the case, really, I
felt that these gentlemen were outraging common decency."[488]

Some time after the trial was over, and sentence passed and satisfied,
these men sent for Albert to come to Rochester. He went with witnesses.
There in the office of a leading lawyer he was tempted with desperate
propositions to do something or say something that would break the
force with which these disclosures must act on public opinion. "They
need not think," he replied, "that they can get me to make a false
oath to let them out of a hole. I would not do it for all the combined
wealth of the trust. When my wife was on the stand they laughed her
in the face when she told about losing all we had. Do you suppose any
man with a particle of American blood could have any love for them? I
think as much of my wife and daughter as any of them of theirs, and I
will do nothing to disgrace them." This hard-working and hard-living
laborer and his wife had, by thirteen or fourteen years of toil and
stinting, saved $6000. The laughers had in the same time saved about
$300,000,000, and somebody else had done all the work. The poor man and
his wife had been afraid that the $300,000,000 would devour the $6000.
It said it would, and it had. Shall not they laugh who win?



CHAPTER XX

TAKEN FROM THE JURY BY THE JUDGE


The District Attorney put the president of the light of the world on
the stand. His evidence showed that the purchase of the three-quarter's
interest in the Vacuum Company, sold because "there were restrictions
in the shipments," was made by the three New York men on trial. "They
are share-holders in the trust," he said. When they bought the stock
they transferred it to the oil trust. He had known of the contemplated
purchase. Having thus proved that the three indicted directors from
New York on trial were members of the oil trust, and were managing
the Vacuum for it, the District Attorney proceeded, in pursuance of a
logical plan of inquiry, to bring before the jury what the trust was,
and its relations to the companies it covered.

"What is it ... if you know?" the District Attorney asked. The
president, through his counsel, objected to the question.

"What is the object of this?" the judge asked the District Attorney.

The trust, the District Attorney explained, owns a majority of the
stock of this Vacuum Company and others, and controls the manufacture
in this country of substantially all the lubricating and illuminating
oils. These defendants belonging to the trust, and "one of these being
chairman of a committee of the trust, it was the desire and motive
of the three to do away with competition, to destroy and ruin the
competitive works in Buffalo."

The Court asked the president of the trust if it was a manufacturing
company.

"It is not, your honor."

The Court ruled out the question "What is it?" although in doing so he
used language apparently contradicting his ruling, saying, in effect,
that it was "quite immaterial what the objects or purposes of the oil
trust are, unless these defendants are in some way interested so as
to create a motive to do what it is claimed they did do." Again, when
the District Attorney sought to ascertain in what other corporations
engaged in the manufacture of oil in 1879, 1880, and 1881 the trustees
on trial owned stock, it was objected to and the objection sustained,
although the Court but a few moments before had said, "I will allow
you to show everything these defendants have done upon the question of
motive, ... to show what their business is, the companies they have
stock in, whether it is an oil company or some other company--that
is, any company engaged in the manufacture of oil that would come in
competition with the Buffalo company...."

The judge, declaring that he would admit such evidence, refused to
admit it. What the District Attorney would have been able to uncover
as to the responsibility of the "trustees" for what was done by the
subordinate companies, the reader, freer than the jury in this case,
can find out for himself.

The nine trustees, of whom three were on trial, owned as their
individual property more than half of this as of every establishment in
the trust. They decided who were to be elected directors and officers
of each company. They exercised full control over these officers
when elected. They declared the dividends. The profits of all these
shares are put into one purse, and distributed in quarterly dividends
among the trustees in proportion to their interest in the trust--the
purse-holder.[489] In the case of the Vacuum Company, accordingly, we
find that the minutes of stockholders' meetings record the presence
of members of the oil trust, in person and by proxy, representing
a majority of the stock, electing the officers and directors, and
declaring the dividends. How thorough and minute is the supervision
over the vassal companies an employé, who had been in the service of
the combination for several years in a confidential way, and "had
access to every book and paper and their cipher arrangement," has
told.[490] They "control every movement of every branch of their
business." The subordinate companies "make a report every day of all
their business.... They have blanks there on which they make a report
of all their shipments, where shipped, and who shipped to, and all
their purchases; and they report every month the exact percentage they
have made out of their crude oil, of all the different products they
get out of it. They report everything in detail."

This was in 1879. Ten years later, in 1888, the testimony of the
president shows that the system is the same. "They know the cost at
every refinery. They get such reports once in thirty days; each report
shows just what it has cost for everything.... Made out on regular
blanks."[491]

But when put on the stand in this case, in Buffalo, he had professed
himself altogether ignorant of any such reports.[492] Asked if the
Vacuum Company had made them, he replied:

"I can't recall any such reports."

Asked if it was obligatory upon the Vacuum Oil Company to make reports,
he said:

"I can't state."

But the manager's testimony in the same case shows that the system of
reports which his superior "could not recall" was in regular operation.

"There are reports of sales of the Vacuum Oil Company made to certain
parties in New York."[493]

The three trustees who bought the control of the Vacuum stock did
not keep it for themselves. They transferred it to the trust, and
received for it shares in the trust. They were not stockholders in
the Vacuum, but stockholders in the trust. It was the trust which was
the real stockholder in the Vacuum. The profits on this Vacuum stock,
therefore, went into the common fund in which the trust accumulated the
profits of all its controlling ownerships in companies all over the
country--all over the world. Every trustee shared in the profits of
every company so controlled, whether in the United States or Europe or
Asia. The president of the trust, now on the witness-stand, was a large
participator in the profits of the Vacuum, because he was a large owner
in the trust which possessed three-quarters of it. Similarly as to the
three trustees indicted and on trial, and every other trustee.[494]
The case was interwoven, notwithstanding the exclusion of this by the
judge, with evidence that the three members of the trust on trial
were the managers of the company for the trust, and were consulted
habitually about the current details by the salaried agents.

"After this purchase was made did you continue to represent the
purchasers in the management of the affairs of the Vacuum Oil Company?"
one of the three was asked.

"I did."

After the purchase of the Vacuum by the trust, Mr. Matthews, before he
left to go into business on his own account, had to go to its office
in New York half a dozen times, to see the New York directors when he
wanted instructions. His testimony on this point covers thirty pages of
the official testimony, and shows repeated interviews between him and
the members of the trust about every kind of detail of the business of
the Vacuum. When Matthews asked the manager of the Vacuum to give him
more pay, the latter had told him to speak to one of the trustees--one
of the three now on trial. "It will be as he says about it." Again, as
to another matter, he said to Matthews: "I cannot tell you. There is no
use for me to pretend that we run our business, for we do not."[495]

This evidence must be sought in the original records of the case at
Buffalo, as it is left out in the transcript furnished by the trust to
the committee of Congress, which represents the case against the two
local managers only. The Rochester manager, after the explosion, and at
the time of sending for Albert to come to New York, telegraphed to his
son: "Our views with regard to Albert confirmed." By whom? as Matthews'
lawyer asked. The manager saw one of the three accused trustees in New
York after he returned from the trip to Boston to hide Albert. "I told
him that I had hired him," he testified.

The trustee denied this, as the president denied the monthly reports.
But he has himself furnished the evidence that his employé told the
truth. In their answer in court to the allegations of the suit against
them for damages, he and the other two trustees concerned in the
Vacuum direction testified that they advised the Rochester managers
"to endeavor to retain the said" Albert, ... "and after" he "had left
the employment of the Vacuum Oil Company ... they further advised that
he should be re-employed if it could be done by reasonable increase of
his wages. They were afterwards informed that he had been re-employed."
This shows they knew about the negotiations before, during, and after.
They knew the man was to have more wages, though the increase was only
$300 a year, and their income was millions yearly. When he had been
gotten away they were informed of that too. The District Attorney knew
all about this answer in the civil case, but under the statutes of New
York it could not be used in a criminal prosecution against those who
had made it. He put the trustee on the stand, and did his best to get
him to tell the same story, but in vain.

The body-guard of lawyers surrounding the great men who made the
court-room a veritable curiosity-shop for the people of Buffalo, did
a deal of acting throughout the trial to impress on the jury that the
whole proceeding was a farce. They laughed and yawned and pooh-poohed,
and sneered at the District Attorney's questions and points, and went
through all kinds of dumb-shows of indignation and ennui that their
clients should be so needlessly called on to waste priceless time. But
this could not prevent their faces from lengthening as the story was
told by witness after witness, as more than one observant reporter
saw and noted. When the evidence was all in, and District Attorney
Quinby had closed his case, the situation was desperate. There was no
doubt about that. The great men of the trust on trial had been proved
to be the actual directors of the Vacuum at every turn of its daily
affairs. Before any evidence was introduced for the defence, one of
the distinguished lawyers arose and moved the discharge of the three
members of the trust, who were a majority of the Board of Directors
of the Vacuum Company, and managed it for the trust. The prosecution
were not taken unawares by the motion. The District Attorney's able
assistant, William L. Marcy, had gathered all the precedents and
equipped himself to resist the discharge. He and the District Attorney
fought hard to have the principals in the company go to the jury with
their agents, but in vain. Mr. Marcy pointed out that, as shown in the
case of The People _vs._ Mather, "to charge partners as conspirators it
is not necessary even to show that they were the original conspirators.
It is sufficient if at a subsequent time they become party to it by
accepting the benefits derived from the conspiracy. The case lays that
down in exact terms."

The Judge: "Must there not be an adoption?"

Mr. Marcy: "That is an adoption--accepting the benefits."

The Judge: "They may accept the benefits without knowing."

Mr. Marcy: "Then the jury may infer that knowledge from all the
circumstances. The jury are the tribunal to determine whether or not
the parties had the knowledge." Mr. Marcy pointed out that there was
everything to lead the jury to infer that these men were parties to the
plan. "Where did the meetings of the Board of Directors take place?
At Rochester, where the works are? No; at New York, where these men
carried on their other business. The Rochester representatives dance
in attendance wherever these New York parties desire them to go." He
pointed out to the judge that the trustee whom Albert met in New York
after the explosion knew of the plan to take him to Boston. He showed
that the same trustee, when remonstrated with by Matthews for bringing
patent suits without foundation, said that he intended to carry them
on, and if he was beaten in one court, he would carry them to a higher
court. Just in the same way the Rochester representative of the trust
had said: "I will bring lawsuits against you. I will get an injunction
against you." "When the Rochester manager," said Mr. Marcy, "hired
Albert, he did not pretend to be able to make a bargain until he had
been to New York and consulted about it. He was in New York before he
telegraphed to him to come to New York. This significant fact points
home the conspiracy upon the gentlemen who reside in New York."

But the judge, and not the jury, rendered the verdict as to the three
members of the trust on trial. He failed to remember or observe the law
that leaves it to the jury to render the verdict. He announced that he
had decided to grant the motion for their discharge. There was silence
in the court-room for a moment. Then: "Gentlemen of the jury, hearken
to your verdict as advised by the Court," came in sonorous tones from
the clerk; "you find the defendants"--naming the three members of the
oil trust at the bar--"not guilty of the crime, as charged in the
indictment, so say you all."

The jury looked scared at being addressed so peremptorily, but said
nothing.

"The New York men looked happy," said one of the observers, "but
their Rochester associates and codefendants did not smile." Upon the
discharge of the trustees, one of the Buffalo dailies said that whether
there was any conspiracy at all is an undecided question, but it should
be remembered that the oil trust and the Vacuum Oil Company "have been
honorably acquitted of the charge of having anything to do with the
matter. As the case now stands, it is simply The People against"--the
two Rochester managers.

Poor men! It was for this that they succumbed to the attacks of the
oil trustees upon their business, sold them for $200,000 three-quarters
of a concern which produced $300,000 in dividends in one year for
the lucky conquerors, became vassals instead of masters in their own
refinery. It was for $10,000 a year, divided into $6500 for one and
$3500 for the other, that they undertook to fetch and carry for their
suzerains, even to the gates of the penitentiary; and when discovery
and conviction came, to bear in silence upon their own shoulders the
guilt and shame from which others got only "more."

The trial of the two remaining defendants proceeded. Neither of them
took the stand. In a deposition the elder said it was Albert who had
spoken about misplacing the pipes; but when asked what he said in reply
to a suggestion, which no one better than he knew the significance
of, he replied: "I made no reply to it, but I thought it would be a
very scandalous proceeding."[496] Albert had told how, in conversation
in California, his employer had described his plans with regard to
Matthews.

"We would have just got them fellows in a boat, right in the middle
of the stream, and we would have tipped them two over, and drowned
them, and you would have been all right."[497] "If I ever made such a
remark," this defendant deposed, "it was in a playful humor. I am in
the habit of making playful remarks."

Witness after witness had to confess, under cross-examination, that
his testimony had been written and rewritten by himself or the lawyer
for the defence, and carefully conned before coming on the stand. The
District Attorney asked one of these tutored witnesses why he had read
over the written preparation of his testimony in the rotunda of the
court-house just before going on the stand.

"I read it over," he replied, lucidly, "for the simple reason of
reading it over."

"Just to practise in reading?"

"Well, perhaps we might call it practice in reading."[498]

"This preparation of the testimony," said the District Attorney to the
jury, "which I stigmatize as infamous, this going to a witness and
writing him down, and having him fix it, and write it over again, and
keeping it in his mind, and reading it over, and so going on the stand,
is not the way to try a lawsuit, in my mind. I write nothing down. I
coach no witnesses. I want a witness to tell me his story. I put him on
the stand and he tells me his story; but no writing down, no reading
over. It is not right, and it is very liable to be very wrong."

Several witnesses were introduced to prove that Matthews had offered
to settle the criminal prosecution. He could not have done so had he
wished to. The criminal case was in the hands of the State. Of the
witnesses who made this charge against Matthews, one was a stockholder
in the trust, another had been a stockholder in one of its pipe lines,
and both had to admit on cross-examination that the occasion of his
alleged agreeing to settle the case had been that they had gone to him
for their friends, unsolicited by him and unexpected, to find out at
what price he would sell his works to the combination." I was anxious
to settle the criminal prosecution," said one of these ambassadors.

"Anxious for whom?" asked the ever-ready District Attorney.

"I should say--nobody," replied the witness, in confusion.

"Mr. Matthews told him," said Mr. Hiram Benedict, one of the best-known
citizens of Lockport, who was present, "that if they bought the capital
stock of the company they could do what they chose with the civil
suits, but with the criminal suit he had nothing to do; the people had
that in charge."[499]

The lawyers tried to make a jest of the whole proceeding, and affected
to look upon the incidents of this rivalry with their powerful client
as something too trivial to be noticed. "Is it a trivial matter," asked
District Attorney Quinby, "that it shall be decided, once for all, in
a court of justice, that in an alleged republic you and I shall not
start a business which is a rival to some one else? That is the issue
here, and yet the lawyers for the accused tell us it is trivial. It
is the most important question that was ever left to a jury of twelve
men in this or any country in this age of monopoly." The jury thought
so too. The meaning of the policy of suppressing competition was
skilfully described by Judge Edward Hatch, Mr. Matthews' counsel in
the civil suit for damages, and here again the jury, representing the
people, thought so too. "When a man or a corporation is in a position
to control the market as to a given article, then everybody is within
their power, and it rests with their conscience to determine what
shall be the price. Every time you farmers at home, or your wives or
daughters, take your oil-can, turn it up, fill your lamp, and then
sit down to read by it, you can understand what is meant by this
proposition to crush these men out.... It was a matter that not only
these three men were interested in, but every person that lived in the
community. Competition would run along to a point where you could get
the oils that you use in your families, to grease your wagons, and to
burn in your houses, or for any other purpose, at a price that should
give the manufacturer a fair profit, and at the lowest possible price.
On the other hand, if you leave that open to these parties to regulate
as they saw fit, having a monopoly of the market, then you rest upon
the conscience of a corporation and put your faith in a soulless
individual."

It is one of the few bright lines in this picture that whenever the
people got a chance to make themselves heard, their utterance was
always right and true. The four juries which passed upon the facts
understood them, and had the moral standard by which to judge them
aright.

One of the trust's employés was put on the stand to break the effect
of the evidence that the competition of the new works had put down the
price of oil. "In the early part of 1881--the winter of 1881"--he said,
"common oil was 5-1/2 cents a gallon"--this to prove that the reduction
had preceded the appearance of the new refinery. He was confronted
by the District Attorney with one of his own bills of oil sold in
February, 1881. "That would seem to be a sale of 120 degrees oil at 12
cents a gallon," he confessed, and added, awkwardly, "I was asked as to
the winter of 1881. That is not the winter of 1881 as I understand. I
meant to speak from July, 1881, and so on."[500]

The great lawyers held up to the ridicule of the jury the idea that the
gases of distilling petroleum were dangerous. Matthews stated on the
stand that he had seen this gas burn up derricks, property, and several
men. The lawyers could not let anything so absurd go unchallenged.

"Did it explode?" he was asked smartly.

"Yes, sir."

"And how did the 'explosion' burn up the men and property?" with a
knowing look to the jury.

"The gases crept quietly to the boilers, unobserved," said the witness,
"and all at once the whole atmosphere was ablaze."

The witnesses who tried to prove that no harm could have resulted from
the tampering with the still broke down. One of them was the inspector
of oils at the combination's refinery at Cleveland. He, too, had once
been an independent refiner, but had passed under the yoke. He declared
with every possible variation of phrase that there could not have been
an explosion at the Buffalo works; but the District Attorney got out of
him piecemeal admissions that the "escaping petroleum gases would be
inflammable"; that "in a damp day you would expect them to settle close
to the still"; that then, if they came in contact with fire, "you would
have a large flash, and consume those vapors; if a person was in the
vicinity he would burn."

"I ask you if it would be a safe thing to fill a still with 175 barrels
of petroleum, put under it an extremely hot fire, so that the front
portion of the still is a cherry red, and a weighted safety-valve is
blown off--would you consider that a safe thing to do?"

"I would not."

Still another of these witnesses ended, like Balaam, by saying just the
opposite of what had been wanted of him. He testified that the escape
of gases from the stills, and even their ignition, was a matter of no
consequence--"it may occur at any time"--until he was cross-examined.
It turned out then that his own works had been burned three times by
the gases from distillation taking fire. "These gases," he had to
admit, "took fire and burned the receiving-house. A man got burned up
with it."

"Are you willing," the District Attorney asked, sarcastically, "to go
down to the Buffalo works and have them run some vapor, on a quiet day,
on the ground, and let you stand in the middle of it and touch it off?"

"I am not anxious to do that."[501]

Every one looked to see Matthews crushed by the cross-examination, in
accordance with the widely advertised promises of the counsel on the
other side.

"As he stood up to take the oath," said the New York _World_, "and
confronted the men with whom he had been at sword's-point for six
years, men of unlimited wealth and almost unlimited influence, and
controlling the most gigantic monopoly of any age or any country,
Charles B. Matthews looked, as a good observer said, what he proved
himself to be, a fighter, who will never know when he is whipped. Hard
knocks and a struggle of years against an all-powerful enemy have
whitened his hair, and set firm, hard lines about his face. His eyes
are deep-set under a protruding forehead and black, bushy lashes, and
are dark, firm, and searching. His jet-black beard is luxuriant but
coarse, his whole head and face bespeak the dogged persistence in
following a foe that is characteristic of the man. He is tall, well
built, and with those whom he knows to be friends he is kindly and
almost jovial in his manner." He told his story, and the jury believed
it. One of the most damaging portions of his testimony was that given
to connect the New York members of the trust with the conspiracy by
showing that they had the actual, practical, continuous management of
the Vacuum in matters small as well as large. Matthews, when in their
employ, was kept running to New York continually to see one or the
other of them about some detail of the business. Seeking to break down
the force of this testimony, the big gun of the legal battery opened on
him.

"But you did not see the name" of the oil combination "up over the
office that you went into (in New York)?"

"I do not think I ever saw the name over the office that I went into. I
think that name is not often in view over where they do business."

"What makes you think so?"

"My experience and observation."

"What experience and observation have you had?"

"Do you want I should tell it all?"

"No, you need not tell it all. We will let that go now." Matthews had
been in their employ. He knew about the staff of lobbyists they keep to
go from capital to capital as needed.

For lack of evidence the jury was offered abuse of Matthews, spoken by
the brilliant attorney on a shout which enabled the populace outside
the court-house to hear his speech, and, as the verdict proved,
deafened the jury to his eloquence. The jury preferred the view given
by the District Attorney. "When I look upon the troubled face of
Matthews," said District Attorney Quinby in his closing of the case, "I
know what is coming upon his head. When I know the struggle he has gone
through, the integrity that is in his heart, I would say to him, 'Well
done, good and faithful servant, you have withstood the powerful arm
of this insatiable corporation. You stand to-day honored from one end
of this land to the other.' ... I am proud that in the county of Erie
has been born a gentleman who has had the bravery and fortitude he has
shown."



CHAPTER XXI

CRIME CHEAPER THAN COMPETITION


The jury was composed of nine farmers, one tailor, one store-keeper,
and one railroad foreman. "So intelligent a jury," said the Buffalo
_Express_, "is proof perfect that the verdict it returns is the
only one warranted by the law and evidence." The jury found all the
defendants guilty whom the court allowed them to try. The verdict,
"Guilty as charged in the indictment," was given May 18, 1887. Every
possibility of appeal and reversal was resorted to. The judge granted
a stay, and this left the defendants unsentenced. A motion for a new
trial postponed the day of fate until December 24, 1887.

When the judge decided against the new trial an appeal was taken, and
was carried through every court except the highest. Legal procedure
in New York makes the courts a hunting preserve for those who can
afford the luxuries of litigation. The law was changed by the Field
code so that demurrers and counter-appeals, proceedings and ancillary
proceedings, on technical points can be carried, one after another,
from court to court, while the real point at issue has to wait untried
below for the results of this interminable contest. By grace of
this power to carry preliminary and technical questions from court
to court, at the pleasure of quibbling and appealing lawyers and
procrastinating judges, from courts of Oyer and Terminer to the Supreme
Court at General Term, to the Court of Appeals, rich corporations and
individuals are able to tire out altogether all ordinary opponents.
It was only by help of very able and highly paid lawyers, officers of
the courts and of justice, that the law of New York was "reformed,"
so that the technical parts of a case could be to such an extent
disengaged from the main body, and sent forward and backward, up and
down, through the whole series of appeals, consuming endless time and
money, while poor men seeking justice kick their heels in the lowest
courts.

As the time for pronouncing sentence came on, petitions for mercy were
circulated in Buffalo and Rochester. The members of the jury which
had found the accused guilty were labored with separately to sign
a recantation. Only six succumbed and signed a statement that the
prisoners were found guilty, not because they had conspired to blow up
their rival's refinery, but because they had enticed away Albert. This
recantation was in the face of the judge's charge, which had made the
plot to blow up the Buffalo works the chief and the important inquiry
in this case, and the verdict had been given under the influence of
this view of the case. Six of the jury saw the impropriety of making
this statement after they had disbanded and passed from under the legal
and moral restraints they felt when sitting under their oath of office,
and refused to sign it.

When the paper from the complaisant six jurors was handed in, the
District Attorney said in court: "These jurors received money for
making these affidavits. If required to do so I will prove the
statement." He was not called upon to do so. "These affidavits," he
said afterwards, "were procured for the purpose of influencing the
Court to administer the lighter punishment, since they tended to
show that the verdict was directed against the lighter offence. One
of the jurors told me he had been offered money to sign one of these
affidavits, and he knew of one juror who had received $10 for signing
one."

When the last possibility in the way of proceedings for a stay or for a
new trial had been exhausted, except argument of an appeal in the Court
of Appeals, which was known to be useless, sentence was pronounced.
The penalty provided in the statutes was imprisonment for one year in
the penitentiary, or a fine of $250, or both. The lawyers pleaded
that the elder of the convicted men was old, that the younger had just
returned from a wedding tour in Europe, that some of the wealthiest
and most prominent citizens of Rochester had petitioned for mercy,
and that six of the jury had done likewise. Each was sentenced to pay
a fine of $250. Notice of appeal was given by the convicted, and a
year was consumed on both sides in preparations to fight the case to
a bitter finish. But the appeal was abandoned. A new trial and new
sentence might have ended worse. The fine was paid, and these employés
of the trust, upon whose record as reputable and inoffensive citizens
for all the years of their business career no shadow had fallen till
they entered its employ, took thereby the place assigned them by the
jury--that of convicts guilty of crime.

Crime, it seems, may in this country be cheaper than competition.
They who received the larger part of the benefit of the enticement
of Albert, of the harassing litigation, of the damage done by the
explosion, and of the bankruptcy which was finally produced by these
means, went free of all punishment; and the employés found their crime
but little less than a pastime. After his conviction, and before his
sentence, one of the two married. His wedding was attended by many of
the great men of the trust--magnates in the New York world of affairs
and its affiliated interests. It glittered with gold and silver and
precious stones which they sent to signify to the world that they stood
sponsor for him.

The case of some humble boycotters was then fresh in the public mind.
Certain working-men, on strike, handed around printed circulars in the
streets of New York, requesting people not to buy beer sold by their
employer. In a few weeks from the time they dropped those circulars in
the streets they were in the penitentiary at Sing Sing. It was shown on
their trial that they were entirely ignorant of the fact that they were
violating any of the laws of the State in what they did. It was shown
on the trial of the oil men that they did know that the course they had
in view was criminal, and were warned by a lawyer it might land them
in prison. "It was very fortunate," said the New York _World_, "that
they were not poor men convicted of stealing a ham."

One of the reasons given by the judge for his leniency was that
prominent citizens of Buffalo and Rochester had begged for mercy. "With
the very highest respect for the judge," said the Buffalo _Express_,
"as the _Express_ has often demonstrated, we must say that this is a
mighty queer excuse. Three-fourths of those citizens are in one way
or another identified in interest with the oil trust, as the judge
could readily have ascertained, and their names on that petition were
entitled to no more moral weight in the consideration of this case than
the names of the two guilty men should have had if they had seen fit to
sign it."

The sentence raised a whirlwind of indignation. "As ridiculous as
anything that could be imagined," said the Philadelphia _Ledger_. "It
is high time," said the New York _World_, "that the lines were drawn
between competition and conspiracy, between business and brigandage."
Referring to the golden harvest of $300,000 dividends in one year on
a capital of $100,000, representing an original investment of only
$13,500, the _World_ said: "The monopoly of this sort of business is
a very seductive thing. It is calculated to make men of more boldness
than morals blow up factories, or do almost anything else to control
the field." "It can afford to blow up a rival refinery every day
in the year at that price," said the Erie _Dispatch_. "There have
been conspiracies," said the Oil City _Blizzard_ (Pa.), "to injure
the business of opposition concerns right here in Oil City, and the
conspirators have never been punished." "It is--a light sentence," was
the comment of the Buffalo _Commercial_. "Poor criminals," the Buffalo
_Express_ declared, "may well wonder why rich ones are let off so
easily. It is equivalent to deciding that wealth may securely indulge
in that inexpensive sort of amusement as a mere pastime. Who's afraid?"
it asked. "What conspirator 'in restraint' of trade is afraid of a $250
fine?" "Certain it is that no wealthy criminals convicted of such a
crime ever before received from a court such a mockery of justice," was
the verdict of the Springfield (Mass.) _Republican_.

The facts of this case have not been carelessly examined or decided.
Two grand-juries in succession passed upon the evidence and found it
good enough for indictments. Two petit juries heard the evidence,
both for and against, in the civil and criminal suits, and found it
good enough--one jury for $20,000 damages, another for a verdict of
criminally guilty. Seventy picked citizens have unanimously concurred
in the decision "Guilty." And this scarlet letter the monopoly will
always have to carry.

"So surely as Matthews lives, and so long as he lives," District
Attorney Quinby said in the criminal prosecution, "he will never again
make another dollar upon a barrel of oil he may manufacture. The
word has gone forth, right in this court-room, that this man shall
be crushed, and he can never again run his works successfully. That
is going to be one of the results of this case." The fulfilment of
this prediction came swiftly. This sentence of ruin upon Matthews was
executed before sentence was even pronounced upon the conspirators
against him. He had been left crippled by the flight and corruption
of his partner, the only practical oil man in the enterprise. When
he tried to obtain some one to take his place, he could not get word
of any one not connected with the oil combination. He did not dare
to advertise, and knew no one in Buffalo he could venture to speak
to. He had made contracts before opening the works, and was unable to
fill them. The pipes had been laid wrong; it took him a year trying
one way and another, and making a great many mistakes, to set them
right. His third partner was frightened back into the employ of the oil
combination by threatening litigation.

Then came the suits to destroy, punctually as threatened.[502] "If one
court does not sustain the patents, we will carry them up until you
get enough of it," one of the trustees said to Matthews. One of the
Rochester managers, in speaking of these suits, said: "I don't know as
we will gain anything really, but we will embarrass them by bringing
these suits, and, if it is necessary, we will bring them once a month;
yes, we will bring them once a week." One, two, three, four, five suits
came with injunctions. "Null and void" was the verdict of court after
court on the worthless patents and pretended trade-marks on which he
was sued.

Matthews had to keep pushing his pursuers to trial. What they wanted
was not decisions but delays, to ruin him by the waste of time and
money.[503] "It cost me one-third of my time, and $25,000 or more to
defend these suits." These suits were used to scare away his customers.
"I was instructed," said the Boston representative of the combination,
"to tell the customers that the Buffalo company were using their
patents."[504] The sole legal victory the combination won was the
recovery of six cents damages on a technical point.

Matthews, on his side, took to the courts. He sued his persecutors as
individuals and corporations. He pursued them civilly and criminally.
He was successful in defending himself against their suits. All his
suits were successful as far as he was able to carry them. One suit
for damages produced a $20,000 verdict; another was for $250,000,
on the still stronger evidence procured in the criminal trial. It
took Matthews two years--from 1883 to 1885--to get his first case
for damages for conspiracy to trial. All that time was consumed by
his opponents in quibbles about procedure, technical objections, and
motions for delay, appealing them from court to court. The judge, in
taking from the jury afterwards the three trustees who had been brought
to trial for conspiracy, declared that he could see no reason to
believe that these suits had been brought without probable cause. But
the jury before which the suit for damages was tried saw plenty of such
reasons, and gave Matthews' company a verdict of $20,000 damages. The
views of the judge and jury might have varied in the same way on the
question of the guilt of the three members of the trust.

Matthews woke up one morning to discover, as he had been told he would,
that there was no Atlas Company to get his oil from. Corporations may
have no souls, but they can love each other. The Erie Railroad killed
the pipe line of the Atlas Company for the oil combination.[505] The
courts had been kept busy granting injunctions against it on the
motion of the Erie. These were invariably dissolved by the courts,
but an application for a new one would always follow. At one time the
lawyers had fifteen injunctions all ready in their hands to be sued
out, one after the other, as fast as needed. The pipe line was finally
destroyed by force. Where it crossed under the Erie road in the bed
of a stream grappling-irons were fastened to it, and with an immense
hawser a locomotive guarded by two freight cars full of men pulled it
to pieces. The Atlas line and refinery became the "property" of their
enemy. Matthews' supply of crude oil was not cut off immediately. He
was tapered off. One of the superintendents of the Atlas testified in
the suit for damages Matthews brought against the Atlas after it passed
into the hands of the combination, that by the order of the manager
of the refinery he mixed refuse oil with the crude which they sold to
the Buffalo Lubricating Oil Company. Finally the supply was shut off
altogether.

Matthews turned to the railroads connecting Buffalo with the oil
country. They all put up their rates. At the increased rates they
would not bring him enough to keep him going; they would not give him
cars enough, and told him they would not let him put his own cars on
the road. Even the lake steamers raised their rates against him. The
farmer-refiner was taking his lesson in the course which had driven
his first employer to dig oil-wells because "there were restrictions
in the shipments." Cut off from a supply by either pipe or rail at
Buffalo, Matthews made an alliance with the Keystone Refinery in the
oil regions. War was now made upon the Keystone. It was finally ruined.

Packs of lawyers were set upon Matthews, and they finally brought
him down. An attorney appeared before a judge and made a motion that
the property of Matthews' company be taken out of Matthews' hands
and be placed in the charge of a receiver, as officer of the court,
to secure a debt due a Buffalo bank. This done, the lawyer appeared
before the judge who afterwards decided that $250 fine was punishment
enough for criminal conspiracy, with an offer from the monopoly to
pay $17,300 for the discontinuance of the suits for damages which
Matthews had instituted, and $63,700 for all the other assets. The
other creditors and all the stockholders opposed the motion, but the
judge granted it. There were two suits. One had produced a verdict of
$20,000, and the other one for $250,000 was brought on the new and
much stronger evidence secured in the criminal trial. As to the value
of the property, Matthews had brought his enterprise to the point
where it was worth $20,000 a year. It was capable of producing many
times that amount of profit. Had not Albert been enticed away, the new
works would have yielded a profit of over $100,000 the first year.
They had a capacity of 70 to 80 barrels a day of lubricating oil,
and the profit was $5 to $6 a barrel at the time Matthews and Albert
went into the business.[506] The judge, overruling a majority of the
creditors, ordered the receiver to accept the offer. He gave as his
reason for selling these damage suits that a criminal prosecution had
already taken place for the same offences, and a person could not be
punished twice for the same offence. As they had not yet been punished,
this meant, if it meant anything, that the suits were to be sold out
for this inconsiderable sum, and the guilty men were to get their
punishment in the sentence he was to pass upon them in the criminal
court.

Three months later, before the same judge, these convicted agents stood
up to receive their criminal sentence. The judge gave them the lightest
sentence in his power, "nominal punishment." He did so, he was reported
by the Buffalo press to have said, because "it has come to the
attention of the court that civil suits have been brought to recover
damages sustained by reason of the same overt acts. Large punitive
damages are demanded in those actions. It is fundamental that a person
cannot be punished twice for the same offence."

The judge released them from the suits for damages because they were
to be punished criminally. Then he released them from any but nominal
punishment, because there had been suits for damages. One would infer
that the civil suits for damages were in full career in the courts,
to end possibly in hundreds of thousands of dollars' damages against
the convicted. No one would infer what was the truth--and who should
have remembered it so well as the judge, for it was he who had done
it?--that the civil suits had been ordered sold. The judge had ordered
his officer--the receiver--who had the luckless Matthews' affairs in
his grip, not to try the cases, but to sell them. The suits had been
ordered sold in February preceding, and they were as dead as--justice.
But as all the technical formalities and slow proceedings needed to
consummate the sale had not been completed when sentence was passed in
May, the damages they might produce were made a reason for inflicting
none but nominal punishment. The order of sale made it impossible that
they should ever be tried.

Of the money paid into court, nearly half--$30,000--went to the
lawyers, and, crudest stroke of all, the attorney who had made the
successful motion before the judge to take Matthews' property away, and
to order the forced sale, got $5000. Matthews got nothing. Even his
right to sue his destroyers had been sold to them on their own motion
and at their own price.

The crime was plotted in March, 1881. The participants were indicted in
1886. It took until May 15, 1887, to secure conviction. While sentence
was still unpronounced Matthews' property was put into the hands of a
receiver of the court, January 16, 1888; the property was sold by order
of the court, February 17, 1888; sentence was pronounced May 8, 1888;
the formalities of the sale were consummated July 11, 1888; and the
sentence, coming last of all--the fine of $250--was executed May 1,
1889.

Matthews had tried to make money in oil, and had failed; but his
competition had forced those in control of the markets to increase the
price to the producer, and he made light cheaper to the community. In
Buffalo his enterprise had caused the price to drop to 6 cents from 12
and 18 cents, in Boston[507] to 8 cents from 20. Oil has never since
been as high in Boston or Buffalo as before he challenged the monopoly.
And he forced the struggle into the view of the public, and succeeded
in putting on record in the archives of courts and legislatures and
Congress a picture of the realities of modern commerce certain to
exercise a profound influence in ripening the reform thought with which
our air is charged into reform action.

Nothing is so dramatic as fact, when you can find the fact. The
treatment his church gave the brother, who had been the victim, as
judicially declared, of a criminal conspiracy, is described in the
following letter from Matthews:

 "BUFFALO, January 19, 1888.

 "MY DEAR FRIEND,--As your father was a clergyman, and as you feel an
 interest in church affairs, I think you will wish to know of my recent
 experiences. My church here is not a rich one, but we pay as much for
 church music as we do as salary to our pastor. Probably the wealthiest
 man in our church is an agent of the oil trust. He receives a salary
 of $18,000 per year, and keeps their retail store here, and has been a
 witness for them in important suits. He does not belong to our church,
 but is a trustee and treasurer of the Church, and is very kind to our
 pastor, whom he took last summer on quite an extended vacation trip
 in New England. But you know the class of men that usually become
 trustees in our city churches these days.

 "My pastor surprised me a few days ago by making a visit at my office,
 and telling me that as my term of office as member of the session
 expired soon, it might be best for me not to be a candidate for
 re-election, in view of what the newspapers had said about me, and
 the opposition there was. He said, however, that he personally felt
 friendly to me, and regarded me highly. He seemed to be embarrassed,
 but I quickly relieved the situation by saying that I had told my
 family some months before that I should not again hold a church
 office. I told the doctor he well knew I did not desire office in or
 out of the Church. True, the newspapers, under the influence of the
 oil trust, had ridiculed me as 'farmer Matthews from the country.' But
 why should my pastor mock me with such shallow pretences for reasons
 for church opposition to me? I had engaged in the oil business without
 the consent of the oil monopoly, and my pastor then and there told me
 my friends thought me foolhardy in doing so. I could hardly suppress
 my feelings on hearing this said by the man who baptized my children
 and ministers at the church altar. What could all this mean? I had
 only fought for my rights as an American citizen, as a manufacturer
 and shipper of oil. I had been sustained in every detail by the
 courts. I had convicted in our courts prominent men of conspiracy,
 little thinking that the subtle power of these men could come to
 dominate the Church itself. My feelings were intense, and words came
 thick and fast--all too tame to express my feelings. I told the doctor
 how I had struggled on from boyhood, and at middle age had accumulated
 a few thousand dollars, and in all these years had never sued a man or
 been sued, and that my struggle with the oil monopoly was for rights
 that no one worthy to be called a man dare to surrender. I told the
 doctor how I had been hounded, and my business beset by spies--that
 my friends had often told me I was in danger of assassination if I
 continued the fight in the courts. He, having done his errand, seemed
 uneasy, and anxious to go. I told him I had seen the rising and
 corrupting power of this trust in their control of our aldermen and
 courts, in state and national legislation. I could witness all this
 with comparative composure; but it made every drop of my blood hot
 to see them erect their altars for Mammon worship in the Church of
 the living God. I had seen the hard-won earnings of a lifetime swept
 away, and had hoped that at least one word of sympathy might come
 from the Church. If I had been robbed by old-fashioned highwaymen and
 the Church received none of the loot, church sympathy would have been
 hearty and abundant. But no; Sabbath after Sabbath our reverend doctor
 rises in the pulpit, and, at the regular time, says: 'Let us worship
 God in the gift of money.' Religion, divine worship, and money all
 seem to have a like meaning as they are alternately mentioned in our
 pulpit. My ancestors far back were church people, but this worshipping
 money, or worshipping God with money, is all new to me. It was not the
 acceptable worship required by Christ and taught by his disciples.
 After the conversation I had with my pastor that day I trudged home,
 but could not sleep that night. My heart was too full of sorrow as
 well as anger. I hope you will forgive me for writing you so long a
 letter. I have written much more than I intended to, but did not see
 where to stop. There are many things I wish you could see but not
 experience in the life of a business man nowadays. I want you to write
 often, as every word from a true friend is prized highly in these dark
 days for me."

The action of the judge in this and another celebrated case was made
an issue in the elections in New York in 1889. In June, 1882, the
railroads in New York City, rather than pay the freight-handlers the
20 cents an hour they asked for, instead of 17 cents, brought the
business of the city to a stop. They refused to employ their old men
at that price, and did not supply their places. Trucks by thousands,
heavy with merchandise, stood before the railroad freight-houses for
days, waiting in vain to be unloaded. The trade of the metropolis was
paralyzed, and the railroad officials sat serenely in their offices,
letting the jam pile up until the freight-handlers were starved into
accepting the wages they were offered, and commercial distress had made
the business community desperate enough to tolerate that injustice, or
any other iniquity, provided the "Goddess of Getting-on" were allowed
to get on again. It was so clear that the price asked by the men was
fair, and that the refusal of the railroads to set them at work and
keep the channels of trade open was due to a purpose to manufacture
such widespread loss and trouble that the public should be goaded into
forgetfulness of the rights of the men, that public opinion forced the
Attorney-General of the State to act. Re-enforced by able counsel, he
applied for a peremptory writ of mandamus to compel the roads to resume
operations. This motion came before this Buffalo judge, then sitting
by assignment in New York. He kept the people waiting ten days, and
then quashed and dismissed the petition. The decision of the Supreme
Court, composed of judges of both parties, reversing his action, was
unanimous, but the mischief he had done was by that time--January 17,
1883--long past mending.

When he was nominated to be judge again, after his indecision and
decision had swelled the dividends of the great railways of New York,
the presiding officer of the convention which was to choose him to be
their candidate was, by a coincidence, also the president of one of
the great railway corporations which had been involved in the judicial
proceeding of 1882. The judge's record was made one of the issues in
the State election which followed the defeat of justice in Buffalo. He
was nominated by the Republicans in 1889 for Judge of the Court of
Appeals, the highest court in the State of New York, and the nomination
was asserted by the New York _Times_, in a leading editorial, to have
been procured by the oil trust. Its "influence was active," said the
_Times_, "in securing the nomination of" this judge. " ... An attorney
who has labored in its interests at Albany during the last two sessions
of the Legislature was conspicuous among the men who did the work." The
New York _Times_, the Buffalo _Courier_, the New York _Star_, the New
York _World_, and other leading journals of the State retold the story
of the trial, and declared that the judge's action in taking the case
of the members of the trust from the jury, and the sentence he gave the
convicted agents, made it clear that he was unfit to be a judge. The
oil combination, the _World_ said, editorially, "have had agents busy
this year trying to secure his elevation to the highest court in the
State.... We say confidently that the history of the case establishes
his conspicuous unfitness for a place on the bench of the Court of
Appeals. He should be defeated, and with him the oppressive monopoly
which is actively seeking his election."

He was defeated with the rest of the ticket. District Attorney Quinby
was re-elected several terms in succession. After their victory the
people went to sleep, but not the sower of tares. At the election of
1890 the nomination of this judge to a seat on the bench was secured
from both parties. For fourteen years, therefore--from 1890--a seat of
the Supreme Court, one of the most important tribunals of justice in
New York State, will be occupied by this judge, before whom must come
many questions affecting oil transportation, electric lighting, natural
gas and illuminating, street railways, banking, and other interests of
the oil trust.

Monopoly cannot be content with controlling its own business. It is the
creature of the same law which has always driven the tyrant to control
everything--government, art, literature, even private conversation. Any
freedom, though seemingly the most remote from any possible bearing
upon the tyrant, may--will grow from a little leak of liberty into a
mighty flood, sweeping his palaces and dungeons away. The czar knows
that if he lets his people have so much freedom as free talk in their
sitting-rooms their talk will gather into a tornado. In all ages
wealth, like all power, has found that it must rule all or nothing. Its
destiny is rule or ruin, and rule is but a slower ruin. Hence we find
it in America creeping higher every year up into the seats of control.
Its lobbyists force the nomination of judges who will construe the laws
as Power desires, and of senators who will get passed such laws as it
wants for its judges to construe.

The press, too, must be controlled by Power. During the criminal trial
at Buffalo one of the oil combination's detectives was put on the
stand. He was compelled to produce his written instructions from the
counsel of the trust.[508] These had been given him at the office of
the oil trust in New York. He forwarded his reports to its office in
New York, and received his pay from the same place.[509] He sent his
subordinates to get employment in Matthews' works, and through them
obtained information from the inside. The monopoly paid one of these
detectives $2.50 a day for spying, while he could earn only $1.50 a day
for working.

"I see here further," said the District Attorney, "'Why the _Express_
published the last complaint'"--in Matthews' suit for $250,000 damages.
"Did he ask you to find out about that?"

"He did."

"That is, he wanted you to find out what arrangements were made with
the Buffalo _Express_ to have the complaint published?"

"Yes; the whole complaint. It covered the whole of the newspaper."

"And do you know 'how many copies were taken by Matthews?' Did he tell
you to find that out, too?"

"Yes, sir."[510]



CHAPTER XXII

ANOTHER TALE OF TWO CITIES


The South is the most American part of America. Close observers note
as its especial characteristic the preservation of the original
Anglo-Saxon types, which gave this country its first and deepest
impress.

The South is not yet so steeped as the North in the commercialism to
which it is all of life to buy and sell, and its population, less
affected by trade and immigration, remains more nearly American, as the
fathers were American, than the parts of the country flooded by the
full force of the modern tide. Only in the South is there record all
through this history of a man "too prejudiced to buy" from those who
claimed the sole right to sell.

The merchants of Columbus, Mississippi, were buying their oil of the
southern branch of the combination when they were offered a supply at
cheaper prices by an independent refiner. They asked the combination
to meet this competition of the market. This was refused. There were
eleven firms there which sold oil in connection with other things. The
combination "coolly informed us," wrote one of the firms to a journal
of the trade, "that we were in their power, and could not buy oil
from any one else, and that we should either pay such prices as they
demanded or not sell oil. We immediately formed an association among
ourselves and ordered from other parties. On receipt of our first car
they immediately put the retail price below the cost per car lots,
and for some time tried to whip us in that way, as we still declined
to handle their oil. They then wrote offering to rebate to several of
the larger firms if they would withdraw and leave the smaller ones to
fight the battle alone. This proposition we declined, and they again
tried the low-price dodge, their agent telling us that they would
spend $10,000 to crush us out. This game they have now been trying for
three years, and in that time we have not handled one gallon of their
oil." As these devices, irresistible in more commercial civilizations,
did not fool the brotherhood of Columbus, a special agent was sent to
Columbus to carry on the war.

"You can tell the Columbus merchants if this does not succeed we will
have it out on other lines," the agent was instructed, in the strain
of the letter to the merchant of Nashville.[511] "The battle has not
fairly opened yet; sharpen up your sword, we mean war to the knife."
And again: "We want Columbus squelched," was the word sent the agent
from the headquarters at Louisville.

He was ordered to start a grocery store in Columbus, to compete in
their entire business with the "black-mailers." While the fight was
on, and it was still hoped to conquer Columbus, the following was kept
prominently before the people in the daily papers:

"We desire to state that we did not establish an agency in Columbus to
force the wholesale grocers to handle our oil."

But seven years later the general in command of this department told
Congress it was his practice to fight in that way. "Almost invariably I
did that always."[512]

"To threaten the people elsewhere with Columbus," the agent at Columbus
was told, "will make them scat, as it were, and take our oil at any
price." But the people of Columbus did not "scat." The new store had a
complete stock of groceries. Prices on everything, including oil, were
put "down to the bone." But one essential feature of the enterprise all
the ingenuity and power of the invader could not furnish--customers.
Goods were advertised at cost; alluring signs were hung out with daily
variations; but the people would not buy. A few citizens who bought at
the beginning, without understanding the plan of campaign, came out
in the newspapers with cards of apology, and pledges that they would
not repeat the mistake. Local bankers refused to honor the drafts of
the enemy, threw out its accounts, and gave notice that they would
advance no money to persons who bought at its store. The public opinion
of Columbus so bitterly resented the attack upon the livelihood of its
merchants, because they had dared to buy where they thought best, and
so clearly saw that the subjugation of the merchants would be but the
preliminary of a conquest of themselves, that any one seen within the
doors of the odious store fell into instant and deep disgrace. "Their
store is regarded as a pest-house," wrote one of the leading business
men, "and few respectable people ever darken their doors, their trade
being confined mostly to negroes. Their oil trade has dwindled down to
almost nothing, and we are selling now to merchants in other towns who
heretofore bought exclusively from them."

At the first sign of aggression the merchants had given up competition,
which they saw meant only mutual ruin, and had tied themselves together
in an association. Now as the struggle widened the people did the
same, and found a greater benefit and pleasure in co-operation than in
keeping up the delusion of the "higgling of the market" where there was
no market. The _Index_, of Columbus, printed an agreement signed by
hundreds "of those who will sustain our home merchants in the struggle
they are making.... It will receive many more signatures among our
citizens.... The people have only to understand to properly decide in
this matter between right and wrong."

"You ask if the feeling is bitter against them in our 'community,'"
one of the merchants wrote. "I can only liken it to the spirit which
prevailed when the people of Boston emptied King George's taxed tea
into Boston Harbor."

Attempt was made to intimidate the press. Advertisements were
discontinued because the papers supported the cause of the people.
"If the agent," said the _Index_, of Columbus, "thought the cash that
might be obtained for such advertisements could purchase the silence
of this journal when it should speak, or its support in a wrong cause,
he reckoned without his host." "The pledge" was signed by practically
every man in the place. The country people about Columbus, when they
came to town to sell produce and buy supplies, took back with them
blanks of the agreement not to buy the obnoxious oil, and circulated
them among their neighbors for signature. Agents were sent among
these country people to win back their trade, but they could not be
moved. The competition was made "war to the knife," and the knife "to
the bone." It was a singular sight--this concentration of millions
to "kill" these little men in this remote country town in far-off
Mississippi. Nothing was too small to do. When one of the Columbus
"rebels" bought oats for his trade, a competitive stock of the same
kind of oats was hurried into Columbus, and these instructions sent
with it: "Put your sign out. Rust-proof oats to arrive at 98 cents to
$1 a bushel. This will kill him. The same signs should be posted about
meats, sugar, coffee, etc."

The plan of action of the Merchants' Association was simple: they
declined to handle the enemy's oil at any price. "Then to have a stock
of our own always on hand, ready to sell whenever we could at a profit,
and hold in reserve whenever they put prices below cost; and in this
way we have made it a losing business to them for over three years, and
will continue to do so as long as they remain in our town.... When our
association buys a car of oil, each member pays for and takes charge of
an equal share, but the oil remains the property of the association;
and should any member sell out before the others, he has the right to
buy from them at cost, and the next car is not ordered until all are
nearly sold out."

It is "our pleasure to make oil cheap"; but a written proposition was
made to the merchants that if they would repent and return, the price
would be 20 cents a gallon, with a rebate to the loyal dealers. As
this oil could be, and was being, laid down in Columbus at 12 cents
a gallon, the proposition amounted to a request that the merchants
join in imposing a tax on the people of 8 cents a gallon, which must
be added to the retail price, and go to swell the profits of the
"sympathetical co-operation." "Can any one," said the _Index_, "after
knowing these facts, doubt that in a pecuniary point our merchants
could have done better by surrendering the principle and joining the
ring? But, at the same time, could any reasoning man (even viewing it
in the light of policy alone) advise such a course?--one which, if
adopted, would only open the door for other monopolies to enter and
demand high prices on meat, flour, and the other necessaries of life,
until our city becomes the highest market in the land. Let all good
citizens, then, unite in a steady effort to resist the yoke which this
monopoly is now trying to force upon us, and let us teach them and all
others that our people are too loyal to each other and too intelligent
to allow themselves to be made the instruments of their own destruction.

"Remember, that should our merchants be forced to yield, the day of
low prices will be a short one, and then these strangers, having
accomplished their purpose and forced their yoke upon you and us, will
return to their homes, and while rioting in the taxes wrung from you,
with your own assistance, will laugh at you for allowing yourselves to
be so easily duped, and, emboldened by their success in forcing upon
you high-priced oil, will soon return to demand high prices on sugar,
coffee, and every other article of trade."

The nose for news of the American press scented out the novelty of a
whole community acting as one man in successful resistance to those who
had till then found nowhere any cohesive brotherliness to make a stand
against them. The newspapers of the county took the matter up. It was
absolutely the first time any method had been found that could prevail
against the tactics of divide and conquer, which had been elsewhere
irresistible. Public attention was fascinated by the revelation that
a brotherhood to ravage the people turned impotent when the people
were roused to meet it with their brotherhood of the commonwealth.
There was in the spectacle a moral illumination--the light that never
fails. Instead of becoming, as had been planned, a warning to all the
people of the dire destruction to be visited upon any who dared to
disobey, the encounter between the one-man power of united Columbus
and the one-man power of hundreds of millions of dollars became every
day more brilliantly a sign in the sky, showing all the people how the
invasion of their industrial liberties could be changed into a ruin
more complete than the retreat from Moscow. Scores of such assaults on
the people had been won before. "What was being done at Columbus," said
one of the papers, "is but what they have done before at Aberdeen, and
at hundreds of other places North and South."

But as despoilers always have to fear, one defeat may undo a lifetime
of conquest. The success of the people of Columbus was teaching the
people of the whole country, and of all markets, that their real enemy
was not the oil trust, but the lack of trust in each other. The people
were learning there was a magic in association more potent than the
trick of combinations. The _Index_ proposed to the people of the South
to join the citizens of Columbus, and make the fight general. "There
is this about it: if there was concentrated action among the smaller
cities and towns throughout even this section of the State, we would
have no fear of the result. The oil trust may be too strong for a
single small locality, but if a combination of a certain number of
localities handling oil were effected, they would soon be forced to
retire. Such a combination can be and should be brought about at once."

The struggle at Columbus lasted three years. It had seemed unequal
enough--a few thousands of dollars against hundreds of millions. But
three years of this commercial warfare failed to break the spirit or
resources of the brave--and wise because brave--people. The community
never broke rank. They laughed when they were tempted with cheap
coffee, flour, sugar, to join in the attempt to bankrupt their home
merchants. They could see that the gift of forced cheapness, used to
destroy natural cheapness, was a Trojan horse bearing within itself
the deadliest form of dearness. Defeated, the oil lords gave up the
contest, closed their store in Columbus, and left the people of that
place free.

"England," says Emerson, "reaches to the Alleghanies; America begins
in Ohio." In the Western Reserve of Ohio, hive of abolitionists and
Union soldiers, was the same spirit of America which, at Columbus,
Mississippi, had defended its market rights as outposts of all other
rights. It was only a few years ago discovered that the flames of the
"burning springs" of the Caspian Sea, China, and America, whose torches
kindled the lamp of history, were beacon-fires uncomprehended by a
procession of civilizations, and waiting to light man to the knowledge
that the earth beneath him was a city of domes, huge receivers storing
up the products of vaster gas-retorts below. Man found that he need not
wait for this spirit to come to him out of the "caverns measureless to
man." He could go to it, as in oil, and, tapping the great tanks, could
lead their flighty contents to homes and mills, to emerge there as
light and warmth and power.

Experience in oil had made ready skill and capital to use the new
treasure. In a very few years thousands of miles of pipe were laid, and
millions of capital invested in the natural-gas business, mainly in
Ohio and Pennsylvania. The gas was found in the same general localities
as oil, and the methods of procuring and distributing it were similar,
and the similarity easily extended to the methods of administering this
bounty of nature as "property." Toledo began to be supplied in 1887
with the new fuel through pipe lines by two companies. They obtained
their franchises as competitors, but were soon found to be one in
ownership, prices, and all details of management. The discovery that
the two companies at Toledo were really one, and that one the evil one
of the oil trust, aroused the apprehensions of the people, and these
were increased by a number of circumstances.

The Toledo companies got from the city as a free gift a franchise
worth hundreds of thousands of dollars, on condition that they would
supply Toledo before a certain date. But in the midst of the work of
laying pipes they suspended operations, and declared that they would
do nothing more unless the City Council fixed, at rates dictated by
them, the prices the people were to pay. These rates were enough
to pay not only a fair dividend, but to return in a few years every
dollar of capital invested in lands, pipes, etc. Later they demanded
another increase which, according to the sworn statement by their
superintendent of the amount of gas supplied daily, would have
amounted to $351,362.50 a year. They made the charges regardless of
the ordinance, and used delay in furnishing gas as a means to make
people willing to pay these illegal rates. Consumers seeking to renew
their contracts were informed that the price would be doubled. The
companies had assured the people that they should get their heat at
half the price of coal; but when the bills were footed up, the gas in
many cases cost more than coal. The companies refused to supply fuel
to an oil refinery which had been built in Toledo in opposition to the
trust refineries. The companies discriminated against some customers,
and in favor of others. The power to say which manufacturer should
have cheaper fuel than his competitor was a power to enact prosperity
or ruin.[513] It was a power to force themselves into control of any
business they desired to enter.

Those who controlled these gas companies appeared in the Circuit Court
of the city in a proceeding which alone contained warning enough to
put any self-governing community on guard. The Court was asked to deny
the right of farmers in Wood County to give a way over their lands to
the Toledo, Findlay, and Springfield Railway, being built to give the
independent oil-refiners and producers of the Ohio oil-field a route to
market. The farmers in question had made leases to an oil corporation
of the trust, giving only the specific right to bore for and pipe and
store oil and gas. The farmers supposed that they had parted only with
what they had signed away in the leases. They supposed they still owned
their farms. When the new railroad sought the privilege of a right of
way the farmers granted it. Suit was at once brought for an injunction
to prevent this use of the land. According to the logic of the claim
in these cases a farmer who has made such a lease could not build a
road across his own farm without permission. "Most certainly not," was
the reply made by one of the lawyers to the judge who asked if the
farmer could do so.

By occurrences like these an increasing number of influential citizens
were convinced that the gas companies would hold a power over the
comfort and daily life of the people not wise to surrender entire to
any corporation. An agitation was begun for the supply of gas to the
people by themselves acting through the municipality. Six thousand
citizens sent a petition, in the session of 1887-88, to the Legislature
to pass the necessary enabling act. There was a discussion of the
project for two years. Public opinion grew more favorable every
day. The citizens chartered a special train to carry a delegation
to Columbus the day the pipe-line law came before the Senate. The
Legislature in 1889 passed the law. It authorized the people of Toledo
to issue bonds to the extent of $750,000 to buy gas land and build
pipe lines. This legislation was, of course, bitterly opposed by the
existing gas companies, and they demanded of the Legislature that
before the law became operative it should be ratified by a three-fifths
vote of the people. The friends of this scheme of municipal self-help
and independence accepted the challenge. In the ensuing campaign the
opposition to the people was officered by the president of one of the
natural-gas companies, twice Governor of Ohio, afterwards United States
Secretary of the Treasury. The natural-gas trustees of the City of
Toledo in an official communication said: "There is reason to believe
the money of the natural-gas companies was freely spent to defeat it."

The act was ratified April, 1889, by a vote of 7002 for to 4199
against--"a vote," say the trustees, "in which the heavy taxpayers
were largely acting with the majority."[514] Organized labor took an
enthusiastic part in the work of this election. The Central Labor Union
held a special meeting which filled the largest public hall. Men
paraded the streets with banners favoring the policy of independence.
The Knights of Labor held meetings to discuss the project, and the
Central Council, representing all the assemblies in the city, passed
unanimously resolutions appealing to all members of the order and all
working-men to support no candidate who would not pledge himself to
the city pipe line. At a meeting of the glassworkers it was resolved
to be "the duty of every working-man to vote 'Yes' for the pipe line
next Monday." "Many of us glassworkers," said the resolutions adopted,
"have been employed in factories in the Ohio Valley, receiving their
natural-gas fuel from a gigantic corporation similar to that which now
supplies Toledo. We have seen our employers unfairly dealt with, and
arbitrarily treated in the matter of making rates. Some of them were
forced to go into the courts, to prevent the extortion of the piratical
company who were bent on assessing each citizen and industry at the
highest rate possible, irrespective of its effect on the industries or
the wages of the employés. Many manufacturers were compelled to move
their plants to the cheap gas-fields of Ohio and Indiana. The employés
were compelled to break up their homes and emigrate, in order to follow
their trade for a livelihood." The question came before the people
again the next spring, when both the Republican and Democratic parties
by acclamation renominated a natural-gas trustee, whose term was
expiring, to succeed himself. At the election the vote was 8958 for,
and only 58 against--a practically unanimous indorsement of the project
by the people.

Toledo now began to make history. "It is entirely safe to say," a
well-known citizen declared in the Toledo _Blade_, "that in the history
of this country no other people have been called to the experience
which Toledo has been undergoing for the past year. Communities often
are agitated and divided on questions of local policy; but no second
case will be found in which a people, after settling such questions
among themselves according to recognized rules, were confronted with
warfare, bitter and persistent, such as this city is now called to
meet, and at the hands of a combination wholly of non-residents,
without the slightest proper voice in their domestic concerns."
In every direct encounter with the "commons" the "lords" had been
defeated--in the two years' debate which preceded the first appeal to
the Legislature; in the Legislature, where the bill passed the House
almost unanimously, and the Senate more than two to one; in the appeal
to the voters; before the governor, who had been approached to cripple
the enterprise of the municipality by naming unfriendly trustees. The
gas companies had tried at each city election, after the Legislature
acted in 1889, to seat in the City Council a majority in their
interest; but the people, making the city pipe line the issue of the
election, gave an overwhelming preponderance of their votes to the men
pledged to see it through.

"Strong and subtle opposition"[515] was then brought to bear on the
Common Council to prevent it from passing the necessary ordinances;
but, in spite of it, both branches of the Council voted them
unanimously. A clearer case of the will of the people and of law and
order there could not be. A free and intelligent community, in a matter
of vital concern to its industrial freedom and business prosperity,
after thorough discussion, in which all sides had been freely heard,
had by constitutional proceedings decided by an overwhelming majority
upon a policy altogether within its legal, moral, and contract rights.
The ablest lawyers, writers, and financiers that money could hire had
had it under the microscope to find some breach for attack, but had not
been able to find a flaw. All was constitutional, legal, proper, and
expedient. A glance at the contestants brings out in clear outlines
some conditions of our modern development which have come upon us
almost unawares. The City of Toledo was a vigorous community of 90,000
people; its opponent was a little group of men; but they controlled
in one aggregation not less than $160,000,000, besides large affairs
outside of this. The assessed valuations of the property of the people
on which Toledo could levy taxation was, in 1889, but $33,200,000.
The total income of the municipality was $961,101; that of a single
member of the little group opposing them had been acknowledged to
be $9,000,000 a year, and was believed by the best informed to be
several times as much. This individual income was greater than the
product of all the manufactories of the city, and three times greater
than the combined wages of the workmen in these establishments. There
were several members of the natural-gas syndicate who collected and
disbursed every year more than the community. Toledo had about the
same population as Kansas in 1856. The slave power of the South that
assailed the liberties of the 90,000 in Kansas numbered millions, but
the new power in the North, which in a short generation had grown so
strong that it did not fear to attack the 90,000 freemen of Toledo,
counted only nine names. The people could act only after public
deliberation, and through the slow stages of municipal and State
procedure. Their antagonist met in secret council, and devised plans
executed by a single hand, armed with the aggregated power of hundreds
of millions of dollars, and liable, if found illegal or criminal, to
only "nominal" punishment, or only 6 cents damages.[516]

At Columbus the struggle was with something very simple but
extraordinarily difficult to overcome, as simple things often are--an
obstinate, immovable, thoroughly angry public opinion, acting only
through private voluntary means, its set will to exchange the fruits of
its labor with whom and on what terms it pleased. There was absolutely
no leverage to be got to bear upon the people of Columbus except by
changing their feelings. Compulsion was out of the question. But at
Toledo compulsion was possible. There the people had acted not through
unofficial combination as at Columbus, but through the official
machinery of the town and State. If the law could be turned against
them by able counsel or compliant judges; if any smallest fault,
however technical, could be found in the legislation of the State or
the city or the practical administration of the official machinery
provided for the natural-gas business of the city--if this could be
done, the people of Toledo could be compelled, however little their
will had changed, to see their enterprise of independence balked; this
compulsion could be carried to the use of force if they resisted, and
the militia of the State and the regular army could be brought into the
conflict.

Such is the prize of power which tempts--more than tempts, drives as
by fate--our overgrown wealth to fortify itself by control of judges,
governors, presidents, commanders-in-chief--all the agents of the
supreme authority and force.

Columbus was so local that its people were sufficient unto themselves.
All they had to do was to keep on saying, We will not buy. But Toledo
was a citizen of the great world of affairs and finance. It was part
of London, New York, Chicago. Much of it was owned as an investment
elsewhere. Sensitive nerves connected it with all the markets,
especially the greatest of all--the money-market. It sold and bought
and borrowed and lent far beyond its own border. What Wall Street
gossips said about the people of Columbus would not make a dollar's
difference to the whole town in a year, but a whisper started through
the offices of the great capitalists in New York and abroad would
flash back by wire to Toledo, and go like a quick poison through its
industries and credit, private and public.

"Private enterprise" could not afford to let the people of Toledo go
forward with their public enterprise. Many millions had been invested
in getting control of a business representing $200,000,000. Many
towns and cities, as Fostoria, Sandusky, Fremont, Clyde, Bellevue,
Norwalk, Perrysburgh, Tiffin, and Detroit, were being supplied with
gas at a handsome profit. If Toledo should set a successful example
of self-supply, it would find imitators on every side. The essence of
"private enterprise" was that the people should get their gas from
Captains of Industry, and pay them for their captaincy two or three
times the real cost as profit, just as monarchical countries pay kings
for kindly supplying the people with the government which really comes
from the people. The essence of municipal supply was that the people
should supply themselves at cost without profit, and without Captains
of Industry, except as the people provided them. Toledo, in fine,
proposed to keep step with the modern expansion of self-government,
which finds that it can apply principles and methods of democracy
to industry. It proposed to add another to many demonstrations
already made, noticeably in this very department of gas supply to
municipalities, of the truth that the ability to carry on the business
of supplying the various wants of mankind is not a sort of divine right
vouchsafed from on high to a few specially inspired and gifted priests
of commerce, by whose intermediation alone can the mysteries of trade
be operated; but, like the ability to govern and be governed, is one
of the faculties common to mankind, capable of being administered of,
by, and for the people, and not needing to be differentiated as the
prerogative of one set of men. The Toledo experiment was another step
forward in the world-wide movement for the abolition of millionaires--a
movement upon which the millionaires look with unconcealed apprehension
for the welfare of their fellow-beings.

Mankind views with equanimity the expulsion of the profit-hunter from
the businesses of carrying letters, minting coins, administering
justice, maintaining highways, collecting taxes, in which
millionaireism has been universally put an end to. It views with hopes
of larger results the newer manifestations of the same tendency which
in England have abolished millionaireism in telegraphs and parcel
express; in Germany and France, Australia, and India have gone a long
way towards the abolition of the millionaire in railroads; and in
various cities and towns in Europe, America, and Australia have put up
local signs, "No millionaires allowed here," by the municipalization of
trade in water, gas, electricity, street-railways, baths, laundries,
libraries, etc. The trust of millionaires was therefore fighting for a
principle, and what will good men not sacrifice to principle!



CHAPTER XXIII

FREEDOM OF THE CITY


Towns, like men, stamp themselves with marked traits. Toledo had an
individuality which showed itself from the start. Its leading men
clubbed together and borrowed money as early as 1832 to build one of
the first railroads constructed west of the Alleghanies--the Erie and
Kalamazoo, to connect Toledo and Adrian. When, in 1845, the steamboats
on the lakes formed a combination, and discriminated against Toledo,
the city through its council refused to submit, and appropriated
$10,000 to get an independent boat to Buffalo. The city appropriated
its credit and revenues to other important and costly enterprises,
including four railroads, to keep it clear of the cruel mercies of
private ownership of the highways. In 1889 it expended $200,000 to
secure direct railway connections with the Pennsylvania and the
Baltimore and Ohio railways for competition in rates with the Lake
Shore Railroad.

As it had been authorized to do so by the State, the City Council of
Toledo, April 29, 1889, ordered gas bonds to the amount of $75,000
sold, that work on the city pipe line might begin. Before proceeding
with the enterprise confided to them, the natural-gas trustees gave
the private companies an opportunity to save themselves from the
competition of the city. They asked them in writing if they would agree
to furnish gas cheaply for a term of years, or if they would sell
their entire plant to the city? They did this, as they expressed it,
as "an honorable effort ... to obtain cheaper gas without unnecessary
expenditure, and without injury to established rights." After a
delay of nearly a month a reply was received, refusing to enter into
negotiations either for a reduction of charges or for the sale of the
private plants to the city. The trustees then asked for a personal
interview, but this was refused. Then when the city began preparations
to sell its bonds, a cannonade was opened on it in the courts, the
money-market, the gas-fields, the city government, the press, among
the citizens, and everywhere. Injunctions were applied for in three
courts, unsuccessfully in all instances. No injunction was ever granted
in these or any other of the many suits brought for the purpose of
enjoining the sale of the bonds. Courts will usually grant temporary
injunctions awaiting a hearing on the merits when complainants will
enter into ample bonds and indemnify defendants. But the parties
instigating this litigation would not put up the necessary bonds. They
thus could smirch the bonds without incurring any personal liability in
so doing.

An expensive array of lawyers was sent before the United States
courts to prevent the issue of the bonds on the ground that they were
illegal, and the law under which they were issued unconstitutional.
The principle involved had been frequently discussed and always upheld
both by the Supreme Court of Ohio and the Supreme Court of the United
States.[517]

"Does not your argument appear to be in conflict with the views of the
Supreme Court of Ohio and the Supreme Court of the United States?" the
judge asked. The counsel for the gas companies responded in substance:
"If so, then so much the worse for the views of those courts."

As it was through the suffrage that the people of Toledo were able to
do this, the attack was widened from an attack on the enterprise to one
upon the sovereignty of the citizens which made it possible. "Everybody
votes in Ohio--in fact, too many people," said the lawyer who applied
for an injunction against Toledo. If he had his way, he declared, there
would be fewer voters, and he stigmatized the arguments of Toledo as
those of John Most, the communist.

"Unquestionably," decided Judge Jackson, "the Legislature may
authorize a city to furnish light, or facilities for transportation, or
water to its citizens, with or without cost, as the Legislature or city
may determine.... Since the decision in Sharpless _vs._ Philadelphia
it is no longer an open question whether municipalities may engage in
enterprises such as the one contemplated by the act in question in this
case. The act of January 22, 1889, authorizing the city of Toledo to
issue bonds for natural-gas purposes, is clearly within the general
scope of legislative power, is for a public use and purpose, and is
not in contravention of any of the provisions of the constitution. The
court being of the opinion that the legislation is valid, it follows,
of course, that the injunction applied for must be refused."[518] When
the news of Judge Jackson's decision was telegraphed to Toledo nothing
less than the booming of cannon could express the joy of the citizens.
They sent this message to the just judge: "One hundred guns were fired
to-night by the citizens of Toledo in honor of your righteous decision
to-day." Judge Jackson again upheld the bonds at Toledo, January 14,
1890, when he again dismissed the case against the city "for want of
equity, at cost of complainants."

The favorable decision by Judge Jackson, although an appeal was taken,
made it possible for the city to sell the $75,000 bonds which had been
issued by order of the Council. The bonds brought par, interest, and
over $2000 premium. With the money thus procured the city's Board of
Natural Gas Trustees began operations. Their opponents had spread far
and loud among the voters before the election--among those who would
be likely to buy the bonds, everywhere it would hurt--the assertion
that all the territory that was good had been bought up by them, and
the city's trustees would not be able to get any. One of the companies
had no less than 140,000 acres of gas lands in its possession or under
contract, at a cost in rentals and royalties of $100,000 a year.[519]
But the city trustees, even with the small sum at their command, were
able to secure at the very beginning wells with a capacity more than
four times as great as the private companies had had when the latter
began the investment of a million or more to lay their pipe lines to
Toledo.[520] Together with this supply the city trustees got 650 acres
about 35 miles from Toledo of as choice gas territory as there was in
Ohio, almost all of it undrilled, and they had offers amounting to 5000
acres more within piping distance from the city. The city's trustees
made their purchases with success, and received the laudations of their
constituents for having got lands and wells at better prices than the
private companies.

August 26, 1889, after a decision in the United States courts that
there was no ground on which to object to the issue of the bonds, the
City Council voted the issue of the remaining $675,000.

Defeated in the public debate which preceded the decision of Toledo
to supply itself; defeated at the State Capitol; defeated at the
polls of Toledo time and again--every time; defeated in the Common
Council; defeated in the gas-fields; defeated in the courts of their
own choosing, the opponents of the city, thorough as only the very good
or the very bad can be, refused to submit. When the two corporations,
in 1886, were seeking the franchise indispensable for doing business
in Toledo, they said to the Board of Aldermen: "We ask no exclusive
privilege.... We cannot have too many gas companies." They also said:
"If the city desires to furnish its own gas, there is nothing in this
ordinance to hinder it. We are ready and willing at any time to enter
into competition with the city or any other company." They said, on
the same occasion, in answer to apprehensions which had been expressed
about the danger of putting the fuel supply of the city into the hands
of a monopoly: "You can go before the Legislature and obtain the right
to issue bonds for furnishing yourselves with gas." It was by these
assurances the companies induced the Common Council to grant them
gratuitously the very valuable franchises they were seeking.

The right of the people to compete was not left to these assurances.
It was specifically and formally asserted in the ordinance of July 5,
1887, fixing rates. This was the ordinance to procure which the gas
company suspended its operations in mid-course, and declared it would
not continue unless the prices which it wanted were made. The ordinance
was, in fact, prepared by the company. It said: "Provided that nothing
herein contained shall be construed as granting to existing companies
any exclusive rights or privileges, or prevent any other company from
furnishing natural gas to the citizens of said city." But the same
learned counsel who, in behalf of the companies, had assured the city
that "there was nothing in this ordinance to hinder it," went before
the United States Court and pleaded that ordinance as good reason for
the intervention of the Federal Government to prevent the city from
going on with its enterprise.

The only morning paper--an able advocate of the city pipe
line--suddenly changed owners and opinions. Among its new directors
were two of the lawyers of the trust opposing the city, a director
in one of its companies, and, besides them, the manager, a contract
editor from Pennsylvania. His sole conspicuity there had been won in
turning against the people of the oil regions a paper which had been
their stanchest defender. This Toledo daily, in its espousal of the
cause of the city, had been firing hot shot like this against the oil
combination: "It wants a monopoly of the natural-gas business. This
is what it is driving at." Under its new management it roared like a
sucking dove, thus: "It is fashionable with demagogues and men who are
not capable of appreciating the worth of brains in business to howl
against it"--the oil combination--"as a grasping, grinding monopoly."
Just after the people had decided in favor of the pipe line, and only
a few days before it changed owners, it had said: "All manner of
influences were brought to bear to defeat this proposition.... All the
plausible falsehoods that could be invented, and all the money that
could be used, were industriously employed, but the people saw the
situation in its true light, and the majority voted right." It now made
the defeat of the city's pipe line the chief aim of its endeavors. In
this work "no rule or principle recognized in decent journalism was
respected."

In all the history of Toledo no interest on its bonds had ever been
defaulted or delayed; no principal ever unpaid at maturity. The city
was prosperous, its growth steady; its debt growing less year by year
in proportion to its population and wealth. Its bonds ranked among the
choicest investments, and commanded a premium in the money-market.[521]
But the credit and fair fame of the city were now over-whelmed with
wholesale vituperation by this paper, and others elsewhere under
similar control. Articles were carefully prepared for this purpose by
skilled writers. These were then copied from one newspaper to another.
By some arrangement insertion was obtained for them in financial
journals in New York and in London, and in other foreign capitals.
The Toledo organ declared that Toledo was an unsafe place for the
investment of capital in any form. Its public affairs were said to be
run by a set of "demagogues and speculators," whose administration was
"piratical mob rule." The city pipe line was a "monstrous job," and the
men who favored it were "a gang of throttlers and ravenous wolves."
They were "blatant demagogues, who made great pretence of advancing
the city's interest, but whose real aim is to enrich themselves at
public expense." The bonds, which had been issued in due form by
special authority of the Legislature, ratified by a vote of more than
three-fifths of the citizens, and declared to be valid by the United
States Court, were described as "chromos," "worthless rags," "bad
medicine," "disfigured securities," "like rotten eggs, highly odorous
goods," "but few persons at most can be found ignorant enough to buy
them."

The Mayor, City Auditor, Board of Natural Gas Trustees, united with
a citizens' committee of the Board of Trade in a plan to promote the
sale of the bonds direct to the people of Toledo through a financial
institution of the highest standing. This action the paper described
as "a scheme for gulling simples," "a blind pool," "an unpatented
financial deadfall"; compared it with "gambling, pool-playing, and
lottery selling." These grave charges were widely circulated throughout
the country. Bankers and capitalists in other cities who received them
had no means of knowing that they were not what they pretended to
be--the honest if uncouth utterances of an independent press chastising
the follies of its own constituency. Newspapers which supported the
city's project were assailed as ruthlessly as the community and
citizens. The _Blade_ was constantly referred to as "The Bladder."
Another journal was given a nickname too vulgar to be printed here. One
of the most prominent journals of Ohio was punished by the following
paragraph, which is a fair sample of the literary style of monopoly:
"That aged, acidulous addle-pate, the monkey-eyed, monkey-browed
monogram of sarcasm, and spider-shanked, pigeon-witted public
scold, Majah Bilgewater Bickham, and his backbiting, black-mailing,
patent-medicine directory, the _Journal_."

An old journalist and honorable citizen who wrote over his initials,
"C.W.," a series of able and dignified letters in the _Blade_, which
had a great influence in the formation of public opinion in favor
of the pipe line, was assailed with "brutal falsifier," "hoary old
reprobate," "senile old liar." Caricatures were published depicting the
buyers of the bonds as "simple greens." When the County Court of Lucas
County, following the United States Court, sustained the bonds on their
merits, and did so on every point in question, because, as the judge
stated, "the equities of the case are with the defendants," the organ
falsely stated that judgment for the city was given "because the merits
of the case are involved in a higher court." When a capitalist of New
York, who had been an investor in the bonds of Toledo and a taxpayer
there for twenty-five years--one of the streets of the city was named
for him--bought $10,000 of the city pipe-line bonds, the paper attacked
him by name in an article headed "Bunco Game," charging him with being
a party to a bunco game in connection with "public till-tappers" for
"roping Toledo citizens into buying doubtful securities." When the
Sinking Fund Commissioners of Toledo very properly invested some of the
city's money in the gas bonds, they were held up by name as "public
till-tappers," "menials" of a "hungry horde" of "boodle politicians,"
accomplices of "plunderers of the public treasury," unable to withstand
"the brutal threats and snaky entreaties of the corrupt gas ring." For
one of the associate editors the position of Deputy State Inspector
of Oil was obtained--an appointment which cost the Governor who made
it many votes in the next election, and did much to defeat him. Such
an appointment might give a versatile employé the chance to do double
duty: as editor to brand as bad good men who could not be bought, and
as inspector to brand as good bad oil for sale.[522]

One of the means taken to defeat the pipe line was the publication of
very discouraging accounts of the "failure" at Indianapolis, where the
citizens had refused to give a natural-gas company belonging to the
oil trust the franchise it demanded, and, forming an anti-monopoly
trust, had undertaken to supply themselves. Some "influence" prevented
the Common Council of Toledo from sending a committee to Indianapolis
to investigate. A public-spirited citizen, prominent and successful
in business, came forward, and at his own expense secured a full and
accurate account of the experience of Indianapolis for the city.
This proved that the people were getting their fuel gas at less than
one-half what Toledo was paying. The contest against giving the
Indianapolis franchise to a corporation of the trust had been a sharp
one. Its success was due to the middle classes and the working-men,
who stood together for freedom, incorruptible by all the powerful
influences employed. "We will burn soft coal all our lives," one of
their leaders told the Toledo committee, "rather than put ourselves in
the power of such men."

In Indiana the Legislature meets only once in two years, and when this
issue arose had adjourned, and would not meet again for a year. The
people, not being able to get authority for a municipal gas pipe line,
went to work by voluntary co-operation. Every voting precinct in the
city was organized and canvassed for the capital needed. The shares
were $25 each, and they were bought up so rapidly that the entire
amount--$550,000--was subscribed in sixteen days by 4700 persons,
without a cent of cost to the city. When subscriptions to the amount of
$550,000 had been raised, $600,000 more was borrowed on certificates of
indebtedness.

Gas lands were bought and 200 miles of pipe lines laid, all at a cost
of about $1,200,000. The income in one year, during a part of which the
system was still under construction, was $349,347. In the first year of
complete operations the Indianapolis people's trust paid off $90,000
of the principal. The income for the year ending October 31, 1892,
was $483,258.21, and the bonded debt has been paid. The stock, since
January 1, 1893, has been paying dividends at the rate of 8 per cent. a
year.

A prominent citizen of Indianapolis, one of the State judges, told the
Toledo papers, in an interview: "The private companies had their gas
laid to the city and along the streets several months in advance of the
Citizens' Trust, but it did them little good. Everybody said: 'I will
wait for the Consumers' Trust.' 'Yes, but we will furnish you gas just
as cheap,' said the Indianapolis company; 'why not take it of us?' To
this the citizens replied: 'To take gas of you means cheap gas to-day,
but high gas to-morrow.' And wait for the gas they all did." The charge
to manufacturers was 2-1/2 cents a thousand feet, as against 8 cents,
at that time charged at Toledo. There were 12,000 private consumers.
Cooking-stoves in Indianapolis were about $12 a year, against $19.50
in Toledo. One of the representatives of the private company declared
at a public meeting at Indianapolis that its charges were made
such as to give a full return of all the invested capital in three
years, as that was the probable life of the supply. A year after the
inauguration of the Indianapolis movement a committee of the citizens
at Dayton, who had risen against the extortionate prices charged them,
investigated the condition of affairs at Indianapolis. They reported
that Indianapolis had paid $200,000 on its bonded debt, and was getting
ready to pay as much more. The Consumers' Trust supplied between 10,000
and 11,000 consumers, and spent $1,000,000 less than the Dayton private
company spent to supply 3000 fewer consumers. The annual charge at
Dayton was $54.80; at Indianapolis only $26.80--less than half.

When facts like these were brought out, to the demolition of the
fictions circulated in Toledo, the answer was characteristic. The
"organ" could not deny the statements, but it fell upon the citizen
through whose generosity the information had been got for the people,
and assailed his private character in articles which, one of the daily
papers declared, editorially, "would almost, if not quite, justify him
in shooting their author on sight."

This newspaper charged the city natural-gas trustees with being "rotten
to the core," and with every variation of phrase possible to its
exuberant rhetoric sounded the changes upon their official career as a
"big steal," "fostered by deception, falsehood, and skull-duggery." It
sought to intimidate the Legislature and the courts when they failed
to enact or construe laws against the people. It said: "Law-makers,
judges, and others may feel the force of this element when the proper
time comes and political preferment is sought."

It was money in pocket that facts like those of the experience of
Indianapolis, Detroit, and other places should not be made known. Even
ideas must not be allowed to reach the public mind. Professor Henry C.
Adams, the well-known political economist, lectured in Toledo during
this contest, in a University Extension Course, on "Public Commissions
Considered as the Conservative Solution of the Monopoly Problem." The
"organ" gave a synopsis of the lecturer's views, which is printed
herewith in parallel columns, with a synopsis of what Mr. Adams really
said, as revised by himself:


 WHAT THE ORGAN OF MONOPOLY REPORTED.    | WHAT THE LECTURER REALLY SAID.
                                         |
 The lecturer made reference to Toledo   |Professor Adams thought the
 as an unfavorable place to discuss      |solution of the monopoly problem
 the matter of municipal control of      |must be found either in public
 quasi-public business and competition   |control or in public ownership.
 of municipalities with private          |He advocated public control, and
 corporations. But he deprecated anything|held that the State and Federal
 in that line. He did not mention        |railroad commissions should have
 particular instances, but broadly       |a fair trial, that their hands
 condemned the policy pursued by this    |should be strengthened by further
 city in matters of this kind, and his   |and adequate legislation. He
 remarks had a visible effect on his     |entertained the hope that this
 audience. He considered municipal       |control and regulation would
 control of business enterprises the     |ultimately protect the interests
 worst form of monopoly, as they began   |of the public in a satisfactory
 by having the unfair advantage          |manner. He was willing to admit,
 of the law-making power, and the        |however, if this effort to secure
 tendency to corruption was greater      |the needed public control by the
 than when individual enterprises were   |aid of commissions and
 asking privileges. The audience         |legislation should fail, then
 was much pleased with the lecturer.     |public ownershipwas the only
                                         |remaining solution. He held that
                                         |in local monopoliesit may still
                                         |be wise to try the experiment of
                                         |public control by aid of
                                         |commissions. He said, however,
                                         |that if anything should be owned
                                         |and controlled by and for the
                                         |people it would be
                                         |street-railroads, gas and
                                         |waterworks. He admonished his
                                         |audience not to be misled by the
                                         |argument that municipal ownership
                                         |would be dangerous because of
                                         |undue political influence, for
                                         |the local monopolies under
                                         |private ownership were already in
                                         |politics, and in a most dangerous
                                         |manner. He observed facetiously
                                         |that he hesitated to discuss the
                                         |question before a of municipal
                                         |control orownership Toledo
                                         |audience.


From the control of the markets to the control of the minds of a
people--this is the line of march.

So direct, persistent, and bold were the charges of corruptions rung
day after day by this journal against all the officials concerned
in the city gas enterprise that some people began to believe there
must be truth in them. But when the community at last turned upon
its maligners, and the grand-jury brought indictments against the
active manager of the paper and his chief assistant for criminal
libel upon the city's natural-gas trustees, the whole structure of
their falsehood went down at a breath. They had no defence whatever.
They made no attempt to justify their libels or even explain them.
Their only defence was a series of motions to get the indicted editor
cleared as not being responsible for what had appeared in the paper.
Counsel labored over the contention that the accused was none of the
things which the language of the law holds for libel. He was neither
the "proprietor," "publisher," "editor," "printer," "author," nor a
person "who uttered, gave, sold, or lent" a copy of the newspaper,
but only the "manager." The employés gave testimony which would have
been ludicrous but for the contempt it showed for court and community.
The journalist who was the "managing editor" of the paper under the
indicted chief editor was asked:

"Who was the head of the paper when you entered upon your duties as
managing editor?"

"I do not know."

"Who hired you as managing editor?"

"I really can't say that I was hired at all."

"Who employed you to come to Toledo?" The witness had been an employé
in Pennsylvania of the editor on trial, and had followed the latter to
Toledo to take the place of managing editor. "Nobody employed me."

The son of the indicted editor had also followed his father to Toledo,
and was employed on his paper. Asked for what purpose he came, he said:
"I had no purpose in coming."

The gentleman who had charge of the counting-room was asked who fixed
his salary.

"I regulate my own."

The advertising manager declared:

"I have no knowledge who is my superior."

The accused had to let the case go to the jury without a spark of proof
of the accusations which had filled the paper every day for months.
He had no evidence to offer either that the charges were true, or
that he believed them to be true. He stood self-confessed as having
for years printed daily gross libels on citizens, officials, and
community, as part of the tactics of a few outside men to prevent a
free city from doing with its own means in its own affairs that which
an overwhelming public opinion, and the legislative, executive, and
judicial authorities, and its present antagonists themselves, had all
sustained its right to do. The agent of this wrong was found guilty,
and sentenced to imprisonment in the county jail, with heavy costs and
fine; like the unhappy agents at Buffalo--"made cheap" for others.[523]
But sentence was suspended pending hearing of the motion for a new
trial. This did not come up for a year. The court could find no error
in the proceedings of the trial court, and could not sustain any of the
objections made. But it found a point which even the lawyers had not
hit on, and strained this far enough to grant the new trial. Then the
convicted editor went before another judge--not the one who had tried
him--pleaded guilty, and was fined, and so saved from jail.

One of the last scenes in this Waterloo was the abandonment of the
newspaper with which the corruption and intimidation of public opinion
had been attempted. Failure was confessed by the sale of the paper, and
it was bought by a journalist who had been especially prominent in the
defence of the city, and against whom on that account a bitter warfare
had been waged by the daily which now passed into his possession. The
_Sunday Journal_ of Toledo, in commenting on the surrender, declared
that the course of the organ had been one of the strongest factors of
the success of the people. "In every possible way it slandered and
outraged the city, where of necessity it looked for support. There
could be but one result. Scores who had opposed the pipe line became
its most ardent advocates purely in the general defence."



CHAPTER XXIV

HIGH FINANCE


When Judge Jackson refused to enjoin the city from issuing its bonds an
appeal was taken. The court and the lawyers of the city were promised
that it would be carried up without delay. Months passed, and no use
was made of the privilege of filing new pleadings and taking new
testimony--that is, no use but to make the suits the basis for libels
on Toledo and its bonds.

Time ran on until the day was at hand for opening bids for the bonds.
That was to be Wednesday. Then the counsel for the opposition notified
the city that on Monday they would begin the taking of depositions.
This was not then or afterwards done, but on the strength of the
notification news despatches were sent over the country that the
proceedings against the legality of the Toledo bonds were being
"pressed." In consequence of this and other manoeuvres, when Wednesday
came there were no bids. A hasty rally of some public-spirited
capitalists at home, learning of the emergency, made up a subscription
of $300,000. The names of the citizens who made this patriotic
subscription were printed in the daily paper under the heading of "The
Honor Roll."

Only by extraordinary manoeuvres could the market for such securities
offered by such a community have been thus killed in a time of great
general and local prosperity, and extraordinary they were. What they
were was formally and authoritatively ascertained by an investigation
made by a committee appointed at a mass-meeting[524] of the citizens
of Toledo called by the mayor, the Hon. J.K. Hamilton. The call ran:

 "For the first time in the history of Toledo, its general bonds,
 secured by the faith and property of the city, and bearing a fair rate
 of interest, have been offered, and only such of them sold as were
 taken at home by popular subscription. It is deemed desirable that
 under such circumstances the citizens of Toledo should meet together
 and determine what further steps should be taken to carry out the will
 of the people as expressed by 62 per cent. of the voters of the city.

 "It is believed that with proper effort a large additional popular
 subscription may be obtained, and thus notice given to the world that
 notwithstanding all opposition the citizens of Toledo have confidence
 in and will maintain the credit of this fair city, and that a great
 enterprise undertaken by its people will not be defeated by the
 machinations of private opposing interests, no matter how powerful and
 unscrupulous."

The meeting appointed a committee of three--David Robinson, Jr., Frank
J. Scott, and Albert E. Macomber--"to prepare and circulate throughout
the financial circles of the country a pamphlet which shall set forth
the case of the city of Toledo in its struggle against those who by
anonymous circulars and other dishonorable ways have attempted to
prevent the sale of the Toledo natural-gas bonds." This committee put
the facts before the public in a very able pamphlet, "The City of
Toledo and Its Natural Gas Bonds." In an official statement asked for
by this committee the city natural-gas trustees say: "Skilled writers
were employed to furnish articles for Eastern financial journals, to
cast discredit on the bonds on the very grounds that had been set
aside by Judge Jackson's decision. Not content with this open warfare,
anonymous circulars were sent to leading investment agencies in the
United States, warning them to beware of these bonds, as they were
under the cloud of doubtful constitutionality and an impending lawsuit.
When the day arrived for bidding for the bonds no bids were made.
Agents of investors were present, who came to bid, but by some unknown
and powerful influence they were induced not to put in their bids. The
writers are not aware that any similar mode of striking at the credit
of a whole community was ever before resorted to in this country.
It is an insult and a wrong not only to this city, against which it
is aimed, but to people of independence everywhere in the United
States who have a common interest in the maintenance of the rights of
all."[525]

Press despatches impugning the validity of the bonds and
misrepresenting the facts were sent all over the country. The anonymous
circulars referred to were mailed to all the leading banks, investment
agencies, capitalists, and newspapers. The New York _Mail and Express_
said: "It would be decidedly interesting to know who is responsible
for the ... methods by which it was thought to prevent the city from
undertaking the enterprise. A number of volunteer attorneys and
correspondents deluged bankers and newspapers with letters warning them
against the bonds which the city proposes to issue, on the ground that
it had no right to issue them. The _Mail and Express_ received several
communications of this kind."

"Not only the financial centres of this country," say the city's
natural-gas trustees in their official report for 1890, "but those
of Europe were invaded with these circulars."[526] The circular was
headed "Caveat Emptor." It contained twenty-four questions, and every
one of the answers, except those which referred to matters of record
and routine, like the date, amount, name, etc., of the bonds, was
incorrect. What hurt the people of Toledo most, as it was most base
and baseless, was its attack on their hitherto unquestioned credit and
financial honor. Asking the question, "How does the credit of the city
stand?" the circular answered: "Refunding has been going on ever since
1883. The bonded debt was greater at the beginning of 1889 than of
1888; bonds bearing interest at 8 per cent. will become due in three or
four years. The mayor, in his last annual message, admits the inability
of the city to pay much of these except the refunding." "Willing to
wound, and yet afraid to strike," the authors of this attempt to pull
down an entire city managed, by the interweaving of such phrases as
"ever since 1883," "bonded debt greater," "inability of the city to
pay," to create by insinuation the feeling of financial distrust for
which their greatest industry and ingenuity had been able to find not a
particle of foundation. No modern municipality is asked or expected or
desired "to pay much except the refunding." Capitalists would greatly
prefer that even the refunding should not be carried on, but that the
debt should run along at the original high rates of interest, which
they regretfully see dwindling away. The circular failed to state that
the city was borrowing money at 4 per cent. to pay off debts bearing 8
per cent. The insinuations of the circular could have been used of "the
credit" of the United States, New York, Paris, London, Chicago, with
the same appropriateness--with this exception, that Toledo's municipal
financial credit was relatively to its resources on a sounder and more
conservative basis than these much more highly financed cities. The
circular did not state that the proportions of debt to population had
been decreasing for many years past.[527]

"Toledo has not two years' supply of gas," the circular said, "in all
the territory acquired." The State Geologist, in his annual report
for 1890, said that Toledo would have no gas to supply its pipe lines
or citizens in 1891. In 1892 the city pipe line supplied gas to the
value of $168,954.46. Three years have passed, Toledo wells still flow,
and new ones are being found continually. "Whatever may have been his
object," say the city gas trustees, "in volunteering such a statement,
we know that so far in 1891 it is untrue, and that such positive
declarations, based upon hypothetical conditions, are utterly unworthy
of scientific pretensions."[528] The State Geologist also took part in
his annual report in the debate between municipal control and private
enterprise, siding altogether with the latter.

The quantity of gas land owned by the city was put by the circular at
300 to 500 acres. The city had 650 acres. The circular declared the
life of an ordinary well to be one to three years. There is no such
limit. Referring to the quantity of gas land the city had, the circular
asked and answered:

"Cannot other territory be acquired?

"Not in Northwestern Ohio, and not nearer than the gas fields of
Indiana."

This was untrue, for the gas trustees had already been offered, as
stated, several thousands of acres of the best gas lands in addition
to those they had bought. But the authors of the circular did their
best to make it true. The city's natural-gas trustees say in their
report for 1890: "As soon as the trustees were prepared to negotiate
for gas wells and gas territory, the field swarmed with emissaries and
agents of the Northwestern Ohio Natural Gas Company to compete with
the trustees. In order to prove what had been previously stated, 'that
Toledo could procure no gas territory,' no means were left untried;
agents of that company even fraudulently represented themselves to the
owners of gas property that they were connected with the gas trustees
and working in their interest, and in some instances introducing
themselves as the president of this board. Prices went up 1000 per
cent. in some instances rather than let it fall into the hands of the
trustees. A conspicuous officer of that company, as an excuse for
paying an enormous sum of money for a gas well, is reported as saying,
'We did not want the gas well, but we had to buy it in order to keep
Toledo from getting hold of it.'"[529]

Referring to the private companies, "Are the people of the city already
supplied with natural gas for public and private use?" the circular
asked. "They are," it answered, and goes on: "Why does the city want
to go into the natural-gas business, then?" "To boom the lands of
real-estate speculators." This is a charge affecting the Legislature
and Executive and State courts of Ohio, the courts of the United
States, the people of Toledo, and all the members of their city
government. Burke confessed that he did not know how to draw up an
indictment against a whole people. That art has been acquired since his
day.

"Are these bonds of unquestionable validity?" this catechism of libel
upon a community queries.

"By no means. Prominent taxpayers have suits pending attacking the
constitutionality of the act under which they are issued."

"Have these cases," the last question ran, "ever been tried on their
merits?"

"They have not."

They had been tried so far that the United States and State courts had
refused on every ground urged to interfere with their issue and sale,
declaring the legislation authorizing them to be valid. They had never
been tried any further in the United States courts for a very good--or
bad--reason. The "prominent taxpayers," after their defeat before Judge
Jackson, took every possible means to prevent the case from reaching a
final adjudication. The invariable rule of the United States Supreme
Court has been to treat as final and conclusive the decisions of State
courts as to such domestic issues. During the hundred years of its
existence not a case can be found in which that court has overruled
the fixed and received construction given to a State law by the courts
of that State.[530] The only hope for the suit of the "prominent
taxpayers" was, therefore, that the Supreme Court of the United States
would for their special profit reverse the practice to which it had
consistently adhered since the establishment of the government. What
they really thought of their prospect of success in that effort they
confessed when their case, no longer delayable, was upon the point of
being reached.

They who had been so "anxious to get to the case as soon as possible"
refrained from printing the record, a condition precedent to putting
the case on the docket of the United States Supreme Court. The city
wanted the decision, and in order that the case might not be dismissed
for this failure to print the record, and a decision upon the merits be
thus prevented, the city's gas trustees advanced the money--$1100--to
the court printer for printing the record. Pushed thus against their
will to trial, when the day came on which they must rise to state their
case the opponents of Toledo folded their tents and stole silently
away. On the motion of their attorney the case was dismissed, against
the protest of the city. They paid all the costs, including the money
advanced by the city for printing the record. To their defeat all along
the line they did not want to add a formal decision against them from
the Supreme Court, which was inevitable. And they ran away to fight
another day.

Another purpose of these suits was confessed only a few weeks after
this circular was issued. The existence of the suits was used to try to
frighten the city's natural-gas trustees into accepting a "compromise."
The compromise was that they should abandon the enterprise, sell out
pipes and lands for a fraction of their worth, get their gas from the
private company at higher rates, and put the city in its power for
all time to come. "It will be three or four years before your case is
through the Supreme Court," its representative told the natural-gas
trustees, in urging them to accept. "You can't sell your bonds," he
continued; "you have no money." The "compromise" was refused, but the
city's pipe line had been delayed so long that the profits of the
company for another twelvemonth were secure.

The demonstration against the bonds in the United States Circuit Court
had been followed by similar suits in the State courts. Here again the
city was successful. It was upheld on every controverted ground--in
the enabling act, in the vote of the people, in the appointment of the
trustees by the governor, and in the issue of the city bonds. Appeal
was taken here, as in the United States courts, and, as there, for
delay, not for decision. To checkmate further use of this lawsuit to
smother the law and cripple the city, the friends of the pipe line
began a suit against the authorities to force an immediate decision
from the Ohio Supreme Court as to the legality of the bonds. It was
certainly, as was said in the press, "a curious state of things when
the defendant is compelled to bring suit against himself because the
plaintiff refuses to allow trial in his own case."

These litigations, the circulars, the press, were only part of the
campaign. One of the committees of the Common Council was brought
under control, and induced to throw technical difficulties in the way
of the sale of the bonds, which caused months of delay.[531] Effort
was made to get the Governor to appoint natural-gas trustees hostile
to the city, but failed. It was attempted, also without success, to
get the Legislature to prevent the sale of the bonds at private sale.
During all this controversy the city was most fortunate in receiving
the needful authority from the State Legislature. This was due mainly
to a faithful and able representative of Toledo in that body, the Hon.
C.P. Griffin. He was offered every promise of political preferment
and other allurements to betray his constituents, but he always
remained faithful. Without his support the efforts of the city would
have failed. His services amid great temptations deserve the grateful
remembrance of the public.

Some of the devices of "private enterprise" were childish enough.
"A Business Men's Protest" was published, which proved under the
microscope to have been largely signed by men whose names could not be
found in the directory. A similarly formidable-looking remonstrance
against the pipe-line bill was sent to the Legislature. It had 1426
names; of these 464 could not be found in the directory, and over 300
of the 962 remaining names signed the petition for the city's bill.
Many of them avowed that when they had signed the "Remonstrance" it
had a heading in favor of the pipe line, which must have been changed
afterwards. As part of the tactics of misinformation, a report was
published--in January, 1890--claiming to give the business of both the
private companies; but the members of the Council Committee on Gas,
when afterwards examining the books for the gas company, found that
it gave the receipts of only one company. A paper was prepared by a
citizens' meeting for circulation among the manufacturers to ascertain
how much they would contribute towards the city pipe line; but when
reported back to the meeting it had become, in some mysterious way, a
paper asking the manufacturers how much they would advance to quite a
different scheme, the effect of which would be to sell out the city
pipe line or convert it into a manufacturers' line.

These were the infantile methods of men who could not see the
ludicrousness of the position they put themselves in by such efforts to
keep a business which they were constantly declaring to be hazardous
and unprofitable.

Detectives appear in almost every scene of our story, and are as common
in its plot as in any extravagant melodrama of the Bowery thirty years
ago. To counteract the anonymous circulars the City Council sent a
committee headed by Mayor Hamilton--the "War Mayor," one of the ablest
lawyers of the city, upright and loyal at all times to Toledo--to visit
the Eastern money-markets. The committee, in their official report,
state that they were assured by responsible dealers in municipal
securities in New York and Boston that they would bid for the entire
amount to be sold. "We regret, however, to have to report that the
powerful and influential parties who have on all occasions and in every
way sought to obstruct and defeat the enterprise for which the proceeds
of these bonds were to be used, in some way succeeded in inducing those
who intended to purchase to withhold their bids--in fact, no matter
how guarded our movements, we believe that every person or firm with
whom we had interviews was reported to the agents of the Standard
Oil Company, for in every instance where from our interviews we had
encouragement that the bonds would be bid for, within a short time more
or less influential agents of opponents interviewed these parties and
succeeded in changing their minds."

What a picture of "high finance," of the "beneficent inter-play of the
forces of supply and demand," of the "marvellous perfection" with which
capital moves under "natural laws" to carry its fertilizing influences
where they are most needed! The officials of this free city compelled
to sneak around in the open money-market under cover with "guarded
movements," seeking buyers for its bonds as if they were stolen goods!
About them a cloud of spies and detectives reporting every movement as
if it were a crime to the little handful of trust millionaires in their
grand building on Broadway! "They have entered the ---- Bank!" "They
have just left ----'s office!" After each report the leash is slipped
of a waiting sleuth, who flies away to run down the quarry.

The gas trustees made public a letter and telegram they received from a
prominent New York bank:

 "NEW YORK, November 27, 1889.

 "DEAR SIR,--A gentleman named" (naming a man who signs the
 certificates of the Standard Oil Trust as treasurer),[532] "introduced
 by the card of Mr. ----" (one of the richest men in New York not
 otherwise known as connected with the trust), "called on us to-day and
 stated that understanding that our firm was on the point of bidding
 on the Toledo bonds, etc., he would caution against the purchase, as
 they were not legal. Mr. ---- represented himself as coming from ----"
 (one of the companies of the oil combination), "and referred us to
 their lawyer for further information. Now as this may hurt the sale
 of the bonds we want to be cautious, and on Friday will make further
 inquiries, and will wire you accordingly. We may not care to hand in
 our bids on this account."

The telegram sent on Friday is as follows:

 "NEW YORK, November 30th.

 "Fearing sale of bonds has been injured, will not bid at present."

"That tells the story," said one of the trustees, "in a nut-shell."

A local bank bid for $500,000 of the bonds, but did not sustain its
bid. A reputable citizen, an ex-mayor, wrote for publication in one of
the leading journals that he had been informed by a well-known banker
there was reason to believe a banking firm which, in 1892, defaulted
on its bid for bonds, had been indemnified by the opposition for the
$5000 it thereby forfeited to the city, and for the profits it would
have made from the sale of the bonds. With the city line crippled the
gas company would pocket the profits on the sale of a million dollars'
worth of gas a year. Five thousand dollars, or several times that, was
a small insurance to pay for such a gain.

This was the game of hide-and-seek played in Wall Street by detectives
and financial stilettos against "simple greens," who thought supply and
demand still rule values. This was the reality which the officials of
Toledo found behind the outward aspect of its magnificent buildings,
the benevolent millionaires who look out through their plate-glass, the
grandiloquent generalizations of professors about "the money-market."

The city was brought to the humiliation of seeing its officials meet
in public session at an appointed hour to open bids it had invited
from all the money centres for its bonds, only to have the news
flashed all over the country that not a bid from abroad had been
made. This opposition cost the city in one way and another not less
than $1,000,000, according to the estimate of the city's natural-gas
trustees. The feeling of the people was expressed in the following
language in a circular sent out with the pamphlet report of the
committee appointed in mass-meeting to make a statement of Toledo's
case to the public:

"We have seen the modern aggregation of corporations--trusts--suppress
other corporations in the same line of business. But this Toledo
contest is believed to be the first instance where private
corporations--creatures of the State--have assumed to exercise
monarchical powers over a portion of the State--one of its leading
municipalities; to dictate the policy of its people; to seek to
control the legislation as to the laws that should be enacted for such
portion of the State; to bribe and intimidate the votes of such city
at the polls; to attempt to subsidize the press by the most liberal
expenditure of money; to at last purchase, out and out, a heretofore
leading paper of the city, place its own managers and attorneys as
directors, import one of its long-trained men as editor, and turn
this paper into an engine of attack upon the city, an attack upon
the city's honor and credit, characterized by the most unscrupulous
misrepresentation and a perfect abandonment of all the amenities of
civilized warfare."

The Toledo public felt no doubt as to who were attacking it under
the convenient anonymity of the two gas corporations. At a public
conference, January 16, 1889, between the presidents of the private
natural-gas companies and the people assembled in mass-meeting, the
representative of the former said the only condition on which the
members of the oil trust had been induced to interest themselves in
natural-gas in Northwestern Ohio was that of absolute and unqualified
control of the entire business through a majority of the stock of all
the gas companies to be organized.

"The trust is interested in companies engaged in supplying natural
gas?" the president of the oil trust was asked by the New York
Legislature about this time.

"To a limited extent, yes."

"Have they a majority interest in any of these companies?"

"I think they have."[533]

This was identically the arrangement by which the nine trustees owned
as their private property the control of the oil business. At several
later conferences with the city's trustees and the Common Council
the gas companies were represented by one of the principal members
of the oil combination, the ingenious gentleman who had managed the
negotiations with the railroads by which, under the _alias_ of the
American Transfer Company, the trust claimed and got a rebate of 20
to 35 cents a barrel,[534] not only on all oil it shipped, but on all
shipped by its competitors. He was also its representative in the
similar arrangement by which the Cleveland and Marietta Railroad
agreed to carry its oil for 10 cents a barrel, to charge Rice 35 cents,
and to pay it 25 out of every 35 cents Rice paid.[535] He had acted in
the same interest throughout the gas field as well as in oil, and his
pathway could be traced through one independent company after another,
whose wrecks, like those in oil, are milestones.

July 27, 1889, in an item originating in New York, in the _Tribune_, a
friendly paper, and given an extensive circulation by news despatches
sent to the leading papers in other cities, it was said that the
representatives of the oil trust "in this city say emphatically
that they will attack in the courts the right of the city to issue
them"--the bonds.

At the great meeting of the citizens, October 19, 1889, to organize
a popular subscription to take the bonds killed in the money-market,
the resolutions named the oil combination as the power responsible for
the attacks on the city, and appealed to the people to observe that
it, "no longer content with destroying individuals and associations
which stand in the way of its moneyed interests, now rises to grapple
with and destroy the rights of cities and states; we therefore ask all
liberty-loving men to make common cause with us in the defence of the
community against the aggression of colossal power."

The aldermen and the Common Council of Toledo unanimously adopted
resolutions, September 15, 1890, requesting the State and Federal
courts to give decisions as promptly as possible in the suits pending
against the validity of the natural-gas bonds. These bodies in their
official utterance declared that the oil combination, "through its
officers and agents in the city of Toledo and at many other points in
the United States, has circulated false and malicious statements about
the bonds of the city of Toledo issued for natural-gas purposes." The
natural-gas trustees of the city say in their report for 1890: "These
injunctions and circulars, although fathered in the first instance
by non-resident taxpayers, and in the second by irresponsible or
anonymous parties, were traced directly to the oil trust, a trust
having a large number of corporations within its control, among which
is the North-western Ohio Natural Gas Company, and to whom the city
of Toledo may reasonably attribute a loss of more than a million of
dollars already. What further financial embarrassment it may suffer
in the future cannot be measured by the depravity and moral turpitude
which its seeds have sown in our midst."[536]

When the warfare against Toledo became a scandal ringing throughout
the country and beyond, the organ of the trust in Toledo attempted to
make it appear that the oil trust was not the party in interest. But
there was open confession on the record. Its connection and its control
were admitted by two representatives in conference with a committee
appointed by the mayor at their request to discuss the situation.[537]
They described the circumstances under which the members of the oil
trust had gone into the project of the Toledo line and the project
of the natural-gas business. One of the two stated that he came into
it as its "more direct representative." The pipe line of the private
gas company was built, he went on to say, by one of the principal
corporations in the oil trust. At the same interview it was admitted
that the oil trust owned 60 per cent. of the natural-gas company's
stock.

The people of Toledo did not surrender to this success of their enemies
in the money-market. The bonds which calumny and espionage prevented
them from selling at wholesale to the great capitalists of New York and
Boston they took themselves at retail. The Legislature having given
authority for such sales, a committee of one hundred had been appointed
by the citizens' meeting, October 19, 1889, to canvass all the wards of
the city for subscriptions to the gas bonds. "Gas Bond Pledges" were
circulated, to which people subscribed according to their ability, in
amounts ranging from $2 to $5000. The employés at the Wabash Railway's
car shops sent in a list signed by fifty names for a total of $1102, an
average of $22 each. The labor of two hundred men for a week without
pay was offered the gas trustees as an earnest of the good-will of the
people. Piece by piece the city's pipe line was pushed through. At a
critical moment a shrewd and patriotic contractor saved the enterprise
by building a large part of the line, and taking for his pay the bonds
the banks would not take. In June, 1890, the public were gratified by
the announcement that their trustees had secured the means "for the
construction of three miles more," making eight miles in all, or nearly
one-fourth the entire line. In August a contract was made for five
miles more, and so the work went on, step after step.



CHAPTER XXV

A SUNDAY IN JUNE


In the midst of the anxious discussion by the citizens of Toledo as
to the character of the power which ruled them both by night and by
day, the same question arose in the metropolitan religious press, but
in its broader ethical aspects. After the petition of Toledo to be
allowed to take the control of its light, heat, and power into its own
hands had been laid before the Legislature, the _National Baptist_
of Philadelphia, in an article on the trusts, criticised them as the
prophet Nathan would have done. It gave to that in oil, "of course,
the bad pre-eminence in all this matter." "This corporation has, by
ability, by boldness, by utter unscrupulousness, by the use of vast
capital, managed to control every producer, every carrier, to say
nothing of the legislatures and courts." The _Examiner_, the leading
religious weekly of the Baptist denomination in New York, rose against
this. "We can readily understand how there should be differences of
opinion in the matter of these trusts, and their influence is a proper
subject of discussion; but to make it the occasion of so unjust and
intemperate an attack on Christian men of the highest excellence of
character is something that was not expected from a paper bearing
such a name. The four most prominent men in the oil trust are eminent
Baptists, who honor their religious obligations, and contribute without
stint to the noblest Christian and philanthropic objects.... All
of them illustrate in their daily lives their reverence for living
Christianity."

The _National Baptist_ did not submit to this attempt to cite men's
creeds to prevent judgment on their deeds. It quoted the reply Macaulay
makes Milton give to the similar pleas urged for King Charles: "For
his private virtues they are beside the question. If he oppress and
extort all day, shall he be held blameless because he prayeth at night
and morning?" It held to its ground, and cited against the trust
the recorded evidence, but it declared it was "a marked breach of
propriety for the _Examiner_ to bring their private character into the
discussion." The _National Baptist_, going on to speak in praise of a
series of lively cartoons in _Harper's Weekly_ on the Forty Thieves of
the Trusts and similar subjects, said, with some sadness: "It will be
a sorry spectacle if the secular papers shall be ranged on the side of
justice and the human race, while the defence of monopoly shall be left
to the so-called representatives of the religious press."

Later, March 20, 1890, the _Examiner_ returned again to its
discussion of the religious performances of the chiefs of the oil
trust as a matter of public importance. Of one of them it said: "The
prayer-meetings of the Fifth Avenue Church are on Wednesday evening,
and no business man in the church is less likely to be absent from one
of them than he. His wife and children, when they are in the city, come
with him, and it is by no means an unusual thing for the whole family
to take part, each of them occupying one or two minutes of time. He and
they are at church every Sunday when in the city, and no husband and
wife keep up the good old Baptist habit more faithfully of exchanging a
kind word with the brethren and sisters after the regular services are
over. He dresses plainly, and so do his family, and every one of them
has a kind heart and a pleasant word for all. They are among the last
to leave the church and the prayer-meeting. Now the question is, How
is it, as things go, that a man possessing the great wealth imputed to
him should have so warm a fraternity of feeling for the lowly in their
temporal conditions? And is there not an example here that might well
be imitated in all the churches of our Lord?"

In an address on Corporations the reverend secretary of the Church
Edifice Department of the Home Missionary Department of the Baptist
Church followed the example of the leading Church journal. "The oil
trust was," he said, "begun and carried on by Christian men.[538] They
were Baptists, and, so far as the speaker knew, both the objects and
the methods of the oil trust were praiseworthy." A clergyman of another
denomination once called upon one of the great men of the trust to seek
a subscription.

"But," said the rich man, "I am not of your Church."

"That does not matter," said the minister, "your money is orthodox."

The secular press followed the example of the religious press in
treating their public faithfulness to Church ceremonies as news of the
day, and part of the record of their social functions. The New York
correspondent of the Philadelphia _Daily Record_ wrote for the people
of Philadelphia: "It is not often that a millionaire stands up to lead
in prayer, but I heard the president of the oil combination make an
excellent prayer the other evening. He is said to be worth $25,000,000,
but he neither drinks nor uses tobacco, and he is a deacon in Dr.
Armitage's church. He likes a fast horse, and has eleven horses in his
stable here. Few men, however, lead plainer lives than he, and few put
on less style. He gives liberally to unsectarian charities, but, he
says, 'when it comes to Church work I always give to the Baptists--my
own denomination--and to no other Church.'" A New York daily described
the same trustee "as one of the few millionaires who devote much of
their time to the improvement of the condition of others. When not
called away by social or business engagements, you are pretty sure
to find him at home evenings. Here, in his costly and well-equipped
library, he receives his visitors, many of whom represent the various
benevolent and religious undertakings in which he is interested. He
has for years been a hearty supporter, financially and personally, of
foreign-missionary work, and no layman, perhaps, is so well informed
concerning the details of it. He has a personal acquaintance with
many of the leading missionaries of the world, and his residence is
frequently the scene of a gathering of these workers among the heathen.
He is now devoting considerable attention to home-missionary work,
a field which, he is convinced, presents splendid opportunities for
Christian endeavor."

Many descriptions have been given by the press, metropolitan and
interior, of the success with which one of the trustees built up the
largest Sunday-school in his city at the same time that he was building
up the monopoly--leading the children of his competitors and customers
to salvation with his left hand, while with his right he led their
fathers in the opposite direction financially. The church where these
men appear has had columns of admiring description in the leading
daily papers of New York and other cities. "There are few wealthier
congregations than this one," says a reporter of the New York _World_,
though he adds, "the wealth is elsewhere more evenly divided." The
trustee of the light of the world "is the magnate of the church, the
centre around which all lesser millionaire lights revolve. Everybody
stops to speak and shake hands with him. Everybody smiles upon him,
this modest man of nearly $200,000,000." "It is amusing," says the
Brooklyn _Eagle_, "to note the manner in which his neighbors watch him
during the service. Quite a number of people loiter near the door to
see him as he walks out of church." "They are worth a bit of careful
study," says another paper of the trustees, "and no place is quite so
convenient as when they are at church. Their interest in religion is
as sincere as their belief in oil. From the moment they enter church
until they leave they are examples that Christians of high and low
degree might follow with profit." "They have made the most of both
worlds," writes another journalist. The oil trust was criticised
by the Rev. Washington Gladden at Chautauqua, in 1889. One of its
prominent officials, as reported in a friendly journal, defended it as
"a sound Christian institution; and all these communistic attacks are
due entirely to the jealousy of those who cannot stand other people's
prosperity."[539]

"In Anniversary week" in Boston, in May, 1889, at the meeting of the
American Baptist Education Society, the secretary said he had an
announcement to make. "It had been whispered about," says the New
York _Examiner_ of May 23, 1889, from whose friendly account we are
quoting, "that something important was to occur at this meeting, and a
breathless silence awaited the announcement. Holding up a letter, the
secretary said that he had here a pledge from a princely giver to our
educational causes, naming him (here he was interrupted by a tremendous
cheer), of $600,000 for the proposed Chicago college.... This statement
was followed by a perfect bedlam of applause, shouts, and waving of
handkerchiefs. One brother on the platform was so excited that he flung
his hat up into the air, and lost it among the audience." Eloquent
speeches at once overflowed the lips of the leading men of the meeting,
which was a delegate assembly. They sprang to their feet, one after
the other, and mutually surpassed each other in praising God and the
giver of this gift, which was equal to his income for a fortnight. "I
scarcely dare trust myself to speak," said a doctor of divinity. "The
coming to the front of such a princely giver--the man to lead.... It
is the Lord's doing.... As an American, a Baptist, and a Christian I
rejoice in this consummation. God has kept Chicago for us; I wonder at
his patience." Another reverend doctor said: "The Lord hath done great
things for us.... The man who has given this money is a godly man, who
does God's will as far as he can find out what God's will is."

The audience rose spontaneously and sang the Doxology. On motion the
following telegram was sent, signed by the president of the society:

 "BOSTON, May 18, 1889.

 "The Baptist denomination, assembled at the first anniversary of the
 Education Society, have received with unparalleled enthusiasm and
 gratitude the announcement of your princely gift, and pledge their
 heartiest co-operation in the accomplishment of this magnificent
 enterprise."

The name signed to this telegram happened to be the same as that of
the divine with whom, when president of Brown University in 1841, one
of the most devoted of the laborers for the freedom of the negro had a
discussion which is perhaps the most pungent in the literature of the
antislavery movement.

On August 30, 1841, Henry C. Wright wrote to Edmund Quincy: "I once met
the president of Brown University, in the presence of several friends,
to converse on the subject of slavery. The conversation turned on the
question: Can a slaveholder be a Christian? To bring it to a point,
addressing myself to the doctor, I asked him, 'Can a man be a Christian
and claim a right to sunder husbands and wives, parents and children,
to compel men to work without wages, to forbid them to read the Bible,
and buy and sell them, and who habitually does these things?' 'Yes,'
answered the reverend doctor and president, 'provided he has the
spirit of Christ.' 'Is it possible for a man to be governed by the
spirit of Christ and claim a right to commit these atrocious deeds,
and habitually commit them?' After some turning he answered, 'Yes, I
believe he can.' 'Is there, then, one crime in all the catalogue of
crimes which of itself would be evidence to you that a man had not the
spirit of Christ?' I asked. 'Yes, thousands,' said the doctor. 'What?'
I asked. 'Stealing,' said he. 'Stealing what, a sheep or a _man_?'
I asked. The doctor took his hat and left the room, and appeared no
more."[540]

The Sunday following a special service was held in the churches
throughout the country in behalf of further help in "the new
educational crisis." Many eulogistic sermons were preached that day
by the leading clergymen of the denomination. "And so," one of them
is reported to have said, "when a crisis came God had a man ready to
meet it.... An institution was bound to come, and unless a God-fearing
man established it it was likely to be materialistic, agnostic.... In
this emergency, and in God's providence, society raised up a man with
a colossal fortune, and a heart as large as his fortune." "God," said
the Chicago _Standard_, a religious weekly, "has guided us and provided
us a leader and a giver, and so brought us out into a large place."

Another of the trustees has poured into a Southern State hundreds
of thousands of dollars for churches of various denominations, and
millions for hotels of a more than Oriental magnificence. "There is
no philanthropist," says an editor of that State, commenting on these
expenditures, "who renders the world greater service than the man of
enterprise." But "Western Pennsylvania," said the Pittsburg _Post_,
"looks more with awe than pride at the liberal diffusion of its wealth
in Florida improvements and Baptist universities." A daily paper of
Richmond, Virginia, in an editorial commenting on a report that the
hostlery glories of St. Augustine were to be repeated in Richmond,
said: "We have naught to remark on the tyrant monopoly if some of
its profits are to come in such a direction. We could forgive much
that monopoly visits on the down-trodden, horny-handed son of toil
if it would come with open pockets proclaiming the era of luxuriant
accommodations for all those other millionaires whose money we want to
see invested in Richmond."

The next year after the Boston meeting the Church celebrated its
"Anniversary week" in the city which was to be the seat of the new
college. And the anniversary closed with a jubilee meeting, which
filled the largest assembly room in America. "All the church-going
people of Chicago must have attended," one of the daily papers said. It
was addressed by the principal clergymen of the denomination from all
parts of the country. Again, as at Boston, the centre of interest was
the gift of a fortnight's income to the university. A telegram making
the gift conclusive, since the conditions on which it was promised had
been complied with, was read. Cheer after cheer rose from the assembly,
and oratory and music expressed the emotion of the audience. The divine
who made the closing speech declared that he needed ice on his head on
account of the joyful excitement of the occasion. The cheers and the
hand-clapping closed again, as at Boston, with the spirited singing
of the Doxology. Not only in the religious press of all denominations,
but in the worldly press, the topic was the best of "copy." The great
dailies gave columns, and even pages, to the incident, and to the
subsequent gift from the same source of larger sums. "Conspicuously
providential," "princely," "grand," "munificent contribution,"
"man of God," were the phrases of praise. A writer in the New York
_Independent_ said: "Your correspondent speaks from opportunities of
personal observation in saying that pecuniary benefaction to a public
cause seldom if ever, in his belief, flowed from a purer Christian
source." The only recorded note of dissent came from a humbler source.
Under the text, "I hate robbery as a burnt-offering," a weekly business
journal said: "The endowment of an educational institution where the
studies shall be limited to a single course, and that a primary course
in commercial integrity, would be a still more advantageous outlet for
superabundant capital. Such an institution would fill a crying want."

It was the last Thursday in May, 1890, when this great representative
convention of the Church from all parts of the United States celebrated
the acceptance of this endowment. Even while the roll of the Doxology
was still rising to the roof of the auditorium the plans were preparing
for a performance at Fostoria the next Sunday, three days later, which
had a profound effect upon Toledo, though just the opposite of what was
expected.

Fostoria, Ohio, is the home of the president of the principal
natural-gas company in Ohio controlled by the oil trust and leader
in the vendetta against Toledo. A wealthy miller erected in Fostoria
in 1886 a flouring-mill, with a capacity of 1000 barrels a day. One
of the inducements was a contract made with this manufacturer by the
gas company, by which it bound itself to supply him with natural-gas
at a price which would be one-fifth what coal would cost him, and to
continue to supply him as long as it supplied any one. The manufacturer
carried out his agreement by the expenditure of $150,000 for the
erection of the mill, and by running it continually to its full
capacity. His bills for gas he paid promptly every month. Relying upon
the contract with the gas company, the mill was built for natural
gas, and could use no other fuel. In February, 1890, the gas company,
dissatisfied with the bargain it had made, demanded better terms. The
milling company refused. On a Sunday morning in June, "when, if ever,
come perfect days," a gang of men appeared, led by an officer of the
gas company, and dug up and tore out the pipes supplying the mill with
gas.

Church bells of different denominations were scattering their sweet
jangle of invitations to the sanctuary as the tramp of these banded
men, issuing on their errand of force, mixed with the patter on the
sidewalks of devout feet. Private grounds were unlawfully entered,
property was destroyed, the peace broken, a day of love changed to one
of hate, all the bonds of community cut asunder, and the people turned
from the contemplation of divine goodness to gaze at shapes of greed
and rage. Sunday is chosen for such deeds, since the help with which
the pagan law, gift of heathen Rome, would interpose, cannot be invoked
by the victims on Sunday, and because on Sunday Christian people go
to church, and leave their property undefended. The peace-officers
were summoned to arrest the invaders for violating the Sunday law, but
before they could get on the ground the mischief was done. The pipes
had all been excavated, the connections wrenched off, and the trench
nearly filled up. The milling company began suit for $100,000 damages
against the gas company,[541] but a private settlement was made, and
the case has never been pressed to trial. The laborers who did the work
of the Captains of Industry in this matter were tried and convicted at
the County Court in July, but by no process did the law, which is "no
respecter of persons," reach out towards the principals.

This Fostoria incident occurred during the heat of the Toledo
contest--June, 1890--while the city was pushing the sale of bonds
for its emancipating pipe line by popular subscription and in odd
lots. Notice had been already served on the people of Toledo at public
conference, that despite contracts, charters, franchises, the private
companies would not take any less price from Toledo than they demanded.
In pursuance of this, after the council had fixed the price in
accordance with its admitted right, a circular was sent out containing
this significant threat: "If it"--the legally declared price--"is
approved by our customers we will know what course to pursue."

Even before the occurrence at Fostoria it had been definitely suggested
to the people of Toledo that in case the council failed to accept
the demand as to rates in making the new ordinance (July, 1890) the
pipes would be so far removed as to cut off the supply on some Sunday
when no legal help could be invoked. The possibility of this Sunday
cut-off of the fuel supply of 15,000 consumers became a living topic of
discussion, public and private, and was considered in all its bearings
by the Toledo press. Calculations were made and published of the
number of men it would require to take up the hundred miles or so of
pipe in the streets of Toledo between dark and dark some holy Sabbath
day. It was confessed, hopelessly, that they would be more than the
police could handle. "Of course," as was said in the Toledo _Blade_ by
a leading citizen, "such enterprise would involve a very remarkable
degree of both lawlessness and desperation on the part of the managers.
It would be a mode of withdrawal from trade quite unknown among sound
business men. But then their processes have been peculiar from the
start."

It was nothing less than startling to Toledo, almost before the print
on the types of these words was dry, to hear the news from Fostoria of
the Sunday raid there. There were those who declared that the Sunday
violence at Fostoria was deliberately done as a warning to Toledo. If
it were a warning to them not to insist on the legal and equitable and
contract right of their Common Council to fix the rates of gas, it
was a failure. The council went forward and did its duty. If it were
a warning to the people to redouble their labors to free themselves
forever from the possibility of such thraldom as that in which Fostoria
and other cities were enchained, it was a success. The people heard and
heeded, and in ten months thereafter gas began to flow into the city
through its own pipes.



CHAPTER XXVI

TOLEDO VICTOR


It was remarkable to see the revival of the passion of freedom of 1776
and 1861 in the editorials, speeches, resolutions of public meetings,
and the talk of the common people in Toledo as in Columbus. The example
of "the heroic liberty-loving people of Boston" was held up in every
aspect to fire the heart of Toledo not to be frightened into subjection
to the foreign power that threatened them. To resist "the domination
of an economic monarchy" was the appeal made in posters with which the
town was placarded.

"During all the time George III.'s soldiers were quartered in Boston
that monarch did not spend as much money to bring the city to terms as
has been spent in this effort to subjugate the city of Toledo," said
Alderman Macomber.

"A people like those of Toledo," said one of them in the press, "when
once united and determined as they now are, cannot be subjugated by any
combination of mercenaries yet known."

"It is evident," the Toledo _Sunday Gazette_ said, "that the people
of Toledo have come to a full realization of the truth that the money
saved by the independent pipe line, though great, is a matter of little
importance compared with the social and political issues involved. It
would be a thousand times better," it continued, "to utterly bankrupt
the city than permit the oil combination to win. The fight was not for
the present alone, but it was for the present and future, and for all
time to come. It was not for the people of Toledo alone, but it was for
the whole Union, though God had chosen the people of Toledo for the
struggle."

The Cincinnati _Commercial-Gazette_ said, in its editorial columns:
"In itself the Toledo enterprise is not a big one, but it will prove
an object-lesson for the whole country. It will show the open door
through which people may pass from under the yoke of a most gigantic,
unscrupulous, and odious monopoly. And it will be surprising if this
does not extend beyond gas and ultimately cover oil. We are only on the
verge of a revolution that is as sure to come as that which followed
the throwing overboard of a lot of tea in Boston Harbor. Neither the
power nor the vulgarity of capital can long rule the people."

Numerous letters of sympathy, congratulation, and indignation
were received by the Toledo committee appointed by the citizens'
mass-meeting to make a statement of their case to the people of the
United States. There were letters from chairs of political economy in
the universities, from scholars and students in history and politics,
and from men in affairs and finance.

The completion of the line to the city was not the completion of the
enterprise. Mains had still to be laid in the streets, and house
connections made. At every step, now as before, unrelenting opposition
did all that could be conceived of--in the courts, the Legislature, the
city government, the money-market--to block municipal self-help. Great
numbers of the citizens desired to change from the private companies
to the city. Over 7500 consumers were at one time, in 1891, calling
upon the city to supply them.[542] The litigation which was kept up,
and the defeat of the attempt of the city to sell its natural-gas bonds
in the open market, had exhausted the funds at the disposal of the
city trustees. But they showed a readiness of resource equal, with the
help of the people, to all these emergencies, and proving that public
enterprise can more than hold its own in the competition with private
enterprise. Contractors were got to pipe the streets by sections, and
take for pay the pledge of the income earned by the pipes so laid. In
other cases people wanting the gas were willing to advance a part of
the cost. The same contractor who had faith enough in the city to build
the main line from the gas-fields and take the bonds while they were
under fire volunteered in the same way to build the submerged lines
across the Maumee River, and ten miles of mains within the city. This
was done at a moment when otherwise the enterprise must have come to a
stop, and the name of this patriotic contractor is given to the public
by the trustees in their annual report with words of gratitude.

The amount of bonds originally authorized was $750,000. The trustees,
in consequence of the delays and enhanced cost caused by lawsuits and
other tactics of opposition, had to incur a floating debt of $300,000.
The council by ordinance directed the issue of bonds by the city to
the amount of $120,000 to pay off part of this floating debt. The
State Circuit Court refused to sustain this action of the council,
but pointed out that all the city lacked was the authorization of the
Legislature. This was the only decision against the city in all the
litigations, and in this the State Court was afterwards overruled by
the United States Circuit Court. A bill was accordingly introduced,
giving the city the right to issue $300,000 in bonds for the floating
debt, and $100,000 for the extension of the gas plant: wells, pipes,
pumps--whatever was needed. A strong lobby immediately appeared in the
State Capitol to defeat the bill. As part of its ammunition a pamphlet
was circulated among the legislators, giving "Facts and Reasons" why
the Legislature should not authorize the new issue of bonds. This
pamphlet illustrates the easy virtue with which some lawyers dispose
of themselves to those who have the money to pay them. Two of its
strongest points were that the contracts for which the floating debt
had been incurred were let without proper competition, and that the
trustees had no power to make the contracts. This pamphlet was signed
by two lawyers, one of whom, before these contracts were let, had
given the trustees his written opinion supporting such contracts
unqualifiedly. The representatives of the people were able to exhibit
to the Legislature his written opinion stating that the trustees had
the power to make the contracts, and had let them in compliance with
the requirements of the statute as to bids. The pamphlet declared that
the court, in granting the injunction against the issue of the $120,000
of bonds by the Common Council, had declared the claims which were to
be paid by the proceeds of the bonds to be "illegal and invalid." This
was untrue. The court had held only that the city had not the power to
issue the bonds, and pointed out that the remedy was in new legislation
by the State to remedy the want of power.

Pursuing the tactics of defamation of the city and its authorities
which had been used throughout this contest, the pamphlet said: "We
are prepared to prove ... that the contractors put in their bids
substantially as gambling transactions, at such excessive price
that they thought they could take the risk of the illegality of the
natural-gas proceedings, trusting that these illegal transactions would
be permitted to pass without question, or that subsequent legislation
would ratify these illegal acts; all, or nearly all, of the contracts
were taken at prices more than double the fair cash value for all the
work and material provided for; and all the work and materials, the
claims for which now aggregate about $350,000, could have been obtained
in the open market, under valid laws, upon proper terms of payment,
for less than $250,000. We have the evidence within our control to
establish that the work under some of these contracts was actually
done for less than 40 per cent. of the amount named in the contract.
In addition to these facts, we can establish, if permitted to offer
evidence, that the certificates issued by the natural-gas trustees
were, immediately after the conclusion of the contracts and before any
litigation was had upon them, hawked about the streets of Toledo at
from 60 to 75 cents on the dollar; and that the great majority of these
certificates are now in the hands of speculators, who bought them at
not to exceed 65 per cent. of their face value."

The authors of these statements were at once challenged by the city's
gas trustees to prove them. "We assert," the gas trustees said, in
a formal challenge, "that you cannot establish the truth of those
statements. We deny that the facts are as you state them to be, either
in substance or in detail." This was signed by John E. Parsons, W.W.
Jones, Reynold Voit, J.W. Greene, gas trustees, and Clarence Brown
and Thomas H. Tracy, ex-gas-trustees. The city's trustees proposed
that they and their accusers deposit $1000 on each side as a forfeit
to abide the result of an inquiry by the three judges of the Court of
Common Pleas, or any other disinterested arbitrators. They placed at
the service of the accusers and the arbiters all the books, records,
and employés of the city's gas department.

The challenge was not accepted, and the authors of these attacks made
no attempt to prove them. The Legislature disregarded them, and granted
the city and the gas trustees all the additional power to issue bonds
asked for. In a subsequent proceeding in the Federal courts--the issue
involving the validity of these certificates--it was admitted, contrary
to these allegations, that the prices were fair, and that the contracts
were entered into in good faith, and the court held the certificates
valid.

The most serious crisis in the contest was still to come. In 1892 the
gas wells of the city began to do what the people of the city will
never do--surrender to the enemy. When the oil trust found, after years
of opposition in the Legislature, the courts, and the gas-fields, that
it had been helpless to prevent Toledo from getting ample tracts of
excellent gas territory, with some of the largest gas wells in the
field, and equal to the supply of the entire consumption, domestic and
manufacturing, it turned to other tactics.

All about this territory secured by Toledo and found so productive the
private companies of the trust proceeded to buy or lease and to sink
wells. The trust shut off all its own wells, except those adjacent to
the city territory, and for two years drew exclusively from the wells
nearest those of the city. When the city's line was completed to the
wells the volume of gas was found to be largely reduced. It had been
drawn off into the wells of the opposition. In the spring of 1892 the
private companies resolved to put in pumps to strengthen the diminished
natural pressure, but to prevent the city from doing the same thing.
Then, with their pumps alone at work, the pressure could be so much
further reduced as to render the Toledo pipe line valueless. To this
end all efforts were directed. The newspapers were kept full of matter
showing how impossible it was to pump gas, that all the money expended
in pumps would be just so much wasted, and that the companies had
canvassed the matter fully, but abandoned the idea. Column after column
of inspired interviews filled the papers, all admonishing the city of
Toledo not to commit such an act of folly as to put in gas pumps. Then
application was made to enjoin the sale of the bonds authorized by the
council and the Legislature for pumps. So month after month dragged
along. The bonds remained unsold, and the pumps unobtainable.

The injunction was refused both by the Court of Common Pleas and by
the Circuit Court. But there was a right of appeal to the Ohio Supreme
Court until the beginning of 1892. Boston bankers had subscribed for a
large block of the bonds, but withdrew upon learning these facts. "It
is possible for the contestants," the lawyers advised them, "to carry
the matter to the Supreme Court. This, we understand, they propose
to do." The simple assertion of a purpose to continue the litigation
was enough to defeat the sale of the bonds. The payment of costs and
lawyers' fees would be a very moderate price to pay for compelling the
city's gas plant to go past midwinter without the pumps indispensable
for its operation. One of the employés of the private pipe line,
according to an account in one of the Toledo papers, declared to a
reporter that "if we could not prevent the city from putting in a
[pumping] plant any other way, we would blow it up with dynamite."[543]

Any faithful employé familiar with the blowing up of derricks in the
shut-down of 1887,[544] the explosion in the independent refinery at
Buffalo,[545] and the "chemical war" waged by the whiskey trust against
the "outsiders" in Chicago[546] might almost be pardoned for thinking
this was "only good, reasonable talk." The oil monopoly is evangelical
at one end and explosive at the other, and it has made both ends meet.

The people of Toledo were thus prevented from getting the pumping
facilities ready during the summer of 1892 for the work of the winter.
Meanwhile its rival had been secretly pushing pumps for itself to
completion, in the hope that it alone would be ready when cold weather
came. This would mean a gain to it, at the city's expense, of hundreds
of thousands of dollars. Late in August, 1892, the representatives of
the city found that two powerful duplex gas pumps had been shipped
to the gas-field, and were being put in place by the very opponents
who had declared pumps impracticable. Public sentiment became aroused
to the need for the immediate purchase of pumps to protect their
wells. The city attempted to use its income from the sales of gas to
buy pumps. An injunction was applied for and granted. This emergency
was finally met by having the gas trustees hand over to the city
authorities the accumulated earnings they were forbidden by the court
to spend themselves. The city thereupon turned around and invested
this money in the gas bonds. In this way the identical money the gas
trustees could not use while it remained in their hands was made
available to them by passing through the hands of the Sinking Fund
Trustees, and coming back to them. Thus the natural-gas trustees were
enabled to make a contract in September, 1892, for pumps to assist the
flow of gas to the city.

The gas pumps are a patented device. The private companies, wanting
all the profit of everything, had had their pumps made at their own
factory. The city made its contract directly with the owner of the
patents. The result was that the city got its pumps in place in time
to save the city pipe line, while its opponents were delayed by the
inexperience of their own pump-makers. This was the most critical
period in our history. Greed had again defeated itself. Had the
opposition gone to the owner of the patents he would have been unable
afterwards to take the city's contract and complete it in time, and the
effort to make the city line valueless would have succeeded--for the
time being, at least. The bonds in question were afterwards held valid
by the Supreme Court.

Toledo knew it was building wisely, and every day brought new proof
that it had builded better than it knew. Its saving was great, but
that was the least of its gains. It escaped tyranny and extortion and
other wrongs which fell upon communities in plain sight, which had not
the wit and virtue to establish their independence. When the city pipe
line was opened in 1891 the city began supplying gas to its citizens
at 8 cents a thousand for houses. The private companies were charging
12 cents a thousand, or 50 per cent. more. Profits were such at this
charge of 12 cents a thousand feet that in some tracts single wells
would repay the cost of the land every four days and two hours, or
eighty-nine times a year. Since then the private corporations have
raised their rate to 25 cents. The city continued the rates at 8 cents
until December, 1892, when the rate was advanced to 15 cents. This
advance would have been unnecessary but for the losses arising from the
obstructions placed in the way of the city plant.

The people of Toledo got their gas lands, pipe line, and street mains
for an outlay of $1,181,743 up to the end of 1891,[547] and $1,294,467
up to the end of 1892. In the canvass before the election in 1889 their
opponents declared that $4,000,000 would be required.

Private enterprise cannot find rhetoric strong enough to express its
contempt for the inefficiency, costliness, and despotisms of public
enterprise. Private enterprise put at $6,000,000--twelve times the
amount of the property they reported for taxation--the "capital"
stock invested by the two natural-gas companies. The city pipe line
was capitalized (bonded) at just what it cost--a little more than
a million. The city trustees built a better pipe line than private
enterprise had laid. The private line was of cheap iron of 14-feet
lengths, while Toledo's was in 24-feet pieces. One of the private lines
was laid with rubber joints and in shallow trenches, in many places of
not more than plough depth. It leaked at almost every joint; its course
could be traced across the fields by the smell of gas and the blighted
line of vegetation. There were frequent explosions from the escaping
gas; lives and property were much endangered. The city line was laid
with lead joints, and had every device that engineering experience
could suggest for its success, and was so constructed that it could
be cleaned or repaired, and freed from liquids interfering with the
flow of gas, without shutting off the supply--features the other pipe
had not. The action of the city trustees had to endure the microscopic
scrutiny of friend and foe. No one was able to show as to a single acre
that the title was defective, or that it could have been bought for
less, or to find any taint of a job in the construction of the pipe. A
committee of the city council sat and probed for six weeks, but failed
to find any evidence whatever to confirm the reported "irregularities."

What Toledo will save in one year by the difference between the actual
cost at which its people can supply themselves and the price the
private companies would have charged, to pay dividends on $6,000,000 of
"capital," is only part of the story. The profit of the city enterprise
is to be estimated by its competitive effect upon the charge of the
private companies. These have been kept down in Toledo much below the
average of other towns, where they have been as high as 35 cents a
thousand. If the city had not supplied a foot of gas this check on the
private companies would make its pipe line still a good investment.
The people, when it is in full operation, can pay the cost of the
system complete out of the savings of a few years, then pay off the
entire city debt, and have a large income left for public buildings,
roads, parks. Or by reduction of price they can keep this sum in their
pockets, where it will do quite as much for the general welfare as if
it had been transferred to the bank accounts of non-residents.

The city, at the end of 1891, had 3299-3/4 acres of gas land. In March,
1892, forty-five wells were giving over 50,000,000 cubic feet of gas,
equal to 3500 tons of anthracite coal. Its income from the sale of gas
was at the rate of $20,032 a month in winter, and $10,221 in summer.
An investigation made in March, 1892, by a committee appointed by the
mayor at the request of the city's gas trustees, showed that an income
could be counted on ($180,000) ample to pay all expenses ($128,120),
including interest, rentals, and the cost of drilling new wells, and
provide a small fund annually ($51,880) for the extinction of the
bonded debt. The committee said: "We believe that if the gas plant is
properly managed upon prudent business principles and methods, that it
can be made a profitable investment for the city and her people; that
the class who will derive the greatest benefit is the laboring class,
who pay rent or taxes upon their little homes, and to whom the matter
of cheap fuel is quite an item in the total amount of annual expenses;
and we believe it to be the duty of every good citizen to aid and
encourage this class."

These were the results with a charge of 8 cents a thousand. Gas to
the amount of $167,899 had been sold up to August 1, 1892. Between
November, 1891, and August, 1892, the city earned on the million
invested the sum of $150,000, or nearly one-ninth of the cost of
the plant, and this at the low price of 8 cents a thousand feet.
Unobstructed by its enemies and at the price charged by the private
companies, 20 cents a thousand, the city would pay for its entire plant
in less than three years.

To discourage the public from going forward with its pipe line the
private companies "talked poor." In an interview in the public
press the president of the principal company said it had paid but
9 per cent. in dividends in two and a half years. The net earnings
were stated to be "about 4 per cent. per annum on the capital,"
$4,000,000;[548] for the smaller company they were figured out to be
at the rate of a fraction less than 1 per cent. a year on its capital
of $2,000,000.[549] "We feel sore and hurt about it," said the "direct
representative" of the oil combination to the citizens' committee; "we
have seen no good return from our money." "It has pretty nearly swamped
us," said the president of the company. The citizens of Toledo were
shrewd enough to ask themselves how long their antagonists would have
been likely to remain in a business which paid only 3 per cent., and
was as "hazardous" and "shortlived" as they pictured it to be. Careful
estimates made by close students of the question calculated that of
the $6,000,000 of paper capital "invested" in the two companies which
supplied Toledo and other cities, $1,125,000 was the proportion of
actual cash devoted to Toledo. The receipts upon this Toledo investment
in the two and three-quarters years between the opening of the business
and the date at which, by the contract with the city, the council was
to make new rates (June 30, 1890), were, as nearly as can be calculated
from the figures of their report, $1,300,000 greater than the expenses
of the Toledo business. This is a profit of 115 per cent. In less than
three years the total investment had been repaid by the profits, and,
in addition, enough to have paid dividends of 5 per cent. a year.
This was an estimate, but it was an estimate publicly made from the
companies' figures, and by a responsible man. It remained unchallenged
at a time when every cranny of fact and fiction was being rummaged for
missiles to fling at the people.

When the citizens' committee sought a reduction in price, the companies
pointed to the small dividend their stockholders had had. In the face
of the fact that they had received but a 3-per-cent. dividend the
previous year, no business man, their spokesman said, could ask them
to reduce their price. It is for such uses that shrewd men "water"
stock. The surface of the capital is broadened, so that even large
dividends can cover it only by being spread out very thin. This 3 per
cent. a year was on $6,000,000 of dilution, representing a solid, at
the most, of only $1,500,000. The balance sheets of the companies
showed that the companies had paid small dividends for the additional
reason that a large part of their receipts had been reinvested in
lands, wells, and extensions of the pipes and plants.

The people are often assured that these false figures of capitalization
are merely romantic and do them no harm, because charges must be
governed by the "laws of trade." One of the "laws of trade" that
regulates the "market price" of such commodities as transportation,
light, water, gas, furnished by the help of the public franchises, is
the power of the public to regulate. This public power depends upon the
public knowledge and the public disposition. To make the public believe
that the profit of serving it has been only 3 per cent. a year, when it
has been nearer 50 per cent., is to manipulate public opinion, the most
potent of all the "laws of trade," for a competing supply cannot be got
easily, often not at all.

A committee of citizens were invited by the representatives of the gas
companies to meet them to verify the statements of the companies as to
the unprofitableness of the business, and the inexpediency of municipal
self-supply. But when the committee wanted to know what had been the
real cost of the private pipe lines, on the $6,000,000 nominal capital
of which the people were expected to pay dividends, they could not get
any satisfaction. The companies would only give an estimate. To the
request for more definite information, the reply of both companies
was, "We have not got the books of the contractors; we have never
had them. We have no means of knowing the actual cost of the Toledo
plant, or any books to show it.[550] We have no papers or documents in
regard to the construction of this line." It came to light later that
one of the companies in the oil trust had constructed the pipe line
for the gas company, and at a price approximating the large figures
claimed. The company that built this pipe line is a ring within the oil
and gas ring, always on hand for such contracts and at like margins
of profit, and it is owned almost wholly by the principals of the
combination.[551] The people--mostly Ohioans--who took the minority 40
per cent. of stock of the gas company were really the "simple greens."
All that was paid for this construction by those who were members
both of the inside ring and the gas company came back to them; their
associates in the minority paid, but got nothing back. It was from the
latter came the profits of this contract to the insiders.

The people of Dayton had a similar experience. Their natural-gas
company demanded an advance to 25 cents a thousand, and met a committee
of the people to prove that the demand was proper. But it would not let
the people know what the actual investment was to make which good it
sought to tax the people. The books containing the construction account
were "not accessible." "The actual cost to construct the plant is what
we most desired to know," the committee reported. As at Toledo, so at
Dayton; all private enterprise would let its customer-subjects know was
what it wanted them to pay; information to show what they ought to pay
"was not accessible." What the profits were elsewhere can be guessed at
from the fact that in Pennsylvania $36 a year was charged in most of
the towns for cooking-stoves. In Toledo the charge was $19.50 a year.

Almost every day after the pipe line had been decided on the people saw
something done, showing how well founded their apprehensions had been.
The power to discriminate in rates the people saw used by the private
companies for selfish and anti-public purposes, precisely as they had
foreseen it would be. When the fight for and against the city pipe
line was on, one of the gas companies sought to enlist the strong men
in their support by making them special rates, pursuing the tactics of
divide and conquer. Manufacturers with influence useful in controlling
public sentiment were conceded special rates. Others were given to
understand that any lack of "loyalty" would be followed by punishment.
So effective were these alternating methods of boodling and bulldozing
that the council committee on gas, in a subsequent investigation, found
it almost impossible to obtain any information from manufacturers as
to their use of natural gas for fuel. What little they did secure was
under injunctions of secrecy. The committee found that some were made
to pay twice, some three, and some even four times as much as was paid
by neighbors for like service. The only rule for charging seemed to be
to favor those who had "influence." This was using municipal franchise
just as the franchise of the highways had been used in their behalf by
the railways. An assembly of divines could not be trusted with such
power over their fellows.

After the Fostoria incident the people of Toledo had another
illustration given them of how wisely they had builded. The gas supply
of the people of Columbus, Ohio, was shut off arbitrarily and suddenly
in midwinter--January, 1891--and they were informed that the company
would supply them with no more gas unless the City Council would raise
the price to 25 cents a thousand feet from 10 cents. The gas had not
failed. The caverns that discharge gas at 25 cents a thousand will let
it come just as freely at 10 cents. The council had fixed the price
at 10 cents, and the company had accepted it. The demand for a higher
price was close upon an increase in the capital stock of the Columbus
company from $1,000,000 to $1,750,000. More stock called for more
dividends, and this was one way to get it--to strike this sudden blow,
and then to say, after the manner of Silas Wegg, "Undone for double
the money!" It was for the power to do this at Toledo, to preserve the
power of doing it everywhere else, that hell and earth were being moved
in Toledo to prevent the people from serving themselves and setting an
example to the rest of America. In the same way the gas was turned off
at Sidney, Ohio, and not turned on again until, upon the application of
the mayor, the company was ordered to do it by the courts. "There is a
great deal of suffering here," the press reported, "and it is feared
that several deaths will result from exposure."

The people did not fail to comprehend the significance of criticisms
in the Toledo organ on the municipal water supply. Monopoly must go on
conquering and to conquer, or be overborne by the ever-recuperating
resentment which rises against it, freshened with each new day. Nature
hates monopoly, says Emerson. The studied attack on the city water
works was believed to be meant to prepare the people to intrust that as
well as the gas supply to the trust's "sound business men" and "private
enterprise."

Finding that the council would not bend to the demands as to rates,
and that the people were too resolute to be in any way diverted from
their pipe line, Toledo was given some such doses as could be ventured
upon of the Fostoria and Columbus medicine. The company shut gas off
from those who would not pay the increased rate. It deprived public
institutions of their fuel. It refused to supply gas to a new public
school whose building was planned for natural gas. As the city's pipe
line was not completed, the children had to go cold. The winter of
1891-2 was the first winter the city's pipe line was in operation. With
the first cold snap, at the end of November, great distress and danger
were brought upon the people by a lawless act, done secretly by some
unknown person to the city's pipe line. One of the main pipes in the
gas-field, through which flowed the product of two of the largest gas
wells, was disconnected, so that its gas could no longer reach Toledo.
Who did this was never discovered.[552]

Defeat, final and irrevocable, crowned the unvarying series of
defeat which the private companies had suffered everywhere and in
everything--in public meetings, in the Legislature, in the gas-fields,
at the polls, in the courts, in the sale of the bonds, and in the
competition with the city. The City Council of Toledo, advised by its
lawyers that it could recover damages from those responsible for the
losses brought upon the city by the opposition to its pipe line, has
had suit brought for that purpose. April 14, 1893, City Solicitor
Read began proceedings to recover $1,000,000 damages from members of
the oil combination and the various individuals who had been used as
stalking-horses in the campaign. At the next meeting of the Common
Council several citizens of the "influential" persuasion assisted the
mayor in trying to coax and bully the council to abandon the suit, but
without success. The council were threatened with a financial boycott
to prevent the sale in future of any of the bonds of the city, but it
refused to be terrorized.

April 8, 1893, the natural-gas trustees of Toledo had the happiness
of being able to give formal notice to the city auditor that no taxes
need be levied to pay the interest on the gas bonds, as it "can easily
be met from the revenues derived from the sale of natural gas." The
city pipe line was on a paying basis at last. Toledo had vindicated
its claim to be a free city. The completion of the enterprise had
been delayed three years. A loss of not less than two million dollars
had been laid on the city, but its victory was worth many times that.
Toledo's victory showed the country, in full and successful detail,
a plan of campaign of which Columbus had merely given a hint. It was
not a local affair, but one of even more than national importance, for
the oil combination has invaded four continents. This struggle and its
results of good omen will pass into duly recorded history as a warning
and an encouragement to people everywhere who wish to lead the life of
the commonwealth.

 NOTE.--For the year ending December 31, 1893, the city trustees report
 that they sold gas to the amount of $139,066. The city owns 5433 acres
 of gas territory, and has 85 wells, 73 miles of pipe outside the city,
 and 91 miles in the city. Since the gas began to flow the sales have
 amounted to $388,540. Out of the receipts the debt has been reduced
 $60,000, besides refunding $67,000 to those who advanced the money for
 piping the streets. While doing this the plant has been considerably
 enlarged. The city accomplished this while charging the people but
 15 cents a thousand, while the gas companies of the trust charged
 25 cents a thousand. Had the city been permitted to act without
 obstruction, the cost of the gas plant would have been long since
 fully paid, and the price of gas made still lower.[553]



CHAPTER XXVII

"YOU ARE A--SENATOR"


How to control the men who control the highways?

The railroads have become the main rivers of trade and travel, and to
control them has become one of our hardest problems in the field where
politics and industry meet. The Duke of Wellington exhorted Parliament
"not to forget, in legislating upon this subject, the old idea of the
King's Highway." But here, as well as there, the little respect paid
by the Legislature at first to this idea soon vanished. In England, as
well as in America, the State, in giving some citizens the right, for
their private profit, to take the property of others by force, legally,
for railways, began by limiting strictly the power so acquired. Then,
passing under the control of that which it had created, the State
abandoned its attempts to control. Now the State is retracing its
way, and for many years has been struggling painfully to recover its
lost authority. In the first English charters there were the minutest
regulations as to freight and passenger charges, and the right of
citizens generally to put their own cars on the tracks was sacredly
guarded.

The railroads became too strong to submit to this, and the success with
which the teachings of Adam Smith were applied to the abolition of
the old-fashioned restraints on trade bred a furor against any social
control of industry. These limitations were left out of new charters,
and for fair play were revised out of the old charters. After a brief
dream of this _laissez faire_, England began, in 1844, investigating
and legislating, and, after nearly thirty years of experiments and
failures, established the railway commission in 1873. This was a step
forward, but has not proved the solvent it was expected to be. The
expense of getting a decision from the commission and the courts to
which the road can appeal from the commission has frightened people
from making complaints. "A complainant," says Hadley, "is a marked man,
and the commission cannot protect him against the vengeance of the
railroads. A town fares no better ... even the [British] War Department
is afraid. It has grievances, but it dares not make them public for
fear of reprisals."[554]

The course of events in the United States was much the same. The first
railroad powers were carefully limited. The early charters regulated
the charges, limited the profits, gave citizens the right to put their
private carriages on the road, and reserved to the State the right to
take possession of the railroad upon proper payment. But as early as
1846 the railroads had grown strong enough--in the revision of the
Constitution of New York, for example--to secure an almost complete
surrender of these public safe-guards.[555]

But it was seen immediately in America, as in England, that the new
institution could not be left in the uncontrolled hands of individuals.
It created simultaneously two revolutions, each one of the most
momentous in modern civilization. It made the steam-engine master in
transportation, as it had already become in manufacturing. It made the
public highways the private property of a few citizens. An agitation
arose among the people--to-day stronger because more necessary than
ever--and they began to seek what they have not yet found: means of
regulating the relations between new rich and new poor, and protecting
the private interests of all from the private interests of the few who
had this double sovereignty. As early as 1857 New York established a
commission for the regulation of the railways. But the railroads within
a year procured a law abolishing it, bribing the leading commissioner
to make no opposition in consideration of receiving from them $25,000,
the whole amount of his salary for five years. "I was the attorney
of the Erie Railway at that time; I specially used to attend to
legislation that they desired to effect or oppose.... I remember the
appointment of that commission.... We agreed that if they" (the leading
railroad commissioner) "would not oppose the repeal of the law we would
pay $25,000, and have done with the commission; it was embarrassing....
The law was repealed, and we paid the money, I think." "If the
commission had been a useless one," said the counsel of the New York
Chamber of Commerce before the Legislative Committee, "the railroads
would not have parted with their money to get rid of it."[556]

Thirty of the States and Territories of the Union had established
commissions or passed laws to regulate the railroads before Congress,
in 1887, used its power under the Constitution to regulate commerce
among the States, and passed the Interstate Commerce law, establishing
the National Interstate Commerce Commission, in the hope that it might
protect the people. Congress did not act until 1887, although for years
different sections of the public, in their efforts to find a cure for
the new evils which had come with the new good, had sought to set in
action their representatives in Washington. The "Granger movement" of
1871, 1872, and 1873, with its "Granger legislation" by the States
against the railroads, is one of the never-to-be-forgotten waves of
public commotion over this problem which took on its acutest form in
the oil regions. Illinois, California, Michigan, Minnesota, Missouri,
Rhode Island, Wisconsin, and Iowa established railway commissions, or
put stringent regulations on the statute-books at this time. Public
opinion did not cease to demand action by the national government
under the constitutional power of Congress to regulate interstate
commerce, and became clamorous. Petitions poured in by the hundreds,
public meetings were held, chambers of commerce and boards of trade and
anti-monopoly conventions passed resolutions of urgency. This was one
of the main issues in the election of the 44th Congress.

Representative Hopkins, of Pennsylvania, rose in his place in the
House of Representatives on May 16, 1876, and asked unanimous consent
to offer a resolution for the appointment of a committee of five
to investigate the charges that "many industries are crippled and
threatened with extreme prostration" by the discrimination of the
railroads, and to report a bill for the regulation of interstate
commerce. This was the first move to reopen in Congress the great
question, first on the order of the day both in England and in America,
which had been smothered by the Committee of Commerce of 1872. It
required unanimous consent to bring the resolution before the House.

"Instantly," said Representative Hopkins, in describing the occurrence
afterwards,[557] "I heard the fatal words 'I object.' The objector was
Mr. Henry B. Payne, of Cleveland." Other members appealed to Mr. Payne
to withdraw his objection.

The Speaker of the House: "Does the gentleman from Ohio withdraw his
objection?"

Mr. Payne: "I do not."

In a private conference which followed between Representative Payne
and Representative Hopkins, the former said, as Mr. Hopkins relates:
"What he objected to in my resolution was the creation of a special
committee; but if I would again offer it and ask that it be referred
to the Committee of Commerce he would not object. I thought perhaps
there was something reasonable in his objection. A special committee
would probably require a clerk, which would be an expense. He looked to
me so like a frugal Democrat, who had great confidence in the regular
order of established committees and did not want the country to be
taxed for clerks attending to the business of special committees--I say
that he so impressed me that, as the record will show, I adopted his
suggestion."

When the Committee of Commerce to which the investigation was
accordingly referred began its investigation, a member of the oil
combination, not then, as later, a member of the Senate, took his seat
by the ear of the chairman, who was from his State, "presiding," as
the oil producers said in a public appeal, "behind the seat of the
chairman."[558] The financial officer of the oil combination was called
as a witness, but refused to answer the questions of the committee as
to the operations of the company or its relations with the railroads.
The vice-president of the Pennsylvania Railroad also refused to answer
questions. On the plea of needing time to decide how to compel these
witnesses to answer, the committee let the railroad vice-president
go until he should be recalled. But the committee never decided, and
the witnesses were never recalled. The committee never reported to
Congress, made no complaint of the contempt of its witnesses, and the
investigation of 1876, like that of 1872, came to a mute and inglorious
end.

When Representative Hopkins applied to the clerk of the committee for
the testimony, he was told, to his amazement, that it could not be
found. "Judge Reagan," he relates,[559] "who was a stanch friend of the
bill"--for the regulation of the railroads--"and very earnest for the
investigation, and who at the time was a member of the committee, told
me that it had been stolen."[560]

Eight years after "I object" the people of Ohio were a suppliant before
the Senate of the United States. They believed that their dearest
rights had been violated, and they prayed for redress to the only body
which had power to give it. Officially by the voice of both Houses of
the State Legislature and the governor, unofficially by the press, by
the public appeals of leading men, by the petitions of citizens, press,
leaders, and people, regardless of party, the commonwealth asserted
that the greatest wrong possible in a republic had been done their
members, and sued for restitution. They declared it to be their belief
that against their will, as the result of violation of the laws, a man
had taken their seat in the Senate of the United States who was not
their senator, that they had been denied representation by the senator
of their choice; and they demanded that, in accordance with immemorial
usage, the evidence they had to offer should be examined, and their
right of representation in the Senate of the United States restored
to them, if it should be found to have been taken from them. After
the Legislature had examined sixty-four witnesses, the Ohio House of
Representatives resolved that "ample testimony was adduced to warrant
the belief that ... the seat of Henry B. Payne in the United States
Senate was purchased by the corrupt use of money." The Ohio Senate
charged that "the election of Henry B. Payne as Senator of the United
States from Ohio ... was procured and brought about by the corrupt use
of money, ... and by other corrupt means and practices."

Both Houses passed with these resolutions an urgent request for
investigation by the Senate of the United States.[561]

Mr. Payne's election by the Legislature was a thunder-clap to the
people of Ohio. They did not know he was a candidate. Who was to be
United States Senator was of course one of the issues in the election
of the Ohio Legislature of 1884, and the Democratic voters who elected
the majority of that Legislature had sent them to the State Capitol to
make George H. Pendleton or Durbin Ward senator. One of the leading
newspaper men of the State testified: "I went over the entire State
during the campaign.... Out of the eighty-eight counties I attended
fifty-four Democratic conventions and wrote them up, giving the
sentiment of the people as nearly as I could, and during that entire
canvass I never heard a candidate for the Legislature say that he was
for Henry B. Payne for United States Senator; but every man I ever
talked with was either for George H. Pendleton or General Ward. I think
out of the Democratic candidates throughout the State I conversed with
at least two-thirds of them."[562] As was afterwards stated before the
Senate of the United States by the representatives of the people of
Ohio, "He was in no wise publicly connected with the canvass for the
Senate, nor had the most active, honorable, and best-posted politicians
in the State heard his name in connection with the senatorial office
until subsequent to the October election [of the Legislature]. He was
absolutely without following."[563]

The Democratic constituencies sent their legislators to vote for
Pendleton and Ward, but between the receipt and the execution of
this trust from the people a secret charm was put to work of such a
potency that the people woke up to find that the representative who
had betrayed them in Congress in 1876 was their senator, instead of
one of their real leaders. The people had been digging oil wells for
twenty years that all the value might flow into the bank accounts of a
few interceptors; they had been building railroads and pipe lines that
their business and property might be transported into the same hands;
they had organized agitation and conducted a national anti-monopoly
campaign all over the country, only to see the men who were to have
been investigated take command of the inquiry. The people had had
enough such experience not to be surprised that when they started to
make a beloved leader senator it was their enemy who came out of the
voting mill with the senatorial toga upon his shoulders. But terrible
was the moral storm that broke forth out of the hearts of the people
of Ohio. The votes they had thrown, like roses to garland the head
of a hero, had been transformed as they went, by a black magic, into
missiles of destruction, and had fallen upon him like the stones that
slew Stephen.

The press, without regard to party, gave voice to the popular wrath.
Scores of the Democratic newspapers of Ohio went into mourning. One of
them said: "The whole Democratic Legislature was made rotten by the
money that was used to buy and sell the members like so many sheep."
Many representative Democrats of the State privately and publicly
declared their belief in the charges of corruption. Allen G. Thurman,
who had been a senator and representative at Washington, said: "There
is something that shocks me in the idea of crushing men like Pendleton
and Ward, who have devoted the best portion of their lives to the
maintenance of Democracy, by a combination against them of personal
hatred and overgrown wealth.... I want to see all the Democrats have
a fair chance according to their merits, and do not want to see a
political cutthroat bossism inaugurated for the benefit of a close
party corporation or syndicate." Again he said: "Syndicates purchase
the people's agents, and honest men stand aghast."[564]

It was the "irony of fate" that this Legislature, like the 44th
Congress, had been specially elected to represent opposition to
monopolies. Of course the Legislature that had done this thing was not
to be persuaded, bullied, or shamed into any step towards exposure or
reparation. But the people, usually so forgetful, nursed their wrath.
They made the scandal the issue of the next State election, and put
the Legislature into other hands. The new Legislature then forwarded
formal charges to the Senate of the United States, and a demand for an
investigation. The State of Ohio made its solemn accusation and prayer
for an investigation through all the organs of utterance it had: the
press of both parties; honored men, both Republican and Democratic;
both Houses of the State Legislature and its senator whose seat was
unchallenged--an aggregate representing a vast majority of the people
of the State. The Hon. John Little and the Hon. Benjamin Butterworth,
former Attorney-General of Ohio, both members of Congress, had been
delegated to present the case of the State. They made formal charges,
based on evidence given under oath or communicated in writing by
reputable citizens, who were willing to testify under oath. None of
the matter was presented on mere hearsay or rumor.[565] No charge
was made to connect Senator Payne personally with the corruption. His
denials and those of his friends of any participation by him were
therefore mere evasions of the actual charge--that his election had
been corruptly procured for him, not by him. The substance of their
accusation, as contained in their statement and the papers forwarded by
the Legislature, was as follows:[566]

That among the chief managers of Mr. Payne's canvass, and those who
controlled its financial operations, were four of the principal
members in Ohio of the oil trust: its treasurer, the vice-president
of one of its most important subordinate companies, its Cincinnati
representative, and another--all of whom were named.

That one of these four, naming him, who was given the financial
management of the Payne campaign at Columbus, carried $65,000 with
him, "next to his skin," to Columbus to use in the election, as he had
stated to an intimate friend whose name would be given.

That the cashier of the bank in Cleveland, where the treasurer of the
oil combination kept one of his bank accounts, would testify that this
money was procured on a check given by this treasurer of the oil trust
to another of its officials, and passed over by him to its Cincinnati
agent, who drew out the cash.

That the back room used by the Payne manager at Columbus as his office
displayed such large amounts of money in plain view that it looked like
a bank, and that the employé who acted there as his clerk stated upon
his return home that he had never seen so much money handled together
in his life.

That a prominent gentleman, going to the room used by the Payne
managers for a "converter," had said that he saw "canvas bags and coin
bags and cases for greenbacks littered and scattered around the room
and on the table and on the floor ... with something green sticking
out," which he found to be money.

That members who had been earnest supporters of Pendleton were taken
one by one by certain guides to this room which looked like a bank,
and came out with an intense and suddenly developed dislike of
civil-service reform (Mr. Pendleton's measure), and proceeded to vote
for Mr. Payne; and that these conversions were uniformly attended with
thrift, sudden, extensive, and so irreconcilable with their known means
of making money as to be a matter of remark among their neighbors; and
that "the reasons for the change (of vote) were kept mainly in this
room, passed by delivery, and could be used to buy real estate."

That this use of money in large amounts to procure the sudden
conversions of Pendleton legislators to Payne would be shown by
numerous witnesses, generally Democrats, several of them lawyers of
great distinction and high ability.

That the editor and proprietor of the principal Democratic journal
in Ohio had stated, as was sworn to, that he had spent $100,000 to
elect Payne, and that it cost a great deal of money to get those
representatives and senators to vote for Payne, and they had to be
bought. "It took money, and a good deal of it, to satisfy them," and
he complained that the oil trust had not reciprocated in kind. This
statement was made by one of his editorial writers, who after making
it was discharged. The latter subsequently put it into the form of an
affidavit.

That Senator Pendleton would testify that more than enough of the
legislators to give him the election had been pledged to him.

That the number of members of the Ohio Senate and House of
Representatives who had been paid money to vote for Mr. Payne was so
great that without their votes and influence his nomination would have
been out of the question.

That a legislator who had been violently opposed to Payne, then changed
and became violently rich, had acknowledged that the treasurer of
the oil trust, out of gratitude for what he had done, had "loaned"
him several thousand dollars--"a case," said the representative of
Ohio before the United States Senate, "of a man becoming well-to-do by
borrowing money."

That legislators who were so poor before the election that everything
they had was mortgaged, and they had to beg or borrow funds for their
election expenses, became so prosperous after their sudden conversion
to Payne that they paid off their debts, rebuilt their houses,
furnished them handsomely, deposited large amounts in the banks, or
opened new bank accounts, bought more property, and that the reasons
they gave for this new wealth were demonstrably untrue--or impossible.

That a member of the Legislature, a State senator, had himself stated
that he had received $5000 to vote for Payne,[567] and had offered the
same amount to an associate if he would do the same; and that after the
election this member opened a new bank account, depositing $2500 in his
wife's name, who immediately transferred it to him.

That another member of the Legislature, who changed suddenly after his
election to the Legislature, and just before the caucus, from a warm
advocacy of one of the recognized candidates to the support of Payne,
when directly charged with having taken a bribe, did not deny it, but
"became exceedingly sick, white as a sheet, and answered not. He went
away and laid in bed two days."

That, contrary to all the precedents of Ohio politics, the caucus of
the majority party was not held until the night before election, so as
to leave no time between the caucus and the election.

That, also contrary to the precedents, the nomination was made, not,
as usual, by open vote, but by secret ballot and without debate, on
the demand of the Payne managers and contrary to the protests of the
opponents, so that it could not be known to the public who the Payne
men were.

That this knowledge was made sure to the Payne managers, who were
to pay for the votes, by the ingenious device of requiring each
purchased legislator to use a coupon ballot furnished by them, the
corresponding stub of which they kept. These legislators were not paid
for their votes unless the torn edges of the coupon ballot voted by
them corresponded with the edge of the stub in the possession of the
managers.

That responsible men would testify that they had received confessions
from members of the Legislature that they had been bribed with money to
vote for Mr. Payne.

That two members of the Legislature who had been elected as
anti-monopolists became supporters of Mr. Payne, and were heard
discussing together the amount of money they had received, and
quarrelling because one had received more than the other.

That a member of the Legislature which was corrupted, standing on the
floor of the Ohio House of Representatives, pointed out members who
had been purchased to vote for Payne, saying: "These members were paid
to vote in the senatorial fight," holding a little book in his hand in
which he had the names and amounts; but although he made the charges
openly and defiantly, and although the same charges were made in
Republican and Democratic papers, no investigation was ordered. Three
attempts to have an investigation made by the Legislature in which the
bribery occurred failed.

That a correspondent of a leading Cincinnati daily, sitting on the
floor of the House, daily charged that the election was procured by
bribery, talked about it generally, and dared the House to investigate
or the accused to sue for libel, and that no such step was taken by
either.

That a memorandum of the names of the legislators who sold themselves,
and the amounts they received, had been furnished from a responsible
source.

That on the eve of the election money was sent by draft to twenty-four
of the Democratic candidates for the Legislature, with the promise
of more the next day, and with the statement that thanks for both
remittances were due to one of the prominent members of the oil trust,
who was named, and two others of Payne's managers, "they paying most
of it themselves."

That before the election of the Legislature one of the Payne managers
sent large sums of money amounting to $10,000, or $12,000, perhaps
$13,500--the treasurer of the oil trust "and other wealthy Democrats
contributed it-- ... into different parts of the State."

That the managers of the election absented themselves from the State
during the legislative investigation, and remained out of reach until
it closed.

That during the two and a half years which had passed since these
specific charges of bribery had been put into circulation, there had
been no demand for investigation on the part of those whose reputation
and honor were concerned, but there had been a manifest effort to
prevent investigation.

That in addition to these offers of evidence the case against Mr. Payne
would be greatly strengthened by new and additional testimony from
responsible sources.

Testimony was taken by the Legislature that an ex-Lieutenant-Governor
of Ohio, afterwards Consul-General of the United States at Frankfort,
Germany, had been in the room of Payne's manager, had seen that he was
using money to procure the election, and had so told Mr. Payne before
the election, and that Mr. Payne's reply--"You don't suppose I would
endorse anything of that kind, do you?"--showed that he had understood
the use of money referred to to be an improper use, thereby fastening
upon Mr. Payne, if true, the knowledge that his agents were corrupting
the Legislature.

During this deluge of charges Mr. Payne made no denial.

After the investigation had been ordered by the State Legislature,
Senator Payne made an offer to the committee to submit all his private
papers and books of accounts to their examination--an empty offer,
because it was not charged that the corruption had been done by him,
but for him by others. These latter made no such offer, but fled from
the jurisdiction of the Legislature. When the representatives of the
people of Ohio appeared before the committee of the United States
Senate on elections, with the offer to prove under oath the foregoing
charges, he remained voiceless. He did not rise in his place in the
Senate to deny these accusations, as every other senator since the
Senate began had done. He did not go before the committee, nor send
before them any witness, or make any explanation. When the Senate
committee decided to recommend the Senate not to investigate, and the
representatives of Ohio begged the committee to reconsider, Senator
Sherman declared that he heartily agreed with every word of the appeal,
but Senator Payne still kept silent. The records of Congress show that
his sole utterance or appearance in this matter in Congress was to make
the motion that the papers forwarded by the Ohio Legislature should be
sent, as was the routine, to the Committee on Elections. In doing this
he did more than abstain from the utterance of a word which could be
in any way construed as a demand for investigation. He delivered what
was, in effect, an appeal to his fellow-senators not to investigate. He
attacked the Legislature for sending the report of its investigation
to Congress, characterizing "this proceeding--the transmission of
the testimony here--as an attempt to circulate and give currency to
baseless gossip and scandal, after everything substantial in the way of
a charge had been discredited and disproved." In conclusion he left the
matter to the committee "for such disposition of it as they may find to
be in accordance with dignity and justice."

The Legislature which made the investigation selected as the reason for
ordering it the fact that a well-known citizen had just repeated in
an open letter in the public prints the charges of bribery which had
been made already hundreds of times. When this citizen was called upon
to testify before the Legislature he stated that, as his information
was derived from others, he had no personal proof to offer of his own
knowledge that bribery had been committed. Referring to this, Mr. Payne
said to his colleagues of the Senate:

"Thus fell all that the investigation was originally based upon."[568]

This was not true. The witness furnished the committee with the names
of the men on whose authority he had spoken, and through whom evidence
based on personal knowledge could be procured as to the truth of
the charges.[569] Therefore the statement, "Thus fell all that the
investigation was originally based upon," so far as it was believed by
the senators, deceived them. The State Legislature could not compel
the witnesses to testify. Only the United States Senate could do this,
and it was deterred from doing so by this concealment of the fact that
the investigation, instead of falling because of no basis, had struck
firmer ground. The proffer of evidence was of such a character that,
as has been well said, none of the lawyers of the Senate committee
who voted against recommending investigation "would have failed to
recommend thorough investigation of such an incident if it had been
relevant to an alleged title set up against a private client."[570]
But the Senate Committee on Privileges and Elections--Senators Pugh,
Saulsbury, Vance, and Eustis voting against Hoar and Frye--recommended
the Senate not to investigate, and the Senate adopted this report.

No one had expected this. The unbroken precedents of the Senate had
made it a matter of course in public expectation that the investigation
would be made. A convention of Ohio editors, sending a memorial for
a reconsideration, said: "No instance has yet arisen in the history
of the Senate where specific and well-supported charges of bribery in
a senatorial election, preferred by the Legislature of a State, have
not been promptly investigated by the Senate. In fact, so jealous has
the Senate been of its own integrity and honor that it has heretofore
promptly ordered investigations upon the memorials of citizens, and in
other cases upon the memorial of individual members of a Legislature
charging fraud in senatorial elections." In so doing the Senate, to
adopt the language used by the chairman of the Committee on Elections,
Senator Hoar, declared that "it is indifferent to the question
whether its seats are to be in the future the subject of bargain
and sale, or may be presented by a few millionaires as a compliment
to a friend."[571] "This matter never can be quieted," said Senator
Sherman in the debate in the Senate. "There are six or seven men who
are known--I could name them--who, if they were brought before this
Committee on Privileges and Elections, would settle this matter forever
one way or the other in my judgment."

The Senate decided that such a charge, accompanied by such offers of
proof, did not deserve its attention. The trial of "even a criminal
accusation," said the minority of the committee, "requires only the
oath of the accuser who is justified if he have probable cause."
The minority, Senators Hoar and Frye, further said: "It will not be
questioned that in every one of these cases there is abundant probable
cause which would justify a complaint, and compel a grand-jury or
magistrate to issue process and make an investigation. Is the Senate to
deny to the people of a great State, speaking through their Legislature
and their representative citizens, the only opportunity for a hearing
of this momentous case which can exist under the Constitution? The
question now is not whether the case is proved--it is only whether it
shall be inquired into. That has never yet been done. It cannot be done
until the Senate issues its process. No unwilling witness has ever yet
been compelled to testify; no process has gone out which should cross
State lines. The Senate is now to determine, as the law of the present
case, and as the precedent for all future cases, as to the great crime
of bribery--a crime which poisons the waters of republican liberty
in the fountain--that the circumstances which here appear are not
enough to demand its attention. It will hardly be doubted that cases
of purchase of seats in the Senate will multiply rapidly under the
decision proposed by the majority of the committee."[572]

The debate upon the recommendation of the committee not to investigate
was impassioned. Senator Hoar said: "The adoption of this majority
report ... will be the most unfortunate fact in the history of the
Senate." When the vote of the Senate not to investigate was announced,
Senator Edmunds turned to his neighbor in the Senate and summed up the
verdict of posterity in these words: "This is a day of infamy for the
Senate of the United States."

The same Legislature which sent Senator Payne to the Senate defeated
the bill to allow the Cleveland independent refiners to build a pipe
line to furnish themselves with oil. The defeat of the bill was
accomplished by a lobby whose work was so openly shameless that it
was characterized by the Ohio press "as an indelible disgrace to the
State." The bill was one of many attempts which have been made by
the people of Ohio and Pennsylvania, without success, to get from
their Legislature the right to build pipe lines. It has been tried to
get laws to regulate the charges of the existing lines, but without
success. The history of the pipe-line bills in these legislatures
for the past ten years has been a monotonous record of an unavailing
struggle of a majority of millions to apply legal and constitutional
restraints to a minority of a few dozens. The means employed in the
Ohio Legislature of 1885 to defeat a bill giving equality in pipe-line
transportation to refiners in competition with the oil trust, which
owned the existing pipe-lines, were of such a sort that that body has
gone into the history of the State as the "Coal-oil Legislature." It
is stated by Hudson, in his _Railways and the Republic_, that the
Democratic agent of the bribery openly threatened to publish the list
he had of the members of the Legislature he had purchased, and that in
consequence of this threat proceedings which had been begun against him
for outraging the House by appearing on the floor in a state of gross
intoxication were abandoned.[573]

In a debate about combinations in trade and industry--trusts--in the
United States Senate in 1888, the sore scandal of this senatorial
election of 1884 was disinterred.

"If there be such a trust," said Senator Hoar, referring to the
oil trust, "is it represented in the cabinet at this moment? Is it
represented in the Senate? I want to know the facts about these five or
six great trusts which are sufficient in their power to overthrow any
government in Europe, if they existed in those nations, that should set
itself against them--the coal, the sugar, the whiskey, the cotton, the
fruit, the railroad transportation of this country, controlled by these
giant chieftains."

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 11-1/2 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 8-1/2
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 3-1/2 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
14-1/2 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 12-1/2 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 8-1/2 to 4 and 4-1/2 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 14-1/2 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 7-1/2 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

 ------------------------------+---------------+-------------+-------------
                               |               |             |Per cent. of
                               |April 28, 1893 |July 20, 1894|Decline since
                               |               |             |April 28,
                               |               |             |1893
 ------------------------------+---------------+-------------+-------------
 Wheat, No. 2, red             | 0.76-3/8      | 0.56-1/2    |      26
 Corn, No. 2, mixed            |  .50          |  .47-1/2    |       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          |  .01-1/2    |      25
                               |               |             |
                               | June 30, 1892 |June 30, 1894|June 30, 1892
 Coal, Bituminous, Pittsburg   |$ 1.07         | 0.86        |      20
 Coal, Anthracite, New York    | 4.15          | 4.15        |      00
 ------------------------------+---------------+-------------+-------------

 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."

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

There had been negotiations, after all!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"Not yet."[652]

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

"Not yet!"



CHAPTER XXXII

"NOT BUSINESS"


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"I am not able to demonstrate that proposition."

"You have some arithmetical knowledge?"

"I cannot answer that question."[703]

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

"You own the pipe line to New York?"

"Yes, sir."

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

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

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

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

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

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

"I could not tell."[708]

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

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

"Never."

"Or the production of oil?"

"Never."

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

"I cannot."[710]

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

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

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

"I do not know."

"How much has the capital been increased since?"

"I don't know."

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

"I don't know."

"How many directors are there?"

"I don't know."

"Do they own any pipe lines?"

"I don't know."

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

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

"I do not know."

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

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

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

"I am unable to state."

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

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

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

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

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

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

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

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

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

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

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

"There is no book to produce?"

"There is no book."

"And there is no memorandum?"

"There is no memorandum."[718]

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

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

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

"You have never seen those books?"

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

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

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

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

1. Not to know anything about the business.

2. To keep no books.

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

4. Never to look at it.

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

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

"Undoubtedly they do."[722]

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

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

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


        TRUST'S OFFER TO PROVE.      |             THE PROOF.
                                     |
 It offered the evidence of the third|But the testimony of this witness
 vice-president of the Pennsylvania  |states that his connection with
 Railroad to "show the South         |the oil business of the Pennsylvania
 Improvement Company never did any   |Railroad--the principal railroad in
 business, and its charter was       |that scheme--did not begin until
 repealed in 1872."                  |1873.[726]
                                     |
 It offered the same evidence to     |But this witness stated that his
 prove that the same rebates granted |road would give other shippers as
 it by the contract of October 17,   |low rates as to the oil combination,
 1877, "were also granted to every   |"if they would guarantee the same
 shipper who contracted to do _all_  |quantity--not otherwise--under that
 his business over the Pennsylvania  |contract";[727] and the contract
 Railroad."                          |itself states that no other shipper
                                     |should have the same rebate
                                     |--"commission," it is called--unless
                                     |his business gave the road "the same
                                     |amount of profit you realized from
                                     |our trade."[728] No shipper could get
                                     |the same rates by giving "all his
                                     |business." He must give "the same
                                     |quantity"--a totally different
                                     |proposition.
                                     |
 It offered the evidence taken in the|The evidence shows that this was
 Buffalo Explosion case, to show that|what was sworn to: "I have now a
 "C.B. Matthews testified falsely"   |detective agency here" (Buffalo). "I
 in testifying that it was sworn to  |employed L---- B----. At the time
 that the members of the oil         |he was in my employ he was employed
 combination on trial employed       |at the works of the Buffalo
 detectives in Matthews' refineries, |Lubricating Company" (Matthews'
 and that the detective was some time|company). "He made reports to me....
 in Matthews' employ, and made his   |I forwarded copies--one to New
 report to the lawyer of the trust,  |York, one to Rochester.... The one
 and he got his pay from this lawyer.|forwarded to New York was addressed
                                     |to" (the lawyer of the oil
                                     |trust). "I met" (this lawyer, naming
                                     |him) "at New York City, at No. 44
                                     |Broadway, which is the office of the"
                                     |(oil trust). "I received my pay from"
                                     |(him). "My instructions from" (him)
                                     |"were in writing."[729]
                                     |
 It offered "to prove that C.B.      |This was what "was proved by a
 Matthews testified falsely in saying|witness," and referred to by
 that it was proved by a witness"    |Matthews.
 that the Rochester representative of|"He" (the Rochester representative
 the oil combination said that the   |of the oil combination)
 principal company in it "would sue  |"said he thought they" (Matthews'
 Matthews once a month, or once a    |company) "would not survive.... By
 week, if necessary, to squeeze him  |the time they got through with all
 out."                               |the suits that they" (the oil
                                     |combination) "would bring, the
                                     |Buffalo Lubricating Company would
                                     |be pretty much used up.... He didn't
                                     |know as they would gain anything
                                     |really, but they would embarrass them
                                     |by bringing these suits, and if it
                                     |was necessary they would bring them
                                     |once a month--yes, they would bring
                                     |them once a week."[730]

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



CHAPTER XXXIII

THE SMOKELESS REBATE


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"None whatever."[741]

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

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

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

2. Reports of State legislative committees.

3. Copies of the contracts.[742]

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

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

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

"What was the effect on the small dealer?"

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

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

The San Francisco complainant goes on to charge that a plan was
concocted and put in operation by which rates were lowered whenever the
combination wanted to fill its warehouses on the Pacific coast, and as
soon as they were full were put back again. This lowering and raising
of rates was "to the public sudden and unexpected."[748] It was known
in advance only to the ring and the railroads. Before other shippers
could take advantage of the low rates they would be raised again. The
complaint recites that in pursuance of this plan, after the combination
had transferred to the Pacific coast at the end of 1888 from its
Eastern refineries all it needed for the next season's business, the
railroads advanced the rates from 82-1/2 cents a hundred pounds to
$1.25. The next May the railroads made a similar seesaw, and, he says,
in December, 1892, "are still making ... such arbitrary and sudden
reductions ... to the undue advantage" of the oil combination "and to
the detriment and injury of all other shippers." The San Francisco
merchant also charges that in the interest of the Eastern refineries
of the combination rates are made to prevent the large product of the
oil-fields and independent refineries of Colorado and Wyoming from
reaching the Pacific coast, "which needs them to furnish fuel for its
manufactories, as well as for light for its residents." Similarly we
find the Chicago and Northwestern Railroad charging $105 for a car-load
of cattle from Wyoming to Chicago, while for a car of 75 barrels of
oil the freight would be $348. In connection with these charges the
press published the telegrams, filling columns, which were said to have
passed between the officials of the railroads and the oil combination
in the negotiation of this arrangement. In one of these telegrams the
freight agent of the Southern Pacific explains the new deal. "He" (the
agent of the oil combination) "would stock up at the low rate, then
notify the association of railroads when to advance." The advance or
decline was to be "made at certain seasons of the year in accordance
with this supply on hand." When the negotiation was finished and the
plan was agreed to, a San Francisco agent of the oil combination is
said to have telegraphed to its officers in New York: "I think we have
managed this freight business pretty well from this long distance,
especially when you think that we have secured the 90-cent rate with
which to stock up from time to time." His telegram also discloses
that the arrangement extended to lead and linseed-oil, showing, what
is well known, that the combinations in these articles belong to the
members of that in oil. These charges are, it is to be remembered,
still unadjudicated, this published evidence is not yet substantiated.
But the arrangement which is charged is in exact pursuance of that
part of the South Improvement Company contract which bound the
railroads to "lower or raise the gross rates of transportation ...
for such times and to such extent as may be necessary to overcome
... competition."[749] And Attorney-General Olney has been publicly
informed[750] that during the summer of 1894 oil rates between
Pennsylvania and Colorado were put down from 75 cents a hundred to 25
cents, and a few weeks later raised again to the old rate. Another
increase made the rates to Denver higher, for oil, than to the Pacific
coast. He has been asked to ascertain, judicially, if this shuffling
of rates was not made, like that complained of before the Interstate
Commerce Commission, to allow the oil trust "to stock up at the old
rate." His informants suggest that the same powers with which he has
brought railway employés to trial for infractions of the Interstate
Commerce law can be used against the railways.

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

Meanwhile their oil, side-tracked in the Mojave Desert and elsewhere,
was being cooked to death, their customers were going elsewhere, and
they were being put to loss and damages which they are now suing to
have made good to them. "There are some equivocal circumstances in
the case," said Judge Hoffman, dissolving the injunctions in 1890. He
pointed out that the railroad made no objection to the injunction which
deprived it of business. This "tends to corroborate suspicions," he
said, suggested by other features of the case. The railroad persisted
in remaining in the case to the end, after the real parties in interest
came in, and, although codefendants with these parties, the road
manoeuvred for the benefit of the other side in a way which the Court
again said "had an equivocal appearance." The counsel for the firm,
in his brief for the United States Circuit Court of Appeals, pointed
out more causes for "suspicion." He showed the Court that the records
of the case had been mutilated in many places. All the mutilations
were in favor of the other side of the case. Who was the author of
the mutilations was not shown, but it was shown that the record had
been intrusted by the lower court to a representative of one of the
oil trust, to be printed and delivered to the Court of Appeals. "It
would be a very easy matter for a vicious attorney," said the lawyer
of the independents, "under such circumstances, to make changes
and alterations in the record that might not be noticed, but would
nevertheless greatly prejudice the case."

When the victims of the smokeless rebate used the only property many
of them had left--their right of appeal to courts or Legislature
or executive officials--they were showered with abuse, as people
with "private grievances,"[752] "strikers and sore-heads,"
"black-mailers,"[753] "moss-backs," ... "naturally left in the lurch"
... "people who came forward with envy and jealousy of the success"
of the oil combination,[754] "throttlers," "ravenous wolves," "hoary
old reprobate," "senile old liar," "public till-tapper," "plunderers,"
"pestilence."[755] Such are a few of the blossoms of rhetoric
with which those who sought their rights in courts or before the
Legislature have been crowned. These witnesses have come forward all
through the period between 1872 and 1892, and from every point of
importance in the industry--New York, Pittsburg, Cleveland, Oil City,
San Francisco, Titusville, Philadelphia, Marietta, Buffalo, Boston,
Cincinnati, Louisville, Memphis, New Orleans. They have come from every
province of the industry--the refineries, the oil fields, the pipe
lines, railroads, the wholesale and retail markets. Bound together
by no common tie of organization or partnership, they have, each and
all, exactly the same kind of story to tell. The substance of their
complaint--that one selected knot of men, members of one organization,
were given, unlawfully, the control of the highways, to the exclusion
and ruin of the people--has been sustained by the evidence taken by
every official investigation, and by the decision of every court to
which the facts have been submitted.

As the counsel of the New York Chamber of Commerce before the New York
Legislative Committee of 1879 said: "Such a power makes it possible to
the freight agents of the railways to constitute themselves special
partners in every line of business in the United States, contributing
as their share of capital to the business the ability to crush out
rivals." Men who can choose which merchants, manufacturers, producers
shall go to market and which stay at home, have a key that will unlock
the door of every business house on the line; they know the combination
of every safe.

In their appeal to the executive of Pennsylvania, the Petroleum
Producers' Union refer to the conduct of the railroad officials as
"inexplicable upon any ordinary hypothesis, or under any known theory
of railroad politics."[756] What the railroad managers did, we know;
why they did it, has never been judicially demonstrated. One of the
earliest intimations of the kind of lubricant used was given by the
anti-monopoly leader of the people in the Constitutional Convention
of Pennsylvania of 1872, who is now the legal leader of the oil
combination. He said: "I am told that discriminations are now made to
so great an extent as to be ruinous to certain companies unless the
railroad companies' officers are given a bonus. That is the evil under
which we labor. I do not know how to cure it, but it must be cured
somehow." Again he said: "It is charged--I do not make the charge
myself--but it is charged upon a railroad company running through the
oil regions that it will not, without delay, transport oil delivered to
the railroad station by the various pipe lines unless it is interested
in the pipe line.... It is said that whenever a new pipe line is
built, it is necessary that somebody connected with the particular
railroad company shall be presented with stock in the pipe line;
otherwise, it (the railroad company) will not furnish cars without
tedious and unnecessary delay. This is a discrimination which should be
stopped."[757]

It is plain that the purpose of the discrimination was something
more than to shunt the control of the trade--more than "to maintain
the business" of the favorite. Ten cents a barrel difference would
have done that, for, as the Supreme Court of Ohio pointed out, that
alone amounted to a tax of 21 per cent. a year on the capital of the
"outsiders."[758] When 10 cents was enough, why was the tax made
22-1/2 cents, 25 cents, 64-1/2 cents up to $1.10?

Some railroad men are known to have been stockholders in the oil
combination. "I think I owned--I guess I had $100,000 in it.... I don't
know anything at all about it"--the company--the head of the New York
Central admitted.[759] Who were the owners of certain shares of their
capital stock these men have always refused to divulge. In giving in
court a list of stockholders of one of their corporations one of the
officers uncovered only three-quarters of the stock. Who held the other
fourth he avowed he could not say, although the stock-book was in his
custody.[760] The dividends were paid to the vice-president, and by
him handed over to these veiled prophets. There was a similar mystery
about the owners of about $2,000,000 of the National Transit stock, the
concern which owns and manages the pipe lines. Asked for the names of
the owners of this portion, the "secretary" said:

"It is a private matter.... I decline to answer."[761]

The president of this pipe-line branch also refused to give Congress
this information.[762] This secrecy will couple itself at once in the
mind of the investigator with the charges just quoted, that railroad
officials had to be given backsheesh of pipe-line stock before their
roads would carry the oil of the pipe lines.

The United States Senate Committee which investigated the cattle and
meat monopolies had a similar experience. Their report says: "The
secretary of the Union Stockyards testified at Chicago that when the
company was established the stock was subscribed by the railroads; but
when asked to show his stock-books he declined, after consultation with
the company's attorneys, and persisted in this refusal at Washington
City. For the purposes of our investigation it was not considered
necessary to ascertain in whose names the stock now stands, for we
were satisfied that whatever the ownership it would not appear in the
names of the railroad presidents, directors, and stockholders, who
are the real owners.... The refusal of the secretary, under direction
of his employers, to make public the list of stockholders must have
been because of the fact that the same men own the stockyards and the
railroads running to them, and they do not propose to submit their
books to scrutiny because they dread the truth.... This extraordinary
conduct on the part of the stockyards company is not alone in the chain
of evidence which shows complicity between the stockyards and the
railroads."[763]

The smokeless rebate makes the secret of success in business to
be not manufacture, but manufracture--breaking down with a strong
hand the true makers of things. To those who can get the rebate it
makes no difference who does the digging, building, mining, making,
producing the million forms of the wealth they covet for themselves.
They need only get control of the roads. All that they want of the
wealth of others can be switched off the highways into their hands.
To succeed, ambitious men must make themselves refiners of freight
rates, distillers of discriminations, owners, not of lands, mines, and
forests--not in the first place, at least--but of the railway officials
through whose hands the produce must go to market; builders, not of
manufactories, but of privileges; inventors only of schemes to keep for
themselves the middle of the road and both sides of it; contrivers, not
of competition, but of ways to tax the property of their competitors
into their pockets. They need not make money; they can take it from
those who have made it.

In the United States the processes of business feudalization are moving
more rapidly to the end than in any other country. In Chicago, the
youngest of the great cities of the youngest of the great nations,
there are fewer wholesale dry-goods stores in 1894 for a population of
1,600,000 than there were in 1860 for 112,172. In almost every one of
the meteoric careers by which a few men in each trade are rising to
supreme wealth, it will generally be found that to some privilege on
the railed highways, accomplished by the rebate, is due the part of
their rise which is extraordinary. A few cases of great wealth from
the increased value of land, a few from remarkable inventions like the
sewing-machine, are only exceptions.

From using railroad power to give better rates to the larger man, it
was an easy step to using it to make a favorite first a larger man,
then the largest man, and finally the only man in the business. In
meat and cattle we see men rising from poverty to great wealth. From
being competitors, like other men, in the scramble, they get into the
comfortable seat of control of the prices at which the farmer must sell
cattle, and at which the people must buy meat.[764] Many other men
had thrift, sobriety, industry, but only these had the rebate, and so
only these are the "fittest in the struggle for existence." We find a
merchant prince of the last generation in New York gathering into his
hands a share of the dry-goods business of the country which appears
entirely disproportionate to his ability and energy, great though these
be. Is his secret a brain so much larger than his competitors' brains
as his business is greater than theirs? The freight agent of the New
York Central testified that he gave this man a special rate "to build
up and develop their business."

"They were languishing and suffering?"

"To a great extent."[765]

"This," said the counsel for the Chamber of Commerce of New York before
the committee, "is deliberately making the rich richer and the poor
poorer, by taxing the poor for the benefit of the rich through the
instrumentality of the freight charge."[766]

The officials of the Pennsylvania Railroad, by the use of rebates,
handed over the State of Pennsylvania to three coal-dealers, each of
whom had his territory, and was supreme in it, as would-be competitors
found out when they undertook to ship coal into his market. They made
a similar division of the iron and steel business. The rebate is the
golden-rule of the "gospel of wealth." We have already seen that the
secret of the few corporations which have become the owners of almost
every acre of the anthracite coal of Pennsylvania was the rebate.[767]

Along one of the most important lines out of Chicago grain dealers who
had been buying and selling in an open market, building elevators,
investing capital and life, found five years ago market and railroad
and livelihood suddenly closed to them, and the work of thirty years
brought to an untimely end. The United States Interstate Commerce
Commission, and the United States District Attorneys co-operating with
it, broke down in the attempt to compel the railroad men who gave these
privileges of transportation, or the business men who received them,
to testify or to produce their books. The United States grand-jury in
Chicago, in December, 1890, proceeded against the shippers and the
railroad men. All of them refused to tell the rates given or received,
or to produce their books.

Why do you refuse to answer? they were asked.

Because to do so would incriminate us.

Here, too, would-be successful men have gone gunning with the smokeless
rebate for control of the wheat and corn and all the produce of the
American farmer. Grain is fated to go the way that oil, hard coal,
cattle, and meat have already gone. The farmer may remain the nominal
owner of his farm under these circumstances, but he will be real owner
of nothing but the piece of paper title.

First the product of the farm; then the farm. In America rises the
shadow of a coming land-ownership more concentrated, more cruel, with
the impersonal cruelty of corporate anonymity, than any the world has
yet seen.

The grain broker who becomes, by favor of the general freight agent,
the sole shipper and warehouseman of grain along a line of railroad,
becomes thereby the sole buyer, and in the sole buyer of the produce we
have the fast-growing germ of the future sole buyer of the land.

"Petroleum is the victim to-day," said the address, in 1872, of the
Petroleum Producers' Union "to all newspapers and boards of trade
opposing monopoly.... Coal, iron, cotton, breadstuffs, or live-stock
may be in the grasp of the monopoly to-morrow." The prediction is more
than half fulfilled.

"I ran away from home, and went to California," said a prominent grain
merchant to the writer, "to escape being compelled to testify as to
the freight rates I was paying. But these decisions that we cannot be
forced to incriminate ourselves give me safe-conduct, and I am going
home to take all the rebates I can get."

This is what is going on to-day in the "division of property" in
America. Our society is woven together by the steam shuttle that
moves between its farms and dinner-tables, its cotton-fields and
factories, thousands of miles apart, and the shuttle is crooked.
Out of $800,000,000 paid yearly in this country for the carriage of
freight, it was estimated in 1888, by one who knew, that $50,000,000
to $100,000,000 goes to favored shippers.[768] As the result of
personal examination made as an expert for stockholders, he declared
that one of the great trunk lines had in the last twenty years thus
diverted to favorites of the managers $100,000,000 of the money of
the stockholders. Besides his yachts and trotters, every Captain of
Industry worth talking about keeps his stud of railway presidents and
general freight agents.

Public opinion, as yet only in the gristle in these new questions,
turns upon first one and then another as the author of its
troubles--the soulless corporation, the combination of corporations,
railroad oppression, or what not. But the corporation is merely a
cover, the combination of corporations an advantage, the private
ownership of public highways an opportunity, and the rebate its perfect
tool. The real actors are men; the real instrument, the control of
their fellows by wealth, and the mainspring of the evil is the morals
and economics which cipher that brothers produce wealth when they are
only cheating each other out of birthrights.

The success of the same men in Europe shows that railroad
discrimination is not the essence of their power, though it has
in America been the chief instrument. By their wealth and their
willingness to use it in their way they have become supreme. Supreme
even where, as in England and Germany, they had no such unjust and
crushing preference on the highways as in America. Back of highway
privilege, back of money power, back of trade supremacy gained by
these two means must be reckoned, as the essence of this phenomenon,
the morality--our morality--which not only allows but encourages men
to do each other to death, provided only the weapon be a bargain and
the arena a market. "Everything shall not go to market," says Emerson;
but everything does go to market. The millionaire is the modern hero,
says the New York _Evening Post_. The men who have found in the rebate
the secret of business success--and there are more of them than the
public guesses--have only extended a fiercer hand to the results all
were aiming at. They have used the smokeless rebate because it was the
best gun. But if that had not been ready to their hand, they would have
taken the next best. The course of conquest might have been slower,
but, unless checked by moral interventions, it would have reached the
same end. If society is founded on the idea that property belongs to
the strongest, these will sooner or later get all the property, by
bargains or by battles according to "the spirit of the age."

The highest State and national courts and the Interstate Commerce
Commission of the United States have sustained the people in the
assertion of their rights, under the law, to come and go with free
and equal rights on the highways. The judges have solemnly warned
the guilty men that they must give up their "abhorrent" attempt to
drive citizens out of the industries of their choice, and to add the
property of the people to their vast estates. Although thus declared
in the right by the highest judges of the law and the fact, the people
are poor, defeated, and unsuccessful. Though thus warned by the
authoritative voice of the ministers of right and justice that their
purposes and practices are iniquitous and intolerable, the men who have
determined that whole provinces of American industry shall be theirs,
and theirs only, continue their warfare of extermination upon poor men
with methods practically unchanged. They evade or defy the laws of
the States and of the nation, and the decisions of the courts, State
and national. Guided by the advice of the skilfullest lawyers, they
persist in open violation, or make such changes in their procedure as
will nullify statute and decision without danger to them. For thirty
years the independents in the oil regions have had this reinforcement
of the law, and for thirty years, in spite of it, their rights have
been defiantly, continuously violated to the common ruin. The people
spend their lives passing about from field or factory, or shop or
office, to market, from market to court, from court to Legislature,
from Legislature to printing-office. They are the type of the time,
disturbed by the demand of the new tyranny of wealth for tribute from
their daily labors, and forbidden to rest until out of their suffering
a new liberty has been won--the industrial liberty, for which political
and religious liberty wait for their full realization.



CHAPTER XXXIV

THE OLD SELF-INTEREST


The corn of the coming harvest is growing so fast that, like the farmer
standing at night in his fields, we can hear it snap and crackle.
We have been fighting fire on the well-worn lines of old-fashioned
politics and political economy, regulating corporations, and leaving
competition to regulate itself. But the flames of a new economic
evolution run around us, and we turn to find that competition has
killed competition, that corporations are grown greater than the
State and have bred individuals greater than themselves, and that the
naked issue of our time is with property becoming master instead of
servant, property in many necessaries of life becoming monopoly of the
necessaries of life.

We are still, in part, as Emerson says, in the quadruped state. Our
industry is a fight of every man for himself. The prize we give the
fittest is monopoly of the necessaries of life, and we leave these
winners of the powers of life and death to wield them over us by the
same "self-interest" with which they took them from us. In all this
we see at work a "principle" which will go into the records as one of
the historic mistakes of humanity. Institutions stand or fall by their
philosophy, and the main doctrine of industry since Adam Smith has been
the fallacy that the self-interest of the individual was a sufficient
guide to the welfare of the individual and society. Heralded as a final
truth of "science" this proves to have been nothing higher than a
temporary formula for a passing problem. It was a reflection in words
of the policy of the day.

When the Middle Ages landed on the shores of the sixteenth century
they broke ranks, and for three hundred years every one has been
scurrying about to get what he could. Society was not highly developed
enough to organize the exploration and subjugation of worlds of new
things and ideas on any broader basis than private enterprise, personal
adventure. People had to run away from each other and from the old
ideas, nativities, guilds, to seize the prizes of the new sciences, the
new land, the new liberties which make modern times. They did not go
because the philosophers told them to. The philosophers saw them going
and wrote it down in a book, and have believed themselves ever since to
be the inventors of the division of labor and the discoverers of a new
world of social science. But now we are touching elbows again, and the
dream of these picnic centuries that the social can be made secondary
to the individual is being chased out of our minds by the hard light of
the crisis into which we are waking.

"It is a law of business for each proprietor to pursue his own
interest," said the committee of Congress which in 1893 investigated
the coal combinations. "There is no hope for any of us, but the
weakest must go first," is the golden rule of business.[769] There is
no other field of human associations in which any such rule of action
is allowed. The man who should apply in his family or his citizenship
this "survival of the fittest" theory as it is practically professed
and operated in business would be a monster, and would be speedily
made extinct, as we do with monsters. To divide the supply of food
between himself and his children according to their relative powers of
calculation, to follow his conception of his own self-interest in any
matter which the self-interest of all has taken charge of, to deal as
he thinks best for himself with foreigners with whom his country is at
war, would be a short road to the penitentiary or the gallows. In trade
men have not yet risen to the level of the family life of the animals.
The true law of business is that all must pursue the interest of all.
In the law, the highest product of civilization, this has long been a
commonplace. The safety of the people is the supreme law. We are in
travail to bring industry up to this. Our century of the caprice of the
individual as the law-giver of the common toil, to employ or disemploy,
to start or stop, to open or close, to compete or combine, has been
the disorder of the school while the master slept. The happiness,
self-interest, or individuality of the whole is not more sacred than
that of each, but it is greater. They are equal in quality, but in
quantity they are greater. In the ultimate which the mathematician, the
poet, the reformer projects the two will coincide.

Our world, operated by individual motive, is the country of the
Chinese fable, in which the inhabitants went on one leg. Yes, but an
"enlightened self-interest"? The perfect self-interest of the perfect
individual is an admirable conception, but it is still individual,
and the world is social. The music of the spheres is not to be played
on one string. Nature does nothing individually. All forces are
paired like the sexes, and every particle of matter in the universe
has to obey every other particle. When the individual has progressed
to a perfect self-interest, there will be over against it, acting
and reacting with it, a correspondingly perfect self-interest of the
community. Meanwhile, we who are the creators of society have got
the times out of joint, because, less experienced than the Creator
of the balanced matter of earth, we have given the precedence to the
powers on one side. As gods we are but half-grown. For a hundred
years or so our economic theory has been one of industrial government
by the self-interest of the individual. Political government by the
self-interest of the individual we call anarchy. It is one of the
paradoxes of public opinion that the people of America, least tolerant
of this theory of anarchy in political government, lead in practising
it in industry. Politically, we are civilized; industrially, not yet.
Our century, given to this _laissez-faire_--"leave the individual
alone; he will do what is best for himself, and what is best for him is
best for all"--has done one good: it has put society at the mercy of
its own ideals, and has produced an actual anarchy in industry which is
horrifying us into a change of doctrines.

We have not been able to see the people for the persons in it. But
there is a people, and it is as different from a mere juxtaposition
of persons as a globe of glass from the handful of sand out of which
it was melted. It is becoming, socially, known to itself, with that
self-consciousness which distinguishes the quick from the dead and the
unborn. Every community, said Pascal, is a man, and every man, said
Plato, is a community. There is a new self-interest--that of the "man
called million," as Mazzini named him--and with this social motive the
other, which has so long had its own way, has now to reckon. Mankind
has gone astray following a truth seen only partially, but coronated
as a whole truth. Many civilizations must worship good men as gods
and follow the divinity of one and another before civilization sees
that these are only single stars in a firmament of humanity. Our
civilization has followed the self-interest of the individual to learn
that it was but one of the complex forces of self-interest.

The true _laissez-faire_ is, let the individual do what the individual
can do best, and let the community do what the community can do best.
The _laissez-faire_ of social self-interest, if true, cannot conflict
with the individual self-interest, if true, but it must outrank it
always. What we have called "free competition" has not been free, only
freer than what went before. The free is still to come. The pressure
we feel is notice to prepare for it. Civilization--the process of
making men citizens in their relations to each other, by exacting of
each that he give to all that which he receives from all--has reached
only those forms of common effort which, because most general and most
vital, first demanded its harmonizing touch. Men joining in the labors
of the family, the mutual sacrifices of the club or the church in the
union of forces for self-defence and for the gains of co-operation on
the largest scale in labors of universal concern, like letter-carrying,
have come to be so far civilized.

History is condensed in the catchwords of the people. In the phrases of
individual self-interest which have been the shibboleths of the main
activities of our last hundred years were prophesied: the filling up of
the Mississippi by the forest-destroying, self-seeking lumber companies
of the North; the disintegration of the American family--among the rich
by too little poverty, and among the poor by too much; the embezzlement
of public highways and public franchises into private property; the
devolution of the American merchants and manufacturers into the
business dependants--and social and political dependants, therefore--of
a few men in each great department of trade, from dry-goods to whiskey;
the devolution of the free farmer into a tenant, and of the working-man
into a fixture of the locomotive or the factory, forbidden to leave
except by permission of his employer or the public; and that mêlée of
injunctions, bayonets, idle men and idle machinery, rich man's fear of
poor man and poor man's fear of starvation, we call trade and industry.

Where the self-interest of the individual is allowed to be the rule
both of social and personal action, the level of all is forced down
to that of the lowest. Business excuses itself for the things it
does--cuts in wages, exactions in hours, tricks of competition--on
the plea that the merciful are compelled to follow the cruel. "It is
pleaded as an excuse by those" (common carriers) "who desire to obey
the" (Interstate Commerce) "law that self-preservation drives them to
violate it because other carriers persist in doing so," says Senator
Cullom. When the self-interest of society is made the standard the
lowest must rise to the average. The one pulls down, the other up. That
men's hearts are bad and that bad men will do bad things has a truth
in it. But whatever the general average of morals, the anarchy which
gives such individuals their head and leaves them to set the pace for
all will produce infinitely worse results than a policy which applies
mutual checks and inspirations. Bad kings make bad reigns, but monarchy
is bad because it is arbitrary power, and that, whether it be political
or industrial, makes even good men bad.

A partial truth universally applied as this of self-interest has been
is a universal error. Everything goes to defeat. Highways are used to
prevent travel and traffic. Ownership of the means of production is
sought in order to "shut down" production, and the means of plenty
make famine. All follow self-interest to find that though they have
created marvellous wealth it is not theirs. We pledge "our lives, our
fortunes, and our sacred honor" to establish the rule of the majority,
and end by finding that the minority--a minority in morals, money, and
men--are our masters whichever way we turn. We agonize over "economy,"
but sell all our grain and pork and oil and cotton at exchanges where
we pay brokerage on a hundred or a thousand barrels or bushels or bales
of wind to get one real one sold. These intolerabilities--sweat-shops
where model merchants buy and sell the cast-off scarlet-fever skins
of the poor, factory and mine where childhood is forbidden to become
manhood and manhood is forbidden to die a natural death, mausoleums in
which we bury the dead rich, slums in which we bury the living poor,
coal pools with their manufacture of artificial winter--all these are
the rule of private self-interest arrived at its destination.

A really human life is impossible in our cities, but they cannot be
reconstructed under the old self-interest. Chicago was rebuilt wrong
after the fire. Able men pointed out the avenues to a wider and better
municipal life, but they could not be opened through the private
interpositions that blocked the way. The slaughter of railway men
coupling cars was shown, in a debate in the United States Senate, to be
twice as great as it would be if the men were in active service in war.
But under the scramble for private gain our society on its railway side
cannot develop the energy to introduce the improved appliances ready to
hand which would save these lives, all young and vigorous. The cost of
the change would be repaid in 100-per-cent. dividends every year by the
money value alone to us of the men now killed and wounded. But we shall
have to wait for a nobler arithmetic to give us investments so good as
that. The lean kine of self-interest devour the fat kine. The railroad
stockholder, idolater of self-interest, lets himself be robbed--like
the stockholder of all the railroads in this story--either because he
is too rich to mind, too feeble to make himself heard, or too much
implicated elsewhere as principal in the same kind of depredation to
care or dare to stir what he knows to be a universal scandal. He has
become within himself the battle-ground of a troop of warring devils of
selfishness; his selfishness as a stockholder clutched at the throat by
his selfishness as a parasite, in some "inside deal," feeding on the
stockholder; some rebate arrangement, fast-freight line, sleeping-car
company, or what not. And, as like as not, upon this one's back is
another devil of depredation from some inner ring within a ring. Torn
at the vitals, the enlightened swinishness of our _leit-motif_ is
hastening to throw itself into the sea.

We are very poor. The striking feature of our economic condition is
our poverty, not our wealth. We make ourselves "rich" by appropriating
the property of others by methods which lessen the total property of
all. Spain took such riches from America and grew poor. Modern wealth
more and more resembles the winnings of speculators in bread during
famine--worse, for to make the money it makes the famine. What we
call cheapness shows itself to be unnatural fortunes for a very few,
monstrous luxury for them and proportionate deprivation for the people,
judges debauched, trustees dishonored, Congress and State legislatures
insulted and defied, when not seduced, multitudes of honest men ruined
and driven to despair, the common carrier made a mere instrument for
the creation of a new baronage, an example set to hundreds of would-be
commercial Cæsars to repeat this rapine in other industries and call it
"business," a process set in operation all over the United States for
the progressive extinction of the independence of laboring men, and all
business men except the very rich, and their reduction to a state of
vassalage to lords or squires in each department of trade and industry.
All these--tears, ruin, dishonor, and treason--are the unmarked
additions to the "price marked on the goods."

Shall we buy cheap of Captain Kidd, and shut our ears to the agony
that rustles in his silks? Shall we believe that Captain Kidd, who
kills commerce by the act which enables him to sell at half-price, is
a cheapener? Shall we preach and practise doctrines which make the
Black Flag the emblem of success on the high seas of human interchange
of service, and complain when we see mankind's argosies of hope and
plenty shrink into private hoards of treasure, buried in selfish sands
to be lost forever, even to cupidity? If this be cheapness, it comes
by the grace of the seller, and that is the first shape of dearness,
as security in society by the grace of the ruler is the first form of
insecurity.

The new wealth now administers estates of fabulous extent from
metropolitan bureaus, and all the profits flow to men who know
nothing of the real business out of which they are made. Red tape,
complication, the hired man, conspiracy have taken the place of the
watchful eye of the owner, the old-fashioned hand at the plough that
must "hold or drive." We now have Captains of Industry, with a few
aids, rearranging from office-chairs this or that industry, by mere
contrivances of wit compelling the fruits of the labor of tens of
thousands of their fellows, who never saw them, never heard of them,
to be every day deposited unwilling and unwitting to their own credit
at the bank; setting, as by necromancy, hundreds of properties, large
and small, in a score of communities, to flying through invisible
ways into their hands; sitting calm through all the hubbub raised in
courts, legislatures, and public places, and by dictating letters
and whispering words remaining the master magicians of the scene;
defying, though private citizens, all the forces and authorities of a
whole people; by the mere mastery of compelling brain, without putting
hand to anything, opening or closing the earth's treasures of oil or
coal or gas or copper or what not; pulling down or putting up great
buildings, factories, towns themselves; moving men and their money this
way and that; inserting their will as part of the law of life of the
people--American, European, and Asiatic--and, against the protest of
a whole civilization, making themselves, their methods and principles,
its emblematic figures.

Syndicates, by one stroke, get the power of selling dear on one side,
and producing cheap on the other. Thus they keep themselves happy,
prices high, and the people hungry. What model merchant could ask
more? The dream of the king who wished that all his people had but one
neck that he might decapitate them at one blow is realized to-day in
this industrial garrote. The syndicate has but to turn its screw, and
every neck begins to break. Prices paid to such intercepters are not
an exchange of service; they are ransom paid by the people for their
lives. The ability of the citizen to pay may fluctuate; what he must
pay remains fixed, or advances like the rent of the Irish tenant to the
absentee landlord until the community interfered. Those who have this
power to draw the money from the people--from every railroad station,
every street-car, every fireplace, every salt-cellar, every bread-pan,
wash-board, and coal-scuttle--to their own safes have the further
incentive to make this money worth the most possible. By contracting
the issue of currency and contracting it again by hoarding it in their
banks, safe-deposit vaults, and the government treasury, they can
depress the prices of all that belongs to the people. Their own prices
are fixed. These are "regular prices," established by price-lists.
Given, as a ruling motive, the principles of business--to get the
most and give the least; given the legal and economic, physical and
mechanical control, possible under our present social arrangements, to
the few over the many, and the certain end of all this, if unarrested,
unreversed, can be nothing less than a return to chattel slavery. There
may be some finer name, but the fact will not be finer. Between our
present tolerance and our completed subjection the distance is not so
far as that from the equality and simplicity of our Pilgrim Fathers to
ourselves.

Everything withers--even charity. Aristocratic benevolence spends
a shrunken stream in comparison with democratic benevolence. In an
address to the public, soliciting subscriptions, the Committee of the
United Hospitals Association of New York said, in December, 1893: "The
committee have found that, through the obliteration of old methods of
individual competition by the establishment of large corporations and
trusts in modern times, the income of such charitable institutions
as are supported by the individual gifts of the benevolent has been
seriously affected."

Franklin pricked the bubble of the lottery by showing that to buy all
the tickets and win all the prizes was to be most surely the loser. Our
nascent common-sense begins to see that the many must always lose where
all spend their lives trying to get more than they give, and that all
lose when any lose. The welfare of all is more than the welfare of the
many, the few, or the one. If the few or the one are not fine enough
to accept this truth from sentiment or conscience, they can find other
reasons as convincing, though not as amiable. From the old régime of
France, the slave-holders of the South, the death-rate of tyrants,
the fear of their brothers which the rich and the great of to-day are
printing on their faces, in fugitive-slave treaties with Russia, and in
the frowning arsenals and armories building in our cities for "law and
order," they can learn how to spell self-interest.

If all will sacrifice themselves, none need be sacrificed. But if one
may sacrifice another, all are sacrificed. That is the difference
between self-interest and other-self interest. In industry we have
been substituting all the mean passions that can set man against man
in place of the irresistible power of brotherhood. To tell us of the
progressive sway of brotherhood in all human affairs is the sole
message of history. "Love thy neighbor as thyself" is not the phrase
of a ritual of sentiment for the unapplied emotion of pious hours;
it is the exact formula of the force to-day operating the greatest
institutions man has established. It is as secular as sacred. Only
by each neighbor giving the other every right of free thought, free
movement, free representation which he demands for himself; only by
calling every neighbor a friend, and literally laying down his life
for his friend against foreign invasion or domestic tumult; only by
the equalization which gives the vote to all and denies kingship to
all, however strong or "fittest"--only thus is man establishing the
community, the republic, which, with all its failings, is the highest
because the realest application of the spirit of human brotherhood.
Wonderful are the dividends of this investment. You are but one, and
can give only yourself to America. You give free speech, and 65,000,000
of your countrymen will guard the freedom of your lips. Your single
offer of your right arm puts 65,000,000 of sheltering arms about you.
Does "business" pay such profits? Wealth will remain a secret unguessed
by business until it has reincorporated itself under the law which
reckons as the property of each one the total of all the possessions of
all his neighbors.

Society could not live a day, the Bishop of Peterborough said, if
it put the principles of Christ into practice. There is no rarer
gift than that of eyes to see what we see. Society is society, and
lives its day solely by virtue of having put into actual routine and
matter-of-fact application the principles of Christ and other bringers
of the same message. Imperfect and faulty though the execution, it is
these principles which are the family, the tribe, the sect, the club,
the mutual-benefit society, the State, with their mutual services,
forbearance, and guarantees. The principles of Christ are the cause
and essence of society. They are not the ideal of which we dream; they
are the applied means with which we are working out our real life in
"the light of common day." They have not been so much revealed to us
by our inspired ones as best seen and best said by them. Insurance for
fire, accident, sickness, old age, death--the ills that flesh is heir
to--has the same co-operation for its innermost forces. Limited now by
the intervention of the selfishness of profit-seeking, it needs only to
be freed from this, and added, as in New Zealand, to the growing list
of the mutualities of the general welfare operated by the State to be
seen as what it is. The golden rule is the original of every political
constitution, written and unwritten, and all our reforms are but the
pains with which we strive to improve the copy.

In the worst governments and societies that have existed one good can
be seen--so good that the horrors of them fall back into secondary
places as extrinsic, accidental. That good is the ability of men to
lead the life together. The more perfect monopoly makes itself the more
does it bring into strong lights the greatest fact of our industry, of
far more permanent value than the greed which has for the moment made
itself the cynosure of all eyes. It makes this fair world more fair to
consider the loyalties, intelligences, docilities of the multitudes who
are guarding, developing, operating with the faithfulness of brothers
and the keen interest of owners properties and industries in which
brotherhood is not known and their title is not more than a tenancy at
will. One of the largest stones in the arch of "consolidation," perhaps
the key-stone, is that men have become so intelligent, so responsive
and responsible, so co-operative that they can be intrusted in great
masses with the care of vast properties owned entirely by others and
with the operation of complicated processes, although but a slender
cost of subsistence is awarded them out of fabulous profits. The
spectacle of the million and more employés of the railroads of this
country despatching trains, maintaining tracks, collecting fares and
freights, and turning over hundreds of millions of net profits to the
owners, not one in a thousand of whom would know how to do the simplest
of these things for himself, is possible only where civilization
has reached a high average of morals and culture. More and more the
mills and mines and stores, and even the farms and forests, are being
administered by others than the owners. The virtue of the people is
taking the place Poor Richard thought only the eye of the owner could
fill. If mankind, driven by their fears and the greed of others, can do
so well, what will be their productivity and cheer when the "interest
of all" sings them to their work?

This new morality and new spring of wealth have been seized first
by the appropriating ones among us. But, as has been in government,
their intervention of greed is but a passing phase. Mankind belongs
to itself, not to kings or monopolists, and will supersede the one as
surely as the other with the institutions of democracy. Yes, Callicles,
said Socrates, the greatest are usually the bad, for they have the
power. If power could continue paternal and benign, mankind would not
be rising through one emancipation after another into a progressive
communion of equalities. The individual and society will always be
wrestling with each other in a composition of forces. But to just
the extent to which civilization prevails, society will be held as
inviolable as the individual; not subordinate--indeed inaudible--as
now in the counting-room and corporation-office. We have overworked
the self-interest of the individual. The line of conflict between
individual and social is a progressive one of the discovery of point
after point in which the two are identical. Society thus passes from
conflict to harmony, and on to another conflict. Civilization is the
unceasing accretion of these social solutions. We fight out to an
equilibrium, as in the abolition of human slavery; then upon this new
level thus built up we enter upon the struggle for a new equilibrium,
as now in the labor movement. The man for himself destroys himself and
all men; only society can foster him and them.

The greatest happiness of the greatest number is only the doctrine of
self-interest writ large and made more dangerous by multitude. It is
the self-interest of the majority, and this has written some of the
unloveliest chapters of history. There have never been slaves more
miserable than those of Sparta, where the State was the owner. American
democracy prepares to repeat these distresses of the selfishness of
the many, and gives notice to its railway employés of a new divine
right--"the convenience of the public"--to which they must forego every
right of manhood. No better definition of slave could be found than
one who must work at the convenience of another. This is the position
into which recent legal decisions and acts of the Federal executive
force railway men. These speak in the name of Interstate Commerce, but
their logic can be as easily applied by State judges to State commerce,
and all working-men are manifestly as necessary, each in his function,
to the convenience of the public as the men of the rail. The greatest
happiness of all must be the formula. When Lamennais said, "I love my
family more than myself, my village more than my family, my country
more than my village, and mankind more than my country," he showed
himself not only a good lover, but the only good arithmetician.

Children yet, we run everything we do--love or war, work or leisure,
religion or liberty--to excess. Every possibility of body and mind
must be played upon till it is torn to pieces, as toys by children.
Priests, voluptuaries, tyrants, knights, ascetics--in the long
procession of fanatics a new-comer takes his place; he is called
"the model merchant"--the cruelest fanatic in history. He is the
product of ages given to progressive devotion to "trading." He is the
high-priest of the latest idolatry, the self-worship of self-interest.
Whirling-dervish of the market, self, friends, and family, body and
soul, loves, hopes, and faith, all are sacrificed to seeing how many
"turns" he can make before he drops dead. Trade began, Sir Henry Sumner
Maine tells us, not within the family or community, but without. Its
first appearances are on the neutral borderland between hostile tribes.
There, in times of peace, they meet to trade, and think it no sin
that "the buyer must beware," since the buyer is an enemy. Trade has
spread thence, carrying with itself into family and State the poison of
enmity. From the fatherhood of the old patriarchal life, where father
and brother sold each other nothing, the world has chaffered along to
the anarchy of a "free" trade which sells everything. One thing after
another has passed out from under the régime of brotherhood and passed
in under that of bargainhood. The ground we move on, the bodies we
work with, and the necessaries we live by are all being "exchanged,"
by "rules fetched with cupidity from heartless schools," into the
ownership of the Jacobs of mankind. By these rules the cunning are
the good, and the weak and the tender the bad, and the good are to
have all the goods and the weak are to have nothing. These rules give
one the power to supply or deny work to thousands, and to use the
starvation terms of the men he disemploys as the measure of the cost
of subsistence of all workmen. This must be near the end. The very
churches have become mercantilized, and are markets in which "prophets"
are paid fancy prices--"always called of God," as Milton said, "but
always to a greater benefice"--and worshippers buy and sell knee-room.

Conceptions of duty take on a correspondingly unnatural complexion.
The main exhortations the world gives beginners are how to "get
on"--the getting on so ardently inculcated being to get, like the
old-man-of-the-sea, on somebody's back. "If war fails you in the
country where you are, you must go where there is war," said one of the
successful men of the fourteenth century to a young knight who asked
him for the Laws of Life. "I shall be perfectly satisfied with you," I
heard one of the great business geniuses of America say to his son, "if
you will only always go to bed at night worth more than when you got up
in the morning." The system grows, as all systems do, more complicated,
and gets further away from its first purposes of barter of real things
and services. It goes more under the hands of men of apt selfishness,
who push it further away from general comprehension and the general
good. Tariffs, currencies, finances, freight-rate sheets, the laws,
become instruments of privilege, and just in proportion become puzzles
no people can decipher. "I have a right to buy my labor where I can buy
it cheapest"--beginning as a protest against the selfish exclusions of
antiquated trade-guilds outgrown by the new times--has at last come to
mean, "I have a right to do anything to cheapen the labor I want to
buy, even to destroying the family life of the people."

When steaming kettles grew into beasts of burden and public highways
dwindled into private property administered by private motives for
private ends, all previous tendencies were intensified into a sudden
whirl redistributing wealth and labors. It appears to have been
the destiny of the railroad to begin and of oil to lubricate to its
finish the last stage of this crazy commercialism. Business colors the
modern world as war reddened the ancient world. Out of such delirium
monsters are bred, and their excesses destroy the system that brought
them forth. There is a strong suggestion of moral insanity in the
unrelieved sameness of mood and unvarying repetition of one act in the
life of the model merchant. Sane minds by an irresistible law alternate
one tension with another. Only a lunatic is always smiling or always
weeping or always clamoring for dividends. Eras show their last stages
by producing men who sum up individually the morbid characteristics
of the mass. When the crisis comes in which the gathering tendencies
of generations shoot forward in the avalanche, there is born some
group of men perfect for their function--good be it or bad. They need
to take time for no second thought, and will not delay the unhalting
reparations of nature by so much as the time given to one tear over the
battle-field or the bargain. With their birth their mission is given
them, whether it be the mission of Lucifer or Gabriel. This mission
becomes their conscience. The righteous indignation that other men feel
against sin these men feel against that which withstands them. Sincere
as rattlesnakes, they are selfish with the unconsciousness possible to
only the entirely commonplace, without the curiosity to question their
times or the imagination to conceive the pain they inflict, and their
every ideal is satisfied by the conventionalities of church, parlor,
and counting-room. These men are the touchstones to wither the cant of
an age.

We preach "Do as you would be done by" in our churches, and "A fair
exchange no robbery" in our counting-rooms, and "All citizens are
equal as citizens" in courts and Congress. Just as we are in danger
of believing that to say these things is to do them and be them,
there come unto us these men, practical as granite and gravitation.
Taking their cue not from our lips, but from our lives, they better
the instruction, and, passing easily to the high seats at every table,
prove that we are liars and hypocrites. Their only secret is that they
do, better than we, the things we are all trying to do, but of which in
our morning and evening prayers, seen of all men, we are continually
making believe to pray: Good Lord, deliver us! When the hour strikes
for such leaders, they come and pass as by a law of nature to the
front. All follow them. It is their fate and ours that they must work
out to the end the destiny interwoven of their own insatiate ambition
and the false ideals of us who have created them and their opportunity.

If our civilization is destroyed, as Macaulay predicted, it will not
be by his barbarians from below. Our barbarians come from above. Our
great money-makers have sprung in one generation into seats of power
kings do not know. The forces and the wealth are new, and have been
the opportunity of new men. Without restraints of culture, experience,
the pride, or even the inherited caution of class or rank, these men,
intoxicated, think they are the wave instead of the float, and that
they have created the business which has created them. To them science
is but a never-ending répertoire of investments stored up by nature for
the syndicates, government but a fountain of franchises, the nations
but customers in squads, and a million the unit of a new arithmetic of
wealth written for them. They claim a power without control, exercised
through forms which make it secret, anonymous, and perpetual. The
possibilities of its gratification have been widening before them
without interruption since they began, and even at a thousand millions
they will feel no satiation and will see no place to stop. They are
gluttons of luxury and power, rough, unsocialized, believing that
mankind must be kept terrorized. Powers of pity die out of them,
because they work through agents and die in their agents, because what
they do is not for themselves.

Of gods, friends, learnings, of the uncomprehended civilization they
overrun, they ask but one question: How much? What is a good time
to sell? What is a good time to buy? The Church and the Capitol,
incarnating the sacrifices and triumphs of a procession of martyrs
and patriots since the dawn of freedom, are good enough for a
money-changer's shop for them, and a market and shambles. Their
heathen eyes see in the law and its consecrated officers nothing but
an intelligence-office and hired men to help them burglarize the
treasures accumulated for thousands of years at the altars of liberty
and justice, that they may burn their marbles for the lime of commerce.

By their windfall of new power they have been forced into the position
of public enemies. Its new forms make them seem not to be within the
jurisdiction of the social restraints which many ages of suffering
have taught us to bind about the old powers of man over man. A fury
of rule or ruin has always in the history of human affairs been a
characteristic of the "strong men" whose fate it is to be in at the
death of an expiring principle. The leaders who, two hundred years ago,
would have been crazy with conquest, to-day are crazy with competition.
To a dying era some man is always born to enfranchise it by revealing
it to itself. Men repay such benefactors by turning to rend them. Most
unhappy is the fate of him whose destiny it is to lead mankind too
far in its own path. Such is the function of these men, such will be
their lot, as that of those for whom they are building up these wizard
wealths.

Poor thinking means poor doing. In casting about for the cause of
our industrial evils, public opinion has successively found it in
"competition," "combination," the "corporations," "conspiracies,"
"trusts." But competition has ended in combination, and our new wealth
takes as it chooses the form of corporation or trust, or corporation
again, and with every change grows greater and worse. Under these
kaleidoscopic masks we begin at last to see progressing to its terminus
a steady consolidation, the end of which is one-man power. The
conspiracy ends in one, and one cannot conspire with himself. When this
solidification of many into one has been reached, we shall be at last
face to face with the naked truth that it is not only the form but the
fact of arbitrary power, of control without consent, of rule without
representation that concerns us.

Business motived by the self-interest of the individual runs into
monopoly at every point it touches the social life--land monopoly,
transportation monopoly, trade monopoly, political monopoly in all
its forms, from contraction of the currency to corruption in office.
The society in which in half a lifetime a man without a penny can
become a hundred times a millionaire is as over-ripe, industrially, as
was, politically, the Rome in which the most popular bully could lift
himself from the ranks of the legion on to the throne of the Cæsars.
Our rising issue is with business. Monopoly is business at the end of
its journey. It has got there. The irrepressible conflict is now as
distinctly with business as the issue so lately met was with slavery.
Slavery went first only because it was the cruder form of business.

Against the principles, and the men embodying them and pushing them
to extremes--by which the powers of government, given by all for all,
are used as franchises for personal aggrandizement; by which, in the
same line, the common toil of all and the common gifts of nature,
lands, forces, mines, sites, are turned from service to selfishness,
and are made by one and the same stroke to give gluts to a few and
impoverishment to the many--we must plan our campaign. The yacht of
the millionaire incorporates a million days' labor which might have
been given to abolishing the slums, and every day it runs the labor
of hundreds of men is withdrawn from the production of helpful things
for humanity, and each of us is equally guilty who directs to his own
pleasure the labor he should turn to the wants of others. Our fanatic
of wealth reverses the rule that serving mankind is the end and wealth
an incident, and has made wealth the end and the service an accident,
until he can finally justify crime itself if it is a means to the
end--wealth--which has come to be the supreme good; and we follow him.

It is an adjudicated fact of the business and social life of America
that to receive the profits of crime and cherish the agents who
commit it does not disqualify for fellowship in the most "solid"
circles--financial, commercial, religious, or social. It illustrates
what Ruskin calls the "morbid" character of modern business that
the history of its most brilliant episodes must be studied in the
vestibules of the penitentiary. The riches of the combinations are
the winnings of a policy which, we have seen, has certain constant
features. Property to the extent of uncounted millions has been changed
from the possession of the many who owned it to the few who hold it:

1. Without the knowledge of the real owners.

2. Without their consent.

3. With no compensation to them for the value taken.

4. By falsehood, often under oath.

5. In violation of the law.

Our civilization is builded on competition, and competition
evolves itself crime--to so acute an infatuation has the lunacy of
self-interest carried our dominant opinion. We are hurried far beyond
the point of not listening to the new conscience which, pioneering in
moral exploration, declares that conduct we think right because called
"trade" is really lying, stealing, murder. "The definite result,"
Ruskin preaches, "of all our modern haste to be rich is assuredly and
constantly the murder of a certain number of persons by our hands every
year." To be unawakened by this new voice is bad enough, but we shut
our ears even against the old conscience.

We cannot deal with this unless we cleanse our hearts of all
disordering rage. "The rarer action is in virtue rather than in
vengeance." Our tyrants are our ideals incarnating themselves in men
born to command. What these men are we have made them. All governments
are representative governments; none of them more so than our
government of industry. We go hopelessly astray if we seek the solution
of our problems in the belief that our business rulers are worse men in
kind than ourselves. Worse in degree; yes. It is a race to the bad, and
the winners are the worst. A system in which the prizes go to meanness
invariably marches with the meanest men at the head. But if any could
be meaner than the meanest it would be they who run and fail and rail.

Every idea finds its especially susceptible souls. These men are
our most susceptible souls to the idea of individual self-interest.
They have believed implicitly what we have taught, and have been the
most faithful in trying to make the talent given them grow into ten
talents. They rise superior to our half-hearted social corrections:
publicity, private competition, all devices of market-opposition,
private litigation, public investigation, legislation, and criminal
prosecution--all. Their power is greater to-day than it was yesterday,
and will be greater to-morrow. The public does not withhold its favor,
but deals with them, protects them, refuses to treat their crimes as it
treats those of the poor, and admits them to the highest places. The
predominant mood is the more or less concealed regret of the citizens
that they have not been able to conceive and execute the same lucky
stroke or some other as profitable. The conclusion is irresistible that
men so given the lead are the representatives of the real "spirit of
the age," and that the protestants against them are not representative
of our times--are at the best but intimators of times which may be.

Two social energies have been in conflict, and the energy of reform has
so far proved the weaker. We have chartered the self-interest of the
individual as the rightful sovereign of conduct; we have taught that
the scramble for profit is the best method of administering the riches
of earth and the exchange of services. Only those can attack this
system who attack its central principle, that strength gives the strong
in the market the right to destroy his neighbor. Only as we have denied
that right to the strong elsewhere have we made ourselves as civilized
as we are. And we cannot make a change as long as our songs, customs,
catchwords, and public opinions tell all to do the same thing if they
can. Society, in each person of its multitudes, must recognize that the
same principles of the interest of all being the rule of all, of the
strong serving the weak, of the first being the last--"I am among you
as one that serves"--which have given us the home where the weakest
is the one surest of his rights and of the fullest service of the
strongest, and have given us the republic in which all join their labor
that the poorest may be fed, the weakest defended, and all educated
and prospered, must be applied where men associate in common toil as
wherever they associate. Not until then can the forces be reversed
which generate those obnoxious persons--our fittest.

Our system, so fair in its theory and so fertile in its happiness and
prosperity in its first century, is now, following the fate of systems,
becoming artificial, technical, corrupt; and, as always happens in
human institutions, after noon, power is stealing from the many to the
few. Believing wealth to be good, the people believed the wealthy to
be good. But, again in history, power has intoxicated and hardened its
possessors, and Pharaohs are bred in counting-rooms as they were in
palaces. Their furniture must be banished to the world-garret, where
lie the out-worn trappings of the guilds and slavery and other old
lumber of human institutions.



CHAPTER XXXV

AND THE NEW


We have given the prize of power to the strong, the cunning, the
arithmetical, and we must expect nothing else but that they will use it
cunningly and arithmetically. For what else can they suppose we gave
it to them? If the power really flows from the people, and should be
used for them; if its best administration can be got, as in government,
only by the participation in it of men of all views and interests; if
in the collision of all these, as in democracy, the better policy is
progressively preponderant; if this is a policy which, with whatever
defects, is better than that which can be evolved by narrower or more
selfish or less multitudinous influences of persons or classes, then
this power should be taken up by the people. "The mere conflict of
private interests will never produce a well-ordered commonwealth of
labor," says the author of the article on political economy in the
_Encyclopædia Britannica_. The failure of monarchy and feudalism and
the visibly impending failure of our business system all reveal a
law of nature. The harmony of things insists that that which is the
source of power, wealth, and delight shall also be the ruler of it.
That which is must also seem. It is the people from whom come the
forces with which kings and millionaires ride the world, and until
the people take their proper place in the seat of sovereignty, these
pseudo owners--mere claimants and usurpers--will, by the very falsity
and iniquity of their position, be pushed into deceit, tyranny, and
cruelty, ending in downfall.

Thousands of years' experience has proved that government must begin
where it ends--with the people; that the general welfare demands that
they who exercise the powers and they upon whom these are exercised
must be the same, and that higher political ideals can be realized
only through higher political forms. Myriads of experiments to get
the substance of liberty out of the forms of tyranny, to believe
in princes, to trust good men to do good as kings, have taught the
inexorable truth that, in the economy of nature, form and substance
must move together, and are as inextricably interdependent as are,
within our experience, what we call matter and spirit. Identical is the
lesson we are learning with regard to industrial power and property. We
are calling upon their owners, as mankind called upon kings in their
day, to be good and kind, wise and sweet, and we are calling in vain.
We are asking them not to be what we have made them to be. We put power
into their hands and ask them not to use it as power. If this power is
a trust for the people, the people betrayed it when they made private
estates out of it for individuals. If the spirit of power is to change,
institutions must change as much. Liberty recast the old forms of
government into the Republic, and it must remould our institutions of
wealth into the Commonwealth.

The question is not whether monopoly is to continue. The sun sets every
night on a greater majority against it. We are face to face with the
practical issue: Is it to go through ruin or reform? Can we forestall
ruin by reform? If we wait to be forced by events we shall be astounded
to find how much more radical they are than our utopias. Louis XVI.
waited until 1793, and gave his head and all his investitures to the
people who in 1789 asked only to sit at his feet and speak their mind.
Unless we reform of our own free will, nature will reform us by force,
as nature does. Our evil courses have already gone too far in producing
misery, plagues, hatreds, national enervation. Already the leader is
unable to lead, and has begun to drive with judges armed with bayonets
and Gatling guns. History is the serial obituary of the men who thought
they could drive men.

Reform is the science and conscience with which mankind in its manhood
overcomes temptations and escapes consequences by killing the germs.
Ruin is already hard at work among us. Our libraries are full of the
official inquiries and scientific interpretations which show how our
master-motive is working decay in all our parts. The family crumbles
into a competition between the father and the children whom he breeds
to take his place in the factory, to unfit themselves to be fathers in
their turn. A thorough, stalwart resimplification, a life governed by
simple needs and loves, is the imperative want of the world. It will be
accomplished: either self-conscious volition does it, or the slow wreck
and decay of superfluous and unwholesome men and matters. The latter
is the method of brutes and brute civilizations. The other is the
method of man, so far as he is divine. Has not man, who has in personal
reform risen above the brute method, come to the height at which he can
achieve social reform in masses and by nations? We must learn; we can
learn by reason. Why wait for the cruder teacher?

We have a people like which none has ever existed before. We have
millions capable of conscious co-operation. The time must come in
social evolution when the people can organize the free-will to choose
salvation which the individual has been cultivating for 1900 years,
and can adopt a policy more dignified and more effective than leaving
themselves to be kicked along the path of reform by the recoil of their
own vices. We must bring the size of our morality up to the size of our
cities, corporations, and combinations, or these will be brought down
to fit our half-grown virtue.

Industry and monopoly cannot live together. Our modern perfection of
exchange and division of labor cannot last without equal perfection of
morals and sympathy. Every one is living at the mercy of every one else
in a way entirely peculiar to our times. Nothing is any longer made by
a man; parts of things are made by parts of men, and become wholes by
the luck of a good-humor which so far keeps men from flying asunder.
It takes a whole company to make a match. A hundred men will easily
produce a hundred million matches, but not one of them could make one
match. No farm gets its plough from the cross-roads blacksmith, and
no one in the chilled-steel factory knows the whole of the plough.
The life of Boston hangs on a procession of reciprocities which must
move, as steadily and sweetly as the roll of the planets, between its
bakeries, the Falls of St. Anthony, and the valley of the Red River.
Never was there a social machinery so delicate. Only on terms of love
and justice can men endure contact so close.

The break-down of all other civilizations has been a slow decay. It
took the Northerners hundreds of years to march to the Tiber. They
grew their way through the old society as the tree planting itself on
a grave is found to have sent its roots along every fibre and muscle
of the dead. Our world is not the simple thing theirs was, of little
groups sufficient to themselves, if need be. New York would begin to
die to-morrow if it were not for Illinois and Dakota. We cannot afford
a revulsion in the hearts by whose union locomotives run, mills grind,
factories make. Practical men are speculating to-day on the possibility
that our civilization may some afternoon be flashed away by the tick of
a telegraph. All these co-operations can be scattered by a word of hate
too many, and we left, with no one who knows how to make a plough or a
match, a civilization cut off as by the Roman curse from food and fire.
Less sensitive civilizations than ours have burst apart.

Liberty and monopoly cannot live together. What chance have we against
the persistent coming and the easy coalescence of the confederated
cliques, which aspire to say of all business, "This belongs to us,"
and whose members, though moving among us as brothers, are using
against us, through the corporate forms we have given them, powers
of invisibility, of entail and accumulation, unprecedented because
impersonal and immortal, and, most peculiar of all, power to act as
persons, as in the commission of crimes, with exemption from punishment
as persons? Two classes study and practise politics and government:
place hunters and privilege hunters. In a world of relativities
like ours size of area has a great deal to do with the truth of
principles. America has grown so big--and the tickets to be voted, and
the powers of government, and the duties of citizens, and the profits
of personal use of public functions have all grown so big--that the
average citizen has broken down. No man can half understand or half
operate the fulness of this big citizenship, except by giving his whole
time to it. This the place hunter can do, and the privilege hunter.
Government, therefore--municipal, State, national--is passing into the
hands of these two classes, specialized for the functions of power by
their appetite for the fruits of power. The power of citizenship is
relinquished by those who do not and cannot know how to exercise it to
those who can and do--by those who have a livelihood to make to those
who make politics their livelihood.

These specialists of the ward club, the primary, the campaign, the
election, and office unite, by a law as irresistible as that of the
sexes, with those who want all the goods of government--charters,
contracts, rulings, permits. From this marriage it is easy to imagine
that among some other people than ourselves, and in some other
century than this, the off-spring might be the most formidable,
elusive, unrestrained, impersonal, and cruel tyranny the world has
yet seen. There might come a time when the policeman and the railroad
president would equally show that they cared nothing for the citizen,
individually or collectively, because aware that they and not he were
the government. Certainly such an attempt to corner "the dear people"
and the earth and the fulness thereof will break down. It is for us
to decide whether we will let it go on till it breaks down of itself,
dragging down to die, as a savage dies of his vice, the civilization
it has gripped with its hundred hands; or whether, while we are still
young, still virtuous, we will break it down, self-consciously, as the
civilized man, reforming, crushes down the evil. If we cannot find a
remedy, all that we love in the word America must die. It will be an
awful price to pay if this attempt at government of the people, by the
people, for the people must perish from off the face of the earth
to prove to mankind that political brotherhood cannot survive where
industrial brotherhood is denied. But the demonstration is worth even
that.

Aristotle's lost books of the Republics told the story of two hundred
and fifty attempts at free government, and these were but some of
the many that had to be melted down in the crucible of fate to teach
Hamilton and Jefferson what they knew. Perhaps we must be melted by the
same fierce flames to be a light to the feet of those who come after
us. For as true as that a house divided against itself cannot stand,
and that a nation half slave and half free cannot permanently endure,
is it true that a people who are slaves to market-tyrants will surely
come to be their slaves in all else, that all liberty begins to be
lost when one liberty is lost, that a people half democratic and half
plutocratic cannot permanently endure.

The secret of the history we are about to make is not that the world is
poorer or worse. It is richer and better. Its new wealth is too great
for the old forms. The success and beauties of our old mutualities
have made us ready for new mutualities. The wonder of to-day is the
modern multiplication of products by the union of forces; the marvel
of to-morrow will be the greater product which will follow when that
which is co-operatively produced is co-operatively enjoyed. It is the
spectacle of its concentration in the private fortunes of our day which
reveals this wealth to its real makers--the whole people--and summons
them to extend the manners and institutions of civilization to this new
tribal relation.

Whether the great change comes with peace or sword, freely through
reform or by nature's involuntary forces, is a mere matter of detail,
a question of convenience--not of the essence of the thing. The change
will come. With reform, it may come to us. If with force, perhaps not
to us. But it will come. The world is too full of amateurs who can play
the golden rule as an aria with variations. All the runs and trills
and transpositions have been done to death. All the "sayings" have
been said. The only field for new effects is in epigrams of practice.
Titillation of our sympathies has become a dissipation. We shed a daily
tear over the misery of the slums as the toper takes his dram, and our
liver becomes torpid with the floods of indignation and sentiment we
have guzzled without converting them into their co-efficients of action.

"Regenerate the individual" is a half-truth; the reorganization of the
society which he makes and which makes him is the other half. Man alone
cannot be a Christian. Institutions are applied beliefs. The love of
liberty became liberty in America by clothing itself in the complicated
group of structures known as the government of the United States. Love
is a half-truth, and kissing is a good deal less than half of that.
We need not kiss all our fellow-men, but we must do for them all we
ask them to do for us--nothing less than the fullest performance of
every power. To love our neighbor is to submit to the discipline and
arrangement which make his life reach its best, and so do we best love
ourselves.

History has taught us nothing if not that men can continue to associate
only by the laws of association. The golden rule is the first and last
of these, but the first and last of the golden rule is that it can
be operated only through laws, habits, forms, and institutions. The
Constitution and laws of the United States are, however imperfectly,
the translation into the language of politics of doing as you would be
done by--the essence of equal rights and government by consent. To ask
individuals to-day to lead by their single sacrifices the life of the
brother in the world of business is as if the American colonist had
been asked to lead by his individual enterprise the life of the citizen
of a republic. That was made possible to him only by union with others.
The business world is full of men who yearn to abandon its methods and
live the love they feel; but to attempt to do so by themselves would be
martyrdom, and that is "caviare to the general." "We admire martyrdom,"
Mazzini, the martyr, said, "but we do not recommend it." The change
must be social, and its martyrdoms have already begun.

The new self-interest will remain unenforced in business until we
invent the forms by which the vast multitudes who have been gathered
together in modern production can organize themselves into a people
there as