6 f iL-' ^#Me#'were regulated en- tirely by the competition between the peddlers'and the retail grocers of that city. The statement is absolutely false that we sold oil from the same tank at different prices, repre- senting it to be of different grades, or that we mixed gasoline with turpentine, or practiced any deception of any kind whatever with regard to the quality of our products in selling the same. W. A. Reed. Subscribed and sworn to by said W. A. Reed before me, this 31st day of August, 1899. [seal. J Feakk Fawhoest, Notary Public, WasMngton County, OJiio. STATEMENT AS TO DECEPTION OF CUSTOMEES. His statements about instructions given George Blazer, and cause of his leaving Springfield, are malicious falsehoods. I have the affidavit of Mr. Foley and Mr. Foutz, which I submit, marked Ex- hibits 3 and 4.^. Mr. Foley was the local agent at the time Mr. Clark was there, and he is still the local agent at Springfield. Exhibit 3. The State oe Ohio, Clark County, ss. C. W. Foley, of lawful age, being duly sworn, upon his oath says: I am local agent of the Standard Oil Company at Springfield, Ohio, and was while W. H. Clark was employed there. It is not true that I ever had any conversation with Mr. Cragin, who is now dead, or anyone else with reference to informing Blazer or any other person about drawing different grades of oil f r(Sfef'z^6y ftSsrH«'«tank and charging 10 different prices for it. It is not true that we ever sold any oil at this station in that manner. All our grades of oil were sold for precisely what they were, and no deception of any kind was practiced upon our customers as to the quality or price of the oil furnished them. It is not true that Blazer quit the employment of the company because he was required by that employment to deceive cus- tomers as to the quality or price of the oil sold. The only reason given by Mr. Blazer when he quit was that the work was too hard for him. 0. W. Foley. ■ Subscribed and sworn to by said C. W. Foley be- fore me, this 29th day of August, 1899. [seal. J W. K. Homer, Notary Public, Clarfc County, Ohio. Exhibit 4. The State of Ohio, Washington County, ss. R. A. Fouts, of lawful age, being duly sworn, upon his oath says : I reside in Marietta, Ohio, and went to Spring- fied and had an interview with George Blazer. He stated that he resided at Springfield, Ohio, and worked for a short time for the Standard Oil Com- pany while W. H. Clark was there. He stated that he never said to Mr. Clark or anyone else that if he could not work for an honest company he would quit, and for that reason must leave the Standard Oil Company's employment ; or that he was leaving or had left the Standard Oil Com- pany's employment because he could not conscien- tiously draw different grades of oil from the same tank. He also sf^M'^fi^'^Tgff'^e employment of 11 the Standard Oil Company because he did not like the tank-wagon work, and for no other reason. He made the above statement to me, but declined to make affidavit. E. A. FoTJTS. Subscribed and sworn to before me, this 4th day of September, 1899. [seal. J 0. C. MiDDLESWART, Notary Public, Washington County, Ohio. His statement that we drew four different grades of oil out of the same tank, and charged four dif- ferent prices, is absolutely false. Mr. Clark, as well as all other tank-wagon drivers, was not al- lowed to discriminate between one buyer and an- other, but was to charge all customers the same price for the same grade of oil. The proof of this : In making his returns at night to the cashier his total sales had to be accounted for on the basis of the ruling market. Therefore he could not cut the price to any buyer without paying it out of his own pocket, and it goes without saying that no retailer would pay more than the market. I have the affidavits of Mr. Toland and Mr. McMa- hon, both tank-wagon drivers at the time Clark was at Springfield, the only two men who were doing the same kind of work that Clark did at Springfield, showing their method of conducting the business, which 1 submit, marked Exhibits 5 and 6. Exhibit 5. The State oe Ohio, Lawrence County, ss. '- W. W. McMahon, of lawful age, being duly sworn, upon his oath says: I worked for tb@/YSi«i^T/^0S Company as tank- 12 wagon driver at Springfield during the time that W. H. Clark worked there as tank-wagon driver. 'I never had any instructions from Mr. B. A. Mathews, manager, C. W. Foley, local agent, Mr. Cragin, or anyone else connected with the Stand- ard Oil Company, to deceive any customers by turning the faucet in different directions to draw different grades of oil out of the same tank. All of our grades of oil were sold for precisely what they were, and no deception of any kind was practiced upon our customers as to quality or price of oil furnished them, and all customers paid me the same price for the same grade of oil. W. W. McMahon. Subscribed and sworn to by said W. W. Mc- Mahon before me, this 31st day of August, 18dSf. [SEAL.] W. D. 'RmniY'NotarylPublic. Exhibit 6. The State op Ohio, Glai'lc Coiinty, ss. C. M. Toland, of lawful age, being duly sworn, upon his oath says: I am now and was in the employ of the Stand- ard Oil Company ns tank-wagon driver at the time W. H. Clark worked as tank-wagon driver for the Standard Oil Company at Springfield, Ohio. In accordance with instructions received from B. A. Mathews, manager, my prices have always been uniform, selling one grade of oil at the same price to all dealers, and I have never deceived my customers by turning the faucet in different ways Digitized by Microsoft® 13 in order to draw different grades of oil from the same tank. C. M. TOLAND. Subscribed and sworn to by said C. M. Toland before me, this 29th day of August, 1899. [SEAL.] Geo. S. Dial, GlarTi County, Ohio. REBATES — HOURS OF LABOR. His statement with reference to rebates at Spring- field is untrue. We did not allow Mr. Clark, while at Springfield, to make rebates. His statement concerning hours of labor is mis- leading and untrue. Our tank-wagon work is planned with the view of a day's work constitut- ing ten hours. In making drives to country towns, from 8 to 14 miles, it is understood that when a driver returns his day's work is completed. QUALITr NOT DETERMINED BY FIRE TEST. His statements about fire test ' governing the quality of oils are not true. One hun- dred and twenty degrees of fire test, by Ohio Law, is the equivalent of 150° by the Tagliabue open cup. Concerning our three grades, there is no difference in the fire test of the same. His statement that there is 10° differ- ence is false. They are all 150° fire test by the Tagliabue open cup, or 120° fire test by the Ohio State test Foster cup, which is the State test re- quired by Ohio. The fire test of oil required by Ohio statutes does not represent quality, but simply safety. Oil may be exactly the same fire test, but different in illuminating power. The quality of an oil i^ distinguished byDisbfeiJlfBrtKaaaibteg quality. 14 His statement that he was promoted to the posi- tion of cashier at Columbus. and had charge of the work around warehouse is false and absurd, for the reason that his position was simply shipping clerk, under a superintendent, who had entire charge of everything around the works. BOILED LINSEISD OIL WOT ADULTERATED. His statement concerning boiled linseed oil is false and malicious. The dryer used in boiling was a pure linseed oil dryer, which cost 10 cents per gallon more than linseed oil, and increased the cost, instead of decreasing it, and improved the quality, instead of adulterating it, as testified by Clark. miner's oil ; its composition — lubeicatin-g oil. His statement that miner's oil is made by com- pounding cotton-seed oil with 40 per cent petro- leum is false and malicious, because the Ohio law prohibits such a large percentage of petroleum being used. The law is rigidly enforced on gravity and smoke qualifications, which would absolutely prevent more than 14 per cent of petroleum! Miner's oil is known to the Ohio State ofiicials to be cotton-seed oil compounded with petroleum. The price of miner's oil is regulated by the price of cotton-seed oil, and runs about 2 cents per gallon below. It was malicious for Clark to state that a dealer would pay 34 cents for miner's oil when the dealer could buy cotton-seed oil for 24 cents. His statement that lubricating oil is received in blank heads at Cg^^^i^^v^^/^ipped out to meet 15 the requirements of the trade without regard to contents is untrue and- absurd, because if the bar- rels came unbranded it would be impossible for the warehouseman to tell the contents, and an order for cylinder oil might be filled with a bar- rel of sewing-maahine oil, or, vice versa, if Clark's statement were true. I have the affidavit of Adam Paulus, referred to by Clark as "mixer," which I submit. (See Exhibit 7.) Exhibit 7. The State of Ohio, Franklin Comity, ss.: Adam Paulus, of lawful age, being duly sworn, upon his oath says : I am in the employment of the Standard Oil Company of Ohio, and am the person referred to in the testimony of W. H. Clark before the Indus- trial Commission at Washington. While Mr. Clark was employed at Columbus I did the mixing of linseed and cotton-seed oils. It is not true that our lubricating oils came from Cleveland in blank heads, but all barrels were branded to designate the contents of the package. In preparing boiled linseed oil it is not true that we used a cheap Japan dryer, but we did use a pure linseed-oil dryer, which improved the quality of ^the linseed oil. Heated the oil to 225° instead of 125°, as stated by him. In compounding miners' oil it is not true that we used 3 barrels of cotton- seed oil to 2 barrels of miners' stock, being a percentage of 40 per cent of the latter. We only used 1 barrel of miners' stock to 6 barrels of cotton-seed, or about 14 per pp_ J. Digitized by Microsoft® 16 It is not true that Mr. Clark had charge of the stock from which these compounds were made, or that I had to go to him to get it. The warehouse and stock were in charge of a superintendent, from whom I received all my instructions. The stock I got out myself, as directed by the superintendent. Adam Paulus. Subscribed and sworn to by said Adam Paulus before me this 29th day of August, 1899, [seal. J W. A. Marsh, Notary PuMic, Franklin County, OTiio. CUT PRICES and rebates. In reference to his statement concerning cut prices and rebates at Columbus, as he was only a shipping clerk (and absolutely without knowledge regarding marketing matters), his statements are purely malicious. On the general question of competition we always seek to protect our trade, and when any competitor makes a cut price for the purpose of taking our business away from us (quality considered) we do not hesitate to meet it. DAILY deliveries FROM TANK WAGONS. The statement that Mr. Gradwohl took in as high as $200. a day with his tank wagon is un- true. The largest delivery made by any tank wagon is about $100. per day, and would not average over $50. per day. To deliver 3,000 gallons, or $200. worth, a day would average one 5-gallon bucket every minute, ten hours per day, which would be a physical impossibility. I have Mr. Gradwohl's affidavit, which ^'%*m^'^'"'"^^ Exhibit 8.) 17 Exhibit 8. The State o£ Ohio, Franldin County, ss.: , Moses K. Gradwohl, of lawful age, being duly sworn, upon his oath says: I am a tank-wagon driver in the employ of the Standard Oil Company at Columbus, Ohio, and was there at the time Mr. Clark was shipping clerk, and am the "Mose Gradwohl" referred to in his testimony before the Industrial Commission at Washington. It is not true that I ever took in $200. a day from my wagon. The largest day's delivery I ever made was about $100., and my average daily deliveries about $50. Moses K. Gradwohl. Subscribed and sworn to by saidjMoses K. Grad- wohl before me this 30th day of August, 1899. [seal. J Chaules S. M. Theumm, Notary Public, Franklin County, Ohio. STATEMENTS AS TO ARRANGEMENT WITH COMPETI- TORS AT COLUMBUS, COMPETITIVE BRANDS, AND PRICES OF EMPTY BARRELS. His statement with reference to having an ar- rangement with competitors to advance markets at Columbus is false. Strong competition still ex- ists, which in itself contradicts his statement. He had no knowledge on the subject, being only ship- ping clerk at the works, located a mile and a half away. Therefore, he would know nothing of what was going on in the ofRce. His statement naming competitive brands of oil at Columbus is untrue, their brands being Ohio State Test, Pry^^^^^^j^^^^ople's Headlight, 18 Suncene, Water White and Diamond Light — not Penoline, Safety Light and Electric Light, as stated by him. Ohio State Test, Prime White, and People's Headlight cover one grade of oil; Suncene and Water White another; Diamond Light a third, showing clearly their trade require- ments. His statements concerning the hiring of a boy to watch tank cars and being paid by him are false. His statement that we took empty barrels at an exorbitant price in order to hold trade on oil is false. He had nothing to do with the purchasing or handling of empty barrels, and had no knowl- edge whatever about empty barrel prices. Our price at- Columbus is strictly uniform on empty barrels to all customers. His statement that he was manager at Urbana is untrue. His position was simply local agent, three-quarters of his time being occupied in driv- ing a tank-wagon.' He did not have full charge of all the business as stated. THE CASE OF WILLIAM HELMICK. His statement about William Helmick at Urbana is untrue. Mr. Helmick bought only one car- load of competitive oil, and after he had sold about half the car he became satisfied that he would lose money on account of leakage and poor quality. We helped him out by purchasing the other half of the car, and he dis- continued jobbing oil, but remained in the oil busi- ness as a peddler for about two years thereafter. We did not at any time drop the price while he was in business. D^etik^m&e^mwy, what little oil Helmick marketed was sold by him at a cut price. 19 No threats were made by Mr. HoUingsworth or Mr. Welsh as stated by Clark. I have their affidavits, which I submit, and also the affidavit of W. H. Hurley. » Exhibit 9. The State of Iowa, Louisa County, ss.: H. S. HoUingsworth, of lawful age, being £duly sworn, upon his oath, says: I am in the employ of the Standard Oil Com- pany, at Columbus, and have been for several years. It is not true, as stated by W". H. Clark in his testimony before the Industrial Commission' at ■Washington, that I ever made any threats of any kind to William Helmick, either alone or in com- pany with Mr. Welsh and Mr. Clark, or either of them . H. S. HOLLINGSWORTH. Subscribed and sworn to by said H. S. HoUings- worth before me, this 30th day of August, 1899. [SEAL.j W. H. HUELEY, Notary Public. Exhibit 10. The State op Ohio, Champaign County, ss.: William Welsh, of lawful age, being duly sworn, upon his oath says : I am agent of the Standard Oil Company of Ohio at Urbana, and am the person referred to in the testimony of W. H. Clark before the Industrial Commission as a cooper man from Springfield, Ohio, where I did formerly work for the company in the cooper shop. It Is not true M.¥lW^''°^^Me any threats of 20 any kind to William Helmick. of Urbana, OMo, either alone or in company with Mr. Hollings- worth, or Mr. Clark, or either of them, but the statement of Mr. Clark in that respect is absolutely false. William Welsh. Subscribed and sworn to by said William Welsh before me, this 28th day of August, 1899. [SEAL.] W. M. Rock, Notary Public, Ohaw^paign County, OMo. Exhibit 11. State op Iowa, Louisa County, ss.: I, W. H. Hurley, a resident of Wapello, Louisa County, Iowa, on oath state that I am a notary public in and for Louisa County, Iowa, and at the instance of H. S. Rollings worth did request one William Helmick to make a deposition in regard to his relations and transactions with the Stand- ard Oil Company of Ohio, at Urbana, Ohio. He was shown a copy of the testimony given by W. H. Clark, before the Industrial Commission at Washington, D. C He declared that the testi- mony, as shown him, in reference to himself was false and untrue, and particularly referred to the causes as therein set forth in regard to his going to the poorhouse, and that it was not brought about through any agency of the Standard Oil Company, but declined to make affidavit as to said falsity until he had communicated with the above referred to W. H. Clark. I state further that he made the above statement in the presence of myself and H. S. Hollingswortb. The copy of ij^rtaaaa^^npjfcr^eiterred to as having 21 been shown to the said William Helmick is hereto attached and marked "Exhibit A." W. H. HUELEY. Subscribed in my presence and sworn to before me by W. H. Hnrley this 1st day of Sep- tember, A. D. 1899. [SEAL.] J. Don. Daerow, Notary Public for Louisa County. [Here follows a copy of the part of Mr. Clark's testimony in question.] State of low a, Louisa County , ss.: I, H. S. Hollingsworth, first being duly sworn on oath, state that the above is a true copy in part of the stenographer's report of the testimony of W. H. Clark before the Industrial Commission at Washington, D. C, and is the copy that was shown Wm. Helmick when he was requested to make a deposition as to truth or falsity of the statements therein contained. H. S. HOLLINGSWOETH. Subscribed in my presence and sworn to before me by H. S. Hollingsworth this 1st day of Septem- ber, A. D. 1899. [seal.] W. H. Hurley, Nota.ry Public. Exhibit 12. The State of Ohio, FranTclin County, ss.: H. S. Hollingsworth, of lawful age, being duly sworn, upon his oath, says : I reside at Columbus, Franklin County, Ohio. I have read the testimony of W. H. Clark before the Industrial Commission at Washington, Pg,fe^.63,;}ft„|g^ch he states that 22 Wm. Heliriick, formerly of Urbana, Ohio, has been unable to earn a livelihood in consequence of having been driven out of the wholesale oil business at Urbana, Ohio, about four years prior to the pres- ent time. Deponent further saith that said Wm. Helmick, after quitting the wholesale oil business, continued in the retail oil business for a period of about two years, to the best of his knowledge and belief, and bought his supplies from the station of the Standard Oil Company, at Urbana, Ohio. Subsequently, said Wm. Helmick retired from the retail oil business, and removed to Louisa County, Iowa, where, on or about August 31, 1899, I found him employed in the canning factory of Baxter Bros., at Wapello, Iowa, at his trade, that of a tinsmith, working at hard labor from ten to eight- een hours per day. I was informed by said Wm. Helmick, and Mr. Colby, the superintendent of the factory, that he, said Wm. Helmick, had first been employed in his present capacity in 1898. Further deponent saith not. H. S. HOLLIMGS WORTH. Subscribed and sworn to by said H. S. Hollings- worth before me this 4th day of September, 1899. [sEAL.J H. N. Standart, Notary Public. * Helmick's so-called warehouse that Clark refers to was simply a temporary shed made of refuse, old car lumber. It had no value except for kind- ling wood, and Helmick afterwards used it for that purpose. I have Mr. Thomas Power's affida- vit, which I submit. (Exhibit 13.) Digitized by Microsoft® 23 Exhibit 13. The State of Ohio, Champaign County, ss.: Personally appeared before me, a notary public in and for said county, Thomas Powers, of lawful age, who, being duly sworn, deposes and says that he is a resident of Urbana, Champaign Coanty, Ohio, and has been engaged in the business of draying for the past seventeen years ; that he was acquainted with William Helmick, of Urbana, Ohio; that about three years ago he hauled a part carload of oil to a shed belonging to said Helmick, situated in the north part of the City of Urbana, near the city limits. The said shed was built of refuse lumber and material, aad in his opinion said shed was not worth more than ten dollars. Thos. Powees. Subscribed and sworn to by said Thomas Powers before me this 28th day of August, 1899. [seal. J W. M. Rock, Notary Public, Champaign County, Ohio. Mr. Helmick did not lose any money during the few days he was trying to sell wholesale oil, therefore it is absurd and malicious for Clark to state that any action of ours drove Helmick to the poorhouse. The loss of his money was due to an entirely different cause. I have the affidavit of K P. Cone, which I submit. (Exhibit 14.) Exhibit 14. The State of Ohio, Champaign County, ss. : N. P. Cone, of lawful age, being duly sworn, upon his oath says : I am a township trustee of Urbana Township, Chanipf^fl^MtfffJ^hio, and have been 24 for eight years. I am acquainted with William Hel- mick, formerly of Urbaiia, Champaign County, Ohio, and have been for twenty-five years past. I knew of his domestic troubles, having been in- formed of them by himself, and have frequently heard him complain of the extravagance of his family. On March 26, 1898, I signed an order committing said William Helmick to the county infirmary of Champaign County, Ohio, upon the report of several reputable citizens of Urbana, Ohio, of his destitute condition. The affiant fur- ther makes oath and says that he believes the cause of destitution of said William Helmick to have been the extravagance of his family and other do- mestic troubles as complained of by him, and due to no other cause. N. P. Cone. Su bscribed and sworn to before me by the said JSr. P. Cone this 29th day of August, 1899. , [SEAL. J W. M. EOOK, Notary Public, Champaign County, Ohio. AMOUNT OE OIL SOLD AT UKBANA AND AT NEWARK. His statement that the business at Urbana ran about 40,000 to 50,000 gallons per month is false, the average being only about one-half. His statement that he held the position of man- ager at Newark is false. His position was that of local agent, same as at Urbana, three-fourths of his time being occupied in driving tank wagon and dray. His statement that the average monthly output at Newark was 80,000 gallons is not true, the cor- rect figures bein^^^^s|J:^^£^^pn^alf that amount. 25 AS TO SELLING GASOLINE AND OIL AT DIFFEEENT PRICES TO DIFFERENT CUSTOMERS. With reference to variation in prices at Newark on stove gasoline, the same situation was true else- where on account of the marked advanced in price of gasoline. Many dealers at the time of the ad- vance were under contract for a period of time ; consequently the advance only applied to those who were not und(5r contract, but as contracts ex- pired, the advance in price was charged to them as well as others. Answering the general statements made by Clark relative to selling refined oil at cut prices at New- ark, all dealers were treated alike. His statement that at Newark we charged Mr. Rankin 6 cents for oil and Showman Brothers 7 1/2 cents is false. The facts are Showman Brothers bought their oil , in bulk from the tank wagon, while C. C. Rankin bought oil- in barrels and paid 1 1/2 cents per gal- lon more than Showman Brothers paid for the same oil ; but we allowed Rankin 75 cents when he returned the empty barrel, the equivalent of 11/2 cents per gallon, which made the net cost to both dealers the same. His statement that Hagmeier, a dealer at New- ark, was rebated 1 cent per gallon on gasoline and 2 cents on oil is false. Clark was given special permission to pay a rebate, which was one-half cent per gallon on both oil and gasoline, under a contract. Mr. Clark paid the one-half cent him- self, and then testified here that he paid 1 and 2 cents. He also presented a letter from George J. Hagmeier stating that he had received rebates, and I have an affidavit from Mr. Hagmeier showing how that letter was pe«»e?H'*a«^seR?o^ihibit 15). 26 Exhibit 15. State of Ohio, Licking County: Before me, a notary public in and for said county, personally appeared Greorge J. Hagtneier, who is well known to me, and being first duly sworn, de- poses and says, that he has read the testimony of William H. Clark, given before the Industrial Commission at Washington, D. C, wherein said Clark read a certain note or statement purporting to be signed by him. That on or about the 18th day of February, 1898, said Clark came to him with a certain note or statement,, which said Clark had previously prepared, and which said Clark re- qaested affiant to sign. That to the best of this affiant's recollection, said note or statement was in the following language and figures, to wit: "Feb. 18th, 1898.— Mr. Clark, Ag't Standard Oil Co., has paid me a great may rebates on goods which were receipted for when given. 'I Said Clark thereupon said to this affiant, and assigned as his reason for requesting affiant's sig- nature thereto, that he, said Clark, was short in his accounts with said Standard Oil Company, and that said shortage had been occasioned, in fact, by the payment of the rebates in said statement men- tioned to this affiant, and that he desired to use said statement in accounting to said company for said shortage in his accounts. That said Clark assigned no other reason for desiring affiant's sig- nature to said statement, and thereupon, and in order to assist said Clark in straightening his ac- counts with said company, affiant signed said statement as presented to him by said Clark, and Digitized by Microsoft® 27 in substance as above set forth. And further af- fiant saith not. Geo. J. Hagmeier. Sworn to before me and signed in my presence by George J. Hagmeier this 2d day of September, A. D. 1899. Walter A. Irvine, Notary Public in and for [seal. J LicMng County, Ohio. I have another affidavit from Mr. Hagmeier re- garding rebates, which I submit. (See Exhibit 16.) Exhibit 16. State of Ohio, LicMng County, ss. : George J. Hagmeier, of lawful age, being duly sworn, upon his oath says : I am a merchant operating the Pittsburg grocery stores, at difPerent points. At the Newark branch I have had numerous business dealings with the Standard Oil Company through its former local agent, W. H. Clark. Under contract for a large quantity (my entire consumption for a certain period), I have received a rebate of 1/2 cent per gallon on both oil and gasoline: It is not true that ~ I ever received a rebate of 1 cent per gallon on gasoline and 2 cents per gallon on oil. I never received more than the 1/2 cent per gallon as per contract as aforesaid. Geo. J. Hagmeier. Subscribed and sworn to by said Geo. J. Hag- meier before me, this 30th day of August, 1899. [SEAL.] D^yjd^:^.^el^r, Notary Public. 28 wo FRAUDS OR TRICKS ITST LAMP TESTS. His statement that we used a trick in making lamp tests is untrue. Competitors marketed an oil from Ohio crude, which was full of sulphur, at a reduced price, and as the dealers mixed this high- sulphur oil with our oil in their storage tank, and as the consumers were complaining a,bout the quality, we were compelled to ask. the dealers to keep our oil separate, that they might know whose oil was producing the trouble when their custom- ers complained. It seemed impracticable in some cases for the dealers to have two storage tanks, so we were compelled, at a very large expense, to put on canvassers to visit the consumers and prove to them, by actual demonstration, that the standard quality of our oil had not been changed. Similar tests were made with the retail storekeepers, and it is the height of folly for any man to say that the people could be humbugged by the turning up of one flame higher than che other. That you gentle- men -may fully understand the falsity of the state- ment made by Clark in relation to the drawing of several grades of oil from one tank by a "twist of the rist," I wish to say that we have a tank wagon at Newark with three compartments, showing con- clusively that we carry three grades of goods. He states that D. J. Hull, H. S. Hollingsworth, E. G.Mathews, W. W. Hughes and W. A. Reed, all employees of the Standard Oil Company, had knowledge of frauds as testified to by him in making lamp tests. Mr. W. A. Reed is not in our employ and was not at the time Mr. Clark testi- fied. I submit the affidavits of all these gentlemen to prove the falsi^^.^of^g^l^k'^s^atements. 29 Exhibit 17. The State of Ohio, Champaign County, ss.: D. J. Hull, of lawful age, being duly sworn, upon his oath says: I am in the employment of the Standard Oil Company of Ohio, and have been for several years. I have read the statement of the testimony of W. H. Clark before the Indus- trial Commission at Washington with reference to testing Ohio and Pennsylvania oils, and giving my name as one who could corroborate his state- ments. I desire to say that his statements as to the method of these tests are absolutely false. I never heard of any instructions or any practice of the character stated by him. When these compar- ative tests are made, lamps 'of the same size, burn- ers of the same kind, wicks of the same make and chimneys of the same make are always used, and at the beginning of the test the height of the flame in each lamp is precisely the same. I never knew of any deception being used in these tests. D. J. Hull. Subscribed and sworn to by said D. J. Hull be- fore me, this 28th day of August, 1899. [seal.] W. p. Ring, Notary Public. Exhibit 18. The State of Ohio, Franldin County., ss.: H. S. Hollingsworth, of lawful age, being duly sworn, upon his oath says : I am in the employment of the Standard Oil Company of Ohio, and have been for several years. I have read a statement of the tes- timony of W. H. Clark before the Industrial Com- mission at Washington with reference to testing Digmzed by Microsoft® 30 Ohio and Pennsylvania oils, and giving my name as one -who conld corroborate his statements. I desii-e to say that his statements as to the method of these tests are absolutely false. 1 never heard of any instructions or any practice of 1 he character stated by him. When these comparative tests are made, lamps of the same size, burners of the same kind, wricks of the same make and chimneys of the same make are alw^ays used, and at the begin- ning of the test the height of the flame in each lamp is precisely the same. I never knew of any deception being used in these tests. ' H. S. HOLLINGSWORTH. Subscribed and sworn to by said H. S. Hbllings- worth before me, this 28th day of August, 1899. [seal.] Ernest T. Hake, Notary Public, FranJdin County, Ohio. Exhibit 19. The State of Ohio, FranTclin County, ss.: E. G. Mathews, of lawful age, being duly sworn, upon his oath says : lam in the employment of the Standard Oil Company of Ohio, and have been for several years. I have read a statement of the testimony of W. H. Clark before the Industrial Commission at Washington with reference to testing Ohio and Pennsylvania oils, and giving my name as one who could corroborate his statements. I desire to say that his statements as to the method of these tests are absolutely false. I never heard of any instructions or any practice of the char- acter stated by him. When these comparative tests are made, lamps of the same size, burners of the same kind, wicks of the same make and chim- Digitized by Microsofmi 31 neys of the same make are always used, and at the beginning of the test the height of the flame in each lamp is precisely the same. I never knew of any deception being used in these tests. E. G. Mathews. Subscribed and sworn to by said E. G. Mathews before me, this 28th day of August, 1899. [SEAL. J Eknest T. Hare, Notary Public, Franklin County, Ohio. Exhibit 20. The State of Ohio, Licking County, ss.: W. W. Hughes, of lawful age, being duly sworn, upon his oath says : lam in the employment of the Standard Oil Company of Ohio, and have been for several years. ^ I have read a statement of the testimony of W. H. Clark before the Industrial Commission at Washington with reference to testing Ohio and Pennsylvania oils, and giving my name as one who could corroborate his statements. I desire to say that his statements as to the method of these tests are absolutely false. I never heard of any instructions or any practice of the char- acter stated by him. When these comparative tests are made, lamps of the same size, burners of the same kind, wicks of the same make and chim- neys of the same make are always used, and at the beginning of the test the height of the flame in each lamp is precisely the same. I never knew of any deception being used in these tests. W. W. Hughes. Subscribed and sworn to by said W. W. Hughes bofore me this 30th day of August, 1899. [seal. J Feedeeic M. Black, Notary Public. Digitized by Microsoft® 32 Exhibit 21. The State of Ohio, Washington County, ss.: W. A. Eeed, of lawful age, being duly sworn, upon his oath says: I was in the employment of the Standard Oil Company of Ohio, as its agent in- Marietta up to November 1, 1898, but since that time have not been connected with the company. I have read a statement of the testimony of W. H. Clark before ihe Industrial Commission at Washington with reference to testing Ohio and Pennsylvania oils, and giving my name as one who could corroborate his statements. I desire to say that his statements as to the method ^of these tests are absolutely false. I never heard of any instructions or any practice of the character stated by him. When these comparative tests are made,_ lamps of the same size, burners of the same kind, wicks of the same make and chimneys of the same make are always used, and at the beginning of the test the height of the flame in each lamp is pre- cisely the same. I never knew of any deception being used in these tests. W. A. Reed. Subscribed and sworn to by said W. A. Reed, before me, this 81st day of August, 1899. [SEAL. J Frank Panhorst, Notary Public, Washington County, Ohio. lubhicating oils. Concerning his general statemept on lubricating oils, he refers to our trade mark brands on which there is no competition and for which we have a regular schedule, the price varying only in ac- cordance with thg.^^ua^ti^^us^ and the cost of 33 delivering same to customers. Inasmuch as no competitor can sell these oils, there is no necessity for our making any different price other than our schedule. THE ALLEGED PUKCHASE OE A WAREHOUSE TO DRIVE A COMPETITOR OUT OE BUSINESS. His statements concerning the purchase and re- moval of an alleged warehouse at Newark, in or- der to drive out a competitor, are false. After the so-called warehouse was purchased, Donald- son, the person whom Clark claimed we drove out of business by the purchase of a shed from its owner (without Donaldson's knowledge), continued in business by renting a barn. Further, Clark purchased the shed unknown to and unauthorized by me or Mr. Hollingsworth,'^and moved the build- ing to his (Clark's) own private lot, for his own private use, and paid for by him, and not by us. We derived no benefit from the transaction, and I criticised Clark severely when the subject came to my notice. This so-called warehouse, empha- sized so largely by Clark, was only an old shed, about 4 feet by 4 feet, with capacity for simply one barrel of oil. I have photograph of shed and Mr. Hollingsworth's affidavit, which I submit. Exhibit 22. The State of Iowa, Louisa County, ss.: H. S. Hollingsworth, of lawful age, being duly sworn, upon his oath, says: I am in the employ of the Standard Oil Company of Ohio, and have been for several years. With reference to the purchase of a warehouse a^I^^e^^ar^^^wMch W. H. Clark, in 34 Ms testimony before the Industrial Commission, mentions, I desire to say that I did not authorize this purchase, nor did I know of it before it was made, and it is not true that I offered. Mr. Clark a two weeks vacation on salary, or any consideration of any kind whatever, if he would get Donaldson out of the business. The first I knew of the transaction, Clark had purchased the building for $2.50, and moved it on to his own private lot, and Clark stated to me that he bought the shed on account of needing it for an outhouse. The so- called "warehouse" was about 4 feet by 4 feet, with a capacity for storing a single barrel of oil, and in my judgment $2.50 was an excessive price for it. The purchase of the shed did not drive Donaldson out of the business, for he rented a barn afterwards in which to store his barreled oil. H. S. HOLLINGSWORTH. Subscribed and sworn to by said H. S. Hollings- worth, before me, this 30th day of August, 1899. [seal. J W. H. HuELET, Notary Public. Referring to his statement concerning Mr. King and others at Newark, running tank wagons, it . is very misleading because the term generally ap- plies to our method of delivery to the retail trade, whereas they were peddlers who ran their own wagons, bought their oil from us and made vs'hat- ever price to the consumer they desired and were practically regulated by the price made by retail stores. We had nothing whatever to do with fix- ing such prices — these peddlers all working for themselves. Digitized by Microsoft® 35 CIRCCTMSTANCES UJSTDER WHICH MR. CLARK LEFT THE STANDARD. Mr. Lockwood was not a manager nor a special inspector, but simply a traveling auditor, whose duty it was to visit stations, check up stocks, balance cash, check accounts, and see that our agents were conducting the business honestly. Mr. Clark's reports were not received regularly, and after I had requested him repeatedly to give the matter prompt attention (and he had failed to do so), at my request Mr. Lockwood was sent to Kewark to check Clark up. He did so, and after balancing the cash (which is the first thing an auditor does) he found it short. This was report- ed to me and I suspended Clark until Mr. Lock- wood had completed his examination. Further investigation disclosed the fact that collections had been made by Clark and not reported. Some of these items were made good by Clark from day to day by payments to Mr. Lockwood on the theory that they were errors. They, however, became so numerous that Mr. Lockwood finally refused to receive any more payments until he had completed his examination, when, according to custom, he would make a final report and leave the adjustment to the officers of the company. From the time I suspended him up to date I have never tried to re-engage him, directly or in- directly, through Mr. Fonts or anyone else. I submit Mr. Fonts' affidavit showing that he has not. Digitized by Microsoft® 36 Exhibit 2,3. The State of Ohio, Franldin County, ss.: R. A. Foutz, of lawful age, being duly sworn, upon his oath says : I am in the employ of the Standard Oil Company, and am the person re- ferred to in the testimony of W. H. Clark before the Industrial Commission. It is not true, as stated by him, that since Clark's discharge by the Standard Oil Company 1 have asked him to re- enter the company's employ, or ever asked him how he would work for the company again. I am a traveling man and have no authority whatever to employ for the company, and I have never had any talk of any kind whatever with Mr. Clark upon the subject. R. A. Foutz. Subscribed and sworn to by said R. A. Foutz before me this 28th day of August, 1899. [SEAL. J E. L. Pease, Notary Public, Franldin County, Ohio. Nor is there any truth in his statement concern- ing our methods of deducting from his salary errors which others made. The inspector's report referred to, a copy of which he filed with you, is not a part of the au- ditor's work, nor did the auditor have anything whatever to do with it, nor was it made out by him at any time, nor at any other time ; conse- quently Clark's statements concerning it are false. The blank referred to is the one that I require filled out by a special agent as occasion requires. Since my arrival in Washington I have examined the inspector's ?^&¥^^^sffiW!fed by Clark, and 37 find 'that it is signed by H. S. Hollingsworth, who made the inspection and filled out the blank. The final report of our auditor showed Mr. Clark's shortage to be $231.57. He made good $121.93. The balance, $109.64, was paid in full by his bonding company after they had examined the report and foiind it correct. He was finally arrested by the bonding com pany, who had signed his bond as agent. Q. (By Mr. Phillips.) What became of him after his arrest? A. He was arrested on a charge of embezzling $109.64, which is a sum largely in excess of the amount, $35., required under Ohio laws to constitute a felony. He was bound over by the examining magistrate. It appears that the aggregate was taken in small sums, and at differ- ent times, no one amounting to $36., or suflicient to constitute a felony under the Ohio statutes. Therefore, T understand the grand jury failed to indict, on the ground that the offenses could not be joined together, and no felony had been com- mitted; only petty larceny. DIFFEEEWCES OF PRICE. Q. (By Mr. Jenks.). One or two questions as to the general method of doing business. You state in your testimony that wherever you have known of rivals cutting rates you intended to meet them to protect yourself. It is true, I sup- pose, that you had some sjoecial contracts, and in that way sold at somewhat difl:erent rates to dif- ferent dealers? A. Occasionally we have a special contract, the GoMmMm°^mig that the dealer buys his entire supply from us. But these con- 38 tracts are very limited in number, and the conces- sion Very rarely exceeds one-half cent a gallon. Q. So that it would be possible that Mr. Clark would have received instructions from you to sell the same quality of oil to different dealers at dif- ferent rates under these contracts you had made?. A. As I stated, we had contracts on stove gasoline, two or three of tliem, in Newark, at a time gaso- line advanced, and the advance did not apply to these dealers until the contract expired. That made two different prices at Newark on stove gaso- line at that time. Q. You would not be likely, then, you think, to have contracts with different dealers in the same place, covering the same time, under which the same grade of oil would be sold at different prices? A. There might be an exceptional case of that kind. Q. The different prices being granted, as you have suggested, in consideration of the buyers pur- chasing their entire supply of you? A. Yes. Q. Do you recollect special instances, for exam- ple, of instructions to sell Capitol cylinder oil to these different parties, Mr. Lingafelter and the Newark Water Works, at 32 and 31? A. I do not remember. These contracts on lubricating oil are largely conditioned upon the quantity of oil purchased by the consumer and the expense of delivering. Q. Some slight variation on that account made from time to time? A. Yes. Q. (By Mr. Smyth.) Such a variation as that might arise in any business, might it not? A. Cer- tai nly . Digitized by Microsoft® Q. (By Mr. Clark,) That, you say, is confined 39 to lubricating oil? A. These are lubricating prices. Q. (By Mr. Jenks.) The variations in prices, I understand you to say, are much less than one cent a gallon? A. On illuminating oil, I do not recall any case where it is more than a half cent. WATGHINa KIVALS' BUSINESS. Q. Reference was made by Mr. Clark, and ref- erence has also been made by other witnesses, to the way in which the Standard Oil Company has secured information regarding the business of its rivals. You yourself have referred to it ; it is your custom to have reports from your different agents? A. We ask our salesmen and our agents to keep their eyes open and keep us informed of the situa- tion in their respective fields. We ask our agents, as they visit the trade, to make reports as of whom the different parties are buying; principally to know whether our agents are attending to their business or not. If they are letting too much business get away from them, it looks as if they were not attending to their business. They get it from what they see as they go around selling goods. Q. (By Mr. Jekks.) Where competition is fierce do you engage anyone to follow the competitor's wagon about to find out what prices he sells at and to whom he sells? A. No, sir; I do not recall any case of that kind. Q. Have you yourself secured reports, or has there been any case that you know of in which re- ports of rivals' business have been secured from employees of fiK^^KimSii^^icro^m^o, sir, never. Q. You instruct your local agents, I infer from 40 what you state here, as to the prices at which they are to sell lubricating oil to different dealers? A. The prices they are to receive represent either an arrangement or contract made with the different fii'ms for oil at certain periods at these prices, and the arrangement is made with the undeistanding that we are to have the entire business for a cer- tain period, possibly a year. Q. (By Mr. Smyth.) Have you not -under these contracts reduced the price during the year when you had a contract, say 32 cents for Capitol cylin- der oil — have you not voluntarily reduced the price one-half cent? A. Notwithstanding the con- tract, we may have done that on a declining market. Q. (By Mr. Jenks.) In the selling of lubricat' ing oils to railroads, do you, in the same way, in- struct your agents as to the prices they are to charge? A. I do not have anything to do vs^ith railroad oils, they are handled by our. people in Cleveland. Q. You have no knowledge on that subject at all? A. I have no knowledge on that subject. Q. (By Mr. Phillips ). Is it your custom to put down oil in one^locality, where there is competi- tion, as a rule? Do you make that a rule? A. No, sir; we never do it unless the competitor makes the cut in prices first and forces us to it. When the competitor makes a cut in prices we do not hesitate to meet the price to hold our business. Q.You do not take the lead in the State of Ohio, under your jurisdiction', then, in cutting prices when there is an independent refinery that ships oil into that locality? A. No, sir; we do not. Q. (By Mr. Katohfoed.) In what capacity are ^ •' Digitized by Midrosoft® ^ •' 41 you serving the Standard Oil Company now? A. I have charge of a marketing department of the company. Q. For the State of Ohio? A. The central and southern portions of Ohio. Q. You have presented a dozen or more affidavits from the gentlemen whose names are signed. Are all these gentlemen employees of the Standard Oil Company? A. Not all of them; probably three- fourths. Q. Have the affidavits come to you voluntarily from these men? A. Yes. Q. Without solicitation? A. Simply upon being shown the testimony and being asked if cor- rect, and whether they desired to make affidavit. It has all been voluntary on their part. Q. I see the affidavits you have read are similar both in language and appearance. Were they gotten up in your office or some office of the Stan- dard Oil Company and sent to the employees? A. Some of these affidavits — not all of them, but a num- ber of them, were gotten up" in my office, covering the points of Clark's testimony, and were then sub- mitted to the person concerned, and he was asked whether the facts contained in the affidavit were true, and if they were, whether he was willing to sign it. Q. (By Mr. Smyth.) I suppose that was largely a matter of convenience? A. Yes. Q. (By Mr. Ratchfoed.) AYere there any affi- davits asked from employees who refused to give them? A. No. Q. They gave an affidavit in every case? A. Yes, sir; every one. (Testimony GloS(^^}d by Microsoft® 42 Washington", D. C, September 8, 1899. TESTIMONY OF MR. JOHN D. ARCHBOLD. At a meeting of the United States Industrial Commission, held in Washington, D. C, Septem- ber 8, 1899, Vice Chairman Phillips, presiding, Mr. John D. Archbold, after being duly sworn, testified on the subject of trusts, as follows: Q. (By Mr. Jenks.) Will you kindly give your name and address to the stenographer? A. John D. Archbold, New York City. Q. What is your relation with the Standard Oil Company? A. lam vice-president of the Stand- ard Oil Company of New York. Q. How long have you been connected with the Standard Oil Company? A. Since 1875. Q. Have you, in anticipation of this examina- tion, prepared any special statement for the use of the commission? A. I have. Q. I shall be glad if you will give that first, and then we will question afterwards. A. The general statement in answer to sx)ecific inquiries is not quite ready, and that will be furnished you with- in a few days. Q. You mean in answer to the general schedule? A. Yes. Q. (By Mr. Smyth.) I think it would be well to ask Mr. Archbold just at this stage to give us some detailed account of the organization of the Stand- ard Oil Company — its different departments. We do not want the names of the individuals, but your transportation department — how is it managed? A. That will all be furnished — all a part of the' statement just in course of preparation. Digitized by Microsoft® 43 Q. (By Mr. Jenks.) You will /give a general statement in your own way o£ the points you care to bring out. The Witness : It would be a matter of prefer- ence to me, and I think it would make what I have to say more intelligible to you all, if I might first be allowed to answer the criticisms of the witnesses who have appeared, and so let my answers lead up to a short general statement which I might make at the last. The Chaieman. Certainly. The Witness. Shall I proceed? The Chairman. Yes. J. W. LEE THE HEAD OB' A TRUST. The Witness. I answer first the testimony of Mr. J. W. Lee of Pittsburg. It is rather remark- able, gentlemen, that the first witness to appear before you as a special critic of our business on the ground of its being a trust, should, at the out- set, have acknowledged himself to be not only a member of, but the real head of, a trust. This Mr. Lee specifically does acknowledge, and I may say for your information, that Mr. Lee and 'his asso- ciates have gone a step further than any other company that I know of, in that they have bound themselves together, not only by the ordinary trust ties, but in a voting trust, made up of a majority of the stock of their principal companies, with a view to perpetuating their faction in power indefi- nitely, and practically disfranchising the minority. I make this statement, gentlemen, not as a criti- cism, but as rather a striking evidence of the irre- sistible tendency toward combination. Digitized by Microsoft® 44 VOTING TRUST CONTRACT OF THE tTNITED STATES PIPE LINE COMPANY. I hand you a copy of the voting trust of the United States Pipe Line. The original trustee under it was a Mr. Wood, who has since died. He has been succeeded, under this voting trust, by three trustees, viz., Thomas W. Phillips, L. Emery, Jr., and Hugh King. (Agreement omitted.) DID NOT ISSUE CIRCULARS AGAINST FREE PIPE LINE LAW. Mr. Lee charges that we fought the passage of the free pipe bill in the Pennsylvania legislature, and that we caused "dodgers" or small handbills to be circulated, saying that if the free pipe bill became a law the orchards would be destroyed, springs polluted, death lark in their doorsills. I want to deny this in toto. In those early days to which he referred we were in favor of the passage of the free pipe law in Pennsylvania. We greatly desired it. We were entering the pipe-line busi- ness, fully understanding its great importance to the future of the petroleum trade, and it is not likely that we would be prejudiced by any such action as Mr. Lee claims. Q. (By Representative Livingston.) You deny the issuing of the circular? A. I deny the issuing of the circular in toto. I never heard of any testi- mony of that kind. Q. (By Mr. Smyth.) Do you know whether such circulars were issued? A. I do not. Q. If you did not issue them, who did? A. I do not know that they were issued. Digitized by Microsoft® 45 EMPIRE TRANSPOBTATION COMPANY. He refers, in the way of criticism, to our course regarding our relation with the Pennsylvania road in connection with the Empire Transportation Company refinery. I may say, in a word of ex- planation, that at the time specified the people prominent in official relations with the Pennsyl- vania road engaged in the petroleum business on their own account. We, deeming that outside of the regular province of the railroad company, of which we were large patrons, discontinued our shipments over the Pennsylvania road, transferring them to the other great lines. This loss of traffic finally brought the Pennsylvania officials proper to a negotiation regarding this special refining business, to which I have referred, and those ne- gotiations resulted in our purchase of those refiner- ies and our again becoming a patron, in the way of transportation, of the Pennsylvania Railroad. That is the exact history of the case simply told. I will refer now to — Q. (Interrupting.) Are you willing to state what the negotiations where? — A. I would be glad to if I had it in mind ; but it is a transaction of nearly' 20 years ago, and I cannot, from memory, give any really exact outline of it. Q. Were there considerable advantages offered to the Standard Oil Company over other shippers? A. There were no advantages offered to the Stand- ard Oil Company. The advantage was in favor of their own people, as wc felt it to be, and was the prime particular reason for our discontinuing our shipments over it. Q. After these negotiations did the Standard Oil Digitized by Microsoft® 46 Company enjoy secret rates or better rates than other refiners? A. I go into that fully in answer to the specific charges to that effect. Q. (By Mr. Faeqtjhar.) Were the Pennsylvania Eailroad holders of oil participants with you in transportation at the same time you made arrange-' ments with the Pennsylvania? A. No, their re- lations ceased. Q. (By Mr. Jenks.) You can furnish that ac- count more in detail, can you not? A. Undoubt- edly, if you desire it. The Empire Line and Green Line were corpora- tions doing freight business over the Pennsylvania Railroad, the stocks of which were Owned by the ofiicers and managers of the railway. Through these companies the railway became interested both in transportation of oil by pjpe-lines and in the re- fining of oil. The Standard Oil Company claimed that the railway discriminated in freights in favor of its own refineries, and refused to ship over that road. This led to negotiations for the sale of the pipe-lines and refineries to persons interested in the Standard. This sale took place October 1, 1877. The railway first purchased from the Empire and Green lines all the pipe lines and refineries which they owned, which it was empowered to do by virtue of an existing contract, and then conveyed the pipe lines and refineries to the Standard parties. ME. EMERY'S ESTIMATE OF $10,000,000. REBATES. Mr. Lee goes quite in detail with reference to allegations regarding preferential railroad rates to us during that early period of the oil business. I want to answer all his charges made at different times during his Digitized by Microsoft® 47 testimony as is indicated, and by referring to the various pages at once and as defi- nitely as possible. £Ie treated first the well-worn statement regarding deductions, originally made by Mr. Emery, or alleged to be made by him, from the testimony of Mr. Cassatt, an oflBcial of the Pennsylvania road, covering alleged rebates paid to our company for a certain period. I have here, and desire to submit and leave with you, a state- ment of the analysis of Mr. Cassatt' s testimony in that regard, prepared by our counsel at the time, showing the utter falsity of Mr. Emery's state- ment. Mr. Emery's statement was made on an absolutely false hypothesis throughout. There never was any foundation for it. It was one of those catching statements which take hold and travel fast. It has been denied over and over again ; but the people who have agitated these questions have adopted it as one of their stock features in trade, and keep on repeating it. I de- sire to submit this analysis, but I will read : "The assertion that Mr. Cassatt testified that $10,000,000 was paid to the Standard Oil Company as rebates from October 17, 1877, to March 31, 1879, was first made by Mr. Lewis Emery, and in examination before the Committee on Manufac- tures of the Fiftieth Congress, May, 1888, he shows how he deduced these figures from the testi- mony referred to. I quote from page 241: "Q. You were also the authority, were you not, for ■ the statement which is referred to in Mr. Dodd's book that it was proved during that ex- amination that in a period . of, I think, 17 months Digitized by Microsoft® 48 "The witness (interrupting). Seventeen and one- half months. "Q. (Continuing.) The four railroad companies had paid to the Standard Oil Company $10,000,000 as rebates on the oil carried by them, were you not? A, Yes, sir. "Q. Look at that paper [handing 'paper to wit- ness] and state whether you made an analysis— an examination of the testimony given by Mr. Cassatt, the Standard Oil Company people, and other rail- road officers in that suit, in order to ascertain what the total au-iount; of money paid over as discrimina- tion during that period of 17i months was ? A. I did." The witness then presented a paper prepared by himself, which, if true, showed a rebate to the Standard Oil Company of 64 1-2 cents per barrel on refined oil, 29 cents on crude oil from 1 district, 26 1/2 cents on crude oil from another district and 22 1/2 cents per barrel on crude oil paid to the American Transfer Company. He added these figures, divided them by 3, and claimed 55 cents as the average rebate to the Standard. He then took the total consumption of oil from October 17, 1877, to March 31, 1879, to wit, 18,556,277 barrels, and multiplying by 55 cents produced $10,155,218, which, he claimed, showed was the amount of dis- criminatory rebates paid to the Standard in 17 months. Mr. Emery did not pretend to have any personal knowledge of the subject. He pretended to com- pile his figures from the evidence of Mr. Cassatt. That evidence is published in the same volume which contains Mr. Emery's evidence. To reach Digitized by Microsoft® 49 this result Mr. Emery had to make these absurdly false assumptions : 'H 'I. That all oil consumed was shipj^ed eastward over four trunk lines, and was all shipped by the Standard Oil Company. II. That all these trunk lines paid the same re- bate as the Pennsylvania Railroad Company. "III. That the shipments of oil of the class on which the rebate was 64 1/2 cents was equal to the shipments of oil of the class -on which the rebate was 26 1/2 cents." Eliminate these gratuitous assumptions from Mr. Emery's statements, and his conclusion is shown to be ridiculous. These gratuitous assumptions are as nothing, however, compared to the gratuitous falsehoods embraced in the figures given. The claim is that a discriminating rebate, averaging 55 cents, was paid to the Standard Oil Company from October, 1877, to March 31, 1879, by 4 trunk lines. The evidence of A. J. Cassatt, which is referred to for the truth of these statements, refers only to 1 trunk line, Pennsylvania Railroad, and shows : "I. That the Standard Oil Company shi^sped no oil over the Pennsylvania Railroad until July, 1875. That the Pennsylvania Railroad was then interested in refining in competition with the Standard, and not only allowed the Standard no preferences, but discriminated against it to such an extent that the Standard stopped shipping over the road in March, 1877. "II. That in October, 1877, the Pennsylvania Railroad and thaS.tendard entered into an agree- 50 ment by which the Standard Oil Company was to have a commission of 10 per cent, on all freight furnished by it in consideration of the Standard agreeing to equalize oil freights on the 4 trunk lines. "III. That this agreement did not effect a dis- crimination even to that extent as against other shippers over the Pennsylvania Railroad prior to May ] , 1878, because said shippers had contracts extending to that date, which were excepted in the contract with the Standard. "lY. That the Pennsylvania Railroad was will- ing and offered to carry oil for all shippers on the same terms with the Standard, excepting only 10 per cent, commission, for which it demanded like considerations. "V. That it did continue to carry for all ship- pers who did all their business over its line as low as for the Standard, commission included. "\'I. That shippers not using the Pennsylvania Railroad were able, after May 1, 1878, to get oil east by the Erie Canal lower than by rail, and shipped their oil by that route, in consequence of which the Pennsylvania Railroad shippers were paying greater freight rates than other shippers. "VII. In consequence the Pennsylvania rate was reduced to those who continued to ship by that line 44 1/2 cents on refined, making the net rate $1, said 44 1/2 cents being paid as rebate. "VIII. For the same reason, namely, to meet canal rates, in July, 1878, the rate to those who shipped by rail was further reduced 20 cents, the Digitized by Microsoft® 51 20 cents being paid as a rebate, and refunded back to May 1, 1878. "IX. That these rebates were paid to all ship- pers who shipped entirely by rail, and were for the express purpose of putting them on an equality with those who shipped by canal. "X. The same is true of the rebate allowed on crude oil during the same period, except 10 per cent, paid to Standard and 22 1/2 cents paid to the American Transfer Company, the latter be- ing the pipe line's share of a through rate. ''XI. That the rebates which were paid from May 1, 1878, to- equalize rail and canal shipments were discontinued December 8 of the same year, when the canal was closed. "XII. All payments of rebates entirely ceased March 31, 1879." The result of the testimony is that while there was an agreement for a 10 per cent, commission between the dates referred to there was in fact no discrimi- nation against shippers by the Pennsylvania Rail- road ; that the rebates paid were paid to all shippers over that line, and that they were paid to put shippers by that line on an equality with ship- pers by canal. Q. (By Mr. Smyth.) You will make that a part of your testimony, will you? A. I will make that a part of my testimony, and I hope it will be in the record of the proceedings of this commission as simple final answers to these lusty old lies about the $10,000,000 rebates. Q. (By Representative Livingston.) You say now-, in your place as a witness, that there never Digitized by Microsoft® 52 have been any rebates in favor of the Standard Oil Company? A. I am proceeding with the state- ment. Q. I understand you deny everything that has been said here before about rebates? A. I will go right into that and be glad to answer question^ about that. AS TO FAVOItlTISM IN BUfING LUBRICATING OILS. Mr. Lee makes the statement 'that the railroad companies are now systematically robbed by their own officers through the making of discriminatory contracts with the Standard Oil Company for lu- bricating oils. I had never heard of this allega- tion brought out here by Mr. Lee and some other witnesses until told before you. I want to deny it absolutely and entirely as being utterly untrue, and I challenge him to produce a scintilla of evi- dence in support of their allegations. Q. (By Mr. Jenks.) Perhaps you will note that Mr. Lee says that he does not state that to be ab- solutely true, but it is a matter of belief with him. A. It is the same old method — he does not know it to be true, and he cannot say it is true, and I challenge him to make any showing of any such thing at any place or any time. Q. Yoa say it is not true? A. I say it is not true. NO DISCRIMINATORY RATKS. In answer to questions as to whether the Stand- ard Oil Company is now receiving discriminatory rates, he does not answer directly, but goes back to the 1889 case, in which the Standard Oil Company was in no way involved; was not, in- deed, in the case referred to by Mr. Lee, and tTie Digitized by Microsoft® 53 same is true in a number of other cases also, was not shown that there was any discriminatioTf in favor of the Standard Oil Company, and as a matter of fact the Standard Oil Company were not given any such discriminatory rates. I make that answer more specifically with reference to the case of the period to wliich he referred, in answer to the testimony at that time. Q. (By Mr. Smyth.) If there had been any such rates, you would have known it? A. I should have known it. Q. It would have been impossible for any such rates to be in existence without your knowing it? A. It would. Further, the cases referred to in Mr. Lee's testimony as pending in the United States court to recover discriminations are really cases to recover freight which the railroad charged refiners on barrels. The Interstate Commerce Com- mission decided that railroads carrying both in tank cars and in barrels should carry barrels free ; and the railroads, refusing to accept such a deci- sion, are testing the question in the United States court. It is fair to say that the same charge for carrying barrels was made against the Standard Oil Company, and if the refiners are successful in recovering the Standard Oil Company will have a claim for a very large amount. Q. (By Mr. Jenks.) Against the railroads? A. We shall be in the same position as the other ship- pers if it is decided in the interest of the refiners. Q. (By Mr. Smyth.) You will claim a rebate of the freight on the barrels of the refined? A. Yes; we are in the same position as they are on that question. Imay say, in my personal opinion, it Digitized by Microsoft® 54 is a most unjust decision for any court to make; but it is not for me to decide it. In answer to inquiry as to whether the Standard Oil Company were paid rebates on shipments of other people, Mr. Lee answers in an untruthful and disingenous way, and refers finally to the Rice case as the only possible support of his assertion. The Rice case will be fully answered in connection with the testimony of another witness. THE STANDARD HAS STRICTLY OBEYED THE INTER- STATE COMMERCE LAW. It is fair to say here, however, and I will make this statement covering the entire question of freight rates prior to the passage of the interstate-commerce law, in 1887, that the shipment of oil or any con- siderable freight over the roads was a question of special contract. While tariffs were nominally is- sued, every shipper knew that a special contract could be had, and it was universally the rule that special contracts were made for the shipment of any considerable freight. Since the passage of the interstate-commerce law w.e have strictly obeyed it. I want to say further in this connec- tion that during the period before the passage of the interstate-commerce law every and any rate of freight was uniformly considered in the fixing of prices at which the oil was sold. I want an exhibit — Q. (Interrupting.) Are your books open to ver- ify that statement? A. To the very utmost. I have thought it worth while, in view of the hard downing of this old ghost, to go into some consid- erable collateral proof to show the falsity of the charges in reference to discriminatory rates, I Digitized by Microsoft® 55 now beg leave to submit to you, and I of course will leave them witli you — Q. (By Representative Livingston.) (Inter- rupting.) If you will pardon me just now — is there a suit pending or anything of the kind on the part of the Interstate Commerce Commission against the Standard Oil Company for rebates now, or has there been since the passage of the act? A. There have been various actions instituted regarding some special features of the carrying law, but I do not know that there are any now pending. I think they have all, so far as relates to our interest di- rectly, been adjudicated. LETTERS FROM RAILROAD OFFICERS DENYING THAT THEIR ROADS GIVE PREFERENTIAL RATES TO THE STANDARD. I submit here, in answer to direct queries — and they are only a small part of the entire number I might have had for the asking — letters from prom- inent railroad officials representing the railroads in this country, North, South, East and West, an- swered on their own part and over their own sig- natures, with reference to the charge of discrimi- nation in any way. These letters are of the most specific character on this subject. I thought it best not simply to rest on our own denial on the charge of discrimination, but to leave these with you as collateral evidence of the falsity of these statements which our enemies and competitors in the business are continually making on this ques- tion. I will, with your permission, read a list of these letters, and I will submit a map, colored in lines, showing the different sections of the country reached by the railroads which are represented in Digitized by Microsoft® 56 these letters, and which deny any preferential re- lations with the Standard Oil Company. [Standard Oil Company, 26 Broadway, New York.] Dear Sie : During May and June of this year the Industrial Commission (a body appointed by Cono;ress) had a hearing in Washington. Before this body appeared a number of oil producers and refiners who testified, generally, that it was their belief that the railroads of the United States were giving the Standard Oil Company and its interests many advantages on its shipments of petroleum and its products as compared with those of other oil shippers. We are now and have been, as you know, large shippers of petroleum and its products over your rails, and we would be glad if you would write me a letter stating as fully as yoix can whether or not, since the passage of the interstate-commerce law, you have in any way given to the Standard Oil Company or any of its representatives any lower rates of freight, either by direct tariff', rebate, un- derbilling, or in any way given to it or its repre- sentatives any advantages in the carriage of its shipments over your rails as against any other oil shipper. In other words, have not the Standard Oil Company and its interests paid the same rate per 100 pounds on its shipments, whether in tank cars, car loads, or less than carloads, as you have charged other shippers between the same points, and has there been since the passage of the inter- state-commerce law, or is there now, any arrange- mant or device by which the Standard Oil Com- pany have in any way received any advantage in the transportation of its oil, per 100 pounds, as Digitized by Microsoft® 57 compared with any other shipper over your road between the same points? If yoa, yourself, hiive not fall knowledge of the matter referred to, we would be glad if yoa would confer with your traffic department before answer- ing. It may be that we will sliow this letter and yoar reply to the Industrial Commission, and would like for your reply to be as full and ex- plicit as possible. Kindly reply at your earliest convenience and oblige. Yours truly, Howard Page. I will not weary you, unless it is your desire, by reading all these letters, but I will read two or three of them. I will first read the list: Atchison, Topeka and Santa Fe Railway, Paul Morton, sec- ond vice president, Chicago, 111. ; Baltimore and Ohio Railroad, Oscar Gr. Murray, first vice-presi- dent, Baltimore, Md. ; Boston and Maine Railroad, W. P. Berry, second vice-president and general manager, Boston, Mass. ; Chicago and Alton Rail- road, C. A. Cliappell, vice-president and general manager, Chicago, 111.; Chicago, Milwaukee and St. Paul Railway, A. J. Earling, second vice- president, Chicago, 111.; Chicago, Burlington and Quincy Railroad, Thomas Miller, general freight agent, Chicago, 111. ; Cleveland, Cincinnati, Chi- cago and St. Louis Railway, E. E. Cost, freight traffic manager, Cincinnati, Ohio; Delaware, Lackawanna and Western Railway, W. H. Trues- dale. president, Kew York City, JST. Y. ; Erie Railroad, Gr. G. Cochran, fourth vice-president, ISTew Y^ork City, N. Y. ; Great Northern Railway, D. Miller, second vice-president. St. Paul, Minn., Lake Shore and Michigan Southern Railway, W. Digitized by Microsoft® 58 H. Newman, president, Cleveland, Ohio; Louis- ville and Nasliville Railroad, S. R. Knott, first vice-president, Louisville, Ky. ; New York Central and Hudson River Railroad, S. R. Callaway, pres- ident, New York City, N. Y. ; Northern Pacific Railway, C. S. Mellen, president, St. Paul, Minn. ; Pennsylvania Railroad, W. H. Joyce, freight trafiic manager, Philadelphia, Pa. ; St. Louis and San Francisco Railroad, D. B. Robinson, presi- dent, St. Louis, Mo. ; Southern Pacific Company, J. C. Stubbs, third vice-president, San Francisco, Cal. ; Southern Railway, J. M. Culp, traffic man- ager, Washington, T). C; Union Pacific Railroad, H. G. Burt, President, Omaha, Nebr. ; Wabash Railroad, S. B. Knight, general freight agent, St. Louis, Mo. ; Western New York and Pennsylvania Railroad, E. T. Johnson, general freight agent, Buffalo, N. Y. I will read, if you please, first, as representing the different sections of the country, a letter from the New England States, Boston and Maine Rail- road: (Boston and Maine Railroad, traffic department.) Boston, Mass., August 18, 1899. Dear Sir: Replying to your esteemed favor of the 15th instant, you ask me to state whether or not since the passage of the interstate commerce law the Boston and Maine Railroad have in any way given to the Standard Oil Company, or any of its representatives, any lower rate of freight, either by direct tariff, rebate, or underbilling, than has been openly quoted to all other shippers of Digitized by Microsoft® 59 oil, and I am pleased to be able to state that we have not. Yours truly, W. F. Berky, Second Vice-President and General Traffic Manager. Mr. Howard Page, 26 Broadway, New TorTc, N. Y. (Chicago and Alton Railroad Company, C. A. Chappell, vice-presi- dent and general manager.) Chicago, III., August 17, 1899. Dear Sir: I take pleasure in stating to you, as I have frequently stated to others, and am v^illing to state before the Interstate Commerce Commis- sion, or any other authority, that, in my judg- ment, the Standard Oil Company has obeyed the interstate law better than any other large shipper in the country. So far as the Chicago and Alton is concerned, the Standard Oil Company has not only declined to accept concessions of any name or nature, but has used its influence with the railroads to main- tain agreed and tariff rates, and there has been no arrangement, de vice or any other plan by which the Standard Oil Company received less rates than other shippers. The rates granted the Standard Oil Company have been the same that all other oil shippers have had. whether in tank cars, carloads, or less than carloads. I have frequently stated to the Interstate Com- merce Commission, and to others, that if all the JDiatized by Miprosoft® \ ^ , . large shippers of^tTie country would co operate m 60 the enforcement of the insterstate law, as the Standard Oil Companj^ has done, we would have an ideal condition. Yours, very truly, C. A. Chappell, V'ice-Preside7it and General Manager. Mr. Howard Page, Standard Oil Company, New York. [Louisville and Nashville Railroad Company, office of the first vice-president.] Louisville, Kt., August 19, 1899. Dear Sir: Please refer to your favor of the 15th instant. Having been since January, 1888, in one posi- tion or another, charged with the direct super- vision of the trafftc affairs of the Louisville and Nashville Company, and having been -for several years prior to that time directly connected with that department of the company's business, I feel I am in position to speak most authoritatively up- on the subject mentioned in your letter. I beg to say that the Louisville and Nashville Railroad Company has not in any way given the Standard Oil Company, or any of its representa- tives or allied interests, any lower rates of freight, either by direct traffic, rebate, refund, underbill- ing, or any other subterfuge or device, than it was at the same time extending to any and all other shippers handling the same or similar traffic and subject to the same rules, regulations and con- ditions. In other words, the Standard Oil Com- pany has been required to pay and has paid Digitize-' '-■■ ""■ irea lo pa to the Louisville ana Nasnvalle Railroad Com ei pany the same charges for the same transpor- tation rendered as any other shipper, and there is no arrangement between it or any of its agents and the Louisville and Nashville Railroad Company by which any advantage accrues to it over any other shipper handling similar traffic between the same points over this company's rails. Yours, truly, S. R. Knott, First Vice-President. Mr. Howard Page, standard Oil Company, New York. [The Atchison, Topeka and Santa Fe Railivay System, Great Northern Building, yj Jackson street, Chicago, second vice- president's office.] August 17, ]i GentlemejSt; It is with a great deal of pleasure and satisfaction that I write you in regard to the general belief that the railroads of the United States are giving the Standard Oil Company and its interests many advantages on its shipments of petroleum and its products as compared with shipments of other oil producers. For nearly four years I have had charge of the freight business of this company, and never in all that time has the Standard Oil Company's rep- resentatives asked for, or received, better rates than other shippers of oil secure. From my own experience I know that the Standaid Oil Company does not ask for rebates, and I know further that the chief aim of the freight representatives of your company has been to have the railroads of the West '- •' Digitized by Micrpspft® ^ . _ _ . absolutely maintain the tarifr. I wish that other 62 large shippers would take the same position in re- gard to this matter that your company does. If the terrible pressure from gigantic shipjpers for inside rates could be relieved the transportation problem of the country would be a very easy one to solve. The position of your company in not asking for special rates and in declining to receive rebates, and its effort to keep the rates on oil and its products up, has been a common topic of discussion among western traffic men ever since the interstate com- merce law became enacted. I take this occasion to thank you, on behalf of the railroad I represent, for the broad-gauged position that you have taken in this matter. Yours, truly, Paul Morton, Second Vice-President. Standard Oil Company, New YorJc Qity. [Great Northern Railway Company, office of second vice-presi- dent.] St. Paul, Minn., August 23, 1899. Dear Sir : Replying to your favor of the 15th instant, 1 herewith hand you a letter from our gen- eral traffic manager, Mr. P. B. Clarke, under date of the 21st instant, which, I think, covers your inquiry fully so far as this company is concerned. I have no hesitancy in stating that since my connection with this company, in November last, the Standard Oil^C^^p^a,^^ h^a^ paid the full legal tariff on all shipments made by it over this line, 63 and there have been no arrangements by which any less rates were secured. I can also make the same statement with regard to the shipments of the Standard Oil Company over the Missouri, Kansas and Texas Railroad during my connection with that road, from May, 1893, to November, 1898. If there is any further information desired, kindly advise and I will take pleasure in furnish- ing same. Yours, truly, D. MiLLEK, Second Vice-President. Mr. Hov^^AED Page, Standard Oil Company, New TorJc City. [Great Northern Railway, traffic department.] St. Paul, Minn., August ^1, 1899. Dear Sir: Referring to the enclosed inquiry from the Standard Oil Company with respect to the rates charged on shipments forwarded over the Great Northern Railway since the passage of the interstate commerce law. My connection with this company dates from December, 1896, since which time I know person- ally that the Standard Oil Company has paid our company full tariff rates on all shipments we have carried for them. I have made inquiry of those connected with the general freight department who were in the service prior to my connection with the company and who have had opportunities to know what rates were being charged on the shipments of the''gtW^^r^''Cffftompany, and have 64 received assurances that the Standard Oil Company has always paid our company the full published tariff rates on their shipments, and that we have yet 1,0 receive the first intimation that the Standard Oil Company desired less than the published tariff rates charged other shippers of the same class of goods. Yours, truly, P. B. Claeke, General Traffic Manager. Mr. D. Miller, Second Vice-President. [Erie Railroad Company, 21 Courtlandt street, New York.] August 29, 189 9. Deae Sie: In answer to yonr letter of the loth instant to President Thomas, I desire to say, in his absence, that the Standard Oil Company has evinced the strongest disposition to co-operate with the railroad companies to the extent of paying fair and reasonable rates for transportation of all of its products based upon and in conformity with the interstate commerce act, and based on my own knowledge and information obtained from other officers of this company that said Standard Oil Company has not been afforded lower rates of freight upon such trafhc than the tariffs oi^en to and offered for the carriage of like products be- tween the same jjoints to any other shippers of oil over this company's lines. Yours, truly, GrEO. G. COCIIEAN, Fourth Vice-President. Mr. HowAEu Page, fi6 Broadway, City. Digitized by Microsoft® 65 [Delaware, Lackawanna and Western Railroad Company, office of president.] August 22, 1899. Dear Sir: I noted with some interest that dur- ing a hearing before the Industrial Commission in Washington during May and June of this year certain parties appeared before that body who testified in a general way that they be- lieved that the railroad companies of the United States were giving the Standard Oil Company, or its interests, many advantages on its shipments of petroleum oil and its products over those accorded other shippers of similar com- modities. These statements or this testimony, if it may be so considered, is so much at variance with the facts and the truth as I know them to be that I feel compelled to write you and state the facts as I know them to exist, and to say that I am willing you should make such use of this letter as you may desire in refuting the false statements re- ferred to. This company has not since the passage of the interstate commerce act, so-called, given the Stand- ard Oil Company or any of its interests or anyone for it any reduced rates or advantages of any char- acter whatever on its shipments of petroleum oil and its products different or in any way more favorable than was at the same time accorded other shippers of similar commodities. As I am advised by our people, no one for the Standard Oil Com- pany has since the passage of said act ever solic- ited any concession in any way, shape or form from the regular, established rates, rules and reg- Digitized by Microsoft® 66 ulations governing the transportation of petroleum oil and its products. Furthermore, I take pleasure in certifying that at the time of the passage of the interstate com- merce act and until 1894 I was in charge of the Minneapolis and St. Louis Railway, and from 1894 until 1899 was vice-president and general manager^ of the Chicago, Rock Island and Pacific Railway Company in charge of its freight traffic; that dur- ing my connection with the Minneapolis and St. Louis and the Chicago, Rock Island and Pacific railways, as aforesaid, neither of those companies ever granted to the Standard Oil Company or any- one in its interests or for it any concessions from the regular, established rates on its shipments of petroleum oil and its products, nor did any official of the Standard Oil Compauy, or anyone else in its interests, ever ask special rates or advantages on its shipments, as against those accorded other shippers of the same commodities. Should it be found necessary or desirable to have the foregoing statement of facts put in the shape of an affidavit or deposition I shall be very much pleased indeed to put my knowledge of this matter in that shape and place it at your disposal for such use as you deem best. Yours truly, W. H. Teuesdale, Fresident. Mr. HowAED Page, Standard Oil Company, ^6 Broadway, City. Digitized by Microsoft® 67 [Cleveland, Cincinnati, Chicago and St. Louis Railway Company.] August 28, 1899. Deab Sir: I have your letter of the 15th in. re- lation to certain testimony that was given before the Industrial Commission during May and June of this year regarding shipments of petroleum and its products. If I mistake not, this company is the recipient of a fair share of the trafBc shipped by your com- pany in all directions, and we can most positively state, and are prepared to support same by an affi- davit, that we have not, since the inception of the interstate law, paid the Standard Oil Company or any of its agents or branches in any manner, shape or form one mill for the purpose of influencing business via our liae, and that the Standard Oil Company have paid full tariff rates on all ship- ments over the line of the Cleveland, Cincinnati, Chicago and^St. Louis Railway, whether in tanks, carloads, or less than carloads. I do not know what further I can say on this subject, only that if the other large shipping in- terests would pursue the same policy as the Stand- ard Oil Company in relation to the strict main- tenance of published rates, it would eliminate the strife and contention among the railroad com- panies which often produces unhealthy competi- tion and ruinous, rates. Very truly, yours, E. F. Cost. •Mr. HowAED Page, ^6 Broadway, New TorJc. Digitized by Microsoft® 68 [Chicago, Milwaukee and St. Paul Railway Company, office of second vice-president.] Chicago, August 18, 1899. Dear Sir : In the absence of President Miller your letter of the 15th instant has been handed to me. In reply I desire to say that since the passage of the interstate commerce act the Chicago, Mil- waukee and St. Paul Railway has carried a satis- factory share of the business of the Standard Oil Company to all competitive points reached by its lines, and I also desire to say that the full, lavs^- fully ])ublished tariff rates have at all times been exacted, and that no concessions or deviations from such lawfully published rates have been granted by this company in any manner or by any device whatsoever; nor has the Standard Oil Company asked for any concessions or siiggested any devia- tions from the lawfully published tariffs. I wish, further, to state that there has been no discrimina- tion practiced by this company in connection with the business of the Standard Oil Company and that of other shipjDers of petroleum and its products. Yours truly, A. J. Earling, Second Vice-President. Mr. Howard Page, Standard Oil Company, M Broadway, New York City. [Chicago, Burlington and Quincy Railroad Company, general freight department.] Chicago, August 22, 1899. Dear Sir : Answering your letter of the 15th instant, I have t6>'mf\^^'Wm never has been a 69 request made by anyone representing the Standard Oil Company since the passage of the interstate commerce law for a reduction in our tariff rates, directly or indirectly, either by tariff, rebate, underbill! ng, or otherwise, and no concessions have been made by this company of any character what- soever on the business transported by us for account of the Standard Oil Company. It has all been done at published tariff rates, which are open to the inspection of everybody. Yours truly, Thos. Miller, General FreigJtt Agent. Mr. HowABD Page, Standard Oil Company, New TorJc. [The Baltimore and Ohio Railroad Company.] Baltimore, Md., August 22, 1899. Dear Sir : Replying to your favor of August 19, in relation to rates charged to and collected from the Standard Oil Company on their shipments of oil over the road, we invite your attention to next-attached communication from our manager freight traffic, Mr. Wight. With reference to the Cleveland, Cincinnati, Chicago and St. Louis road, as you know, it has been a number of years since my connection with that company was severed, and it is therefore sug- gested you take the matter up direct with them. Yours very truly, Oscar G. Murray. First Vice-President. Mr. Howard PaG^E, Digitized by Microsoft® Standard Oil Company, New York, N. T. 70 [The Baltimore and Ohio Railroad, office of manager of freight trafKc] Baltimore, August 21, 1899. Dear Sir : With return of attached letter from Mr. Howard Page, of the Standard Oil Company, would advise that since the interstate-commerce law became effective the Baltimore and Ohio Rail- road has not to my knowledge given the Standard Oil Company or any of its representatives any rate less than published tariffs on oil, whether in tank cars or barrels or by any subterfuge whatever, all such tariffs being filed with the commission and the rates named therein being applicable on all shipments, whether made by the Standard Oil Company or its competitors. Yours truly, C. S. Wight, Manager FreigM Traffic. Oscar G. Murray, Esq., First Y ice- President. [Western New York and Pennsylvania Railway Company, gen- eral freight department, Mooney-Brisbane Building.] Buffalo, N". Y., August- 29, 1899. Dear Sir : I am in receipt of your letter of 22d instant, relative to testimony given by Oil Creek producers and refiners before the Industrial Com- mission in Washington. In reply to your letter would say that on any shipments of petroleum or its products forwarded by the Standard Oil Company, from or via Western New York and Pennsylvania Railway, the Stand- ard Oil Company^^gg ^pgj^^^j^ are not obtaining any advantage in any way, shape or manner as 71 compared with other shippers of petroleum and its products. The shipments of the Standard Oil Company are charged exactly the same rates and the same weights as the shipments of any pro- ducer or refinei between the same points, and no lower rates are given the Standard Oil Company, or to any of its representatives, or through any other party, either through tariff, rebate, under- billing in quantity or in weight, or through any device whatever; and the charges on such ship- ments against the Standard Oil Company have been upon exactly the same basis between the same points as charged any other refiner or pro- ducer since the interstate-commerce law was put in force. If it is desired I am willing to appear before any United States commissioner in Buffalo and make affidavit to the above facts. Yours, truly, Edwaed T. Johnson, General Freight Agent. Mr. HowAED Pa&e, ^6 Broadway, New TorTc Qity. [The Wabash Railroad Company.] St. Louis, August 18, 1899. Dear Sie : I note that in the course of the in- vestigation before the Industrial Commission, dur- ing May and June of this year; evidence was sub- mitted to the effect that the Standard Oil Com- pany had received advantages in the shipment of petroleum and its products as compared with other oil shippe^S^'^'^ec/ /^y M/crosoft® 72 I do not understand that specific reference was made to any railroads thus favoring the Standard Oil Company, but I would like to testify in de- fense of the Wabash Railroad Company that we have not contributed in a discriminatory manner to the Standard Oil Company, and that we have not since April 5, 1887 — when the interstate-com- merce law became effective — deviated from oar published tariffs in the way of rebates or irregular departure from said tariff in a single instance in the handling of shipments of the Standard Oil Company. We have had but one tariff, which ap- plies alike to all oil shipments handled by the Wabash Railroad Company from that period up to the present time. Yours, truly, S. B. Knight, General FreigM Agent. Mr. HowAED Page, Standard Oil Company, ^6 Broadway, New YorJc. (Union Pacific Railroad Company, office of president.) Omaha, JSTebr., August '26, 1899. Mt Dear Sie: Returning to Omaha after an absence, I find your letter of the 15th instant. In reply permit me to say that as far as my per- sonal knowledge is concerned, and from all the in- formation I am able to obtain from other officers of this company, the Standard Oil Company has at all times since the passage of the interstate- commerce act evinced the strongest disposition to co-operate heartily with the railroads to the extent Digitized by Microsoft® 73 of paying fair and reasonable rates for transporta- tion of all of its produQts. I am unaware that the Standard Oil Company has been in any manner af- forded lower rates of freight than the tariffs open to and offered for the carriage of like products for any other shippers of oil over this company's lines. Yours, truly, Horace G. Bdrt, President. Mr. Howard Page, Standard Oil Company, New York City. (Northern Pacific Rail way Company, office of the president, St Paul, Minn.) New York, August ^3, 1899. Dear Sir : In reply to your favor of August 15, I take pleasure in saying that so far as the Northern Pacific road is concerned it has not in any way allowed yon any rebate or concession on your shipments of oil as compared with any other shipper of oil between the same points ; and there is no arrangement or understanding, expressed or implied, by which you receive any concession or consideration not open to every other shipper of the same commodities between the same points upon our line. The same is also true, so far as I can recall, with regard to the relation of your company with the New York, New^.Jfaj^n^andjaartford Railroad, 74 during tlie time I was connected with the same as second 7ice-president, in charge of its traffic. Yours, truly, 0. S. Mellen, President. Mr. Howard Page, 26 Broadway, New YorTc City. (Southern Railway Company, office of the traffic manager.) Washington, D. C, August 21, 1899. De^e Sir: Replying to your favor of the Iflth instant : Since the organization of the Southern Railway Company I have been in charge, as traf- fic manager, of its traffic interests, including the establishment and promulgation of all rates used by it in the transportation of passengers and freight over its line of railway, and I am prepared to say, unhesitatingly and without qualification, that the -Southern Railway Company has at no time given to the Standard Oil Company, or any of its representatives, any lower rates of freight in the carriage of shipments made by that company over our rails, either by direct tariff, refund, or otherwise, than to any other shippers of similar commodities. Our rates, as issued from time to time, are pub- lished and filed with the Interstate Commerce Commission, and with the several commissions of States traversed by the Southern Railway, and the Standard Oil Company has in no instance been given the benefit of anything less than the rates so published and filed with these commissions, and which are the same figures as are charged all other shippers ofcg;»i*j)ipwHtoa(»i) its products. 75 The policy pursued by the Southern Kailway Company is to treat all of its patrons alike, and to fully observe its obligations under the law, and this policy applies as well to shipments of pe- troleum as to other classes of freight between points on our line. Yours truly, J. M. Gulp, Traffic Manager. Mr. HowAED Fage, ^6 Broadway, New York. (St. Louis and San Francisco Railroad Company.) St. Lotjis, Mo., Augustus, 1899. Deae Sir : Absence from home has prevented an earlier reply to yours of the 15th instant. Since the passage of the interstate commerce law there has been no time that the Standard Oil Company,' or any of its subordinate companies, have enjoyed any lower basis of rates on the- busi- ness handled by our line than that which has been charged all other oil companies doing business with us. This statement is made absolutely, and without qualifications of any kind or character. In all of our dealings with the Standard Oil Company we have found it to be the rule that they have never in any instance asked us for any lower basis of rates than was enjoyed by any other company. Yours, very truly, D. B. Robinson, President. HovPAED Page, Standard Oil Company, New lorlc City. Digitized by Microsoft® 76 (Southern Pacific Company. Office of the .third vice-president.) San Francisco, August ^3, 1899. Dear Sir : I am in receipt of your letter of August ] 5, in which you refer to the Industrial Commission which recently met in Washington, and before whicli appeared a number of oil pro- ducers and refiners, who testified generally that it was their belief that the railroads of the United States were giving the Standard Oil Company and its interests many advantages on its shipments of petroleum and its products as compared with those of other oil shippers. I respond to your invitation to state the facts bearing upon this question in its relation to the Southern Pacific Company, not only because I be- lieve the Standard Oil Company is entitled to it, but I believe that it is my duty to my own com- pany and to the railroad interests of the United States that these facts should be published. Since the passage of the interstate commerce law, the Standard Oil Company has not solicited nor received from the Southern Pacific Company any lower rate of freight for the transportation of oil or of the products of petroleum, or anything else in which the Standard Oil Company deals, than the lawful, j^ublished tariff rates, which at the same time were given to every other shipper of like commodities fof similar and contemporaneous service, nor has the Standard Oil Company, in its use of the transportation lines of the Southern Pa- cific Company, employed any device such as mis- representation of the contents of packages or cars or under-billing in weights in order to avoid the tariff or to gain advantages over its competitors. I say that the Standard Oil Company has not em- Digitized by Microsoft® 77 ployed these devices because it has not been de- tected in any such attempts, and our system of inspection has been sucli that I do not believe such, attempts coiild have escaped detection. In other wotAs, according to my observation and experi- ence, and I have full knowledge of its transactions with the Southern Pacific Company, the Standard Oil Company has obeyed the law in its spirit as well as letter. Yours, truly, J. C. Stuubs, Third Yice-President. Mr. HowAED Page, Standard Oil Company, M Broadway, New YorJf. (The Lake Shore and Michigan Southern Railway Company.) Cleveland, Ohio, August 17, 1899. Dear Sik: Replying to your favor under date 15th, relating to rates charged Standard Oil Com- pany on ti'affic as compared with charges on similar traffic from other shippers. The Lake Shore Company does not now, and has not heretofore, so far as can be ascertained from the records for a period of years, charged the Standard Oil Company any less rate per hundred pounds on its property, whether oil or products, in tanks or barrels, carloads or less, than charged to the trade in general on such property ; m other words, the Standard Oil Company has not received any lower rates on the vast traffic handled by that company than other shippers of the same com- modities, regardless of quantity. I would further state that the Standard Oil Company, nor its representatives, have ^t ajiy time Digitized by Microsoft® 78 asked that we give them any form of 6oncession ; but, on the other hand, have insisted that the full authorized tariff rates be charged on its shipments, and that all other shippers of similar commodities be treated likewise. The conditions in that respect do not differ from the practice during the time I was connected with the Chicago and Northwestern Railway, as the Standard Company insisted then, as it does now, on application of the tariff rates on all shipments of petroleum and its products. Very respectfully, yours, W. H. Newmak, President. Mr. HowAED Page, Vice-President Standard Oil Company, New York City. (New York Central and Hudson River Railroad Company, Grand Central Station.) New York, August 17, 1899. Dear Sie: Referring to your letter of the lOth instant, you may state explicitly, for this com- pany, and also for the Lake Shore and Michigan Southern Railway Company, of which I was presi- dent and am now a director, that no discrimination in the matter of rates has been, since the passage of the interstate law, extended in favor of the Standard Oil Company over either of these lines. So far as my knowledge goes, no application has. ever been made by any of the officers of the Stand- ard Oil Company for any discriminating rate. Yours, truly, S. R. Callaway, President. Mr. Howard Page, The Standard Oil Company^ New YorTc City. Digitized by Microsoft 79 (Pennsylvania Railroad Company, General OfBce.) Philadelphia, August S8, 1899. My Dear Me. Page : In reply to your inquiry, in whicli you call my attention to statements in the newspapers relating to the incLuiry of the Indus- trial Commission, in which statements witnesses say that the railroad companies pay rebates to the Standard Oil Company and permit preferences by under-gauging tank cars and by paying fictitious prices for oil supplies, I beg to say that if said assertions are meant to apply to this company, in its relation to the Standard Oil Company, they are wholly groundless and without foundation in fact. Yours, truly, W. H. Joyce, FreigM Traffic Manager. Mr. Howard Page, ^6 Broadway, New Yorh City. NO preferential relations since 1887. dis- criminations INJURED THE STANDARD. Q. (By Mr. Smyth.) You state very plainly that there were no rebates or adi'antages in rates given to the Standard Oil Company. Have you been given any advantages with reference to quicker movement of freight— -immediate dispatch? A. None that I am aware of. Q. You have not asked for any? A. We have- not asked for any. I do not know of any such preferential arrangements. Q. (By Mr. JsMlff^^^^ffi^'i' general statement 80 you make that covers the entire period since the passage of the interstate commerce law? A. Yes. Q. That the Standard Oil Company has in no way had any preferential relations in freights? A. That is my answer. Q. Preferential relations would seem to cover it? With i^eference to the period immediately preced- ing that, you state that before that time for some years the freight rates to all large shippers were made by special contract, and that you did have special rates then? A. Yes. Q. Did I understand you to say further that so far as the Standard Oil Company was concerned the prices to consumers were based upon freight rates in part, so that consumers received the bene- fits of any benefits you had? A. I make that statement very broadly. Q. You make that statement very broadly, then, that the Standard Oil Company did not receive any benefit in preferential rates? A. On the other hand, I think the old system in vogue among the railroads prior to the passage of the interstate commerce law was altogether contrary to the inter- ests of. the Standard Oil Company. I repeat again that the strongest evidence of that lies in the statement that I have made here, that the greatest prosperity has come since the passage of the inter- state commerce law. Q. (By Representative Livingston.) In your answer a moment ago you said, "Not in any way covered by interstate commerce law." Are you getting rebates in any way not covered by this law? A. We are not. There may be local ship- ments, as between some points within a State where tariffs are S)0ziss}^l&iifoiimt I am not familiar 81 with at all, but not to my knowledge in any way tliat would debar any other shippers in the same business, if there was another shipper there, having the same tiring. Q. There is some specific testimony that in some place on the Pennsylvania Central, between tAvo given points, the charge on a tank of oil was $1.80, and that the Standard Oil Company got, or the railroads gave back, the 80 cents and put the $1. into their treasury, and with the independent com- pany kept the whole $1.80. A. I do not know of any such case. Q. Would that be a violation of the interstate- commerce law? A. If within the State it might not be; but I have never heard of any such case as you say. Q. You say they charge them all thesame rates? A. Every shipper could have had the same thing. To my own knowledge I do not know of the case you specially refer to. Q. (By Mr. Fabqupiak.) Are there not many railroads not under the interstate-commerce law, whose lines are within a State, and which are not in the interstate-commerce business? A. There may be, but I do not know. I do not know, on our part, of any arrangement that would be ex- elusive in connection with any such railroad, if there is 'such. Q. (By Mr. Jenks.) Have you any further ref- erence to make to this freight question? A. I think that is all. Q. (By Mr. Kennedy.) In one of these letters your correspondent spoke of your policy in refus- ing rebates. Have any of the railroad companies offered the Stan$Ma^'<^n^&'8fff^nj rebates in con- 82 sideration of securing their business? A. Well, that would be a very difficult question for me to go into. That the Standard Oil Company during the past 10 or 11 years, since the passage of the interstate-commerce law, have not secured large amounts of rebates is true ; but that they may have been offered rebates at times is undoubtedly true ; but I have no specific cases to state. It is one of our duties to keep looking after our com- petitors a little bit, and we are so shining a mark we could not if we were so disposed, but we would not, even if we could and if we were desirous, which we are not. Q. (By Mr. Smyth.) You state positively that you did not accept them in general and have not accepted them? A. We have not and do not ex- pect to accept them. Q. (By Mr. Jenks.) Your statement applies also to your shipments within a State? A. Yes; and I speak of them in a general way — that we have no rates that would debar any other shippers from the same basis. Q. (By Mr. Farqtjhak.) Under the old rule of special contracts, is it or is it not a fact that the Standard or any other great company never needs to solicit special contracts from great, roads, but that the railroads, competing among themselves, offer the shipping contracts and then cut below their original contracts themselves? A. Unques- tionably. Q. That was the character of all traffic business before the interstate-commerce bill? A. It was. Q. (By Mr. Smyth.) That was proved by the case of the Pennsylvania Railroad you have spoken Digitized by Microsoft® 83 of when you shipped by the Erie Canal? (Ques- tion not answered.) Q. (By Mr. Phillips.) Do we understand you, Mr. Archbold, that large shippers never solicited low rates — that they were always solicited on the part of the railroads?. A. I answered that question by saying that a business as large as ours is sought for by railroads. I do not say other shippers do not solicit rates; I have no doubt they secure them. Q. (By Mr. Jenks.) In one of the letters you read a statement was mSide to this effect — that the Standard Oil Company, by not asking for rebates and adhering strictly to the established or pub- lished freight rates, had aided in keeping the freights up. Is it your opinion that the railroads, generally speaking, feel that the Standard Oil Company is aiding them in keeping their freights up, so as to make them good paying railroads ? A. That is true, and the railroads will say so if they are frank enough to say so. Any of you who have contracts with the great railroads in this country, if you will talk with them on that subject, will find that to be the case. Q- (By Mr. Phillips.) How will keeping the rates up afifect the general public? Is that in their interest? A. It is to the interest of the general public to have a uniformity of rates under the in- terstate-commerce law, as the public consider it. Q. (By Mr. Smyth.) You are in favor of the in- terstate-commerce law? A. lam, most decidedly. Q. (By Mr. Ratchford.) Mr. Archbold has made himself very clear, I think, on the question of rebates on the shipments of the Standard Oil Digitizecrby Microsoft® 84 Company. We have received specific testimony to the effect that the Standard Oil Company re- ceived rebates from the shipments of other com- panies. What do yon know of that? A. I will treat on all that matter later if you will allow me. THE CONSUMERS GOT ALL REBATES AND MORE. Q. (By Mr. Phillips.) .You stated, if the Chair remembers, that since the passage of the inter- state-commerce law your profits have been greater than they were prior to that, Now, was that due to the passage of the interstate-commerce law or on account of the larger business and less competi- tion? A. Well, I think that one of the causes— a number of causes may have combined in the growth of the business — but one of the causes is the better settled condition of business incident to the pas- sage of the interstate-commerce law. I think that my assertion that the consumer was given cut rates of freight is not only true, but that the effect was greater than I have stated it; for, in the strain, the anxiety, that the manufacturer was necessarily under lest his neighbor, his competitoi', might get a lower rate than he was getting, they were always all very anxious sellers of oil. I think that often- times the price was made lower than it needed to be because of the belief or expectation that lower rates of freight were either prevailing or might prevail. I think the business was sacrificed on that account. Q. But you do not wish to leave the impression that your greater income or greater profits are due to the interstate-commerce law? A. Oh, no ; bus- iness has grown. Digitized by Microsoft® 85 Q. And competition has not been so great? A. Oh, I think the competition has been quite as vig- orous. PKIOES OF EEFINED OIL IN NEW YORK, AND OF CRUDE, IN 1896. Mr. Lee made the statement as to the coarse of prices for domestic refined oil for New York, or Greater New York, during the period from March, 1896, to July, 1898, I think it was that the Pure Oil Company, the company with which he is related, having made its advent in the market of Greater New York in March of 1896, found the jjrice which we were charging to the people of that great metropolis to be 9^ cents a gallon, and that because of their advent and of their supposed competition, we dropped the prices on them until in July of the same year it was 5 1/2 cents. He spoke of this not only as illustrating our method of attack as against the competitor, but, I believe, claimed some credit from the people of Greater New York to the Pure Oil Company because of their advent there. I will read' from the list prices of the period named as they prevailed at the time and show that, to all the trade in Greater New York and its vicinity, in March, 1896, our selling price averaged for the month 7.98 cents, as against his statement of 9 1/2 cents. Q. In that immediate territory? A. In that im- mediate territory. Q. (By Mr. Phillips.) Was that immediately before or at the time of the advent of the Pure Oil Company? A. Their advent there was in March, according to his statement. Digitized by Microsoft® 86 Q. Can you give us the statement ^of the month prior to that? A. I made it only for the period covered by him in his testimony. I can give you the other. And I will also quote from that state- ment as showing the relation between the two — the crude-oil prices as they prevailed. In March the average price of crude oil per barrel of 42 gallons at the wells was $1.42. In April onr price was 7.31 cents, the average price of crude oil being $1.22. In May the average price of refined was 6.94 cents, and the average price of crude Avas $1.14. In June the average price of refined was 6.72 cents, and the price of crude $1.15. In July, the average price was 6.23 cents, and the price of crude $1.09. It is only an-illustration of the care- lessness which marks the statements which our competitors make, with reference to any feature of the business in which they want to make a point. Q. '(By Mr. Phillips.) One question there; did you sell any oil in March as high as 9 cents? A. I give the average prices. Q. Was there any other selling price? A. I should say not, because there could not be an aver- age of that. Q. It could be sold at 10 or 11 cents in the be- ginning and 3 or 4 cents at the close? A. The following month would show that. ANT GREAT VAEIATION IN PRICE IN ANY LOCAL- ITY WOULD BE SPEEDILY KNOWN AND WOULD BE DISHONEST. Q. (By Mr. Jenks.) You give these average prices for Greater New York. The statement has been made at different times that it is your Digitized by Microsoft® 87 habit in dealing with the customers of com- petitors to find out the individual custom- ers and make special cut rates to them. It might easily be, therefore, that your aver- age_ price would be what you have given, and that to a good many special customers, with whom the Pure Oil Company was trying to deal, it would be 5 1/2 cents? A. I can not make any definite statement, but I would reply that it would be utterly impossible for us to have any great variation in price to any special customers in any locality. It would be speedily known, and it would be dishonest, and I want to say that dis- honesty will not win in any business. We have got our hold on the trade in 30 years because we treated the trade honestly and not dishonestly. Q. You would be safe in saying that in March, 1896, no oil was sold to any customer for less than 6 or 6 1/2 cents? A. Oh, not for less than 6 3/4, railroad y. tj. s. pipe line- — ^o fight of the standard's. Mr. Lee makes a statement regarding the diffi- culty of his pipe line, the United States Pipe Line, in crossing railroads and securing right of way to the seaboard, and makes a general statement im- plying that we have instituted and carried out great obstruction to their progress. I want to make general denial of this statement. We have not at any time had any different relations with reference to any obstruction or effort at ob- struction of their line than would attach to any competitor in a line of business engaging against another. With reference to the special features referred to by M9'^'?B@fe^>'Mfff='?eich he attempts by 88 implication at aoy rate, to connect us with, in the crossing of the Delaware and Lackawanna Rail- road in New Jersey, I want to say that the con- tention in that respect was entirely at the hands of the railroad, and not at our hands in any possible respect. They went there surrepti- tiously and endeavored to force their way, on a Sunday, over a line where they had no right, either by private purchase or by public franchise. Having accprnj)lished the crossing of the road in that surreptitious way, they stationed there an armed force to prevent the railroad company from asserting its rights and taking out their lines, and kept that force there for a long period. The rail- road went about it in a peaceful way, in the Courts, and the final result is that the decision is against the line, after the case has been cai"ried up finally to the Supreme Court of the State, and they must, of course, remove their line. But any statement on Mr. Lee's part, or any other witness, that we had anything to do with that matter, or with reference to any of the difficulties interposed in their progress to the seaboard, is absolutely false. Q. (By Mr. Phillips.) Did your company own in fee simple the tract of ground, and was a road- way reserved by the landholder? AVas that pur- chased by them? A. It was not my case, and I -am not conversant with the details regarding it. The fact that after having been fought in the newspapers and in the Courts for a term of years, seeking the sympathy of the Judges as well as the public, the Supreme Court of the State has ruled against them is the best evidence, I think, that the right was against them. I want to say with refer- ence to our pipeo/^iPtyttefesBfife never endeavored 89 to cross any man's right of way without first seeing him about it. Q. Still did they not go through the railroad on their own ground, and was not this the final deci- sion, that they had not the right to lay a pipe line where a man had reserved a right of way under the ground? A. It was not only decided that they had no right there, but they were ordered to re- move. THE STANDAKD NEVEB HAD SO LOW A FREIGHT RATE. I want also to XJresent a statement showing the rate of freight which Mr. Lee's United States Pipe -Line enjoys from the Central Railroad of New Jer- sey on the crude oil and refined oil also transported over that line from the terminal point of their pipe line to the seaboard, it being a lower freight, I think, than the Standard Oil Company ever had for an equal distance at any time in the history of their business. (Witness here reads a letter from the Central Railroad of New Jersey.) Central Railroad of New Jersey'' s rate to United States Pipe Line, Hampton Junction, N. J., to Bayonne, N. J. [Distance, 52|- miles ; mileage, f cent each way, equals 78 cents per car; empty car returned free. Weight per gallon, crude oil, 6f pounds; refined oil, 6|- pounds.] Rate per Actual Rate per barrel weight Rate car of 50 per barrel per 100 of 120 . gallons'. of 50 gallons. pounds. barrels. Crude 0.0693 333 0.0208 »8.2o Refined... .0769 , 325 ,......-?13.66 9.22 Rate per car, less mileage. bigitizeaby Microsoft® $7.42 8.44 90 The above shows that this oil is being carried 52 1/2 miles in tank cars, averaging 120 barrels or 20 tons to the car, at a gross average revenue to the railroad, on the crude and refined oil, of $7.93 per car, and out of this revenue the railroad re- turns the empty car free. The contract between the railroad and the pipe line is for 100 years from January 1, 1894, and i)rovides for various rates from different points along the line of the Central Railroad of New Jersey to tidewater. The oil is now (and has been for three years) shipped from Hampton Junction, and the above rates are being paid. The contract further provides the righf upon the part of the Pipe Line Company to abrogate the arrangement ux:)on 5 years' notice at any time during the 100 years. The railroad has no right to cancel, excepting for violation of lease. Q. (By Mr. Smyth.) The lease is on record? A. "Yes; it would seem that if there ever was a pref- erential contract, that is one of them. Q. (By Mr. Jenks.) You say this is on record? A. It is not a lease ; it is a contract. Q. (By Mr. Phillips.) You do not assume to say that it is an illegal contract? A. I am not a lawyer ; I am not passing on the legality of the question. EFFOKTS TO BUY OUT THE INDEPENDENTS — AD- VANCES FROM THE OTHER SIDE. Mr. Lee claims at great length and with great particularity that we have at different times done our best to buy them out, offering them large inducements in the way of extraordinary prices for their properties, and have done our best to get ^ ^ Digitized by Microsoft® ^ 91 them out of the business by purchase. I want to say that any approaches on that line that have been made have come from Mr. Lee's side to us ; and I want to say, now that he has forced the question, that approaches of that kind have been made by pretty nearly every person in connection with his company, every prominent person in con- nection with his company, at various times, in- cluding not only Mr. Lee, but Mr. Phillips, Mr. Nichols, Mr. Murphy, Mr. Jennings, Mr. King, and Mr. McDonald, and, as I said, pretty much every gentleman prominent in the affairs of that company. I want to say further that we have persistently declined the considering of any such combination with them on the ground, first, as we have said to them at various times, of its illegal- ity, and, second — and t his would have been enough in itself — our willingness to enter into any business relations with them because of our lack of faith in them. We have had experience with the gentlemen, different ones of them, at different times, and we should have known if there had been no legal difficulty in the way of such com- bination that it was impossible for us to enter into any such relation with them. I am making the broadest possible denial to Mr. Lee's statement that we have gone after them with reference to their purchase or combination ; and I am making in return a statement that they have up to this very day, within the period of your sitting here, approached us on this question. Q. (By Mr. Phillips.) Do you mean to include all of them? A. I mean to include the gentlemen I have named an^i§f^§lf i^iMm^'^^ named. Q. Have any persons or any agent or gentleman 92 from whom you bought property approached in- dividual members, coming direct from your ofBce, to solicit the selling of an interest to you? A. No; I say broadly that the approaches have been made from your side, and the answer is as broad as I can make it. Q. You have no knovv^ledge of a person coming from your office after soliciting you to make a transaction with these people? A. I have knowl- edge of persons coming to our office who came there at the instance of different people in that connec- tion to raise a question about it; you came there ■ — many of them — if that is what you. mean. THE INDEPENDENTS PROI'DSED A DIVISION OE TIIE BUSINESS. Q. Was not that to have a stop put to the litiga- tion that was going on in New Jersey, and to have a right to live as a company? A. I do not know what you mean by that. (By Mr. Rogers.) May I have the privilege of prompting Mr. Arch bold? (By Mr. Phillips.) Certainly, you have the privilege. (By Mr. Smyth.) I think so, certainly. (By Mr. Phillips.) Any information of that kind is entirely admissible. (After talking with Mr. Rogers.) A. 1 answer broadly again, after conference with Mr. Rogers, that we have never sent anybody for any purpose. Q. (By Representative Livingston.) Those propositions, were they written or verbal? A. Oh', no; they were all oral. You do not get that company into m^g^g;^^y|^|^gj^propositions; they are too crafty. 93 '^ Q. (By Mr. Phillips.) Do you say. Mr. Arclibold, that yon were approached by a laige per cent of those persons in an unfair and unjust way? A. Oh, I did not say so ; I do not say so. It may have been entirely fair and just in their view ; but 'their proposition, in our view, was illegal and not to be entertained. ' Q. Was not that after you had purchased a large amount of stock, a controlling interest, in the Producers' Oil Company, Limited, and also purchased a large amount of the United States Company's stock, and was it not to make some fair, honorable and just contract that would leave these companies the privilege of living and doing business years ago when they- were very badly crippled by opposition from the Standard Oil Company, by the lowering of prices of oil in Europe and other places? A. Using your own case, Mr. Phillips, as an illustration — and you can hardly find fault with that — I do not think at the time you came to Mr. Rogers or myself you raised any question whatever with reference to any possible minority ownership in any of these com- panies. What you and they proposed was simply that a division of the business be made, so that you would have a percentage and we a percentage, in order to co-operate in the marketing of the oil and in all that pertained to the welfare of the business; is it not so? Q. Was it not to get the privilege of handling the capacity of the lines then existing, and to cease further opposition, and to do away with the opposition which was very badly crippling these companies; and ]^^Yd^ i^Qisdh>^^^^ ti™e lowered the prices of oil in Germany, so as to make it 94 entirely unprofitable to the refiners? They lost very large sums of money, and you had bought out a per cent, of the refineries that were engaged in these independent lines? A. J!^othing of the liind existed. Our business was entirely satisfactory, was on a profitable basis in Germany and elsewhere, so far as I am aware ; and we had no special desire that a combination should be made, as is evidenced by the fact that we were unwilling to entertain, it. And I now further state that we were unwilling' to entertain it not only because of its illegality, but because of our lack of faith in the individuals connected with it. There can be no question about that. Q. Well, , do you know that at that time a Mr. Poth was managing the business of the independ- ent refiners in Germany? Did he not sell out to the Standard Oil Company the tankage procured in Germany, so that these companies could not do business? Did they not have to re-establish con- nections and send agents there, and build tankage in which their oil could be received and distributed in Germany? For a number of years, did not you put the prices there so that there was no profit? And daring that period did you not buy out some of the largest refineries that were connected with these comi)anies? A. My answer, Mr. Phillips broadly is that none of these questions have any- thing to do with this company, with that proposi- tion. You came to us seeking these propositions. That is my statement and you dare -not deny it. That is true, every word of it. CHAEACTEE OF MEN PROMINENT IN THE STANDARD. X J- Digitized by Microsoft® -,. , , In answer to cne query regarding gentlemen 95 prominent in the Standard Oil Company, Mr. Lee saw fit to speak of them in a most depreciatory way. It is not amiss for me to ask these gentlemen to, think for a moment of J. D. Rockefeller, William Rockefeller, H. M. Flagler, Williaifl G. Warden, Charles Pratt, J. W. Bostwick, Benjamin Brewster, Henry H. Rogers, W. H. Tilford, and James Magee, and I might mention scores of others prominent in the Standard Oil connection, whose business genius and boundless energy have been given to the building up of the petroleum industry. Will you think of these gentlemen in comparison with the men who have appeared here to defame them? I might go fur- ther and speak of the beneficent use these gentle- men are making of their substance, but they require no such eulogy at my hands. In answer to the query as to what would be the eifect if the|Standard Oil Company were abandoned or dismantled, Mr. Lee said that the prices of refined products would go lower all over the world. I will not occupy your time by any lengthy argument in refutation of this most absurd prop- osition, that if we were really out of existence, and put out of existence that which represents to-day two-thirds or three-fourths of ~ the active capital, energy, and equipment employed in the manufacturing and distribution of oil, the prices would go lower; but I will call your attention -to what Mr. Lee says in practically the same breath, as showing his utter inconsistency. He gives it as his opinion that if the Standard were out of the way prices would be lower, and in the same breath testified that he wanted them out of the way because for g.^eaj'i^^l^Jn^his own business. 96 has not made a fair profit. And the utter incon- sistency of his testimony is shown by this question and answer: "Q. (By Mr. North.) What do you call a fair manufacturing profit? A. 'i*liey wonld be entirely satisfied to do this business at 10 cents a barrel on crude oil that runs through the refinery; I think the Standard Oil Company makes $1.50 to $2. on every barrel that goes through their works." If it is true that the Standard Oil Company make $1.50 to $2, and they cannot make 10 cents, they are not good people to serve the public. REFINED OIL FROM OHIO CRUDE AS GOOD AS THAT FROJt PENNSYLVANIA. He says that the quality of Standard oil has deteriorated because of using Ohio crude, and that the reason is that Lima oil contains arsenic and sulphur. I want to say of the gentlemen connected with the companies represented by Mr. Lee, that they have from the very beginning of the great production of oil in Ohio and Indiana, because of their small interest in competition with it in tlie Pennsyl.\ania region, done their very utmost to depreciate and discredit the standing of the products of Ohio oil in the markets of the world. They came to New York, and before the New York Produce Exchange made a verj^ vigorous effort to have the exchange rule that reined oil produced from Ohio crude should not be a good delivery in the markets of the world. Their course has been utterly indefensible in respect to the great interest involved in those States, and nothing but the most active effort on our part has saved to those States the markets which are to-day Digitized by Microsoft® 97 giving them the profit that is inuring to them in the production of the oil in those States. And I want to say that this is in spite of the fact, which they must have known or could have known, if they had any intelligence on the subject whatever, that after the sulphur element in the Ohio crude was conquered — and it was a very difficult work to conqaer it, which we applied ourselves to successfully — the average of the refined oil pro- duced from the Ohio crude has been and is quite equal to that produced from the Pennsylvania crude. That is now admitted by all buyers and in all markets, and it is known to consumers where they know anything about it at all. The talk wliich the agents !of the Pure Oil Company and which the Pure Oil Company have made, and continue to make, as to the superiority of their products over even that which we make from the Ohio crude is entire nonsense; it is not true. I want to call attention to Mr. Lee's testimony, given somewhat in detail, indicating that we obtained higher prices for oil abroad than we do in this country. If that is so — and I do not admit that it is so, but admitting for the sake of the argument that it is — it is a pretty good argument that the consumers in the United States are being very well treated by the Standard Oil Company. FOREIGN GOVERNMENT CONTROL — POPULATION AND OIL CONSUMPTION OE GERMANY AND FRANCE. He makes a long talk about foreign government- al control, which is about as silly as anybody ever listened to, and I will not take the time to com- ment onit. -,••*• ^^ „/i- «^ Digitized by Microsoft® He makes a statement regarding the comparative population and oil consumption of Germany and France, and I refer to this statement only to show how exceedingly careless he is in respect to statements made before this body on matters in which he seeks to influence your minds and that of the public. (Reading.) "Q. Abroad, where the oil of the independent refineries goes, which is not of such a grade as can be consumed in the States here, does it come into competition with the oil sent there and sold by the Standard? A. Yes; the Standard is doing a very large business in Germany. Germany is the largest oil market in the world; although the population is about the same as France, it uses probably twenty times as much oil as France. I think I am not far wrong in that." The relative population of Germany and France, by the last census of 1891, was : German popula- tion, 49,421,803; French 38,343,192. The con- sumption of oil in the year 1898, the last year of record, in barrels of 50 gallons, was, in Germany, 3,357,297, and in France, 1,683,146. Mr. Lee said it was twenty times as great in one as the other; and that their population was about the same. I submit this statement to you. PRICES OF COAL AND MINEKS' WAGES. He makes the statement that the Standard fixes its own price at which it buys coal, and is thus en- abled to oppress not only labor in its own line of business, but also the coal labor. The statement is entirely and absolutely untruthful. The Stand- ard buys its coal on competitive offerings, and if the price is so low as to compel low prices for labor it is the result ofo^gjpg^j^ip^,^ 99 He claims that prices were fixed by the South Improvement Company, when he knew well that the South Improvement Company never did any business. PRICES OP CRUDE OIL. He goes into an elaborate argument to prove that the prices paid for crude oil have been unre- munerative to the producer. This charge, which is more specifically, and I may say hysterically, made by Mr. Lockwood, I will reserve for fuller answer until I reach Mr. Lockwood's testimony. THE standard's MANUPACTURE OF CANS AND CASES. In answer to a query Mr. Lee says that the Standard are largely supplying Eastern markets with Russian oil and making their tin cans abroad. I want to submit, gentlemen, a series of statements on this interesting s abject. Our busi- ness in the canning of oil, for the markets where the oil must be pat into tin cans and. packed into wooden boxes for the market, has been a very im- portant feature from the beginning. It is a busi- ness in which we have perhaps expended as much or more industry, in keeping and maintaining the markets, as in all the other sections of the world combined, because in those markets we have found our great competitor, Russia, most active. In an- swer to Mr. Lee's statement that we have prac- tically abandoned this business, and that we are buying Russian oil in bulk and making tin cans abroad in which to put it and send it to the mar- ket, I present this statement, being a memoran- dum pf oar manufacture of tin cans for the 5 years beginning with the year 1894, and ending with 1898 ■ Digitized by Microsoft® =0 o o 52 00 Co 00 I ■o I CX) IC r-. CO (M 00 |0 CO t~ o iO CO i> w x> (M OJ W ■^' CO 00 o (M CO CM CC OJ CD OO OS CO CO o o (?^ 5D CO CO CO CO (N -^ o Gv< CO CO a lO OJ 00 IC OJ CO Ci NjH la -^ X ,31 la cc x ' co' CD Thi ^ -* CM c: I- (^ T-H oj la ic C^ Oi CM T— < icT r-T r-' I irf 05 t~ CM C^ CM iC »0 CO CO CO 1 — :!. O^ CO (M J-. ~ c E T-H CM 00 O cT irT ^ CD c: — IC ^ CK IC t^ CD CO X cc r-H i^ CO CO O ■^ CO '^ iC iC u CO CM x> TtH O Oi O so CM CO o M iO ^ » TO CM 'O ■^' Oi CM CD 1!7 1^ 00 X CO ic: CO f- >a f- C^l CO Oi I-- .-> X ■* Tt< 00 CO a: IC .') CM ro 1^ CM CO i> i> CM CO c- c- r^ 00 x U^ r-1 o (?} CM CM X CM X CM X ' ' < f^ X X X c« O -< ^ < CO t- X OS Oi OS XXX o CD t- X OS OS OS XXX t: o H ^ »« CD I- X .- OS OS C3S OS OS r^ X X X X X •J t^ X X lO o X CO OS C3S CO CO OS CM X i> CO r-i CD X OS ■* CO ^ t^ lO X o OS o OS CO tfS OS CM CO IC OS X >— OS CO lO CD X 1— CD X CM ■* CM la CD X iO CO l-^ '-' CD in i> X X c o X o OS CO O OS O O X. Hi r}< ^ CO X T-t X TtH o m t^ X X i-H ^ CD X Tjf CO T-H O OS X OS ^ IC OS O OS -* CO o^ j>" o" cm" cd' ■* X ^ in ■* ic c; X o CO •* TjH CM CD in O CM X CM OS X o X in i> CM -* ■* CM X CM i-H CM X T-- t- in o o X O -f O T-H ?* (- O CKi X t- X O t^ X X X X X X O ^ Tt< 'cfi in xH u CM >-■ X OS 1-: Tf CM in t^ X OS ^ o in X cc i> X o in O; r- OS CM CM Tt< m OS CM X O" x" cm" CD x' CM .-^ CM CM CQ ^ O " O cc C^! CM i-H X r- O --^ '^fl CD OS '^ O ^ CM X ^ t^ CM CO OS X CM O m ^ iO CM in O CD X O OS OS X ^ O X CD t-H ^ -* TJH CD O CM (M CM CM CM 03 '. f^ . Sh B . • H N < • Ls C^ • O P3 02 o O ' a : n g : iS ^ , H . -^ B 4J P3 -u gS^§S^§*§^«i t~- X fili |> OS •^ X OS CD (- X OS OS OS ^ gxxxxx Sxxxxx o. XXX t= fH 1- 1— T— r— 101 About 2,500 men are steadily employed in this industry in the United States. In 5 years we manufactured in the United States , 223,116,660 tin cans, which were packed in boxes holding 2 tins each, the requirement being in boxes made from our native pine. The boxes were made mostly from Canadian pine, but made in this coun- try, lumber being brought here and the labor being employed here. This business involved the use of 111,558,330 wooden boxes,» holding, as I say, 2 cans each. And we used in this manufacture 4,590,285 boxes of tin plate. The only business that we do outside of the United States in the manufacture of tin cans is where we are compelled to do it by the exigency of freight; in Mexico City a small business, in Vera Cruz a small busi- ness, and a small business in Tampico, Mexico, also, the amount of which is entirely inconsider- able. "We also do a little canning^a very little — ■ in the exportation of bulk oil and the manufacture of tin cans in Italy, at Venice and Savona, where the tariflE and customs make it necessary that we do the canning there. And there are employed in this great industry, at the minimum, in steady, remunerative labor, 2,500 good Americans. BUSSIAW AND AMEEICAN EXPOETS OF OIL IN OASES. I present here also a statement made up to show the exports in refined oil in cases from Batoum, Russia, from 1894 to 1898, inclusive. I present this statement for the purpose of having you un- derstand something of the menace which attaches to this business at the hands of this great Eussian competitor. Oug.aggjg^^te J^ all this great busi- 102 ness with the East, which we have made such a fight to maintain for the American petroleum in- dustry, is now 109,000,000 eases for the five years, as against Russia's 53,000,000; but for tlfe year 1898, perhaps I should read to you, as showing the change in the matter, their shipment was 10,728,603, as against our 22,479,745. I also present a statement which you, gentle- men, at your leisure, will find great interest in studying, showing the enormous exportation of this particular packing of oil in tins and cases to the markets of the world. It is a business, as I say, which is competed for by these foreign coun- tries most vigorously, on which our hold is uncer- tain, and which requires the utmost vigilance and encouragement on the part of everything pertain- ing to the business from America : Digitized by Microsoft® 103 i:d aD O ^ Oi »a xt< <* iQ CO oo CM la O CD O CO lO CO CQ o o w (M O to T-l it: r-4 CZj OS T— 1 CD CDO'MlO^Oi^OOfOiHCDOiii-li-i^O "i-lr-IC0Ot~i-lOO00i— OOrt (M (M-*C0r-l05CDO^lQCD(MlC0G0 rH CTcoot'O'rfiTtHaitMioiQ 02 i> OS ■* lO !M CO i-^ lO -stl ;o CO -* CO O CM (M lO CD rH CO '2 1 X !X -* O X Ol O -* ^ CO C' X.CD CO t--" lo" ir-" o (>) t> O r-i (M Oi CO ■ cd" . Oi CO O C^ Oi X O CM CD ■^ O CD 1— t Ttl CS "# O -^ X ^ Oi X IT. CO X X ^__ x" O ^ X o o o X X (^) ic CM — XX X 1-1 CO CO r-l OT CO^ CM (M~ cm" r~ i-( CD i-i ■* Tfi (M iO T-H ^ IQ O ^ CM O CM CM CD -^^cd'cm" .-^ CO CD CD rH 1— I CO ,■ ; CM lO X (M ! 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CD I- CD^r- X t-' : ^^ T^ CO !M c5 CO CM O C CM CO CM IC X CO o 00 X k: TO ^ iq'oo" cc oTi^ o' eg' GO O Ol o oc OS r-i r-1 CM TO O - 0"t- CM TO a ■ ■ o ■ • •r~t f-' O o c xfi t~ o (r- ^ CM CO OS 00 oo ■ ?: bo 1 S N I ^ o : Co tn •icccoiccoi>TtHi>tM i^o f-^ r-T T-T ) i> O -t< tM l- rH o Oi (M t-H m o rH (M T-^ (M W .-^ rH K O O Tt< '^ r-i CD in M CO (> Ol ^ Oi ^ CD n 00 OS Tt< ^ IC CC 1> CO o" i> lo' T-H CT-^c3;C0'*C0rtOlC c:cOrtGC'OJiOi>m iCOO^tHi-iC05D T^ CM — O O -* U3 IC 'MC0^OC04ClOC0O00(QlOC0CDCvli>t^xt<00^ €©t- ■*C:^0':oOX>C»i>r-iOW»CC0350i — ' o c o o o — ^ (^ ,^1 O in o ■>i f^ (^ o o o o o o o o o O . ^; o O o O. o la o IC Oi o ^ CD o o o CO »o o ^ 7: r: O 'O -* CD -M CD (^ 05 ^ o CO o ■rt 00 -fl !M t^> lO O' :r~:. — ■ 'M r/) Oi 0-) 03 1 — I o^ o T— 1 =rj CD Q ■JJ ■JJ lO 00 S- 1 — 1 O •-D__ CO 02 CO CO cv IC o T— I O. O CO t- t- ^ — ' O QC '^l (M T-H (M <^( ^ a:ococo-*ocDr^cc»n-tO3 ^'^O'^cDO-^mcoiooiQccas CDCOXO0CO(»tCTj(M^COT-iir- >-nrH r-HCMWTQSXrHlK!lOC0rH o oi COOOCDOOWCOmCO'^COi-irHi— . C 00 1—1 in rH 05Oi-ICOC0t^Q0 mcDCDCOK3CDfflCDCDCDCDt^(^(^t~f~i^t^t^(^ ODaOCXJCKMOOOOCOXCOCOCOCOCyjCXJCOCCCOCCCC Digitized by Microsoft® 120 •5 O S 13 S^~ ho r-i O S ^ e s s o ^ Oi iO <-) r^ 00 lO i> (M CD CD CD in CD Tti 00 CD 00 C^i 00 Oi O CO t~ >-^ -* c^ xfi I-H rH 00 O i> O (?J Oi Oi TJH CM o CO XlH.-* t- i-, rH C^ 00 Oi -* CO 00 o o 00 rH r-l T-l Oi 00 CO Oi f^ in rH r- in TtH c 6 ^ Oi t- CD CD Oi O i> IQ CO o » 00 X in o O J> i> ^ 00 o o" ^ GO T— 1 (M ^ t- f- Oi Oi CM t^ CO (?} CO CM r^ CD 00 r^ -* t> CO CTi or, T-H o c- CM C CO CC) 00 lO CO o CO Oi O o C3i o Oi IQ ^ CO CD CD IQ lO Tjl CO CO 00 Oi CO in in xfl cc: o rH o T^"^ O ^ I-H i> CD CD CO CM 00 CM O CD O (?( CC m xh in CO ^ CM 0> (» rH rH T-l rH r-l 1 — I CM CM rH rH c,-^< Vi CO CM CM f- CO CO 03 o rj 00 IC rH CO ^ ^ ■* ^ CO CM ^ a. CM o 00 CM f^ Oi »o c^ CO o ■•* CO T — 1 Tt< lO ■* w r- '^ CD tH c~ rH o c:i CO in -* CD T— 1 r- o CO o rH lO -* CO 00 rH CM in c» rH o m o Oi rJH O lO rH O CD O CO O in o CM CO ^ ►5-^ <25 00 CO Oi >o Oi rH rH CO lO T-H CO ^ CM o T-i o 00 rH CO iri T3 <" 00 CO CO lO r- -rt< 00 r-< CO 00 CO Oi CO CO o CO CO CO Oi Oi CO c CO 00 C* CM 00 r- CO CD rH CO C* CD Oi CO o (M rH ■rfl CM Oi ^ ^ ■ r-( O 05 r-l o lO CO CO C3i GO CO (?0 Oi CO in CM CM O Tj< in CM (N CO (M (^) CO CO O (M VS ^ Oi lO CO lO CM O CO rH -* 00 O CM ^ CO 1^ CO Oi O (W to CD o rH '^ lO ^ »o rH rH rH rH CO CD r- (^ =( 00 CO CD I— < ^ G^ 00 o r- CQ CC' O CM Oi CM rfH CM CD a; a) C35 rt O CO rH CO C3i T-^ 00 (TQ ^ crj CO CM O O CM o in 00 o CO > Oi o *-- r^ o Oi in OO O 00 CO r~ t- CO ^ in ^ O c^ r- CO o t- OJ o o rH ^ 00 (?« O O lO xi^ CO O a) o in CO Oi ^ r-. CO ^ o o rH C!i GO CO O o rH C3i CO O c- o CO ^ o Oi H O TJH M r- ^ O 00 CO lO Tti r-^ CD CO GO o »n rH -5 f- 00 - Oi r-l CQ CQ rH CM CM rH rH rH rH CM CM CM r-i CM CM •^ .'=*< CM CM CD CO Tfl iO Oi CD ■* X 1 — 1 o c- ■* O O CD Tfl '^ in Oi 00 P-, o 00 Oi 00 f^ O CC CO r- CO CO Oi CO CO in CO 00 CO r-* ^- C^i o tH ' rH rH • CO SSS^ CO >T^ *- CO CM CO 00 c:i rH CD o 'O r- T-H CO CO rH CD (M CD CO o in CO rH o o CO in rH CM J- r-. CM (,M CM CM CM CM CM CM rH CM CO CO CO CO CO CO CO CO CO CD PL, CD ] \ 3 m - H Oi o ^H CM CO ^ o CO ir- OO n CO 1^ no t- CO 00 00 C/J CC c» a.) 00 GO a) Oi Oi Oi Oi Oi rsi Oi Oi Oi 00 CO CO 00 OO 00 OO 00 CO GO GO GO GO C3G GO OO GO 00 en CO i-^ rH 1— 1 T-H r-i rH rH r^ rH 1 — i rH T-i T-. rH rH rH rH rH rH rH Digitized by Microsoft® 121 This table shows during this period, and this is an interesting statement, I am sure, that there has been taken from the oil fields of Pennsylvania 662,048,642 barrels; and that the average for all that period of the prices paid at the wells for the oil is $1,163., or a total value of $769,948,397.37. ROYALTIES TO LANDOWNERS. Q. (By Mr. Smyth.) That amount had been paid to the producers for crude oil? A. This amount has been paid to the producers for crude oil. Now, as has probably been brought out to you in the course of this testimony, the oil produc- ing business is done largely oh a basis of what is called royalty. That is, the operator takes a lease of the land and pays to the landowner, who is usually a farmer in that section, a certain free- royalty interest for the right to occupy and drill the land. Q. (By Mr. Smyth.) That right to occupy does not interfere with the agricultural pursuit of the farmer? A. No; it is held as free as possible from that interference. That royalty right of pay- ment has varied daring the history of the business from one-half of the oil found to the present ruling basis of one-eighth, which basis prevails perhaps to-day through the larger part of the oil-producing country. Of the crude produced one-eighth goes over to the landowner; and for that he does noth- ing, as I say, but furnish the surface on which to drill. Q. (By Repi-esentative Livingston.) Now, will you go further and give us the average profits you have made on all those wells? A. Now, what I want to say is, that figuring for the whole period J , Digitized by Miffosoft® -^ 122 that the payment was one-eighth and not the high amount that has prevailed through most of the period, the payment in royalties alone to the people of that section on the' oil produced would amount during that period to the sum of $96,243,- 549.67. Q. (By Mr. Smyth.) You think these counties are worse off than before the oil wells were drilled? A. If you have traveled through them you will not think so. Q. (By Mr. Claeke.) What is the population of that region? A. It would be a mere guess on my part. Mr. Boyle or Mr. Lee could answer more intelligently than I. I have not lived there for some years; I would say about 350,000. SOUTH IMPROVEMENT COMPANY. Again, Mr. Lee refers, in answer to a question by Mr. Jenks, to the South Improvement Company, as though it was actually doing business ; which was not true. Q. (By Mr. Phillips.) The South Improvement Company did iix rates, did they not? A. Never to do business. Q. But they had rates fixed? A. There was a contract entered into, but abolished before it be- came operative. Q. But there was another contract, and is it not in sworn testimony that that contract was in ex- istence only two weeks afterwards, and did or did not the rates fixed by the South Improvement Company prevail after the Standard Oil Company came into existence? A, I have no knowledge of any relations on the part of the Standard Oil Com- pany succeeding ^o^h^^Sj^^th^^provement Com- 123 pany whatever. I have been an opponent of the South Improvement Company, as you well know. I have disapproved of*it in theory, and practically disapprove of it to-day. I want to say that the statements that that which was the South Improve- ment Company is continued in the Standard are not true ; if they had been true, I would not have been in it. THE SHUT-DOVl^N MOVEMENT. Mr. Lee refers to the shut-down movement, so called. It was entered into at the request of the producers, who alleged they were suffering from low prices incident to a large accumulation of stock. Our relation to it was entirely the result of the urgency of the producers, who were repre- sented by a committee ; they expressed the great- est satisfaction with our course. I want to pre- sent for your knowledge, in support of my state- ment in this respect, the testimony of Mr. Thomas W. Phillips, given before the Congressional Com- mittee inquiring on this subject in 1888, page 112. I will read the concluding part : "We are certain that there would have been much bankruptcy in that region had this move- ment not been made. I will state further, in jus- tice to them, that this was not a movement on, the part of the Standard Oil people. It was a movement conceived by the producers themselves. They aj)- proached the Standard people in regard to this matter, and after long negotiation, which you have here in testimony, the contract, which you also have, was formulated and signed.*' Digitized by Microsoft® 124 Q. (By Mr. Phillips.) I assert the same thing to-day. A. That answers Mr. Lee's statement. Mr. Lee says: "I believe if there had been 50 concerns engaged in the manufacture of petroleum, that just as wide markets would have been ob- tained for the article, and that while the consumer would not have paid any more for his oil, the pro- ducers would have realized better prices and have had a handsome profit, whereas I think they have not made any profit." I present here a statement showing in detail the list of oil refineries in the United States, with their capacity, averaging a life to this time, the first of this year, the end of December, 1898, of 14 years, and numbering 66 in all. Digitized by Microsoft® 125 ui 1 — 1 a plan1 plan -^ P^ ft fciO B 6 ■ Pi fi !E 03 Ph o O o CD 7^ >> o ^ c -c: r^ cn-- o_ CO iO^ CO i> 10 rH r-t CO n" I— 1 i-T T 1 rH cti a. g- -..A^ ^ ..^ >^ c o ~-^ o o o~ c CC 'l^ .■t! o o o o o 10 iO c:; rn s o cS IQ t> CO lO lO G<1 I-H CM CD r^ n. rH CT^ rH 1-H CO CM >Q CM rH rH rH ^ Jw ^ TO O O O o c "53 lO O CO to 10 »o 1-, O C^i CD lO CM 00 (M 10 (M •^ OJ Co XI G^ T-l CC CM 1 — ' T-H 05 (?4 >o s s 3 o z ^^ --r^-' to 1 03 a O c "3 03 r6 Refining d. Qg Co., lim- 03 P5 • rH a B c^ CO 03' 02 00 C _o; p: be rt „ ° 03 0) 11 cz 03 .~ 03 •r-< tlCo3 0! "H. 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C P5 o t^ ci far 5^ o3 _£ p^ri; -0 C) u "s^ '> 0) 2 p IK s -jj Tj ;: ^ <1 P-( H r-i r- )^ (>J -^ C^5 T— 1 ir: X CO CO X X OJ X rr, «) X CO X X X X X X Digitized by Microsoft® 127 a a sd be "■^ fcO 03 • .5 d d g .3 S Q Q -^ C d 'a r.1 Ph rQ -k^ C^ £ J fa E^ o o o iO 10 0*0 O O O r^ >^ IQ »o »Q i> , O o^ o o OOOOOO'OO o o o ^ ."ti W >o lO cooininotMO «3 o m i-l TO CO (M — 11— lt>jT-lrHCO^(M 1—1 CO (N T—i rH 1—1 l^r rH "" Co" ^^ ^^ i-T i-T i-T co" rt" fe o O O O iO iO O IQ ^3 i ca^ o in iO iO (M OT O w o V, o CO (M CO ^H 1^ r-1 iO ffQ TtH OJ ^ ^ ^ .^ rs .. •^ »^ ^ 0^ a :3 c^ 1—1 ^ CQ r- 1 CO rt CC cc cc lO CM t^ CD lO ^ > 00 3: a: (X X C3: OS X X C35 00 oc oo X X X X X X X « — 1 1—1 T— 1— 1—1 l-H Digitized by Microsoft® 128 o d ^ S3 C3 pq 03 a ^ o "So CO l> ,sS +5 ^ CQ o CD o 00 o 00 o CD o o in o cr^ oo w CT >> w CO CO O o 05 1 5 O Q U o 1 — 1 • r-H O Oil W Pa.: ir Oil 1 1 o 4^ o o O o M ^1 rt d CD CD 03 •S^ ^^ ci ■;:J ts . a; ■^ s ri 2 op S ^ H CD 4^ ^4 !» CD 5S o O bJD c^Q o o o o t- ^ CM o o lO lO o o o o O iC CO o o o o r^ CM o o O i> CM CO rH~ (m' CM cm" CM rH^CM" rH ^ IT5 rH ^H . »-, . ^ .^ O - lO c o CO o lO o in O a r^ CO Ph P^ r/T ^ aj O ^TiJ ft cd o 0) ni hJ S-i O U o O bD C ■ I— I d ,X2 Ph o CO CO (33 O t- CM r^ C3i CO C3 c» oo CO 00 Digitized by MicrQsoft® 129 o ^3 l-H B o z. o lo o o 00 iO o o O O O ifl O O lO "O O OT O »0 (Ta lO 1— I 1— I CM I— I r-i CO rl a O 00 o o o O O -M CO CM « (In O ^-^ (D PL, 0, o o ^ O CD !-i J — ( P o^ to o pq Oi 00 cX) CX) 00 00 t- 00 00 oo Digitized by Microsoft® 130 p^ CO " .^ i> •r! o XI . rt O ft -^ s; ^- rC B' ^ ^ o c3 !« O O o IQ o lO o CN O iO t- CO Tfl CO (M (M (M 1—1 -* 00 CM o o o o in o o o !?^ *o T-i CO (M w o io o o to o OC r^ CO CD 00 ^ r-. T-H r-( CO o o o )Oi>OODCO ^ G\( O CM »0 OT (M t^jh" CQ~ 00 o o O O ir: o ^ CO O CO lO o O i> i> o CD lO o o o o O Tfi o o o !M CM (M o H o o bo ■B "3 o O cS OS o -^ , 0.2 o =o . „ o „ o o) ■rr! R aj ^^ (-1. o oO a; o a g .3 ^ .-;:! ct - o o o s OJ •r-4 o S el ^ •r-l < 'a TO r^ f^ O o l^ f/J • rH m >-.^ CO Oi OS Oi 00 00 00 00 t- t- C3i m 00 OO i> C3J (OJ 00 00' CO Digitized by Microsoft® 132 K S-l .9 'o a ^3 '^^ 'ji m rt n, o U 3^^ S z o o o o CD IC o o CO O O Oi o o <- ^ CO o »C (M o (M ^ CM CO in IK CO IC •.6 o o o o CD o o o o o o o lo o o CD CD (M O ^ o o o o O lO "fl o GO :d "* ^ x" cf (m" ^"^ Pi c o o ; ,— < I — I • (— I -r—c oo o C PPU ll c3 O o O 02 O :^-^ 03 S t? 03 o S o rt >o e '-^ ^ •rH ^S CO CD .Si^ oi ^ o3 ci r:= fc« C TJ ow 03 o •rH I 1 .r— I, C3 ^ i) „ Ci ',4J c3 CZI Ch 03 ft;::: c3 o3 -1-1 ■^ ^ ^ -2 o o 03 f3 O O .■« PI p. o CD CD t^ ro Ol 05 O^ OS r- on CO CO CO CO 00 Digitized by Microsoft® 133 The average time since the above refineries com- menced operations is now 14 years. COMBINATIONS AND LABOK. Mr. Lee makes a very labored effort to sliovv^ that trusts and combinations affect labor injuriously. The best refutation possible of this statement is the record of our ovfn experience, the fact being that for all the years we have been engaged in business we have had scarcely any serious diffi- culty with the vast body of men employed. On the other hand, we assert most positively tliat, as a whole, there never was a more zealous body of employees than have been connected with our in- terests. We have been practically without strikes; our labor is well paid and contented in every de- partment, and I submit that our experience in this regard is the best possible proof of the advantage of labor and capital working together on intelli- gent lines, where the rights of each are fairly con- sidered. I am a firm believer in the right, and, indeed, the duty, of labor to organize, as 1 am in favor of the combination and organization of cap- ital. Of course it is true that the labor organiza- tions often do very unwise and arbitrary things. They fall frequently into the hands of leaders who are demagogic and lack the qualities of intelligent leadership, and they are badly in- fluenced also by political demagogues, whose sole stock in trade is often their ability to talk loudly against capital and the employing class; and, above all, they are too much influenced by the bad advice of an element in the public press that is ut- terly depraved and demagogic and which teaches them altogether c^§ilf§ti A^m^sM *« their duties. 134 They are taught that it is no sin for them to cheat capital. They, will, however, learn better as time goes on. Capital, on its side, has made and is making grievous mistakes in the treatment of labor; but the two are moving together on irre- sistible lines toward organization and a better mutual understanding, and one of these days labor will realize, as the employing class already knows, that the howling of a demagogue is hurt- ful to all concerned, and a better era of under- standing between the employer and the employee will be brought about. ME. lee's remedies. At the end of his testimony Mr. Lee suggests remedies. They seem almost too frivolous to demand attention. His views on destructive com- petition, the limitation of capital, etc., seem al- together too absurd to call for special attention. I may say, in conclusion, that he has taken good care to organize his own company or embryonic trust in the very State (New Jersey) which he criticizes so severely, with a view, undoubtedly, to make his capital quite unlimited if he finds it will float. OPERATIONS OF THE STATSTDARD IN OHIO. I turn next to the testimony of Mr. Monnett, the attorney-general of the State of Ohio. I want to say, by way of preface, before answering directly the points presented by Mr. Monnett, that we are interested in Ohio, in whole or in part, in a number of corporations, duly chartered by the State, and all carefully observing the obligations imposed on them by their charters. The actual- Digitized by Microsoft® 135 amount paid in taxes is in the neighborhood of $250,000. The aggregate amount paid in wages to about 4,700 employees in the State by this corpor- ation is over $3,250,000. per annum. The further distribution of money in the State for fuel and supplies of all kinds would amount to a vast sum. I submit for your consideration whether we are not a valuable client of the State and entitled to protection rather than persecution. That Mr. Monnett's course has been an effort at the most malignant possible persScution, and probably worse, I will endeavor to show in taking up his testimony. Mr. Monnett makes a statement that there has been great discrimination in favor of the Union Tank Line or Standard Oil Company. The rates fixed by the railroads in connection with tank car lots and single barrel or part car lots have been the same to all, and carried with them no discrim- ination whatever in favor of the Standard Oil Com- pany. In other words, I deny the allegation par- ticularly. • ALLEGED BURWIN'G OF BOOKS. Regarding the alleged burning of books at Cleveland, Ohio, I want to deny the fact of any such burning absolutely. At the time of the original inquiry on the subject we offered to pro- duce every employee who could have any knowledge on the subject, who would each have denied the statement as to the burning of the books. The attorney-general refused to have them swora at the time, and at the time Mr. Monnett gave this testimony he knew that Mr. Squires, the -, „Digitized by Micmsom ^., „ » then secretary of the Stanaara Oil Company ot 136 Ohio, had made an affidavit in the litigation pend- ing in Ohio that the books were in his possession. Any denial that I have made regarding the matter, or any statement that I have made in reference to the testimony in connection with it, is trae, and it is not true that I have made any retraction, as Mr. Monnett states, with reference to any statement that I have made. Mr. Monnett's reiteration of this matter, after all that has been shown regard- ing it, is most reprehensible. I would like to characterize this in strohger terms, but I bow to the wish of the commission. AMOUNT OF TRUST CEllTIFICATES ISSUED. Mr. Monnett endeavors to carry the impression that more Standard Oil Trust certificates were is- sued than our statements have shown. The alle- gation is made without a scintilla of truth to sustain it. It is contrary to all the evidence that was offered in the case, and it is utterly destitute of the truth. The stock and transfer books of the trust were placed in the hands of Mr. Monnett's associate, Mr. Kincaid, during the Ohio investiga- tion who examined them thoroughlj'' and ex- pressed himself as thoroughly satisfied. DISMANTLING OF WORKS. He speaks with feeling with reference to our having dismantled some works at Marietta. I want to call attention to 2 at Marietta, Mr. Rice's and Mr. Davis', and I do not recall that we have dismantled any there. I do not know of any works there that we have dismantled. Q. (By Mr. Farquhar.) This commission, in some of its testiiq^^y^jy^jj^^j^ considerable stress 137 laid on the dismantling of the works by your, com- pany, and the delocalising, transferring of busi- ness from towns and other places and the concen- tration into larger plants. Would you give the business reasons of the Standard with respect to any of these changes? A. I shall be glad to, and I have it in another place. I think you will find it amply treated. THE standard's OHIO BUSINESS. Mr. Monnett makes a statement which, even to a person unfamiliar with the oil business, is quite unintelligible, to the effect that somehow from the business of Ohio oil we make $120,000,000 a year. It is entirely ridiculous. As I say, it is ex- ceedingly difficult to know what he has in his mind. It certainly had no relation to the facts. I have had prepared a statement which shows the total sales in the State of Ohio of refined oil products for 1898 to be $979,798.56. Q. (By Mr. Jenks.) That includes all by- products? A. Yes; I will ask you to discount his statement at least $119,000,000. Q. (By Mr. Clarke.) That is the sales by your company? A. These were the total sales. BRIBERY case IN OHIO. I must speak somewhat guardedly, in the nature of things, about what Mr. Monnett saw fit to say about the conduct of bribery cases in Ohio. With reference to the so-called "bribery" case in Ohio, I desire to say that affidavits have been filed with the Supreme Court of the State of Ohio denying specifically all (Sfg/fMtf/5yMa?itHfi^t's charges of at- 138 tempted bribery and all of his allegations in rela- tion thereto, and asking the Court to appoint a commissioner to investigate the charges. The Court has not yet acted upon the subject. If they do not, we will then see whether there is not some other method by which Mr. Monnett can be com- pelled to answer on this matter. Q. (By Mr. Farquhae.) What is the supposed amount of bribery? A. The newspapers have it about $400,000. Q. (By Mr. Smyth.) Paid to whom — to Mon- nett? A. To Mr. Monnett; yes. I say we have answered the matter and our answer is before the Supreme Court. With reference to what our final attitude will be it would be unwise for me to state now. We court- an investigation. Q. (By Mr. Ratciifokd.) Are yoa prepared to say that such a proposition might not have been made without your knowledge, or do you deny — A. We have denied it to the very uttermost. Oar answer is now in Court. Q. The answer of your company? A. The an- swer of our company. I want to speak a word regarding the recom- mendation by Mr. Monnett of Mr. W H. Clark, of Newark, Ohio, as a competent witness. In recommending this witness to you Mr. Monnett must have known that he was an untruthful, dis- honest, discharged employee, and his imposing him ujjon yon as a witness was an insult alike to you, to our interest, and to the country at large. COMPETITORS IN OHIO. Mr. Monnett testifies, in answer to a question by Mr. Harris, asD/JeM'b/ff'^crt*^ What companies 139 are competing with the Standard Oil Company in Ohio now? A. There is only a limited competi- tion—I think the Schofield, Shurmer & Teagle people; and a man by the name of Shull, atMans- lield, has an independent agency and only a lim- ited product. The Shurmer & Teagle people originally had a contract whereby they were al- lowed to live- — to sell and live." Mr. Monnett again refers to the absence of com- petition in Ohio, and .repeats that he does not know of a single independent chartered corpora- tion left in the State of Ohio. However, he at- tempts to carry the impression that we are attempting to deceive the public by oi>erating through different names in the State. He quotes the Penn Oil Company. I do not know what he means by this, as we have no such company oper- ating in the State. I now submit statements showing a partial list of our competitors in Ohio, composed of pipe lines, refiners, and producers, covering corpora- tions, partnerships, firms, and individuals. The list is only partial, but it gives some indication of the utter lack of knowledge, or worse, that actu- ated Mr. Monnett in his statement. I will give you a summary of the incorporated companies en- gaged in the State of Ohio ; not in the southern part, but in the Lima district. There are 159 cor- porations. Q. (By Mr. Smtth.) Not controlled by the Stand- ard Oil Company? A. Not to the interest of a dollar. They are, of course, all creatures of the State of Ohio, and if not chartered under the State they are all regi^S^i^^ 'SfM'^^'&h laws of Ohio and 140 paying taxes in that State. There are partner- ships, 258. Q. Not owned or controlled by the Standard Oil Company? A. Not to the extent of a dollar. Q. Not. agents? A. Not agents of the Standard Oil Company in any way or sense. Q. (By Mr. Phillips.) Have you- _any interest in these companies, in producing with them? A. None that I know of. Q. You have alliances with producers in the Pennsylvania field? A. Our business in Ohio is done in the name of the Ohio Oil Company. Q. The point I wish to make is this. Hare you not an eighth, a quarter, or a third in the leases in Ohio, as you have in Pennsylvania? A. Not in these that I am presenting. Q. In Pennsylvania and West Virginia you have? A. Not that I know of. Q. Are you not interested a quarter or an eighth ? A. We may be to a small extent. Q. (By Mr. Jenks.) But not at all in any of these? A. It is such a trifling exception as not to be an exception, if at all. Of individuals there are 1,240, 159 corporations, 258 partnerships; and there are of refining concerns not in the remotest degree related to the Standard Oil Company, 8 active large concerns chartered by and doing busi- ness in the State of Ohio, which makes a grand total of concerns doing business in competition with us of 1,665 in the Lima district against Mr. Monnett's 1 concern that he could name and 1 business man that had a station at Mansfield. Q. (By Mr. Phillips.) What per cent, of the Lima field do y^u.^|^o^j^tr£y ^^roduction ? A. I have that here. 141 Q. (By A. L. Harris.) I had in my mind, when I asked Mr. Monnett the question, the refining companies, not the producing companies? A. He answered also regarding the producing companies — regarding them all. Q. I asked the question with reference to the refining companies, and I think that he intended to make the answer to my question. A. His an- swer mentioned producing companies, and lie spoke about the Penn Company being a i)roducing company, but claimed that was ours. Q. Is that a refiniug coiiipany? A. It is a pro- ducing company. Q. (By Mr. Ratohford.) The witness has stated that the Standard Oil Company has virtually no ^interest in a number of producing companies he has mentioned. Have they no interest in the re- fining companies? A. None whatever, I believe. Q. No relations with the refining companies? A. None whatever. Q. (By Mr. A. L. Harris.) How many refineries outside of the Standard are in operation in Ohio now? A. I have just given them. I do not think this covers them all, but the larger ones. This was made the first of the year. They are : Craig Oil Company, Cleveland Refining Company, Diamond Oil Company, Manhattan Oil Company, National Refining Company, Producers' Refining Company, Paragon Refining Company, and the Sun Oil Company. This is made up with reference to the Ohio field. I might say also that the busi- ness done by these companies, and in which we had not one dollar of interest, director indirect, or one iota of Gontr§^ifi^^j^i^^jfifg,iiggregated for the ,5 years from 1894 to 1898, inclusive, 14,647,949 142 barrels. I am reminded there are some Cleveland refineries in competition with ours, not included in this list. By the way, these Cleveland refin- eries are included in the general list of refineries which I gave in answer to Mr. Lee's testimony. I have further a supplementary list of competitive producing companies, made up of organ i'/ations, corporations, partnerships, and individuals operat-. ing in Southern Ohio, apart from the Lima field, aggregating 16 corporations, 8 partnerships, 69 in- dividuals, or a total of 93 in that section, which should' be added. AGITATION OF THE OIL-TES'J' QUESTION IN ENGLAND. Mr. Monnett shows his vindictiveness as against the American oil industry by applauding a scurri- lous pamphlet j)ut out by one of the yellow jour- nals of London at the instance of the Russian oil dealers as against American oil. There was not a word of justification for the statements made, and a committee of Parliament, who have gone into the subject most thoroughly with reference to pos- sible legislation on the oil-test question in England, have upheld American oil as against all the outrageous charges made by the Russian in- dustry and given publicity through this scurrilous pamphlet. I wish to say one word on the magni- tude of the Russian oil industry and its menace to our American industr3^ Nowhere during the past year have they made so determined an effort against American oil as they have in England, and they have retained a journal of the lowest order to make these scurrilous attacks. The name of the journal is the Stai-, and this pamphlet is published und^/Edsia^iycroactetheir instance, al- 143 though it is anonymous in its character. Even the Russian people who p-ut it out would not put their names to it. I have here a further statement of the Russian oil industry, giving statistics in detail, which I am sure you will find of great in- terest. Q. (By Mr. Jenks.) Can you give us a reference to the official statements of the committee of Par- liament to which you refer? A. I will get that for you. Q. (By Mr. Farquhae.) You state the Star ar- ticle is on the side of the Russian industry? A. They applaud the Russian oil and decry American oil; that is the purpose of the publication. The thing is to cry down the American oil. Q. And you claim they injure the Standard? A. That is where they — yes ; we are the large dis- tributors. Q. What is the test? A. 73 Abel. Q. What is the equivalent of the test? A. About 120. I might add a further list of the Ohio companies organized since November, 1898, and not yet published. I will put them in. PRICES OF CRUDE AND REFINED OIL, 1870 tO 1898. Mr. Monnett endeavors to make a statement that the dismantling of the Standard Oil Coni,pany would reduce prices of oil to consumers. I wish to answer this by giving statistics showing the record of cost and prices for a period. The world wide facilities employed by the Stand- ard Oil Company and its affiliated interests for the distribution of refined oil would involve years ot eSort, and a sij(j§^S bm&Mh o^ capital to re. 144 place, and would immeasurably increase the cost of oil to the consumer. Q. (By Mr. Jenks.) The price of refined oil in the table is the average export price? A. Yes. Q. Export prices fix the price of domestic re- fined? A. Substantially so. Q. Can you furnish to the commission also a list of prices of refined water-white oil in the oil markets of New York, Chicago and Cincinnati? A. If you will give me a memorandum of that I will. Digitized by Microsoft® 145 an So h2 i- in 50oeoi>o:oo3i>oa3-*r-.'*ia (MOtMlCOOCCOTOOlQOlQ-^^D ^ -* cQC':DO r-T i-Tco^co^c^co"-^' of t-^ in" TfTio' r-1 S^ M CO T3 w 1) CO 05 —I CO CD icTm'" r-i C- T3 (D O U * ■- o W t. ho g o oj E ■i2oo [^ CM CO '^ W . 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I- CD o o CM o lO CO CD o 02 o CO o CO CO CO CO CO CO CO CO CO CO CO CO CO CO Oi 00 CO CO CO y^ CO CO CO CO CO CO CD lO ^ o CO o •O CD CC- o o o s oo T-l CO CO CO CO CO CO X CO CO CO CO CO CO s id ic ici ^ -ti '*' -^ -^ -^ id TjH T^r CX) 00 CO CZ) 00 cz; CO o ^C0^i>rHC0'MOCDC0C CO CD CD X5 i-O lO lO IC ^ ^ ^ ^ ^ -* ^ -tl CO r-l c5""cO^CD"<3i CO CD ^" CO~F mCDXi>CDlOOiOCM'*i>QO '^fH -^ TjH ^ ■* ^^ -H iQ id id iew to selling their properties. I did not mean so to state. His approach to us was with a view to com- bination. I supposed I had so clearly stated it; I make this statement in tlie fear I did not. Q. Was it in regard to combination, or was it just not to be interfered with in getting a line through to New York — the right to live, rather than the combination; was it not put in that form? A. My understanding of it was, as I have stated, a combination. MR. THEODORE F. DAVIS. I take up further the testimony of Mr. Theodore F. Davis, of Marietta, Ohio. It is a trifle difficult for us to understand why this gentleman should have appeared brfore you; he certainly has had no experience in tlie refining of oil, or as an owner of a refinery, that would at all qualify him to ap- pear before you as a witness on this important subject. He has had an interest in a little alleged refinery at Marietta, which he bought when he was somewhat in politics. He immediately ap- proached us to M*'^yJith(&os8/tetement was made 154 here, I believe, that you had used the brand "Sun- light Doubly Refined," but put your name on the outside of the circle, which would not be an exact imitation, but would be using the name that he was using for his oil? A. No ; I deny the whole matter in toto. Q. You had yourselves been using barrels of that same color before he began selling in that territory? A. I know so, because I had to do business in that section and with the company who made the yellow barrels, and knew all about it. COMPETITION AT FULTON, N. Y. Q. In regard to the statement about Fulton, N. Y. ? A. The facts are that he first enticed away from us the man Crandall, to whom he refers. He began a campaign against our trade by cutting prices. We, in self-defense, finally put on another seller of oil to compete with him and to regain lost trade. CHAIiLES TEEY, OF IIOBOKEN — ALLEGED PRICE AGREEMENT. Hfe goes with great particularity into the case of Charles Frey, of Hoboken, N. J., whom he char- acterizes as a German with Bismarckian blood in him, who had threatened us with dynamite, etc. I carefully investigated the case, having talked per- sonally with our Jersey City agent, who was our agent at the period mentioned by Mr. Westgate. He denies emphatically ever having made any such threat toward Mr. Frey as Mr. Westgate testified to, or ever having any understanding with him as to prices in conngj^^^yj^^^„jJ^ marketing of Mr. : 155 Westgate's oil oi' any competitive oil, as Mr. West- gate testifies. As a matter of fact, the man Fray was a customer of ours to a considerable extent, having bought, in the year 1890, his principal sup- plies from ns; he was a man of violent temper, an avowed anarchist; he has not been in the business for a number of years now, although Mr. West- gate's testimony would carry the impression that he has continued to help him in the sale of oil at Hoboken. The last known of him was that he was running a saloon in Brooklyn. UNDEHBILLING OF TANK OARS. Mr. Westgate alleges at great length and with some particularity the underbilling of tank cars, citing, as a special case of which he had special knowledge, shipments from Olean to points east- ward. I beg to present to you here letters from the officials of the Western New York and Pennsyl- vania Railroad and the Erie Railroad, being the only two lines out of Olean, on that subject. I will read first, if you please, the letter of Mr. Edward T. Johnson, general freight agent of the Western New York and Pennsylvania Railway Company, dated at Buffalo, August 10, 1899, addressed, to me. "My attention has been called to the testimony of Mr. Theodore B. Westgate (who I think is a refiner fiom Titusville. Pa.) before the Industrial Commission of Washington, in which he testified that it was his belief that shipments of the Stand- ard Oil Company from Olean, N. Y., in tank cars, were billed at a weight less than the actual con- tents of same. "In answer to ci^TfzeWjeffligi^feefe testimony I would 156 say that I have investigated the matter, and of my own know^ledge am positive that there is no ar- rangement of this liind now, nor has there been at any time heretofore, between this company and the Standard Oil Company, or any of its representa- tives. On the contrary, I do know that on all oil shipments from Olean, where the weights liave been per 100 pounds, we have charged and col- lected freight on the full capacity of the tank cars, based on, first, 6.3 pounds to the gallon, subse- qiiently on 6.4 pounds to the gallon, the change at Olean being made at the same time that it was put in force over the entire Western New York and Pennsylvania Railway. Where the weights have been per barrel we have charged and collected freight on basisof maximum number of barrels that the tank could contain. It is possible that in view of the hundreds of cars of oil that are shipped from Olean some clerical errors have been, made by which the weight of a car on the freight bill may have been misstated, but if so it has been by cleri- cal error only, and not by any arrangement with the Standard Oil Company or any of its represen- tatives. "The above is the situation now, and has been the case for at least 15 years, during which time we have had full knowledge of all traffic matters pertaining to shipments from Olean, and the above statement applies from all other points on this road as well as from Olean, N. Y. "If it will be of any service to you I will be glad to put the above in the form of an affidavit, or will appear before any United States Commissioner and testify in regard to same. "Yours, truly, Edwd, T. Johnson, Digitized bif^j^g^i^^l Freiglit Agent V 157 For tlie Erie road, dated at New York, August 29, 1899, addressed to me by George G. Cochran, fourth, vice-president: "Referring to Mr. Harriott's letter to you of the 28th inst., in regard to weights on oil. "I was traffic manager of the Erie lines from January, 1892, to March, 1896, and concur fully for this period in what Mr. Harriott says. The weight of 6.4 pounds per gallon was maintained from the date of its adoption ; previously, the average weight applied was 6.8 pounds per gallon. "Yours, truly, Geo. G. Cochran, ' ' Fourth Vice-President. ' ' Also the letter of Frank Harriott, general freight traffic manager of the Erie road : "In regard to the testimony given before the In- dustrial Commission in Washington, June 8, 1899, by Mr. Theodore B. Westgate, of Titasville, in which he alleged that on shipments of the. Standard Oil Company from Clean, N. Y., tank cars were billed^at less than their actual weight, and in this way an advantage was given the Standard Oil Company over other shippers, I beg to say that for 3 years I have been in charge of traffic matters, covering shipments from Clean and other points on the line of the Erie Railroad, and I can state posi- tively that there is not now, nor has there ever been, an arrangement between this company and the Standard Oil Company, or any of its agents, of a nature testified to by Mr. Westgate. On the contrary, I know that on all shipments from Clean, as well as from all other points on the Erie Rail- road where our tariff rates are 'per 100 pounds,' we have charged and collected freight on the full- Digitized by Microsoft® If58 weight capacity of the tank car, based on 6.4 pounds per gallon, and in a few instances where rates have been 'per barrel,' we have charged and collected freight on the basis of the maximum number of barrels that the tank car held; and this has been true on all shipments made by the Stand- ard Oil Company, as well as by all other shippers. "Yon are authorized to use this letter in any way that you think best, and if I can furnish you any further information, I will be glad to do so. "Yours, truly, Feank Harriott, '■'General FreigJit Traffic Manager.''^ I desire to submit also a pamphlet, a book known as the Tank Gauge Handbook, which covers by number every tank car with its full capacity that is in use in our business, and which is in the hands of every railroad organization over which we make shipments ; and I want to state positively that we have no understanding, and never have had, with any railroad, with reference to the underbilling of any car. Q. (By Mr. Jknks.) You state you have in your freight business paid full weights according to the schedules given in this pamphlet? A. According to the schedules given in this pamphlet. Q. These two railroads from which you have supplied letters are the only ones out of Olean? A. They are the only ones out of Olean V The con- cluding part of Mr. Westgate's testimony, with reference to railroad discriminations, is covered in the statement alreadj^ made in reference to the same question in Mr. Lee's testimony; namely, tliat the cases pending in the United States Court are to recover freight which the railroads charge Digitized by Microsoft® 159 all shippers on barrels. The interstate Commerce Commission decided that railroads should carry barrels free, and the railroads, refusing to accede to such a decision, are testing the question in the United States Court. A final decision will interest us to a larger extent than all other shippers. THREAT TO CUT PRICES AT SOUTH BEND, WA8H. Q. (By Mr. Jenks.) Mr. Westgate presented a letter from Portland, Oreg., which he put in evi- dence, with reference to some statements made by the special agent of the Standard Oil Company. The essential part of it is this : "You can rest as- sured that if another carload of Sunlight oil ar- ' rives at your place, it will be sold very cheap. We do not propose to allow another carload to come into that territory, unless it comes and is put on the market at one-half its actual cost. You can convey this idea to the young man who imported the carload of Snnlight oil." Signed by George C. Flanders, of the Standard Oil Company. The question is whether in competitive territory your people are authorized and instructed to make state- ments of that kind? A. If any such statement was made, it was a foolish statement by a foolish and unwise man, and in our thousands of em- ployees we do have some. The statement had missed my attention, if it was in my copy, or I would have investigated it. Q. I will give you a specific reference to it : It is, Portland, Oreg., George C. Flanders, special agent. A. I will say again the gentleman had no such in- stractions; any such statement as that was unau- thorized and unwise. (The following ol^ifetefi^iyMfctlJo/tiae annexed news- 160 paper clipping, was subsequently submitted by the witness) : 26 Broadway, New Yobk, October 27, 1899. Dear Sir : Referring to the letter submitted to the Industrial Commission at Washington, written by Greorge C. F'landers from Portland, Oreg., to a merchant at Southbend, Wash., and to which you called my attention. While the Standard Oil Company does not compete with other merchants for business, it is done, though, on a basis of a fair margin of profit, and Mr. Flanders did not have any authority to write that oil would be sold on the basis mentioned in his letter. The letter re- ferred to was written some years ago (in March, 1894), and was intended to be written in a jocular manner to deny a claim that he was selling an oil inferior in quality to that sold by others. The Standard Oil Company is at times unjustly accused of doing this, as is evidenced by the inclosed article taken from a Los Angeles paper, and a wrong construction might at times be put on a let- ter written to refute a claim of this kind. Yours, truly, H. M. Tilford. J. D. Archbold, 26 Broadway, New TorJc. ASSASSINATION KEROSENE. Pomona, Oct. ^.— [To the Editor of th 00 CO CO CO r-H rH i> 00 1-1 OJ- OS 4^ ^ (M O 00 -riH o Q ^ CD M r-i T-H rH ^ Eh Irf (M T^f 05 o Oi IQ pq (M (r5 oj 'M CO O (M (>) rH (M (M i-l ■4J ■ . 11 +3 CO (y! 05 CD CO t- 00 00 t-' i> cd' t> u r-l rH r-l iH i-l r-< CQ ^ P-l o ■D ^ (?» O 05 CD Oi CO 03 CO W T-l O CD t- o t- r- oj CO 03 IQ -tH 05 CD '^l ^ E: xt< 00 CD i> T-H OS cS T-l O lO 00 Oi lO pq xh' -^^ co" co" co" oT +j , Ttl 00 i-H ■<*< i> CO o O o O +3 ^ rH (?j 05 CO ffi 0-1 o 00 oo 00 00 00 30 1 — 1 •f-H o T3 CO l-l T— 1 OS 05 i;o CO lO CD i> X CD OS 1 — 1 Oi O t-l -* 05 IT. rd 0) OO'OO" rH^T-ToT ccT a ^ . rH 'sti ^ ^ OS ^ c« bS rH^CO CO_^rH 03^ OS pq oo" od" cd" oo' oT o" r-l tH r-l rH r-l OS : : : : . 1 — 1 ^i '.'.'.','. as . . . • o OP ■^ lO CD t^ 00 H Oi OS OS 05 OS O) 00 00 00 00 T-H 1— 1 ^^ rH rH Digitized by Microsoft® 184 THE STAWDAKB'S COWTBOL OF PRODUCTION. Mr. Lockwood testifies that by manipulation of price of Ohio crude oil, in conjunction with the rail- ways, we succeeded in getting the price down to an abnormally low figure, and then bought substan- tially the whole Ohio producing field. ' I now present a statement covering the years from 1890 to 1898, showing our relation to the business of producing oil, not only in Ohio, but in Pennsylvania, thinking it would set the matter at rest, as the question has been raised: Digitized by Microsoft® 185 'W s « Si^ S W 1^ .0 C) r^C '^ ^~ ?i ^ K , W <» >"> ^0 OS =5 >i s -T rC) 10 OrT bo 1) « «-> u « 551 X e s =0" w « rJ? w ■to ^ GO rC) •?^ ■^ an ^ fi ••-.i ■+^ t^ ^ T-' 'W ■0 !~ a^ Stand- ard Oil per cent of total. Tt<05?OCOr-IQ0iO(M00 -*t-;eOT)HC<)!MThCOiO ^ CO -;JH CX3 00 d Oi 05 in cd ^ oco^t^cioiTtioxH ■* r—t i3 ^ -r; (>)01r-lr-H(Mi>rtlt~0 l> 40 a" CT (j^" co" ^ Q& of ^" of co" THCOOOtDOfM^QOCD Oi 4^ C5 ■ rH ^ 4^ OS^i-iOJOiOS-^CQ-^ ns S° =» i-h" t^' (m" CO CO 10" i> i>' co" C CO ills 03OO50005Q0(MO05 ■^ ^>QC»OOrHr-iCOOO TO f~O'*lCI0rHrH-*'* (TJ Penn! vania Lima ducti o" ^^ i> oT (m' i-T 0" co" T-T 0" 0O(MrHJ>i>T-ICO5Di-l <33 Or-n^OOM^Oi-HOlOi to" CO 0" oT of (m' o5~ 0" I-T r-l TO TtHinio^^inioioin CD 1. 1—1 =1-1 ^ tand ■dOi per into otal. lO^rH-^lMiO-^OJCO CD OiCDOi^OCOQOOOCO CO >d CO j> d CO r-! ^ ai id ai X 5 S^ lOlC^TtlOOCOCOCOCO CO "^ XCC^OlrHOCOOJCD w ^ X coio(Mcsin(>05-t?:>co in r^ 2 ^^ c ■ M 0" oT co' 0" 0" 00 i-T j> 0" co" OrH^COOSOCOOStM f~ o3 ;^ Ph '*COOO(MCOXO^(?5 B C/3 " 00" oT t-' t-" CD co" TO !>" t-" os" ■^ CD " CMOOCOlOOOOrHCOQO TO 2 r^ oocooiinoi^ajcoG^ m !-i a 00^ 03 i-H^ 7M CO (?:> CO in pH ^.t-H rtT r-I lo' x' la^oT w eo" co" — .. « 1=1 r-ICOQ0Si-l(Mi>!M ^ ^S'ti lO~ t-' co" h-" cd" rH~ lo" (m" 0' in" H r^r^^^rH,-^(M(^^(^^(^! T— 1 ' — 1 «4H ' ■ ^ ;=; . r-; i-lTjHfMlOCnCMCDCOlO CM gO ^ ^ J t-;i>OnH-*10(»C»iQ X c6cocoT-!coa5i>t-'ia c>5 • 1— 1 23 ^ S^ T-HrH(M(M(M(M(MCO (M n:i ir-mcMcoico^coco in f- X COJ>!Mt^-*3<>lClO-* (M CO^^t- X^(>J^CO__ 00" co" <*■ i-li-ICOO'-Hi-IQOCO-*! CM c3 > -0 u. COOlKOCMr-ICOl^CN co__ 1 — 1 W ■*" tJh" cd" t" Oi Oi of r-T in" r^ 1 — 1 CD 73 ft i>t^CDCOCDCOrH(>r-( CO fl CO(MOCOr-py^^Jj|biifeitnmeuse value to 198 all classes of our population. The investor, the consumer, and the laborer will all be benefitted by it; the investor by the better security wrhich arises through amplitude of capital for the business con- templated, and the combination of talent in the various departments of administration; the consumer, through improved processes resulting in better products at lower prices, and more efficient distribution; the laborer, by steadier em- ployment at better wages, and a better opportunity for improvement in condition, if special talent is shown. The outcry, gentlemen, against corporations does not come from the great, busy, industrial classes, but from impractical sentimentalist's yellow Journals, and j)olicital demagogues, from the latter, perhaps, more than any other. It is a veritable attack upon thrift and prosperity. To listen to their voice to the extent of imposing restrictive legislation would mean a frightful step backward in the commercial development of our country. NATIONAL CORPORATIONS THE NEXT STEP OF PROGRESS. If you should ask me, gentlemen, what legisla- tion can be imposed to improve the present con- dition, I answer that the next great, and, to my mind, inevitable step of progress in the direction of our commercial development lies in the direction of national or Federal corporations. If such cor- porations should be made possible, under such fair restriction and provisions should rightfully attach to them, any branch of business could be freely entered upon by all comers, and the talk Digitized by Microsoft® 199 of monopoly would be forever done away with. Oar present system of State corporations, almost as varied in their provisions as the number of StateSjis vexatious alike to the business community and to the authorities of the various States. Such Fedei-al action need not take away from these States their right to taxation or police regulation, but would make it possible for business organiza- tions to know the general terms on which they could conduct their business in the country at large. Lack of uniformity in the laws of various States, as effecting business corporations, is one of the most vexatious features attending the business life of any great corporation to day, and I suggest for your most careful consideration the thought of a Federal corporation law. Q. (By Mr. Jenks.) Have you any further statement with reference to the organization of the Standard Oil Company itself? A. That will be included in the statement Mr. Dodd will sub- mit; or the data regarding the organization, I think, will be in that. PETROLEUM CONCERNS IN RUSSIA AND ELSEWHERE. I want to hand you, in connection with this paper, this most interesting statement, which I think, perhaps, is the first general compilation of the information that has ever been made in the country here; almost a surprise to us, who are daily familiar with the oil business, as showing a tremendous growth of the foreign petroleum business. I will only refer by name to the coun- tries in which petroleum is now successfully mined and prepared for market. Capitalization, so far as we are able tOc^ig4%^|jjc/%fl^ tlie names of the 200 companies which, as I think, are substantially accurate, appear on this statement. Q. (By Mr. smytj-i.) Could you give us any- thing like the proportion? A. I have the state- ment which I think shows the proportion of business done. It ivill be a little surprise to you to see the enormous capitalization of the business attaching to the Russian development, and [I may say in a word of oral explanation that the business there is getting to be in strong hands. When I mention the name of the Rothschilds, that will be a sufficient guaranty as to the strength of the company ; and they are growing now enormously in the extension of their business in the various markets of the world. The Nobel Brothers are there competing for the business with tremendous energy. Recently, perhaps within the past year more than in the aggregate time before, English capital and English corporate organizations have engaged in the petroleum trade in Russia to an enormous extent ; the largest concern perhaps being the Shell Com- pany, Sir Samuel Samuels, late lord mayor of London. I hand you this list showing firms in Russia, and this showing list of corporations in Q-alicia, a further statement from Roumania, one from Borneo, and sundry places in the Dutch East Indies, in British India, in Japan, and in Alsace, Germany. It will probably be an item of information to many of you that th e production of petroleum is assuming great proportions in Japan. They are now very rapidly progressing, are coming to the front in improved methods of production, and will ultimately beconi%j»zlfi)£jaw4aMfe competitor to our 201 American industry. The system of petroleum refining in Japan is by corporations and individual firms going out into the different fields and pro- ducing and refining. In Sumatra the business has already attained large proportions, and in Java and the island of Madeira. Q. (By Mr. Smyth.) Is there any American capital represented in these firms? A. There is no American capital that I know of. But they have sent out and taken from our oil-prod acing country here many artisans. Q. (By Mr. A. L. Haeris.) Then the Standard Oil Company is not represented in any of those corporations. A. Not in any way. Q. Not even in the Nobel Bros? A. Not a dollar of interest in any way, or relationship or understanding. Q. (By Mr. Smyth.) I suppose English capital being interested in Russian refining is one of the causes of attack on the American oil in London? A. Undoubtedly, but as I said this morning, I think the attack was undoubtedly made by the people directly and largely interested now in the Russian distribution in the different countries. It may be of interest to read a short letter from our foreign exporters: New Yoek, September 1, 1899. J. D. Archbold, Esq., Building. Dear Sir : I beg to hand you herewith the statements yon desired, in duplicate, and wish to say that the Russian production is on the peninsu- la of Apsheron, on' the west coast of the Caspian Sea, and the Gf-rosni district, northwest from the ' Digitized by Microsoft® same. 203 We estimate the Russian production at present to be about 160,000 barrels prr day, and Grosni about 3 0,000 barrels^daily. The Gralician product- ion isabout 2,000,000 barrels crude, and Roumania 500,000 to 600,000 barrels per annum, and the Al- sace production about 175,000 barrels crude annually. The Dutch East Indies, about 3,400,000 barrels; Burmah, about 2,000,000 cases refined per annum, and Japan will probably amount to about 2,000 barrels crude oil per day. Of course we give you these figures as near as we can get to them, and where we give you the output of refined we have no reliable figures as to what it may represent in crude. Yours, truly, C. F. AcKERMANisr. I have here another statement. This Covers the information which you ask as to the percentages of these various countries. It is for the year 1897. Unfortunately we have not the full data at hand with which to give you the 1898 figures. This statement shows the business of all countries of the world producing refined oil. Some little percentage of it, as you will observe, is not the production of our country, but is shown in this way because the country named compels, by its tariff laws, the bringing into that country of the crude petroleum for refining there ; but the larger items are the production of this country, as you will observe. The total production in the world of refined petroleum illuminating oil, for the year 1897, was 39,338,991 barrels, of 50 gallons each, and was ^divided as follows. I will give the percentages, if you please. Digitized by Microsoft® 203 Q. (By Mr. Jenks.) Yes. A. United States, 64.23; Russia, 23.28; France, 3.25; Austria-Hun- gary, 2.66; Sumatra, 2.32; and the remainder, Scotland, Canada, Java, Roumania, India, Spain, Mexico, Cuba, Brazil, Germany, Peru, Italy, Japan and Porto Rico are all fractions of less than 1 per cent, making the grand aggregate of 100 per cent. ; the great factors, as you will see, for the year, being the United States and Russia ; and a rapidly increasing factor, of course, in Austria- Hungar.y and Sumatra. Digitized by Microsoft® 204 o 555 o IS o t- IG CT a- IT -* CO !M c «• . CM rH C c O O CD o c g3 c ^ 2 ■C Vh j_. OJ o Cu C- CO CC ^ CO :o CSS CD cc T-H C CM OJ CO CO CO 5- ■^ .H "k s o: P^ ^ P-, ^■'^ s >> i 2 e * r^ n ;- !-( rH P< S- a S i^ a > CU _g ^ C ^ Off L5t SDhS^P- ■ cr CO IT :£ 5 C\i Tti Tji C3: ^oj^'o +.: (> CM <^ ! ^ ) CO GO CO ic: ic: '^ TjH 1=1 _■ O V. > iC , O lO xtl C3- O CO CO M-( ui la; o ^ -_^cr 5 O^co^co^?: O CD CO "5 a )"o''^ "i: 5" ^" r-T rn" C ' o' o' t> cc > CD b • 't ^ rH CO IQ CO CO CO lO Sri ^ ! rH C^ [ c 3 C3J CO (M (M C^ ^ 1 rH V- ho « ir 5 O! I- -i r- ■i !> ) *a ' ',- 1 ' z 7 3 ■ t fl ■ 1+^ o a ) ; c .tJ c i r o -4- Vt . c^ T3 If. J '. *^ = ci'^ a » S a -t- Is 3 1; 3 - d rt . = 2 ■Z3 k; n c3 = • ; a oi g 1 tr J J r -1 '- ft/! 2 r Ma 5 ^ iM in 205 The population of the world is 1, 349, 140,091 ; the production of illuminating oil is therefor equal to 1.5 gallons per capita. Q. (By "Mr. Clark.) Do you suppose there has been an increase since these statistics were given? A. The business of Russia is increasing rapidly. Here is a further statement of crude oil, the world's production, which may be of interest in looking over in a general way. Digitized by Microsoft® 206 o> oo 1^ ^ g c^ ■^ l^c> O 1 — 1 CO «t) fi i^ O 'OJ !> CO G CTi) r- T-H a o 03 O C3 3. 0) • nntri 1 ... t3 O P4 CD O s : O OJ « U d J-> o 6 -t-j • CD C) O • 1-1 • pj rri O) >; ^ a ^ 1-^ Oi 1— 1 c^ 00 ^ l6 r-5 i-i rH ascoi>0'*aicocDco<-i'M 050rHCDa3C3l^XOJ>G<> •^C0ClO_00i-iC0000J00CD TtlOOOCOODOlOTflCMrH O t- (M l-l r-( CD lO 03 +^ CO ' s CD Oi oo 2 o DigitizJd /3jfifefi*S^fi® CC O CD "S CO S o3 a ^6 207 to" ■♦^ 'J lo i:d 00 00 O ffl o . O o o o CD OSOOCOQOSOJC O •TOrH0000i>0 t- t-t-iOxfim •i-iooaiTt- Goooooococoin •ocociiQOO GM O CD > Ph \6 r-Hr-ir-HT-Ht-COiO -000003^00 C-; O C3J < "S i-^r-ii-l^ ' ' ' !t1H ' ' QOIO ' ^ -^'OaOOOiOGVilOOOCOCOrHOiCOCO CD ° ^a:lOiO(^»^mt-i>o (M iC o ° 6 'OOOt-I'^ioco OK;^0(MiO-^ C3 (U tfi ' ;5 ?! CD>OC^^Q0^^^tDr^ vDOCO Tl^ i> incoi>ooosco ,-iicco ID CD 2: u CO O -^ 00 O T-H 5D ^ CO O 0) c-o r-T Co" rH~ OtDi-(CCOaDGMJ>aiCii-iC0OO iO iC. Oi G0Or^alt-»OCMi>r-l0ir^0i»0O t- CM Oi ^CDOi-H»COCOCO -^^OCDiO Oi tc ^ !>- Cn^CCi>C<10 ^ !>C0rHCO IC CD CO C0i>0!>00--1 t-OCO CD CJi ^OOJOCDi-H ^05 "*„ QO" CO CC 00 ■*" i-T o" CO OiCOCOlO— . (^!OlCCOOt-^^OOC O C (—1 j>oi^«ocoioQOOT-*ioi>i>t^ioioj:- o OCDOSCOt-iCSCDCO ^t~ioa)Cvi ^ r- ^ vd locDirsicmcoi-ixiH ^ a co (^ rH ^ o OiCOOmi>^ COlOrH CD oo t^OOCOlCCO COWrH CO oT o" co" o~ ^" T-i" 6" T-H 1-1 (^i CD ' 1 — ( ' .(— < :o cti • -r— 1 • i=l • o3 ^ > J ^ .Th c 5 ; .^ .2 >,o ■ +- ^ ■s fl OQ 'E ra 'a •rH c^ C^ !- ) ^ OT nnsylva iw York est Virg io (Pern lio (Lim mtucky. nnessee ssouri . lor ado lifornia P zr > CD 0, ^^i^ .1 ^ D^i^ ^4 p^ ^ 1 — a ^ 208 Total production in the United States, 1859 to 1897, inclusive (38 years), 837,494,059 barrels, on the basis of 5.6 cubic feet to 1 barrel of oil, this amount of crude oil would fill a pipe line 6.9 feet in diameter, extending- entirely around the earth. It would cover a surface of 10,000 square miles to a depth of 0.2 inches, or fill a reservoir having an area of 1 square mile and a depth of 167 feet. PETROLEUM EXPOKTS FROM THE UNITED STATES, 1861 TO 1898. Q. (By Mr. Farquhar.) Have you furnished the commission to-day with the total exports of the Standard oil Company, from the first, all over the , world out of the United States? A. I do not think I have submitted any statement. It may be among these statistical reports given that there are such statistics, but I hardly think so. I have for periods given the exports. Q. (By Mr. Jenks.) Can you furnish the ex- ports year by year? A. From the day we began. Value of exports. Total value of petroleum products exported from United States for the years 1861 to 1871, inclusive, amounted to $199,030,333 Value of exports from 1872 to 1898, inclusive {i. e., since the oi'ganiza- tionof the Standard Oil Company) 1,246,846,381 Value of exports by Standard Oil Company , , 1,126,401,021 Standard Oil Company, 90.34 per cent, of total. Digitized by Microsoft® 209 PKICES UNDER COMPETITION — WOULD NOT ADVISE GOING BELOW COST. Q. With reference to the effect of the Standard Oil Company on prices you have made the general as- sertion that through the influence of the Standard Oil Company, in your judgment, prices of refined oil have been very greatly lessened to the consum- ers. Is it generally true that the prices at the present time are considerably lower at competitive points than at those where you have little compe- tition? A. Well, I can not speak with any pre- cision regarding that matler. I have no manner of doubt that, when we are closely pressed with com- petition at any point, we try to hold our trade. That is a natural law of trade, to which we are, of course, subject. Q. And your general practice is, if a com- petitor comes into the market that you have had before, to put down the prices and hold the market? A. I think, as a rule, the history of our transactions would be that the competitor forces the fight. Q. About what proportion of the refined oil of the country do you supply? A. Well, the grand aggregate is there. Q. Can you state generally? A. I should say that of this country it would be, approximately, the same as the whole; that is, about 82; 80 to 82 per cent. Q. Do you think that an organization that con- trols 80 per cent, of the goods that go into the market will, generally speaking, have the power, within moderate limits, of course, to fix the prices and force their competitors to^llow ? A. It might 210 temporarily have such power. If it exercises it unjustly or arbitrarily it would surely lead to its own downfall. Q. That is, if it attempted to push the prices too high it would call in competition? A. It would invite competition. Q. And if there is fierce competition between large institutions, prices cut in any locality — prices will go down how low; to the lowest rates? A. Personally, I would never advise selling goods at a loss. 1 expect it is done in some cases. I would not personally advise selling goods at a loss. I think when you get to cost you are low enough. Q. You would say, then, as regards your own methods of competition, that where the fighting is forced by competitors you do not cut prices be- low your cost? A. I hope not when they get to that point, because I would rather keep my works going and labor employed there than to shut down, even at the cost point. Q. You would not, temporarily, in a special locality, go below the cost .point for the sake of freezing out a smaller' rival, with the expectation of keeping or getting control of your market? A. I do not believe I would. There might be a greatly aggravated case where such a thing would seem advisable, but it would be a rare one. Q. You would not say that your company had never done that at all? A. I would not say that it was never done at all — no. Q. So far as an organization of the size of the Standard Oil Company is concerned, if you put prices down to cost you can afford to hold them there, of course, very much longer than a smaller rival could ? A . ^'miM.'^'S?^""® 211 Q. And I presume you are in the habit of doing that to get rid of a competitor at times? A. We- are in the habit of fighting vigorously to hold our trade and advance it. , Q. To the extent of holding prices down to cost until the rivals give way? A. Yes. Q. Now, the general result then is this : By vir- tue of your greater power you are enabled to secure prices that on the whole could be considered stead- ily somewhat above competitive rates? A. Well, I hope so. I think we have better merchandizing facilities, better marketing facilities, better dis- tributing facilities and better talent than a com- petitor can have. Q. I am not asking with reference to your power of making profits, but it is with reference to get- ting the prices from the consumer. A. Prices are what make the profit. If we had a better average price, we could get a better profit. Q. You think, generally speaking, that you get prices for oil slightly above competitive prices? A. Well, I should think so; I could not answer^ that is a very general question and very difiicult to answer. I could not answer that specifically. I hope that we do. Q. Of course, in this investigation we are seeing if we can get some general principles on which legislation might be based, and these questions are to bring out, if we can, the power that so great an organization has in fixing, prices. Would you say, then, that in the case of an organization that con- trols perhaps 80 per cent, of the markets of the country, there is a monopolistic element that enters in which enableg,.g^^^^^,g^„h^d prices above the regular rate? Is there a monopolistic power that 212 comes merely from the power of capital itself? A. Undoubtedly, there is an ability, and when that ability, as I have said, is unwisely used, it is sure to bring its own defeat. Q. If that ability goes to get an exorbitant price, of course it will invite competition, but when that ability is kept within modest limits, would you still say that it was in the power of such an organization to get the benefit of the monopolistic power that comes merely from the power of capital itself? A. Well, I should say that that would be a very restricted power, a very restricted limit. The competitors in this country are very active. Q. What? A. The competitors are very active ; they are alert at all points with their small offer- ings in the hope to find Just such a condition as you describe. Q. Certainly. A. But, as I say, as business is and as it has been for many years, we could not have that ability to any considerable extent as merchants. Q. Tf the ability were operative only to a slight extent, would it still be enough, do you think, to make a difference between what we may call a moderate dividend, say 6 or 7 per cent., and a pretty high dividend of between 15 and 20 per cent.? A. Well, that involves so nice a question that I could hardly undertake to answer it; but generally, as to the effect on the community, I should say — Q. Generally on the prices in the United States? A. I should say that the lessened cost incident to doing business in a large volume would more than Digitized by Microsoft® 213 compensate tlie consumer for any ability in getting higher prices. Q. Then that leads to this point, whether the large capital does itself give an organization the power to get a somewhat higher price than it could in the market provided the competitors were substantially equal in power? A. Oh, it may be so ; but that is a difficult question to answer. BT-PEODtrCTS. Q. In your business has there been any decided increase within the last 10 or 15 years in the by- products that come from the refining of oil? A. Oh, my, yes; oh, yes. Their utilization has been greatly improved, and the uses of the by-products throughout the world have been enormously in- creased. Q. Will you give us a few specific illustrations from your own business? A. Our leading by- products are the light gasoline and naphtha prod- ucts, the paraffin product that is used in candle making and kindred uses; lubricating oils for all classes of machinery, as taking the place of the animal and vegetable, oils ; the vaseline products, and numberless small products that I do not at the moment, perhaps, recall. I have named tbe lead- ing ones. Q. Can you say whether it would be possible for these various by-products to be secured to as great an advantage by an organization that had in its control, we will say, only half a million dollars? A. I don't think it possible for them. I don't think they could undertake the different branches of the business involved in the producing of these various articles iisfgjfi^foeroS«i)P there gives are 217 fixed by you? A. "Well, they are suggested, as a rule, by us. Q. He is your general purchasing agent, and there are various sub-agents there? A. Yes. Q. 'Do you recollect about how many? A. I should say forty or fifty. Q. The prices are fixed for it generally, as you say, from your office. As covering the principles on which those prices are fixed, a circular Mr. Seep issued some time ago v^ras produced here, stating that the prices that he would pay V70uld be fixed, in general, by the world's mark- ets; The implication would be that the prices would not vary probably very frequently o very violently. Has it been trne, generally, tha^ prices have kept stable for the crude oil of Penn- sylvania? A. "Well, the prices have varied some- vsrhat during the past several years, according as the outlook was for the production, and as the de- mand was. It could not be better stated by me than the circular states it. We have before us daily the best information obtainable from all the world's markets, as to what the offerings are, and as to what it is possible to sell for; and we make from that the very best possible consensus of prices, and that is our basis for arriving at the current price. Q. Grenerally speaking, are the relative prices of the crude oil and the refined oil kept substan- tially uniform? A. We know all about it every day, of course. Q. y^nd is the relation kept substantially uni- form? A. Oh, substantially so. Of course, it is not always the same. Of course, it seems possible sometimes to geiPwi^^^MI/ifrpm^ and we are glad to 218 avail ourselves of the opportunity ; and sometimes we have to take a closer margin and still buy the crude, and there, of course, Ave suffer a loss. Q. Statements have been made here by some of the witnesses to the effect that there have been times when refined oil at the seaboard was selling lower than the crude? A. I should say that is a very exceptional case. I do not recall. Q. Can you suggest any circumstances where that would be the condition of 'affairs? A. I do not recall any such period. The answer is already given by me that, in competing with the Russians at certain times for certain markets, we have made prices for refined that were as low as the crude products and have taken our returns on the profits from the by-products ; but they have been very exceptional cases, and it is not the case to-day ; it does not at all exist to-day. KEASONS FOR DISMANTLIlSTa REFINERIES. Q. You have at time's purchased the plants of your competitors and dismantled them? Instances of that kind have occurred? A. Oh, my, yes. Q. Will you state the business condition which, in your judgment, justified that? A. I endeavored to do that as directly as possible in my general argument. Q. Will you sum it up again? A. It is this, that we have at times bought refineries with the expectation of succeeding to the volume of busi- ness done by them. We have universally replaced the capacity of these refineries by better ones and better equipped construction at more favorable points. We would not buy refineries and disman- tle them for the D©k§§W'ft/cfiloflioing it. We have 219 done it because of a carefully considered business proposition, tbat being in the direction of economy in tbe business. Q. I will call your attention to the case of some refineries thai were bought up at Titusville. Per- haps you can explain somewhat in detail those cases. A. They were no exceptions to the rule. We had opportunities to utilize some of that property quite advantageously as small refineries. I think one of them was taken to Porto Rico. One was taken to Kansas, where it was put in after the new production ; and one to Porto Rico, where we were compelled by the tariff laws to refine. Q. (By Mr. Smyth.) Is the production equal to the demand?' A. Oh, always vastly in excess of it ; vastly in excess of it. Q. (By Mr. Jenks.) You made the statement that the dismantling of the plants at different times had not lessened your output. A. Oh, no. Of course there has been at all times an excess of capacity as compared with the demand. The ca- pacity of the refineries is never run full — on very rare occasions — I should say never. And the sole purpose in the abandoning of any .plant would be to conduct the business at a point where it might be more economically done. Q. Incidentally, in connection with that, it might be a more convenient way of holding your market in the locality where competition would figure? A. Precisely. Q. That would enter as one factor? A. Tbat would enter as one factor; yes. Digitized by Microsoft® 220 NOT THE STANDAEB'S POLICY TO MAKE PEICES SPECIALLY HIGH AFTER THEY HAVE * BEEN CUT SPECIALLY LOW. Q. The assertion is frequently made — I do not recollect whether it has been made on the stand — that in certain localities where you are compelled, in order to keep the control of your trade, to put prices down for a time until a rival withdraws from business, prices are afterwards put up above what they were before in order to recoup the losses incurred? A. There is no such policy in that business. Q. You have no such policy? A. We have no such policy. It is possible that, in' the zeal and anxiety to serve of some overzealous servant, sach a case might occur. If so, and if it was known, it would not be approved. Q. That is not your policy? A. No; that is not our policy. We fully realize that if we survive with our business we must treat the public very fairly. THE STANDARD DOES 75 PER CENT. OP THE CANA- DIAN REFINING — NO RAILROAD DIS- CRIMINATIONS IN CANADA. Q. Statements have been made several times of late in the papers with reference to special dis- criminatioas in freight rates that have been secured by the Standard Oil Company in Canada. It is said that they affect very unfavorably other American refineries. A. I am not familiar with it all. I know there have been such agitations in the news- papers, but I have considered it as one of the usual class of such agitations. I will gladly inquire Digitized by Microsoft® 221 about it, if you wish, aud see what information I can secure about it. I do not l^now of any dis- criminations in our favor; that is, any rates to the exclusion of other shippers of lil^e character at all. Mr. Rogers says Mr. Harris asked a question in that direction, as . to our being interested in the refining business in Canada. I did not hear him. Q. Will you please tell us about your interest in the Canadian business? A. We are interested in the Canadian refining business and are doing our best in the business there to get it on a fairly profitable basis. It has been very much disorgan- gized there for some time, and we have come into relationship there with that in the past year or so. Q. How large a proportion of the Canadian re- fining interest do you control? A. I think about 75 per cent. ; about 75 per cent. Q. Have you of late, to your knowledge, made any contracts with the Canadian Pacific and the Grand Trunk with reference to advancing rates from Buffalo and Toledo? A. Well sir, I have not any personal specific knowledge about the matter; I will gladly inquire about it. Q. Will you look it up and send us a reply? A. I will. Q. You will get full information on that subject? A. I will. The advance in rates on American oil from Buffalo and Detroit was made by the Cana- dian roads in their own interests and is in no way discriminatory in favor of the Standard Oil Com- pany, but rather to the contrary, for that company pays these advanced rates in full and ships over 75 per cent, of the American oil consumed in Canada. Digitized by Microsoft® 222 DOES NOT KNOW OF ANT KECENT CHANGES IN EEEIGHT KATES. Q. Aside from tlie question of special rates or special favors by the railroads, the state- ment has been made that at times you have been enabled to influence the railroads to put rates over certain lines so high that it would work to the disadvantage of competitors who had to use those lines more than you did. For example, Mr. West- gate testified that in shipping oil into Canada he had found himself at a disadvantage on account of this increase in rate of which I have spoken and of which you say you have no knowledge, and that in attempting to ship to Canada by another route, through the State of New York, he found that rates from his refinery to the northern part of New York State were very much above the rates that' might be considered normal there, judg- ing by the rates on other goods. For example, he found that on other goods the general freight rates to those places in northern New York were Boston rates; but on oil they were special rates. He felt that he was put at a disadvantage on account of the location of his refinery, and that the Standard Oil Company had succeeded in influencing the railroads there to make those special rates to the disadvantage of their competitors. What would you say on that general question? A. I do not know. Q. The matter would be entirely within the law, of course? A. I don't know of any such condi- tion at all. I have no knowledge of the rates — ■ the tariff rates on petroleum — having been changed in New York State or any place else for a long Digitized by Microsoft® .223 period. I don't know that to be so. It is with- in the bounds of possibility, btit I should be dis- posed to doubt it exceedingly. Q. You would be likely to know in detail with reference to the arrangement of freight rates? A. In New York State? Q. In New York State and in Khode Island. A. I think I would. I can make inquiry about it. I would say, with reference to the question of com- ing into relationship with the Canadian, refining interest, the question of rates was considered in connection with the refining, but, as I say, I don't know of any rates that are not open to all comers. Q. That is not the question. Competitors say that rales over one line have worked to their pecu- liar disadvantage and not to yours? A. I don't know of any such condition. I would say that it would be to the interest of the Canadian roads naturally to encourage business in their own ter- ritory. I don't know about that at all as to any preferential condition with us. BEPORTS ON competitors' BUSINESS NOT SECURED BY IMPROPER OR QUESTIONABLE METHODS. Q. In the testimony of Senator Davis a state- ment of this kind was made: That a man in his employ had been approached by a Standard Oil official and offered pay regularly if he would in- form the Standard Oil Company with reference. to their shipments. Does the Company under any circumstances get information .from the employees or officials of their competitors? A. The company does nothing of the kind. If any such case oc- curred — and it might as an exceptionally rare case on the part of %^/fi9Jc/^Mteftfe employee, who, in 224 Ms anxiety to know about his competition, might do a foolish thing — it is not approved by the com- pany. When Mr. Davis or Mr. Westgate or any- body else says that v^e in New^ York get dovsrn to our offices to get our reports early in the morning from the spies we have out, it is utterly untrue. We do nothing of the kind. We are not figuring on Mr. Westgate's or Mr. Davis' business; we are figuring on our own business. Q. Do you make the general statement that no reports are secured from your agents with reference to the business of competitors? A. I don't say that. I should say there would naturally be re- ports, such reports as they could rightfully secure; bat that they should secure them by improper or questionable methods of any kind would not be approved by any member of the Standard Oil Com- pany : and I would be only too thankful to have any such case brought to our attention. STANDARD OUj TRUST DISSOLVED, BUT THE AGGRE- GATION HAS WORKED AS HARMONIOUSLY AS BEFORE. Q. You have said that the general information with reference to the organization of the company would be furnished in the answer to the schedules of inquiries that were given you. But there are some matters that would not be covered in that, particularly. From Attorney-General Monnett's testimony, the different forms of organization of the Standard Oil Company are brought out some- what. You had earlier the trust organization; afterward the trust was dissolved, I believe, and you had a different form of organization. Will you sketch briefljg/f/zfeheyAobfiaafpes in organization 225 that the Standard Oil Company has gone through since the dissolution of the trust? A. Would it not be vastly preferable to have that in such suc- cinct shape as Mr. Dodd would furnish it? Q. That is not covered directly in the schedule? A. I think it would be so much more intelligently stated from the records than I could give it from memory in an oral statement, and I would like very nyuch if you would await that. Q. I think it possible that some of the commis- sioners would like to base some questions on your statement, and then we shall have that for record from Mr. Dodd. A. Well, briefly stated, the Standard Oil Trust, as such, existed from the year 1882 to 1892; formed in 1882 and dissolved in 1892. In 1892, at the time of the dissolution, the majority of the stocks of the various companies concerned or involved in the Standard Oil Trust were distributed to the equitable owners, and that distribution has gone on steadily until this time in the hands of liquidating trustees. Q. Nevertheless, since that time the different Standard Oil'companies have worked together in harmony, have they not? A. The ownership has naturally brought them into harmony of action; the like ownership, of course. Q. The general way in which the control has been kept uniform is this, that the men who were the former trustees have held the majority of stock in each one of these different companies? A. Exactly so. Q. So that the Standard Oil combination, as we may say, has worked together as harmoniously since the dissolution of the trust as before? A. It Digitized by Microsoft® 226 is hardly fair to call it a combination, but yoa might call it an aggregation. Q. An aggregation? A. An aggregation. Q. But as a matter of fact it has worked as har- moniously as before? A. Yes. THE AMOUNT OF TRUST CERTIFICATES OUTSTANDING IS SMALL. Q. Will you explain also briefly — because that was dwelt on also at length by Attorney-General Monnett — the method of distributing the profits to the stockholders under the trust and since? A. Under the trust the profits, of course, were cen- tralized into the hands of the trustees and distrib- uted ratably. Q. Distributed to the certificate holders? A. Since then the dividends have gone directly to the owners of the shares of the various companies. They have kept the same in one case as in -the other, of course. Q. (By Mr. Phillips.) Have they been paid on the original Standard Trust certificates? A. To the extent that those remained out, they have. Q. Is there a very large per cent, of them re- maining out? A. Not very large. Q. (By Mr. Jenks.) Do you recollect what per cent? A. I could not state ; it is becoming very small. Q. (By Mr. Phillips.) The market quotations are based on the original trust certificates? A, I supposed the quotations were based in New York on stock. Q. (By Mr. Jenks.) Will you repeat your an- swer. A. Well, it covers some equitable owner- T . . , Digitized by Microsoft® -^ ship, as it was. 227 Q. (By Mr. Phillips.) It is largely distributed now? A. Largely distributed now. Q. On the original trust certificates? A. No; oh, no ; not largely, but to a very small extent only. Q. And was for quite a time after the dissolu- tion? A. Yes ; but it is very rapidly being ex- tinguished. Q. When the Standard is quoted in the neigh- borhood of $500,000,000., or $490. a share, do we understand that to be the quotation on the orig- inal Standard? A. On what was represented by the original Standard. Q. On what was represented by the original Standard? A. By the original Standard Trust. TRUST CEETIFICATES EXCHANGEABLE FOB STOCK OF THE NEW JEBSEY CORPORATION REPRESENTING SUBSTANTIALLY THE SAME INTERESTS. Q. When a purchaser buys on the market 3 00 shares or 50 shares of what is nominally the Stand- ard Trust certificates and takes it to the company to transfer, what do you give in the place of that? If I should buy 100 shares of Standard Trust certifi- cates and take it to you — A. You would be en- titled to receive a share or an equitable interest in the various companies composing the Trust. Q. What form is that now in when it is trans- ferred? A. It may, if it is so desired, be in the form of a certificate of stock in the various com- panies. Q. They take it in that way when they purchase, transfer or sell? A. They do. Q. Do they tafe^/^feitt'aJ/disaflted form, or do they give them a certificate representative of these 228 aggregations? A. "What is the question? What he woald be entitled to? What he would be en- titled to would be his interest in the business of the various constituent companies. Q. Yes ; and what form of paper do yoa give for that in the way of a certificate? If I buy 100 shares on the market at, say, 490 or 480 or 500, and take that for transfer, or if a man dies and it is sold and transferred to some other person, what kind of a certificate do you give that person ; will it represent all these aggregations? A. We give him, if he so desire— we could not at all reissue a certificate of the Standard Oil Trust; we won't issae any new certificate of the Standard Oil Trust, that being in final liquidation— we would give him his stock in the various companies, or, as some of us are now doing, holding our stock through the New Jersey corporation, he w^ould hold his inter- est in that way. We would give him a certificate in that representing substantially the same interests. Q. Have you such transfers being made.^ Q. (By Mr. Smyth.) Have you got yours in the new stock? A. Oh, to a small extent. Q. (By Mr. Farquhar.) The question is whether the general Standard Oil certificate of stock is on the Stock Exchange of New York? A. None on the Stock Exchange. Q. Not at all? A. No. Q. Then you take up the eight subdivisions? A. How many — seven or eight. Q. And the New Jersey company? A. And the New Jersey company. Q. And the stock that is so quoted in the New York market isoi^ltl^Sy MiStosM) is the remaining fraction of the Standard Trust. 229 Q. Of the old Trust? A. Yes. Although, I think, to a very limited extent, tlie stocli of the New Jersey corporation, which substantially repre- sents all, would be also quoted. THE MANAGERS OP THE STANDARD HATE NOT SPEC- ULATED IN ITS STOCK. Q. (By Mr. Farquhar.) The stock that is usual- ly seen quoted in the New York market is what we might call little driblets of stock? A. That is it. Q. Ends of estates and stock that has come from the division of property into their hands ; in other words, the Standard stock is not in the market, in the general sense of the term, as a dealing stock? A. No, sir; the listing of it on the Stock Exchange is carefully avoided, and they have never endeav- ored to make it a speculative affair at all. Q. Have you never, of your knowledge, at any time, known when your stockholders and your di- rectors or ofiicers or others have dealt in those stocks? A. Oh, I think to a limited extent there have been some transactions on the part of the officers in the stock, usually in the way of adding to their interest, perhaps, as opportunity has oc- curred. I think I have myself. I must myself plead guilty to the charge of having bought 100 shares and then resold them again within the past 10 years. I think that represents my entire stock transactions in 10 years. Q. Are not usually the stock transactions con- fined to the oflacers and the present shareholders of Standard properties? A. There are a large num- ber of shareholders — 3,500. Q. These are simply figures. It is the main fact that we want. 'i^'MM^'&Mt^ Standard Oil, the 230 great properties, is not stock that is usually put into the New York market or any other market^ but is property that is confined within a circum- scribed number — say 40 or 50 people — who are the main great owners and managers? A. Un- doubtedly, the majority is held within as limited a number as that. Q. Have you at any time in the history of your company ever sought to make a profit through your stock? A. Oh, dear, no, sir. Q. At any time? A. Only in the promotion of the business, in the improvement of the stock as a whole, but not as a speculative thing in the stock itself. As I say, I have within the past 10 years personally bought and sold 100 shares. That shows the extent of my operations. Q. (By Mr. Jewks.) Will a list of the dividends that have been declared on the stock, the value of it, and so on, be furnished in answers to the schedule? A. Undoubtedly. Q. Those answers have been made? A. So far as I know; Mr. Dodd has the matter in charge, if that was called for. THE STAKDAED OIL COMPANY OE NEW JERSEY. Q. Now, will you take a moment to explain the organization of this new ISTew Jersey corporation out of the others? A. It is simply that a New Jersey corporation, with a capital of $100,000,000. of common stock and $10,000,000. of preferred stock, is formed that shall be competent to own the stock of these different corporations, to buy from all parties who own stock as they may desire to sell. Digitized by IVIicrosoft® Q. It is expected that these other corporations 231 will practically throw their stock into that? A. Not the corporations ; the individuals owning the stock. Q. (By Mr. Phillips.) Then would it not be a case of a hundred -million company absorbing a five-hundred-million stock? What would they give them in value for it? A. It is substantially the same value that was represented in this Stand- ard Trust ownership ; substantially the same value, whether it is one hundred, two hundred, three hundred or four hundred. Q. This new stock would be put out at three or four hundred per cent, premium? A. No; there is no new stock being put out. Q. (By Mr. Smyth.) The capital is to be one hundred millions? A. That is it. Q. And it is simply a reissue under the New Jersey charter? A. It has nothing to do with the issue; there is no new capital sold at all. Q. Simply a reissuing of the present stock to the present stockholders under another name and an- other charter? Q. (By Mr. Phillips.) Necessarily carrying the same value? A. In other words, the trust being dissolved and the parties in it receiving their equitable shares in the various companies, bring them and sell them to the Standard Oil Company of New Jersey. PREMIUMS ON CRUDE OIL MEAK USUALLY QUALITY ; SOMETIMES COMPETITION. Q. (By Mr. Jenks.) Will yo"u explain to us briefly the system of premiums on crude oil in the districts where the crude oil is purchased? A. In the producing dig^tM^e^ Microsoft® 232 Q. In the produeing districts. A. The preBiiums are usually the result of the question of value in the different parts of the district. I will not say- that in some cases they have not been lower some- what, caused by competition ; where we have had private facilities in certain districts to take care of the oil, and other people have come in and tried to take it away from us, in some cases we may have j)aid more than we would like to pay. I cannot say ; perhaps that is so; but, as a rule, in the spec- ial case of the Franklin oil and the case of the Lima oil and Scio oil, that is not it. It centers entirely on the question of value. Q. I infer from what you say that at times, in order to dispose of competitors, the premiums have been kept on till the competitors have been bought out and have been dropped afterwards? A. As I said, when onr business has been attacked we have endeavored to protect it. Q. (By Mr. Phillips.) I am somewhat familiar with the pipe-line business in the oil fields. Take our district, where an independent line went in a short distance from Oil City; a premium was put on that oil, and no one claimed that that .oil was more valuable than Oil Creek oil or other oil. It was not put on there on account of the value of the oil. A. As I have already said, that may be a case in point; where we have found, after pro- viding these special facilities, which have no value ■for any other purpose, that our business was at- tacked by a newcomer, we have, of course, endeav- ored to protect it. Q. You put on a premium on the oil which the Standard purchased after the American — you will remember that t]4'^^^^:i^rH¥^ through to Phila- 233 delphia and established refineries there, and it be- came quite valuable. 'Now you put on a premium both in Butler County and in Washington County, those very large fields at that time, did you not? A. We undoiTbtedly did. Q. It was t^-ken off when you purchased, was it not? A. Undoubtedly, and we would do the same thing again. We could not do less and be in the business. Q. And you do 'not do that as a mode of dis- crimination? A. We do not; we do that as a matter of self-protection. Q. And when you think you can do it in a legal way you do it, whereas you cannot give a rebate? A. That is it, precisely. Q. Now, there is a pipe line in the Scio field in Ohio, and there is- an independent line there, and there is a premium existing there? A. There is, but it is a question of quality. The Scio oil is a very superior quality. We could not pay a premium for it with the light business that is being done were it not for the quality. Q. But in the case I have referred to in Butler County and Washington County that was not a question of value, but of competition? A. It was competition, unquestionably. There were very strong competitors, and we were there to fight them, of course. THE standard's STOCK IK IISTDEPENDEWT COM- PANIES. Q. (By Mr. Jenks.) Several times in the course of the investigation statements have been made with reference tQ),^fey^'»,fil^^ed interest that the Standard Oil Company has taken in the Producers' 234 Oil Company, Limited. Statements have been made as to their buying stock in that company and attempting to get control of it. Will you give your version of that? A. We bought some stock in the Producers' Oil Company, Limited. We bought some stock also in the United States Pipe Line. Q. About what proportion of the stock did you buy? A. Well, I could not state from memory — a fractional interest in the United States Pipe Line and a larger part in the Producers' Oil Company. Q. A majority of the stock in the Producers' ? A No, no; I should say considerably less than a majority. Q. At any time? A. That is, in the Producers' Oil Company, Limited? Q. Yes. A. To the Producers' Oil Company, Limited, we found such difficulty in the way of admission — Q. (By Mr. Phillips.) I always understood that it was a little over half, and I want to be corrected by Senator Lee if that is wrong. A. Senator Lee, I think, is mistaken, as well as yourself. We never owned more than one-half. The gentleman who bought ours, pending the ownership decision, did own a little more than half; we never did. Q. It was under yonr control, and you worked in harmony? A. It was until we sold it. Q. You worked in harmony with the other person? A. We generally work in harmony with him. Q. Yon, would in the management, if there had been a change? A. If there had been a change we should have hoped for a better relationship, butitdidnotcSMif^^W^^^Stght that stock and 235 were so opposed in the exercise of ownership- that we sold it. "We sold it in good faith, and the Courts have upheld the ownership of Colonel Carter; that has been finally upheld in a most remarkable adjudication. The Court held that he was the beneficiary, but because of some by-law on the books of the corporation he could have no voice in it whatever. AVe have no interest in it whatever, not even a dollar's worth. Our owner- shixD in the United States Pipe Line was bought at a time when we thought that the business ought to become profitable. It was bought as an invest- ment and with a view to having such knowledge as we could have rightfully through such owner- ship, as we should acquire in the progress of the affair. There is nothing covered about it. Our ownership was contested by the gentleman in charge of the property, and the Courts have passed upon it, upholding our ownership, our right to own, and giving us our place and recognition on the board, and we have never done a thing to hurt the business of the company. We have been greatly pained that the results from it have not been more profitable, and we do not understand why they have not been. We think that one of these days, if that iniquitous voting trust is ever dissolved, the shareholders will awake to a feeling that somebody else than those who have managed it could do something for it. Q. (By Mr. Phillips.) Did not all the share- holders agree to the voting trust? A. You got all of them to agree to it, but there have been some that want to get out of it mighty bad. Q. Then you did control, through Colonel Carter, in the Producei^'Bl1'^(Mtepe«^, Limited, a little 236 over half the stock? That was carried up to the Supreme Court. It was organized, a partnership, limited, in which the law itself requires the per- son to be admitted by consent of a -majority of interest and stock in order to vote, and the by- laws recognized the same thing. The Supreme Court decided that purchase would not make your party a partner in that concern °any more than, if I should buy a partner out in the dry -goods busi- ness, I could force myself in. The law was gotten up for that special purpose, as it is understood in Pennsylvania, the same as the English law, was it not? A. I must con'ect you very positively, once and for all, when you say that we are controlling through Colonel Carter. We have nothing what- ever to do with Colonel Carter. The purchase made by Colonel Carter of the stock that we owaed was made in good faith, and he owns it entirely. He can give it away or tear it up with- out raising any question with us or anybody that I know of. The question of the decision of the law I am not here to criticise. I am not criticising judges or courts. But the law was a very queer one, that a man should be adjudged by the Court the equitable owner of a majority of the stock, and then it should be ruled that because of some by-law of which he had not been cognizant, passed by the company, he could be kept out of any voice in the comj)any. That is a very queer law, whether in New York or Pennsylvania, anywhere else. Q. Did Colonel Carter buy that stock of his own instance? A. He did buy it of his own instance. Q. And withogt.^a^v(^i;^^^^tion or agreement with the Standard Oil Company? A. He was in a 237 contention regarding the matter of his individual ownership, and he became enlisted in it and bought our stock, as I say, in the negotiation, the same as yon, or I, or anybody else would buy it. We were glad to get out of it. Q. You had purchased a large amount of stock? A. We had purchased a large amount, and we sold it. SUSPECTS TBEIGHT DISCRIMINATIONS AGAINST THE STANDABD. Q. (By Mr. Jenks.) You have stated em- phatically several times that yon have received no discriminating favors from railroads at all since the passage of the interstate-commerce law. The statement is frequently made that railroads are making discriminating rates on freights of different kinds at different times. Have you, in your own business, met with opposition of that kind, or have you had reason to believe that your competitors were receiving special favors against you? A. Well, I would ratlier not go into that question. I do not feel that I am prepared to go into it. That we have strong suspicions on that line is true enongh, but I am not here to make charges against other people. I am not here prepared to do it. There might arise exigencies in the course of the testimony where it would seem necessary for us to look up the records; and if so, I shall be glad to ■do it. Q. You have no evidence to give on that sub- ject? A. I have nothing to present to-day on that subject. Digitized by Microsoft® 238 FAVOES PUBLICITY OF ACCOUNTS UNDER A NA- TIONAL COEPORATION LAW. Q. You made a suggestion near the close of your direct testimony with reference to legislation. Would you consider it advantageous to the country as a whole to have greater publicity regarding the business of all the great corporations that now exist? For example, with reference to the amounts of stock that are represented by plant, the amounts represented by patents, by good will, the amounts that are water, and so on. In other words, would you consider it an advantageous thing for the country to have substantially the English corpora- tion law apply in this country? A. If it could be put into Federal hands, yes. Q. Into Federal hands? A. Into Federal hands ; yes, by all means. Q. And you would favor, then, the publicity of accounts, the making of reports to the Federal Government quite in detail? A. Oh, unquestion- ably. Q. Somewhat the sam« system as is applied to our national banks? A. Unquestionably. Q. You would favor any law of that kind? A. I certainly would. MARKET PRICE OF STANDARD STOCK. Q. (By Mr. Phillips.) Will you state what the highest price is that the Standard Oil Com- pany's stock has reached on the market? A. I think the present is about the highest price. Q. What is the last quotation? A. I think 460 or 465. Q. That would represent $460,000,000. or $465,- .000,000. ? If it ?,^i^ld^|llj)e |„# at that price. 239 I [Q. Do you object to stating the amount of divi- dends you have been paying? A. That is to go in the statement asked for. (By Mr. Jenks.) I have furnished to Mr. Arch- bold one of the schedules prepared by the commis- sion, and that is to be filled out and returned in 10 days. NO KEBATES ON OIL OF OTHEB COMPANIES — NO COM- PELLING REFINERS TO SELL TO THE STANDARD. Q. (By Mr. Ratchford.) Has your company re- ceived any rebates on the transportation of oil of other companies? A. It has not. Q. What have you to say as to the charge, so generally made against your company, particu- larly, I believe, in the Western States, to the effect that small producers and refiners are forced to sell their product to the Standard Oil Company? That is a pbase of the question v?hich, I believe, has not been touched upon to-day. A. I think we have gone into it very fully. Q. What have you to say vpith reference to the charges, so generally made, to the effect that smaller concerns,, individual producers and re- finers, are forced to sell their product to the Stand- ard Oil Compajiy? This is a charge that is made in Colorado, and I v?ant to give you an opportunity to deny if it is untrue. A. It is untrue ; there is no such compulsion of any kind, either with refer- ence to the producers 'or refiners. In fact, we buy very little of the product of the small refiner — next to nothing. Q. Your company has made no agreement with reference to such small concerns? A. No. Q. Did the pap^/zgotitw Mkay(«®submitted in evi- 240 dence here to-day state that certain other com- panies have received rates of transportation from certain points cheaper than your company have ever received? A. I stated only the one case in connection w^ith transportation of oils furnished by the Central Railroad of New Jersey to the United States Pipe Line. I furnished a statement on that. Q. (By Mr. Kennedy.) There w^as testimony in Colorado to the effect that a distributing com- pany there took all the products of the two refine- ries of the Colorado field, and Senator Hill, of Colorado, who owns one of these refineries, testi- fied that the distributing company, or merchandis- ing company, which bought all of this refined pro- duct, was the AVestern concern of the Standard Oil Company. A. They may do so, but it is entirely a voluntary act on the part of the company refining the oil. There is certainly no compulsion about it. Q. You say they do not buy? A. We not here a't the East — the Standard Oil Company. I did not have in mind the question of a possible pur- chase in Colorado of the local production ; that m;ght be so. Q. (By Mr. Ratchford.) Is there not such a thing as cutting the prices on that distributing company and forcing them, through business reasons, to dispose of their product to your com- pany? A. I do not know how we could do so. It might prove they were incompetent buyers. Q. They hold otherwise. A. Their relation to the company — the distributing company— although I am not familiar with it, must be voluntary ; cer- tainly no compulsion about it. Digitized by Microsoft® 241 AMERICA OSTOT IN THE MARKETS OF THE WORLD, BUT FOR THE STANDARD. Q. (By Mr. Smyth.) Do we understand from your testimony that you claim the Standard .Oil Company has been of vast benefit to the oil indas- try in the United States and abroad? 'A. I believe that it has been of vast benefit to the country. Q. Do you believe it has been a benefit to the American people? A. To the American people and the American producer of oil. I belief firmly that America vrould not have been in the markets of the world if it had not been for the Standard Oil Oil Company. OBSERVED THE STRICT LETTER OF THE LAVS^. Q. Do you state, since the passage of the inter- state-commerce law, in 1887, your company has not received rebates of any kind from the trans- portation companies? A. I think we have observed the strict letter of the law in all that pertains to interstate transportation. CAUSES OF THE STAiNDARD'S PROSPERITY. Q. Yet, since that period your company has prospered more than ever before? A. Yes. Q. How do you account for that? A. One of the contributing features, in my mind, is the greater stability that has attached to the trade since the passage of the law; the extension of bus- iness, growth of business, and better utilization of by-products, and all that; but very largely the stability of business incident to the stability of rates through the inter-state commerce law. Q. I suppose 1di^f/Eta# •ro ^ ■li s> o m E i-iaii>-*(M'-icoowc<)»o IC '75 iC Ici O t-' xtH CO i> r-l tri ^' CO OJicLCiocooyiooi x)i>aocvi(M-*io^ocajco -T T-T co" '^^ icT Td^ T^ cvf -^ ic.' 00 CD CO Oi 00 00 C5i 00 CO CO CO CO ■CD „ 03 ,— 02 r-^ Oi ro CO CO OO CO CO a:> IB o ^ o ^ O) * (B ffl o c o S OJ rt O) rt IB CD a^ CO £ d 9i P 1^ c» :c ^^ ^ o 00 -* CO ^^ IC o o) l-H yj OJ CO CO CO iQ (N T — 1 Cvi aj 33 CD CO -* o r_| Oi Ol CO CO f^ ^ IQ (^ lO i> lO T-H f^ — cu T 1 C- — ' O) •^ T— 1 CO CO o f- lO ^ r^ O ^ on CO ^^ f- c^ o m v> CO 03 IC ^ o a; CO -* o IC w rH o o ^, ^„ OJ lO CO t- ■* CCCOCOC fs^ s i> mmpanj for freight. 286 The contract does not say so. It says one-half of the difference between this 17 cents and the "said public rate" shall be paid to the railroad. Refer- ring back to see what "public rate" has been men- tioned we find it is "the public rate which the local pipe charges." There is no other reference to "public rate" in the section. The figures which Mr. Newlin injects instead of the "said public rate" are made up of the through rate from exit point of gathering pipe and the public rate which the local pipe line charges, or 68 cents, while said "public rate" is 20 cents, and one-half of the difference between 17 and 20 is 1 1/2. Therefore, if he had made his figures cor- rectly, he would have shown that the Standard only paid 1 1/2 cents per barrel freight while others were paying 48 cents. But such a reductio ad absurdum would have defeated his purpose. Pursuing the investigation further, it will be found on Mr. Newlin's theory that "one-half of the difference between this one-fourth and the said public rate" fixed the amount the Standard paid for its freight. If the railroad charged others 60 cents per barrel, the Standard would pay nothing. But if others paid 33 cents jjer barrel, the Stand- ard would pay 3.37 1/2 cents, and the lower the rates to others the higher to the Standard. All this is absurd, and the absurdity consists in the misreading and misapplication of the section. It has no reference whatever to the freight rates the Standard shall pay. They were fixed by the railroad without discrimination. When others paid 48 cents the Standard paid 48 cents, and when others paid 83 cents the Standard paid 33 cents, but if t^^ghleW^^crmfl^ of the way to sea- 287 board by pipe line, under this agreement, the pipe line was paid a pro rata proportion for its share of the transportation. To compensate the railroad for a low rate of freight, the pipe line company agreed to take something from the pipe rate which the local pipe line charged and pay it to the rail- road. This only applied when the rate was less than 40 cents, and would increase as the railroad rate diminished below this point, but was "never to be such as to make the local pipe receive less than 10 cents per barrel." Admit for argument that the Standard and the pipe line are essentially the same, and what is the result? The Standard received from the railroad company a pro rata amount for its share of the transportation by pipe line, and to recompense the railway company for an exceedingly low rate for through freight, agreed to pay to the railroad com- pany a portion of its local pipe-line earnings. It may have been a rebate to the railroad; it cer- tainly was not a rebate to the Standard. Coming next to the agreement of August 22, 1884, which superseded the agreement of May 6, 1881, a case of payment to the railroad company is* much more clearly shown. The pipe line was then completed to seaboard. It could not have reached that point without the consent of the rail- way company, as no free-pipe line law then exist- ed in the State of New Jersey. It was still neces- sary to have a traffic contract with the railroad and to deliver oil to the railroad at diif erent points on the through line, that point being Milton, as before, for oil destined for Philadelphia. In ad- dition to agreeing to pro rata rates for oil carried partly.by^pipe £M'^i>Mf''^f®tai\, it was further 288 agreed that if the railroad company did not move 26 per cent, of the oil, the Transit Company- should pay it the deficiency. Settlements were made with the railroad com- pany, and one of the settlements is referred to in Mr. Newlin's letter, that of September 30,1884, which shows a payment to the railroad company for such deficiency, amounting to $10,722.22. Many such settlements were put in evidence, all of them showing monthly payments of large amount to the railroad company. None of these were payments for freight, but payments to the railroad company for the deficiency in the amount it carried as specified in the agreement. Attemi)ting to distort a payment of this kind to the railroad company as a discrimination in favor of the Standard Oil Company ceases to be absurd — it is malicious. S. C. T. DoDD. Law offices of Geo. Tucker Bispham, A. H. Winterstein, John Hampton Barnes, Sharswood Brinton, Girard Building, Broad and Chestnut streets, Philadelphia. Despeaux v. P. R. R. November, 29, 1899. S. C. T. DoDD, Esq., Standard Oil Company^ '26 Broad,way, New York. Dear Sir: I did not find Mr. Sellers in when I called to-day, and am now writing without consul- tation with him. I will, however, supplement this letter by any suggestions which Mr. Sellers may have to make. Mr. Newlin's claim, to which you refer, is based not upon any oral testimony given at the trial, but entirely upon InBigmfm^^/middmeS) of the fourth and 289 eighth paragraphs of the agreement of May 6, 1881. This agreement was between the National Transit Company and the railroad company, and it was in our view of the matter simply a traffic agreement between two transporting com- panies. Mr. Newlin's position, however, was that the National Transit Company was in reality the Standard Oil Company, which owned a large con- trolling interest in its stock, and his argument is based upon that assumption, and his contention is that any diminution or abatement of the charges of the railroad company under this contract inured to the advantage of the Standard Oil Company and was to be treated as if it were an allowance or re- 'bate to the latter company. He arrives at the figures which you give in your latter in this manner: He considers the fourth and eighth paragraphs in the agreement together, and he contends that the provisions as to through rate contained in the latter paragraph, when read in connection with the former, are applicable to through rates, whether the same are greater or less than 40 cents per barrel from Foxburg to Commnnipaw. As- suming this' to be so, Mr. Newlin's calculation is as follows : The eighth paragraph provides: "Whenever the through rate from the exit point of gathering pipe shall be less than 40 cents per barrel, the local or gathering pipe shall be con- sidered as entitled to a rate equivalent to only one- fourth of the rate which shall be formed by the addition of the said through rate to the public rate , . , , , JDigitized bv Microsoft® , i n n ^ , i which the local pipe cnarges, and one halt oi the 290 difference between this one-fourth and the said public rate shall be considered as due and to be paid to the railroad company, but this difference shall never be such as to make the local pipe re- ceive less than 10 cents per barrel." The through rate by rail was 48 cents. The public rate of the local or gathering pipe was 20 cents. The calulation, therefore, would be thus: 48 > plus 20 eqaals 68 ; one-fourfh of 68 equals 17 ; one- half of 51 equals 25 1/2; 48 minus 25 1/2 equals 221/2. The above calculation is the basis on which Mr. Newlin's allegation, in his letter to Mr. Rice, to which you refer, is based. The ] 9.875 cenis per barrel is arrived at by Mr. Newlin in this way, the calculation being at the rate of 33 cents per barrel from McCalmont to Commuuipaw on the same principle as above. Thus: 36 plus 20 equals 53 ; one-fourth of 63 equals 13.25; one-half of 89.75 equals 19.875. This is the way in which he gets his figures showing, as he says, that the Standard Oil Com- pany was charged that amount only for transpor- tation. In addition to the obvious replies that the ar- rangement was a traffic arrangement, and that such an agreement cannot be construed as a re- bate to a shipper simply because that shipper hap- pens to be a stockholder, and even a controlling stockholder, in one of the transportation com- panies, there are other answers based upon the language itself of paragraphs 4 and 8. The assumption that the provision in para- graph 8, when'^'^'^t&e^^fra?e°^is less than 40 291 cents, shall be applicable to ijaragraph 4, wMcb refers to a rate above 40 cdnts, would seem to be without warrant. Moreover, the "one-half of the difference between this one-fourth and the said public rate" refers to the difference between the said one-fourth (made up of the through rate by rail to the public rate by local pipe charges) and the rate of local pipe charge-^that is, 20 cents. In other words, instead of taking one-half of 51 (see above calculation), there should be taken one- half of 3, being 20 less 17, or 1 1/2. Whether I am right in this last calculation or not, it is nevertheless true, as I have stated above, that there was no evidence whatever, oral or writ- ■ ten, which was introduced at the trial, which justifies Mr. Newlin's assertion; but that assertion rests altogether upon his forced construction of the fourth and eighth paragraphs of the agreement of 1881, which I have endeavored to explain. If the foregoing is not sufficiently clear to you, let me know and I will endeavor to make it plain. Truly, yours, Geo. Tucker Bxspham. Attached thereto is the following : Law offices of Geo. Tucker Bispham, A. H. Wintersteen, John Hampton Barnes, Sharswood Brinton, Girard Building, Broad and Chestnut Streets, Philadelphia. Despeaux vs. P. R. R. December 6, 1899. S. C. T. DoDD, Esq., ^6 Broadway, New TorJc. Dear Sir: I have your favor of the 5th instant. After the plai#S#^tos^d'-(feiiPfevidence a motion 292 for a nonsuit was made and fally argued by Mr. Sellers and myself on the part of the defendant and by Mr. Newlin for the plaintiff. The motion for a nonsuit was granted. Mr. Newlin made a motion to take it off, and this was subsequently argued and the motion denied. The nonsuit therefore stands. Mr. Nevv^lin has taken an appeal to the Circuit Court of Appeals, but there has been some difficulty about settling a bill of exceptions. When this is finally adjusted, I will advise you. Meanwhile the above will give you the present condition of affairs. Truly, yours, Geo. Tucker Bispham. Q. (By Mr. Jenks.) Have these pipe-line and railway companies changed their rates on oil since 1884? A. You go back too far for me. I can say that the rate for oil of the Pennsylvania Railroad Company, both for pipe and rail, is the same as it was when I came to New York nearly ten years ago. Q. A copy of the contract was furnished by Mr. Archbold, and fixed the dates pretty definitely; but you say the rates have not changed for ten years. A. For ten years. "please tuen another screw." Regarding the letter from Chess, Carley & Co. to J. M. Gulp, general freight agent of the Louis- ville and Nashville Railroad, June 16, 1881, in which the expression was used: "Please turn another screw." The firm of Chess, Carley & Co. was a partnership in which the Standard Oil Com- pany, of Cleveland, had an interest. This was before the form^RMipc/M'Mf^pgo'^andard Oil Trust, 293 which was formed in 1882, and the firm of Chess, Carley & Co., as I have testified, was a partner- ship in which Mr. F. D. Carley was the resident partner and manager. Tlie Standard Oil Com- pany of Ohio had an interest in the Chess-Carley business, but absolutely no control or direction of that company's affairs. I was in the office, and the only boss we knew was Mr. F. D. Carley. I should like to refer, in regard to Mr. Carley's control of that business, to his testimony taken before the Bacon committee in 1888. On page 526 of that committee's report Mr. Carley testified as follows (reading) : "Q. Were you a member of the firm of Chess, Carley & Co.? A. Yes, sir. "Q. At what time? A. Through its whole his- tory. "Q. .Over what years does that extend? A. I do not remembei' exactly, but I think somewhere about 1869 or 1870 we formed that firm. "Q. When did you terminate it? A. When we formed the Chess-Carley Company. '•■Q. When was that? A. Four or five years ago. I was president of it until its dissolution. "Q. State whether or not it was dissolved when it sold its pjoperty to the Standard Oil Company. A. Yes, sir. "Q. Are you connected with the Standard Oil Company? A. ISTo, sir. "Q. You occupy no position under it? A. No, sir. "Q. Where did you reside during the lime you were a member of the firm of Chess, Carley & Co. and the Chess-Carley Compairy? A. Louisvillej -^ Digitized by MicrosofifS 294 "Q. Had yoii charge of that business? A. Yes, sir; I was sole and exclusive manager of the Chess. Carley & Co. and of the Chess-Carley Com- pany." The party who wrote this letter (and without the linowledge of Mr. Carley) was a Mr. Hath- away, who had formerly been in tlie Louisville and Nashville Railroad employ. His explana- tion of this letter was that when errors occurred in the Louisville and Nashville Railroad office, there was an expression used, "that the machin- ery of the office was loose," and it should be corrected or tightened up by turning a screw. Li the case referred to, the shipment of a car of oil by Rice to Nashville was billed at less than the regular tariff rate which other shippers were paying, and Hathaway simply called their atten- tion to the error and used the expression referred to. By reference to page 530 in the book of testimony taken before the Committee on Man- ufactures, in 1888, it will be seen that Mr. P. D. Carley testified as follows (reading) : "This much I know about this letter that Hathaway wrote. He would say to me, 'Mr. Carley, there is another carload gone through to Wilkerson,' or to wlroever it miglit be. I said, 'I do not think it is right on the part of the road. Can not you get them to stop it? I men- tioned it to them before. They said it was the fault of the clerk; that it was clerical.' " Now, on page- 524 Of the same book, Mr. J. M. Culp, who is the gentleman to whom the letter was addressed, and who was general freight agent of the LomsvmeP'R'im''^mmm road, and who is 295- now traffic manager of the Soutliern Railway here, testified as follows (reading) : "I desire to say, with regard to that letter, or rather with regard to the rate charged on the ship- ment referred to in that letter, that it was less than the proper rate. It was less than any rate that we had with Chess, Carley & Co., or I believe ever have had. " It was a fifth- class rate. Our rate on oil from Louisville to Nashville was higher than fifth class, and I presume the desire of Chess, Carley & Co.. was to have at least as high a rate as was charged on their shipments charged on this. Had that letter come to me -^had I seen the letter — I would have simply understood it that it meant that we should re- quire our agents to charge at least as high a rate as was charged on the shipments of Chess, Carley &Co." That is the explanation of it, and, in my opin- ion, a very reasonable one. The facts are, as Mr. Gulp has testified, and as I recollect the occur- rence, that the rate charged on that shipment was less than we were paying at that time and less than we ever paid, even prior to the interstate commerce law. CHESS, CAKLEY & CO'S GROCERY STORE. Mr. Rice alleges that the Standard Oil Com- pany established grocery stores in the South. This was before the Standard Oil Company had any control or direction in Chess, Carley & Co's. business, as that business was entirely under the control of Mr. F. D. Carley. And the establish- ment of that ^^fmffy m9^f<®as referred to by 296 Mr. Rice, was during the time of Chess, Carley & Co. Q. (By Mr, Jenks.) Such a grocery was established by Chess, Carley & Co. for the purpose alleged by Mr. Rice? A. There was such a store. Q. (By Mr. Smyth.) Was there only one? A. Only one. Q. (By Mr. Jewks.) Was it established for the purpose of driving out a competitor in the oil business? A. T did not say that. I say that Chess, Carley & Co. established that store to sell groceries and oil, the same as there were stores established selling oil and groceries. Q. Did Chess, Carley & "Co. have stores else- where for the purpose of selling groceries and oil? A. Wo ; it only had that grocery store. Probably the profits of that were not sufficient to justify an extension. Q. (By Mr. Smyth.) Where was that store? A. Columbus, Miss. ; but the Standard Oil Company had no more to do with it than that stenogra^jher. Q. (By Senator Kyle.) Have the Standard Oil Couipany ever indulged in such a practice? A. It has not, to my knowledge, in any way or at any place. Q. Prior to the interstate commerce act or since? A. Not to my knowledge. Q. Have they ever made any threats in that direction through their agents? A. Not to my knowledge. Q. You do not know, then? A. I do not. TANK CARS. Regarding Mc^^gaJ^MSbeeiMng to build tank 297 cars for Rice on credit, the Standard Oil Company never directly or indirectly had anything to do with it and never had any knowledge of it until it was seen in Mr. Rice's testimony. The charge that the Standard Oil ComiDany bought up tank cars from railroads, in order to keep them from other shipjpers, is positively de- nied. As to railroads owing tank cars, I would say that the tank car is a special car, used for the transportation principally of -petroleum, and it would be a burden upon the railroads if they were required to invest their capital in tank cars. The ownership of the car would not insure transporta- tion of oil, and if every railroad were required to have sufBcient tank-car equipment to do the oil busiaess that at times moves over its rails it would mean the building of many more tank cars than the business would require. For instance, say it would require 200 tank cars, costing $150,000., to transport oil between Chicago and St. Paul and Minneapolis. There are five lines competing for this business, and if each railroad was required to own 200 cars there would be four times as many tank cars as the business would require. Take as another example the McDonald field, which was a producing field and is now. At one time it pro- duced oil to the extent of 60,000 to 80,000 barrels a day. It has run down now to 5,000 barrels. If the Pennsylvania road and the Lake Erie and Western, which are the two railroads which touch that field, had been required to furnish tank cars to move the oil produced in the McDonald field when it was V^o§.ngj^^JO£Ogto 80,000 barrels a dav those roads would be in rather bad shape with 298 their tank cars now, when there is only 5,0.00 barrels to move from there. A tank car is just like a Pullman car ; you might just as well require a railroad to own all the Pullman cars that are necessary to go over its road as to require the rail- road company to own all the tank cars that may at times go over its rails. Q. (By Mr. Kennedy.) Can you state which is the cheaper system for the railroads to employ in the transporting of oil — the tank car or barrels? A. I would like to say now the tank car, by all means. But Mr. Rice referred especially to that in his evidence, and I will touch that later on. If you will allow me to proceed in the regular order of his testimony, I think it is better to go right through it. TANK CARS FAVORED AS AGAINST BARRELS. Mr. Rice alleged great discriminations in favor of the Standard Oil Company as against himself for a year or so after the passage of the law. I would say that he refers to the published tariffs of various railroads, that were published and printed and open for all on the Louisville and Nashville railroad and other railroads which at that time made lower rates on oil in tank cars than on oil in carloads in barrels. These were published tariffs and open to everybody, and Mr; Rice and other shippers ship- ped in tank cars as well as the Standard Oil Com- pany, and the Standard Oil Company shipped oil in barrels in carloads the same as Mr. Rice and other shippers. It was simply a tariff rate in which the railroads made a difference between the tank-car rate and the bar^L^^^g^p^r^j^e, and it was open to all; there was no discrimination between parties 299 at all. It was a discrimination, or a difference rather, between two modes of shipment. Q. (By Mr. Jenks.) At that time had there been any ruling upon the relative rates for tank cars and barrel shipments by the [nlerstate Com- merce Commission? A. There had not been ; but in 1888 Judge Cooley, of the Interstate Commerce Commission, ordered that the rates per hundred pounds on oil in tank cars as well as on oil in barrels in carloads, including the weight of the barrels, should be' made the same, and the rail- roads adjust their tariffs according to that, and the tariffs remain on that basis to-day. Q. At the time Mr. Rice claims he was dis- (?riminated against in this way was he, as a matter of fact, shipping oil in tank cars? A. He had a few tank cars, and other oil shippers had tank cars: and as far as the higher rates on oil in barrels are concerned, the Standard Oil Company was shipping more in barrels than all the others put together. Q. How about the relative amounts in barrels and in tank cars shipped at that time over these roads? A. At that time I would say that, as I recall the evidence which was given at that time iu this book, our carload shipments were in excess of our tank-car shipment. Q. Your barrel shipments? A. Our barrel ship- ments were in excess of our tank-car shipments. Q. Over those roads on which you said the dis- criminations were made? A. Over those roads the shipments — prior to th(?se shipments the rates were made.on barreled oil and tank cars; the tariffs were published, and they simply pursued that same Digitized by IVIicrosoft® 300 system of making- rates, and it was open to every- body thatliad both methods of shipment. Q. And other shippers than the Standard Oil Company had both modes of shipment which they were using? A. Absolutely. Mr. Eice refers to outage of 62 gallons and then 42 gallons which was made on all tank-car shipments. This was an al- lowance for the average loss between the full shell capacity of the tank car, which tank car was loaded at the loading point, and the amount that was taken by actual measurement to be received in the tank car at destination. This allowance was made to all tank-car shippers alike and was reasonable, as the actual loss was in excess of the allowance. The allowance, however, was discontinued in the summer of 1892 and has never been reinstated. The principle of that allowance was simply that the railroad ought not to charge on a quantity greater than it delivered, and as the actual result and experience had shown that there was a loss between the amount of oil put into the tank car at the refinery and the amount delivered at the point of destination, an allowance was made, which was very small, at that time 62 gallons, and at another time 42 gallons; but this, as I say, since 1892 has been done away with completely. KSTIMATED AVERAGK WEIGHT OF PETROLEUM PEO- DUCTS. « Mr. Rice refers to the relative charge made by railroads between oil in tank cars and oil in barrels in car loads. The railroads receive a very much Digitized by Microsoft® 301 larger percentage of live weight on oil in tank cars than on oil in barrels. Railroads charge and collect freight on tank-car shipments at full shell cai)acity of the tank car, no 7-natter whether that tank car is loaded to its full capacity or not. The average capacity of the Union Tank Line Company's cars to-day is 140 barrels, and it is on that basis that the railroads charge and collect their freight. Q. (By Mr. Smyth.) Yon do not weigh the cars? A. The weight of the petroleum in tank cars is taken on the basis of the shell capacity of the tank, based on an average weight of 6.4 pounds to the gallon. The reason for that is that some pro- ducts of petroleum, sucli as naphtha, weigh from 5 1-4 to 5 3-4 pounds to the gallon; refined oil weighs 6 1-2; lubricating oil weighs from 7 1-4 to 7 1-2 pounds to the gallon ; and the average weight of 6.4 pounds represents the actual average weight of the various products of jietroleum as they are manufactured and as they are shipped throughout the United States ; and the reason the railroads have made snch a rule is to prevent misrepresenta- tion and tlie'cost that would be involved in weigh- ing every tank car. You can see that it would be a very difficult matter for a railroad to get the actual weight of tank-car shipments, because those tank cars are first loaded at the refinery and not in the railroad yard, as ordinary freight is, and then pulled out by the railroad. They could only weigh, therefore, the full tank car with the weight of the car added to it, and that car is probably des- tined to some point away beyond that railroad that receives it on its rails. So the custom has been ■ever since I have had any knowledge of the busi- ness to have one^iftfaf ^'WlfPt which applies to 302 all products alike and applies to all shipments alike. Q. The average is both as to weight and capac- ity ? A. No ; the average is as to v^eight. The capacity of the tank car varies, and the capacity is shown by the various tank-car owners to the rail- roads, and they publish it at large to the world in the form of this tank-gauge handbook, which shows the actual number, owner, and capacity of every tank car that is iised over the various lines in the United States to-day. Q. (By Senator Kyle.) And the average charge is, as you state, 6.4 pounds to the gallon? A. To the gallon. Q. For the full tank capacity? A. Full shell capacity of the car. Q. (By Mr. Smyth.) Do all the large refining concerns own tank cars? A. Very largely. I will show you the tank-car ownership in the United States in a few moments. The same rule applies, I might say, where oil is shipped in barrels. There is an average weight of 400 pounds applied to the various products of petroleum. Some weigh less and some more, but 400 pounds is the accepted weight on railroads on all petroleum products. TANK. CARS RETURNED EREE. Q. (By Mr. Clarke.) Those which you have referred to are for freight one way I suppose? A. The freight rate is charged, of course, only on the freight that is hauled. Q. (By Mr. Smyth.) Does the car come back empty? A. The car comes back empty ; the tank car as well as the box car. very largely, simply be- cause the box oamm^mSM%ith on is unfit for 303; use for sundry merchandise. You will find that every large oil- carrying railroad in the United States has the box-cars marked " oil," meaning that they can be used only for oil. I do not mean to say they are never used for any other freight, but they are set aside for that purpose. Q. (By Senator Kyle.) Is there any charge for these return tanks? A. No charge. Q. Has there ever been a charge for return tanks? A. No, sir; not in my recollection. Q. Have they ever charged the independent com- panies outside of the Standard Oil Company for the return of these tanks? A. No, sir. They charge the Standard Oil Company the same rate. I mean to say that since the passage of the inter- state-commerce law there has been no charge on the return of what is known as regular tank cars, the cylinder tank car, within the United States, excepting to one section. Q. (By Mr. Smyth.) There is no freight charged on empty coal cars, is there? A. No, sir. ADVANTAGES OE TANK CARS. I digress from this question as to the relative charge. I have stated that the average capacity of the Union Tank Line car to-day is 140 barrels. The minimum weight required by railroads in the ship- ment of oil in barrels is 60 barrels, and not 1 per cent, of the carloads of oil in barrels in the United States run over 60 barrels from the fact that even loading 60 barrels in an ordinary box car requires putting them up on top of the lower tier. This is an expense to the owner and to the railroad, and it also causes leakage from the rolling of the bar- rels on top. Th§/g/??^fl^/jasdt^t carloads of oil 304 shipped in barrels in box cars average 60 barrels as against the average capacity of tank cars of 140 barrels. Therefore one tank car holds twice as much as a box car when loaded with oil, and the railroads receive their pay accordingly. Q. It takes less cars? A. Necessarily. It means one car instead of two for the same freight. It means carrying two cars for one; all ex- pense of handling, and the cost of two cai's. Q. (By Senator Kyle.) And the expense of un- loading is less? A. Yes; in the ta,nk car. It is universally loaded by the shipper and unloaded by the consignee. In the box car it is generally load- ed by the shipper, and very often unloaded by the railroad in their depot. The tank car never is. Q. (By Mr. Jenks.) Is the freight rate the same per barrel, whether in barrels or in tanlt cars? A. It is the same rate per 100 pounds. In barrels the weight of the barrels is charged for. Q. So, when shipped in barrels freight is charged on 400 pounds? A. Yes. Q. When in tank cars it is 300 pounds for the same amount of oil? A. Yes. Q. That makes shipping by tank cheaper than by barrel? A. Absolutely; but the barrel, is an article of merchandise. When the oil is sold in barrels the value of that barrel is ''added to it. There is no ground why the railroad should, on an article of merchandise, which the barrel is, receive no pay for the shipment. Admitting the pay on the weight of the barrel, the railroad then only gets half as much revenue on the oil in barrels as on tank cars of oil. Digitized by Microsoft® 305 TARIFFS NOT MADE UP AT NO. 26 BROADWAY. ' Mr. Rice charges that railroad tariffs were is- sued from No. 26 Broadway. I deny x^ositively that we have ev^er made or promulgated any rail- road tariff by any Standard Oil Company interest, and I am positive that no railroad tariff was ever promulgated by any Standard Oil Company inte- rest. Mr. PntLLiPS. I will ask Col. Clarke to take the chair, as I expect to ask some questions in a short time. I shall be obliged to you, Colonel, if you will take the chair. Q. (By Mr. Jenks.) You say that no oil tariff has been made or promulgated by any of the Standard Oil Companies. I suppose when that statement was made it was • not intended to be taken literally. Would you go so far as to say that the Standard Oil Company, or the Standard Oil officials, did not reason with railroad officials in order to get them to agree upon what they con- sidered to be a fair and just rate of freight on oil? A. I certainly do not wish to be understood that myself or possibly others of our representatives have not seen railroads in regard to tariffs on the shipments. We do have intercourse with railroad officials, as every large shipper probably does, but that we have ever issued Mr. Rice's intent cer- tainly was to give the idea that we simply named a rate and sent it to the railroads to accept. It is not true. RATES NOT ARRANGED TO FAVOR STANDARD OIL SHIPPING POINTS. Q. Is it a fact, as has been frequently stated, that over lines of^Mh&k^^msme the Standard Oil 306 Companj' has very large slaipments the rates on oil are frequently made, relatively speaking, lovsrer than over other roads where the business rivals of the Standard Oil Company have large shipments and where the Standard Oil Company's interests are relatively small, and that this difference in rates to the advantage of the Standard Oil Com- pany is brought about by the influence of the Standard Oil Company officials? A. That is abso- lutely not true, sir. In the first place I do not know any railroad on which competitors of the Standard Oil Company ship that we do not ship on ourselves; and the oil rates of the United States from the various oil shipping points are on a basis. In other words, the same rates apply from all of the Pennsylvania oil fields, both East and West, and the same is true of the Lima field ; and while we may not be located at the very point some competitor is, he has the same rate from his shipping point in that field that we have from our shipping point in the same field. Q. Your main distributing points are, I suppose, ordinarily different from those of your chief com- petitors. Would yon be able to secure rates from your main distributing points which , would affect your business favorably and not affect your rivals in the same way? Is that frequently true? A. I do not think it is, sir. I can only say that we get exactly the same rate from the same point and to the same point that every other shipper pays from and to that point. STANDARD MEN CONNECTED WITH RAILROADS DO NOT GET SPECIAL RATES FOR THE STANDARD. Q. (By Mr. K^aitimt-M^i- the Standard Oil 307 Company officials or stockholders ever in a posi- tion, as railroad officials, where thej'- can give fa- vors to the Standard Oil Company in its ship- ments? A. I am glad you asked that question, sir. I do not think it, but I knowr. Mr. Eice wishes to give that impression, and I can say in reply that since I have had any knowledge of rail- road rates on the Standard Oil Company's business, no official of the Standard Oil Company who is connected with railroads has ever made a rate or arrangement for the Standard Oil Company, nor have any of those gentlemen who are connected and have interests with railroads ever asked me to give any undue or unreasonable, or in fact any, share of the Standard Oil Company business over such a railroad. In other words, the Standard Oil Company's business stands on its own merits; and, as I before said, none of these gentlemen who may or may not have interests in these various railroads have ever made a rate or made an arrangement for Standard Oil Company business. That business is done by me, or by the proper party in whose terri- tory or district the question may arise. Q. Should you be sure to know whether that was so or not? A. I should know. If any of the gentlemen who have large railroad interests, as al- leged, made a tariff or arrangement with a railroad for our business, I certainly should know of it. I should be advised of it, as I am the proper depart- ment that has a record of those rates, and should have to know, necessarily. Q. (By Mr. Smyth.) Do you understand that shipments of the standard Oil Company have not been influenced £o^,aS§ ^^rtai^ lines by the fact that the officers of the Standard Oil were reputed 308 to be large owners of the stock in those lines? A. In no way, sir; and. you can readily see that if the Standard Oil Company's business was run on the basis of favoring the individual interests of -the different stockholders of the Standard Oil Com- pany, the company's business itself would neces- sarily suffer. Q. (By Mr. A. L. Harris.) It is true that officers of the Standard Oil Comj)any have offices in different railroads? A. It is true that Mr. William Eockefeller, for instance, is a director in some of the railroads. He probably also is a bondholder in the United'States, but there is no connection between such interests and the interests of the Standard Oil Company, or the business of the Standard Oil Company. ALLEGED TANK-CAE DISCRIMINATIOjSTS. Q. (By Mr. Clarke.) We will proceed. The Witness: Mr. Rice refers to a rule of the Southwestern bureau in regard to charging on the weight of a tank, wJien that tank is intended for storage, at the same rate as on the oil contained in the tank. If, as Eice alleges, the Standard Oil Com- pany owns nearljf all the sub-stations of the coun- try, this rule is hard on the Standard Oil Com- pany. If the railroads wished to discriminate in favor of the Standard Oil Company, they would carry the weight of the tank free the same as they do the regular tank car. Do you understand? Here is a tank that is intended to be used as a storage tank at some sub-station. It is loaded with oil and sent to that station. The railroad rule re- ferred to charges the same rate per hundred pounds on the w©j^b*y^f /itb«po/f®,nk as on the oil. 309 contained in the tank. Now, ordinarily, on the tanli car there is no charge for the weight of the tank. If they wanted to favor us, all they would have to do would be to treat that tank containing; the oil as they do the ordinary tank car. Q. (By Mr. Phillips.) There is one question I want to ask. That is in regard to shipping oil by barrel and by tank car. Has it not been testified that it is much more dangerous to ship oil in tank cars than in barrels, in case of collision and fire? A. It may have been so testified, sir. Different men have their different opinions ; but the answer to that is that the tank car is growing in favor, not only in the shipping of petroleum, but in shipping all other liquid products, which are open to the same objection. I think the economy in shipping in tank cars over shipping in barrels, which is be- ing shown by the enormous growth in the use of tank cars for a great many liquids, proves that the tank car is a better method for shipping. And the Central Freight Association rule to which he refers is entirely jiroper, as it is intended to prevent tlie unloading of bulk petroleum in railroad yards or depots without proper facilities, as such unloading would increase the danger of loss by fire. The rule simply means that they will not allow a tank car to be held in the depot or in the yard of a railroad to be unloaded by improper means into a tank wagon or into bar- rels, as leakage or accident might result, to the large loss of the surrounding property, and they simply require that proper facilities should be at the point where the tank car is shipped to. The Southern Pacific tariff : The rule referred to was submitted tounds on the difference, amounting to $52.98, was collected." I also offer in connection with that case the tes- timony taken before Commissioner Prouty at the hearing in Boston, March 12, 1898, and I would like to read from Mr. Winlock's testimony at that time. Mr. Winlock was general agent of the New Haven Road at Boston, and testified that he had full charge of rates from Boston to all points on the New Haven Road. Mr. Winlock says: ''I have nothing to say ex- cept what Mr. Page has said, so far as the relations between the New Haven road and the Standard Oil Company is concerned, is absolutely true. There is no arrangement of any kind between the Stand- ard Oil Company and the New Haven road by which they can get any better rates, whether it is by rebate, or by underbilling, or by anything of that kind, than what everybody -else gets. Our rates are published and posted for everybody. These underchariUfc^flby-Rfjgj^gtfevifere errors of our 316 local agents in accepting them as such. They should have investigated the matter more than the.y did. Instead of blindly taking the weights given by the Boston and Albany Railroad vouch- ers, tliey should have taken some means, as they did in nearly every other case, to get at the proper weights. The tariffs to Newport were based on actual weight, and instead of taking this construc- tive tonnage of the Boston and'Albany road, which they used for purposes of their own, they should have taken, as I said, some means of ascertaining the weights in every case. The other cases were errors of theirs." Q. (By Mr. Jenks.) I see in the testimony that the weights are taken from the Boston and Albany. I understand your shipping point is East Bos- ton? A. It is. Q. And the Boston and Albany road takes the oil from East Boston to where it delivers to the New Haven and Hartford? A. Yes. Q. Is it true, as has been stated, that when oil is delivered to the Boston and Albany road by your ]3eople the billing is done by your people di- rectly, and that you furnish the weights to the Boston and Albany? A. It is not true, sir, as was shown in tliis late testimony. I will explain it : Our works are located at East Boston on the Bos- ton and Albany road. The Boston and Albany road have to switch any car from Boston to East Boston, where the cars are delivered to the New Haven road. That switching charge, as I recall it, is $6. per car; either ^4. or $G. per car. The Bos- ton and Albany road, like many other roads, wishes to show its tonnage, whether the rates are per car or per hundred pounds; and where the Digitized by Microsoft® 317 rate is per car, as in this instance, it probably uses 24,000 pounds, which is the usual carload weight; it is the minimum carload weight. They simply put in 2^3,000 pounds. The testimony shows, and I swear now, that we did not give the Boston and Albany road 24,000 pounds as the weight of those cars, nor did we give them any weight. We did notify, not only directly but through this book, the actual weight of all those cars, and it was simply an error of the New Haven road, as shown in the testimony, and as offered by Vice President Hall, that the New Haven road took in error the constructive weight of the Boston and Albany in their bill, instead of taking the actual weight, which th^y had in their power to get, and should have got. Q. It is usually the custom of the Boston and Albany in their shipping, to put in the minimum weight, 24,000 pounds? A. It seems to be so in this case. I can not say what the general custom is, but it is the custom. There is nothing excep- tional in the Boston and Albany having a switch- ing rate for switching; it is no more than any other railroad does. Q. As to the regular custom of the Boston and Albany in shipping to points in Massachusetts, you will swear somewhat positively that their shipping rates are based on the full car rates? I I am not.speaking of interstate traffic. A. I say this : that, as far as the Boston and Albany rates are concerned, whether within the State of Massa- chusetts or without the State, we pay exactly the same rates as anyone else pays from Boston to the same destination. Now, I cannot recall and I do not know every l©^ieEft$)i^Maftso^ery railroad in the 318 United States, but I do know that we pay'the same rate of freight from the same point to the same point as every other shipper. Q. Whether it be local, within the State, or in- terstate? A. Yes. Q. (By Mr. A. L. Harrts.) Who determines the weight and contents of the tank car as listed in your book? A. The capacity of the tank car is first found in the case of the Union Tank Line Company by measurement, and that is confirmed by water gauge, and the Central Freight Association have a bureau of inspectors who go around and test the capacity of those cars. Q. Each car is numbered? Each car is num- bered and each car's capacity in gallons is given, and its equivalent capacity in pounds, based on the average weight of 6.4 pounds per gallon. Q. (By Mr. Clarke.) What paper or vouchers passes from the Boston and Albany Railroad Com- pany to the New York, New Haven and Hartford Railroad Company in that case? A. Simply a bill of lading that that car which they received at East Boston and which they delivered to the New Haven road at Boston was destined for the New- port Gas Light Company at Newport. Q. Do the Boston and Albany haul this freight over its line from Albany to Boston at a lower measurement or at a higher measurement? A. This shipment originated at East Boston on the line of the Boston and Albany road. Q. Over the road that used to be called the Freight Railroad from East Boston to Boston? A. I do not know the name of the road, but the switching charge is from Boston to East Boston. Digitized by Microsoft® 319 Mr. Claeke. I will explain to the commission that it is a railroad some 4 or 5 miles long. It is rather more than an ordinary switch. This used to pass around through Cambridge and connect with the main line of the Albany road, and then ran back into Boston to connect with the New York, New Haven and Hartford. EEGJON SUPPLIED WITH OIL EROM BOSTON. Q. (By Mr. Jenks.) You spoke of this ship- ment originating at East Boston. Do you have East Boston for the main distributing point for all New England? A. For a section of New England. Q. What section ? How much is covered from your central distributing point? A. Well, I can not say. Of course, it is for Boston particularly, and I know we make shipments from there up to Portland, and I know we make shipments from there down into Massachusetts and Connecticut. Q. Down as far as New Haven? A. Almost. I mean as far as New Haven. It depends upon what we may have in the Boston tanks, and what the order may be for. You know there are many grades of petroleum, and we do not carry every- thing required at that point or at every shipping point. Q. Do you suppose that your ordinary ship- ments of petroleum for lighting purposes, at New Haven, for example, would come from East Bos- ton? A. No; I do not think that we ship to New Haven from East Boston. Q. You would to Providence and Newport, prob- ably? A. Newport. In these cases it depends upon the stock and depends upon the situation. I cannot an-swer ay^/Yfeedtij^ew/eflSftfflte territory that may. 320 be supplied from any station, but it would supply the territory as far as its location and its stock was able to do so. Q. How do yon supply your shipping station at East Boston? A. We supply partly by rail shipments and partly by steamer shipments from New York and Philadelphia. Q. From your refineries at Bayonne? A. From seaboard refineries, whatever one it may be. WHY ARE THROUGH RATES REFUSED ON PETROLEUM PRODUCTS? Q. The statement has been made here by some of the independent refiners that in their attempts to ship oil into New England from the West they had found that, although there were through rates on the regular tariff sheets for almost all kinds of goods, there were no through rates for petroleum on the New York, New Haven and Hartford. They stated that in shipping corn, or almost anything else, to Newport or Providence, they would get through rates the same as the Boston rates; but that on petroleum no such through rates were given at all; they had to give the local rate, and this local rate, added to the regular rate from the West, made a rate to New Haven or Newport or Providence very much higher than to Boston. Q. Now, the statement was made here that that applies not only to NewHaveti, but gpnerally, and that the shippers of petroleum in the West are placed at a decided disadvantage on that account. Can you give any reasonable explanation why the railroads should make a special exception of petroleum as to ^^fj^^l^^^^g^ot through rates? 321 A. Why, T can say this — that I do not know any- thing about the corn rates at all. Q. As to what is the general rate? A. I mean to say that there are many commodities which the railroads make rates on, on the basis of through rates and local rates, whereas they may be apply- ing through rates on other commodities. I do not know anything exceptional in the matter of oil in New England as compared with corn in the West. I do know that we ship ffom the oil regions to New England to some extent, and we pay exactly the same rates as the other fellow pays. Q. Can you mention some of the New England points you supply from the West or from regions of the West? A. I cannot. I can say we do make shipments to New England as well as Boston. I know also we have made shipments from Cleve- land, and also as far as Lima, and wherever we have made those we pay the same ' rates as other people do. Q. Is it your rule to make shipments from Cleveland, Lima, or other western points to the territory of the New Haven road? A. Yes; we have. Q. The general fact that you have a distribut- ing point at Boston, from which you can supply this territory that is supplied by the New York and New Haven road, and that they can not fur- nish.through tariffs from the West, would seem to some of your competitors, at any rate, to give you some decided advantage, although no il- legal advantage, over them? A. We do not deny that hj having our refineries at the At- lantic seaboard ad^/^BPiFteiB^ew England from those refineries we have an advantage over the 322 man who has to take the oil from Cleveland or the oil region, bat we claim no fair adjustment of rates can be made that will put that man on an equality with us in that situation. Q. Would you say further that the Standard Oil Company officials have not represented the matter to the New Haven road in such a way that they have succeeded in getting the New Haven road to refuse to make through rates on petroleum, while it does make through rates, and those equiv- alent to Boston rates, on a very large proportion of other goods that are shipped? A. I think that Mr. Commissioner Prouty answered that question by saying that the New Haven road in charging arbitrary rates on oil from Boston as well as from the Hudson River were receiving more money themselves than they would if they applied the through rate, and for seliish reasons they got the most money they could out of the traffic. Q. (By Mr. Smyth.) Is it not a fact that those rates ajjply to a great many other commodities be- sides oil ; that a larger rate is charged for the shorter distance? A. As I say, Mr. Smyth, I do not know much about other traffic. I can say specifically in regard to the difference in the rate of corn and oil that I do not know the reasons for it. I can say in a general way that I do not be- lieve the railroads make rates that will injure the business or prosperity of the road. The prosperity of a road depends upon the prosperity of the pa- trons, and if the railroad makes any rates that are going to prevent shipping over their road, it seems to me they are doing what a reasonable man would not do ; and my experience is that the rail- roads are represera^^ahyflasrbigfe an order of Intel- 323 ligence in this country as any class that I know of. Q. You have no reason to believe that oil is the only commodity that is charged a higher rate for the shorter distance? A. Absolutely none. Q. I mean to that point? A. No, sir; I only know, however, about oil. MR. WILLIAM KOCKEFELLER DOES NOT INFLUENCE TARIFFS ON THE NEW YORK, NEW HAVEN AND HARTFORD. Q. (By Mr. Jenks.) It has been intimated by Mr. Rice and others that this special refusal to give through rates on petroleum by the New York and New Haven road was presumably brought about by th.e fact that Mr. William Rockefeller was a director of the road, or by some other special in- fluence brought to bear in favor of the Standard Oil Company to check these shippers of the west? A. I will say, as far as the New Haven road is concerned, and Mr. William Rockefeller, that ab- solutely I do not know, of any arrangement, or any tariff, or any change in tariff, that Mr. William R.ockefeller has ever suggested or intiaenced on the part of the New Haven road or any other road. I do not believe that Mr. Rockefeller knows who the traffic manager for his road is to-day; or would know him if he was in this room. LOW RATES FROM THE STANDARD'S WORKS AT WHITING. Q. (By Mr. Kennedy.) *I see that your testi- mony has been so far in rebuttal of Mr. Rice; there was anotheorgSE^nb^sB/c/bafere the commission who made a statement that I should like to hear 324 you say something about. He ' is tiie gentlernan to wliom you have just alluded, an interstate-com- merce commissioner. He made a statement before the commission which seemed to show that the Standard Oil Company had an advantage in ship- ping from its Whiting works down the Mississippi valley to New Orleans over the independent ship- pers or refiners of Cleveland, Ohio. I do not know just what the figures were, but they struck me at the time, if true, as indicating that the Standard Oil Company did have an advantage in the rates that were made, a great advantage, over the .re- finers of Cleveland. As traffic manager of this tank-line association, do you know anything about those rates? A. I know what the rates are from Cleveland and from Lima to New Orleans. They are based on the local rate to the Ohio River plus the rate from the Ohio River to New Orleans. The rate thus figures out, as I recall, less than half a cent a ton a mile. The haul from Cleveland to New Orleans is over 1,000 miles and has a low rate. As to the rate from Whiting to New Or- leans we have an advantage. Whiting is some 400 or 500 miles nearer New Orleans than Cleve- land. The rate from Whiting — Q. (Interrupting.) Not that much nearer? A. Well, I do not know that it is, but it is appreci- ably nearer. And the rate from Cleveland to Whiting plus the rate from Whiting to New Or- leans is higher than the rate from Cleveland to the Ohio River plus the rate from the Ohio River to New Orleans. In other words, I mean to say that we are paying a higher rate in proportion from Whiting to New Orleans when you consider the haul from ClevelSJa^z^ftfeiW'hrJepa®;. 325 Q. (By Mr. Jenks.) The rate from Whiting, as you say, is considerably lower than from Cleve- land. Do you know whether the rate from Whit- ing on other similar products, like linseed oil, for example, is lower than the rate from Cleveland to New Orleans? A. T do not know what the rates are on linseed oil either from Whiting or from Cleveland. Q. Statements have been made to this effect — I do not mean to say that these figures are exact, but approximately exact — that on linseed oil the rate from ClevelandHo New Orleans would be pos- sibly 28 cents, and from Chicago it would be some- what less, say 26, but that on petroleum the dif- ference would be as great as from 31 to 26 cents, showing that there would be a considerable ad- vantage to petroleum as compared with a some- what similar product, like linseed oil? A. I can not testify on that ; but you cannot pick out any two commodities and say that because there is a difference on one between two points the same dif- ference should apply to the other. The reasons governing commodities are very often different in the matter of their manufacture, of the territory that they go over, and the cost in getting them up to that point, and various and sundry reasons, which are good reasons from the railroad stand- point ; and as they have the authority we accept them' as good reasons. Q. (By Mr. Clarke.) Are linseed oil shipments made in tank cars? (No answer.) Q. (By Ml'. Farquhar.) Is there a large ship- ment of linseed oil from Whiting? A. Without being an expert on linseed oil, let me call your at- tention to the dflfgM^^'^^^ltseed oil is grown 326 very largely in the west. At Chicago linseed oil ia nearer the point of prodaction than it is at Cleveland. Now, there may be very good reasons why the rate from Chicago to New Orleans on linseed oil might be higher than it is from Cleve- land, simply because the traffic may stand more. Q. The natural distributing point for linseed oil is east of Cleveland rather than west of it? A. The natural distributing point is west of Cleveland rather than east, because the oil is grown in the west. Q. Would not the same reasons hold good for Buffalo the same as Cleveland? A. Yes. Q. Now, does this commission understand you to say that the position of the Standard Oil Com- pany on the seaboard, having an inside line of dis- tribution, is an advantage that you get over all competitors, and that that one is just the one that you have? A. I do not understand what you mean by the inside advantage. Q. By the shorter line of distribution — geo- graphical distribution? A. At the seaboard for the East and at Chicago for the West, as I have said, we have an advantage over the man who is shipping at some interior point. Q. And the Standard would have the advantage over all competitors on an even tariff? A. No. Q. On an even tariff for all from the same point? A. Yes. I say we are on an even tariff for all. We ship from Cleveland, where our competitor is, and we ship from the oil region where our competi- tor is; yet we have competitors on the Atlantic seaboard that pay the same rate as we do. We endeavor to supply each point from our nearest refinery . Digitized by Microsoft® 327 Q. (By Mr. Claekb.) Do you know why your company located their refinery at Whiting? A. Because it was nearer the great West, which is a large consumer of. oil. HAVE OBEYED THE INTERSTATE-COMMERCE LAW. Mr. Farquhar, I do not know whether you were here when I made the explanation in regard to the Newport case. Q. (By Mr. Farquhar.) I do not care; I will take the record as it came on that. A. But I will call your attention to the fact that the Standard Oil Company has shipped thousands of carloads of freight to all points in the United States, over nearly every railroad line in the country, and the freight bills for its cars pass through the hands of numberless employees both of the railroads and the shippers who have such large and diversified interests throughout the United States, and it would have been impossible to keep such rebates secret had any such been granted, especially since Mr. Rice and others like him have been on the con- stant lookout for something tangible by which to prove their oft-repeated allegations that the Stand- ard Oil Company had been violating the interstate- commerce law. That law has been in effect for more than 12 years, and at the end of this period the best case that the opponents of the Standard Oil Company can produce is that involving a clerical error in the biling of three or four cars shipped from Boston to Newport ; and I would like to see somebody else equal that record . Digitized by Microsoft® 328 EAENIKGS OF UNIOJST TANK LINE COMPANY ONLY 4^ PER CENT. Mr. Rice makes the statement that the mileage paid the Union Tank Line Company of three- fourths of a cent a mile pays back the investment every three years. I would say that since the formation of the Union Tank Line Company, August 1, 1891, that company has never paid a dividend, and that the earnings of that company for the 8 years, 1891 to 1898, inclusive, have shown an average yearly return on the capital invested of 4 1/2 per cent. j)er annum. This return has been ligured without charging anything off for deprecia- tion, although, according to master car builders' rules (on which railroads base their settlements between each other) a depreciation of 6 per cent, per year is deducted in case one railroad destroys another railroad's cars. The three-fourths of a cent mileage paid the Union Tank Line Company is exactly the sam3 as is paid all other tank-car owners, and there are in the United States be- tween 170 and 180 individuals and companies, en- tirely oatside of the Standard Oil Company, own- ing an aggregate of 7, 42D tank cars, while the Union Tank Line Company's eqaipment November 1, 1899, was 5,851 cars. I offer a statement giving the names and owner- ship, made up from the very best records we have, , of the owners of cars outside of the Union Tank Line Company, showing an aggregate ownership of nearly 2,000 cars more than the Union Tank Line Company has. (Following is a copy of the exhibit- offered by the witness): Digitized by Microsoft® 329 o 1 1 s ^ ^^ r^ "^ ■^ e "= ^ ^^ s e g S §^ ^ 5>i 5^ s CO OQ T-l 03 P-l •3 „ o .^ SO) ■ J-1 ■ ra > fa O > o TJ O o 5 gl ■ c ■ s o o CD " O) o 5 as p-l O O P •<-f TO fLiPnPqOO^ o M^ 03 o P5 9 oP^ P^ P^ d ?-i a; 03 5 c CO bJO Pi Q-r^. oi 2 O TO • I— < s-i • f^ 6 ^ 5 .g ^ O nj =« c: i^ d ^^Ph =« d 5 ^ ^-1 o be d II— I d •-d 0) d ^ cs d .§ *| d ci 03 Digitized by Microsoft® 330 o 5=1 8 S o S g i-HOOrHCMOiHOiOTtHrHOCMOi^ +3 C^ (D ^ > oD i> g i; o- t3 o .- .r4=^ Its >*/ i_" ■ J -I— I f^-i 'f^ _■— i__ -i^ 'I— I I — I .,—t . fl Ht2i<5UOi-^PQ|2ii-^OOHlZiM ^3 0) -13 03 JLh O CD (H O ft a O P^ S-i 03 > ^^. !>> 03 02 03 P^ o Q,r^ s-i o ^ ^ rd ^.. 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(By Mr. Kennedy.) Do these tank-line com- j)anies, outside of the tank line you are speaking for, carry oil for the Standard Oil Company? A. The Standard Oil Company ship, as far as they can, in Union Tank Line cars. They do use out- side cars when they cannot get the Union tank cars, and need them. Q. Now, the testimony is that the Standard Oil Company do pretty nearly 90 per cent, of the business in the United States, and it would look a little curious that they could do that business with 40 per cent, of the tank-line cars of the coun- try, unless they were using the cars of some other company to some extent. A. The explanation of that is that the tank cars used by other individu- als are not confined to the use of petroleum, but their tank cars receive exactly the same mileage basis as is paid to the Union Tank Line Company; and that company, I say, as vice-pr-esident of it, has shown an average earning of 4 1/2 per cent, per annum, charging off nothing for depreciation. It ought to be borne in mind in connection with the Union Tank Line that, owing to the fact that during the summer the consumption of petroleum is small, a large part of the equipment of the Union Tank Line Company is idle, and during that time is earning nothing whatever ; and at other times the volume of the business requires the whole number of cars owned. Q. (By Mr. Jenks.) What did you say is the number of cars owned by the Union Tank Line Company? A. Five thousand eight hundred and fifty one, November 1. Digitized by Microsoft® 341 SEVEK MELLION DOLLARS REBATES FROM ATOPIISON, TOPEKA AND SANTA I'E RAILROAD; NONE • TO THE STANDARD. Regarding the statement that in 1894 an expert accountant discovered that $7,000,000. in rebates had been, paid by the Atchison, Topeka and Santa Fe Railroad, I would say that the Standard Oil Company did not receive one dollar of this money. WHY THE UNION TANK LINE COMPANY CONTINUES TO DO BUSINESS V7ITII0UT PROFIT WHY A SEPARATE ORGANIZATION. Q. (By Mr. Conger.) I should like to return for a moment to this matter of tank cars. The statement made would indicate that that was very far from being a profitable business. As I understand, it has been continued by this company for a period of years, and I would like 1o ask upon what theory you are able to induce the stockholders to con- tinue their investments and make additional in- vestments from time to time as would seem to be necessary. A. The answer is simple; the tank car is a necessary facility in the economical distribu- tion of petroleum and its products. It is one of the means by which we are enabled to ship oil cheaply and supply it cheaply. For tliat reason the investment, as you see, in the Union Tank Line Company is a proper one, for tlie Union Tank Line Company is the necessary arm of the pe- troleum business. Q. The owners of the Union Tank Line Com- panj'-, to a large e^t©art^y»«(9-osfeh® same as the own- ers of the Standard Oil Company? A. You see — 342 Q. (By Mr. Farqtthak, interrupting.) Is it not of just the same character as horses and vans and other things that are used in distribution? You cannot expect a profit out of it, but it is an inci- dent and a condition that you cannot escape from in distribution? A. It has been one of the most necessary parts of the business in distribut- ing economically the products of petroleum. Q. (By Mr. Conger.) If you regard it in the same light as you do horses and freight wagons, why is the business conducted by an independent company — by the company called the Union Tank Line Company — and not by the Standard Oil Com- pany itself? A. The Union Tank Line Company is simply a corporation that owns tank cars. Q. What is the purpose or advantage of the separate organization? A. I am not a lawyer. Q. You do not need to be a lawyer to answer a question like that, if you choose to answer it ; it is a business question, not a question of law. A. I do not refuse to answer it. The Union Tank Line Company has been formed to own and run these cars over the various railroads of the United States for the transportation of oil. Q. You have testified that there is no profit in it at all? A. I do. Q. What I am trying to get at is why it is con- tinued as a separate organization, instead of by the Standard Oil Company itself directly? A. Well, if it is profitable or unprofitable, it would make no difference whether it was conducted in the name of the Union Tank Line Company or in the name of the Standard Oil Com- pany ; but it was formed under the name of the TT • m 1 a T • Digitized Iw IVIicrosoft® -it • j. • Union Tank I Line XTornpany, and I say it is a 343 necessary adjunct in the distribution of petroleum, and it is therefore continued, although it is not profitable. Q. (By Mr. Smyth.) I suppose the stock of the tank line company can be bought independently of the stock of the Standard Oil Company? A. I do not know. Q. I mean it is listed for sale? A. It is a sepa- rate company. Q. If a man becomes a stockholder in the Union Tank Line Company, does ' he necessarily become a stockholder in the Standard Oil Company? A. No; I do not understand he does. Q. (By Mr. Kenned r.) In what State is the Union Tank Line Company incorporated? A. In New Jersey. Q. Does the Interstate ^Commerce Commission exercise control over it like any other interstate transportation company? A. Why, I never heard that the Interstate Commerce Commission had control of private car lines. No; this is a car line. Q: (By Mr. Smyth.) It does not make rates? A. It has no rate or payment like a railroad. Q. (By Mr. Kennedy.) It does not come under the control, then, in any way of the Interstate Commerce Commission? A. No; no more than the dressed-beef cars or Pullman cars or refrige- rator cars or any other private cars. Q. (By Mr. Fauquhae.) In the building and running of your tank steam ships, is that done by a separate department of the Standard Oil or is it ^M^^^^^ Btmss^& Oil itself? A. 344 I do not know enough to answer you. in regard to that. Q. (By Mr. Jenes.) The Union Tank Line Com- pany has nothing to do with foreign shipments? A. No ; nothing whatever. Q. (By Mr. Conger.) Referring to the number of stockholders in this organization, do you know whether they , are many or few, . three, four or five, or several hundred? A. Of what organiza- tion? Q. The Union Tank Line Company. A. I think there are a great many ; I do not know. I have never kept the books; the secretary could say how many stockholders there are, but I do not know. Q. Do you know, or would you care to testify as to the salaries that are paid the oflScers of the company? The point I am getting at is this, that if such an organization is continued and continues in business when that business is so unprofitable as you testify, it seems to me that there must be some other way than through the distribution of dividends to make it profitable to its officers or stockholders. A. I think I have made that clear, that the tank car is a necessary adjunct in the petroleum business. Q. Well that is . A. (interrupting). And it is nessary in enabling the Standard Oil Comp- any to distribute the products of petroleum econom- ically throughout the United States; and by economically distributing, it has increased its business — the Standard Oil Company's. Now, that the tank-car line itself only shows, as I have testified, a return on the investment of 4i per cent. Digitized by Microsoft® 345 is no reason why it should be discontinued if it is necessary. By Mr. Boyle. May I consult with the witness? By Mr. Cl.\rke. What is the pleasure of the commission? By Mr. Farquhar. There is no objection at all. (Mr. Boyle consults with witness.) Q. (By Mr. Co.vger). How long has this Union Tank Line Company been in business or in oj)era- tion? A. Since 1891, when the company was formed. Q. The point I was getting at is the advantage that the Standard Oil Company gets by having this Union Tank Line Company continue in busi- ness. Does the Union Tank Line Company do it simply through philanthropic or generous motives toward the Standard Oil Company? A. I have testified that my knowledge and belief is that the present owners of the Union Tank Line Company and the Standard Oil Company are the same. Now, those owners think that the tank-car is neces- sary in the conduct of the general business, and therefore continue in the use of those cars under the name of the Union Tank Line Company. Q. Well, that puts a little different light on it; I understood you to say that they were not the same in all respects? A. You misunderstood me; I said that they were different corporations. Q. Now, then, do you know of any reasons why the officials or officers of the Standard Oil Comp- any should prefer to operate this as an independent company instead of by the Standard direct? A. I do not. Q. (By Mr. Jewks). When you speak of the Standard Oil Cofiipan/ are° you thinking of one 346 company or the several Standard Oil Companies ? A. I am speaking of the company, as it is general- ly known, as one company. Q. Is this company that you are speaking of in that way technically and legally one company, or is it several — twenty-live different companies? A. I do not know that I am competent to answer as to that. There has been recently formed, as you know, the Standard Oil Company of New Jersey, which, as I- understand— I had rather cancel that answer. I do not know ; that is all. Q. You had intimated some little time ago that there were probably some legal reasons which you yourself did not know about, for having this Union Tank Line Company organized as a separate corporation. Perhaps in the same way there are some legal reasons why the Standard Oil Company, which we speak of sometimes as one, was organ- ized as several different companies. I had thought it possible that as long as the Union Tank Line Com- pany was serving so many different companies it might be a convenient matter legally for it to have its separate organization, and I did not know but you had — —A. (Interrupting). I am very much obliged for the suggestion. I have no doubt that that is the reason: thattheUnionTank Line Comp- any, as a separate corporation running its cars all over the United States, is in a better position to do so than if those cars were owned by the Standard Oil Company that was doing the manufacturing or the marketing business. Q. You also had suggested that it was largely a matter of bookkeeping between all these diff erent companies? A. Well, I did not niean to convey any such idea. I did mean to say this, and that Digitized by Microsoft® 347 is all I can say abou't it, that the Union Tank Line Company is a separate corporation, and serves all these companies in furnishing tank cars for ship- ment. Q. (By Mr. Kennedy). Have the tank-cars that the Union Line owns been provided with air brakes and couplers in compliance with the inter- state-commerce law ? A. They have. Q. Consequently they are an instrumentality of interstate commerce? A. The cars are used in interstate commerce, yes, and would be subject to the general order requiring cars used iff interstate commerce to be equipped with air brakes and couplers. Q. I asked you those questions because you said inreply to a question of mine a little while ago that you did not know that a company like that was subject to the Interstate Commerce Commission. A. As I understand that, you refer to requiring cars used in interstate traffic to be equipped with safety appliances, and that is not a part of that law. Q. It is put under the Interstate Commerce Commission's supervision. A. It is? Then to that extent they are. THE TANK LINE's ONLY INCOME IS ITS MILEAGE — IT PATS NO COMMISSIONS. Q. (By Mr. Smyth.) But they are not under the jurisdiction of the Interstate Commerce Com- mission in reference to fixing rates, because on those cars the railroads fix the rates. A. We simply 6arry the oil and receive the mileage, the same as the railroads pay all other tank-car-line owners. Digitized by Microsoft® 348 Q. (By Mr. Farquhar.) vDoes not your com- pany stand in the same relation as the other private cars in tills country? A. Exactly. Q. Paying exactly the same as the other cars do? A. Exactly. Q. (By Mr. Conger.) I would like to inquire if the witness can tell whether the Union Tank Line Company pays commissions to the Standard Oil Company for freight cariied? A. They do not. They get nothing from the Standard Oil Company; the only thing that the tank-line com- j)any gets is the mileage they receive from the rail- roads when they run their cars over the line. Q. 1 think yuu misunderstood my question. Does the lank line company pay any of its earn- ings to the Standard Oil Company as a commission for getting its business? A. Not one dollar. Q. Would you care to state the salaries paid to the officers of this tank-line company ; are they large? A. I should say they are small. I should prefer not to say what my salary is or what the others are, but I would say they are not exorbi- tant. I am not afraid of its making too large a showing for the Union Tank Line Company, but I think they are small. Q. The point is this : I think it has been test- ified to before this commission that in the ojfinion of several very prominent and highly respectable railroad men this rate of three quarters of a cent a mile oiight to Be profitable for the owners of the cars, and the testimony that you have given here this morning seems to me remarkable ; I have been trying to get at the disposition of the earnings of this company. A. If a car was continued in con- stant use throughout the year on long trips, it might Digitized by Microsoft® 849 be; but I tell you honestly that my statement that 4 1/2 per cent, is the average earning on the in- vestment of the Unioa Tank Line Company is the exact truth, writhont any manipolation of the books to make a salary or a big earning. We have been, for instancB, in the last 2 years at an expense of $125. on each car for these automatic brakes, air brakes, and the automatic couplers; and that $125. on each car does not bring us back 1 cent. Q. Oh, that is probably true; in addition you testified that in your opinion there are conditions surrounding the use of these tank cars that would make the business of ow^ning and operating them less profitable than the ovming and operating of cars in use the year around? A. Yes. Q. (By Mr. A. L. Haeris.) What allowance is made by the Standard Oil Company to the Union Tank Line Company for hauling its oil? A. No- thing at all. The Union Tank Line Company gets its pay and its only pay from the railroads over whose lines the car travels. Q. That is all the pay it gets? A. It pays none of its earning to the Standard Oil Company, nor does the Standard Oil Company pay any of its earnings to the Union Tank Line. Q. (By representative LoKiMER. ) The majority of the stock, I understand, of the Union Tank Line Company is owned by the principal owners of the Standard Oil Company; is that correct? A. I do not know in detail. I believe, and I have stated, that the owners of the Union Tank Line Company and the owners of the Standard Oil Cctfn- pany are the same. Q. What this D^^S^;SmcMP"is to be trying to 350 get at is why a corporation of that sort should be organized and run without a profit. Now, it seems to me that for some reason of their own, the large owners of this company have organized the Union Tank Line Company for the purpose of running that company in the interest of the Standard Oil Company, and they get their profits by way of dividends on the Standard Oil Company's stock; is not really that the relation? A. I have testified that 1 believe the owners of the two properties are the same, and that those gentlemen think that the ownership and the running of the tank cars is a necessary adjunct to their general business, and therefore they continue it. Q. You probably are not in position to testify that they intend to earn that profit without making the profit directly out of that company, but to get their profits out of the other company? A. lean- not say what their intentions are ; I only know the result of the running of the Union Tank Line Company. Q. Of course, there does not seem to be any- thing in connection with the Union Tank Line that is worth hedging about? A. There is not. The inference that Mr. Rice tried to draw and the statement that he made to the commission was that this mileage returned to us the cost of the car every 3 years. I say to you that for 8 years that the company has shown an average earning of 4 1/2 per cent. Mr. Rice evidently in- tended to convey the impression that that mileage was unfair and unreasonable and intended as a freight discrimination on the Standard Oil Com- pany's shipments; and I give you the results of Digitized by Microsoft® 351 the operations of that company to deny Mr. Rice's allegation. Q. Do you know whether or not any of this stock is held by persons other than those who own Standard Oil Company stock'? A. Yes, I do. Q. You know that it is held by others? A. Yes. Whereupon, at 1 p. m., the commission took a recess until 2 o'clock p. m. The commission met at 2.10 p. m., pursuant to recess, Commissioner Clarke presiding. (By Mr. Clarke.) The commission will be in order and the examination of Mr. Page will be re- sumed. Mr. Howard Page a.gain on the stand and exam- ination resumed. HOW ME. EICE GOT THE "TURN ANOTHER SCREW LETTER. Q. (By Mr. Smyth). Mr. Chairman, I should like to ask Mr. Page a question. He has testified in reference to the Chess-Carley "turn another screw" letter to Mr. Gulp, who was at that time general manager of the Louisville and Nashville Railroad, and is now traffic manager of the Southern. I want to ask Mr. Page if he knows how Mr. Rice came into the possession of that original letter, written by Mr. Carley to Mr. Culp? A. ]\^y information and belief is that Mr. Rice, in making some shipments after the time of the ship- ment which was referred to in that letter, was charged the regular tariff rate, which all other shippers were paying and which was more than he paid on that shipment. He made a claim on the latter shipnaiftjalpacd^Maiag^he same rate as had 353- been paid on the shipment which Chess, Carley & Co. complained of. The claim was sent, as I un- derstand, in the regular way to the railroads, and, as is customary with railroads, the billing of the car and the correspondence in connection with the shipment were all gathered together in one folder, and attached to this folder was this letter written by Mr. Hathaway. That letter was attached to the loapers and the claim when it was returned to Mr. Rice with the claim refused. He got that let- ter in that way. It showed that the railroad peo- ple did not construe it in any such way as Mr. Rice has tried to put it, because if they had they certainly would not have sent it broadcast and at- tached it to the papers and sent them back to Mr. Rice. Q. Mr: Gulp, I believe, testified that he never had seen the letter personally? A. He testified in the proceedings before the Bacon committee in 1888 that he had never seen the letter, and if he had he would have understood it as has been ex- plained, that it was simply calling attention to an error, and that Mr. Hathaway used the same ex- pression that was current in the Louisville and Nashville office when an error occurred, that the machinery was loose and ought to be tightened up. Q. There was apparently no intent on the part of the Louisville and Nashville officials to suppress tile letter or destroy it; it was handled in the or- dinary caui'se with the papers in that case? A. Exactly. And 1 might further add that Chess, Carley & Co.'s offices in Louisville at the time that letter was written were at the corner of Fourth and Mairo/g/ftfeea^tiBicroaafi^ the office of Mr. 353 Gulp was on the corner of Second and Main streets, two squares away ; and I think if it had ever been intended that an order was to be given to the Louisville and Nashville road to advance rates in any such way as Mr. Rice has tried to show, a let- ter would not have been written that had to go only two squares. It would have been attempted in some other way. (By Mr. Clarke.) Mr. Page,, you may resume where you left off. "ghost teains." Mr. Rice refers to ghost trains as a means of discrimination in favor of the Standard Oil Com- pany. T wish to say that the Standard Oil Com- pany has never shipped a pound of freight on such a train, even if there has ever been such a train in existence, which we doubt. NEGOTIATIOlSrS FOR SALE OE ME. EIOE'S PEOPERTY. Mr. Rice states that Mr. F. B. Squire, of the Standard Oil Company of Ohio, made him an offer of $250,000 for his oil properties. I beg to offer an affidavit from Mr. Squire denying this, and af- firming that Mr. Rice offered him his oil properties at one time for $24,000, and several years after- wards Mr. Rice again offered to sell his oil prop- erties and stop prosecutions, etc., for the sum of $250,000; and offered to give Mr. Squire $50,000 of this sum if he could bring about this sale. In other words, Mr. Rice offered to pay a part of the money thab he was to receive from the Standard Oil Company to an employee of the Standard Oil Company if that employee conld bring about the sale of the propePff^f^^M'^S^gflfdardOil Company. 354 (By Mr. Faequhab.) Had you not better read that affidavit? Witness read the affidavit as follows: "State of Ohio, County of Cuyahoga, ss.: "On this 1st day of December, 1899, personally appeared before me, F. B. Squire, who, being duly sworn, deposeth and saith that in the fall of 1876 I lived on Forty-second street, New York City, and while there I was" introduced to Mrs. George Rice, who stated that her husband wanted to sell his oil property, consisting of production of crude oil, storage tanks for same, pipelines and refinery. The result of the conversation was a 30 days' optioQ, which she secured for me to present to the Standard Oil people for $24,000. for the entire property. I presented the proposal to the Stand- ard people, but it was promptly declined, they claiming it was only worth hajf the money. I so advised Mrs. Rice. She stated that the Standard Oil Company would be sorry. "I met Mr. Rice several times after this, and he kept urging the matter. In the summer of 1881 or 1882 he invited me to meet him and his wife at Asbury Park. I did so. They there made me an offer to sell the property, stop all prosecutions, and be friendly with the Standard Oil Company for $250,000.— $50,000. to go to me for my good office if I could bring it about. I reported the re- sult to Mr. Archbold, including the offer to me, and it was immediately declined. I advised Mr. Rice, who called at my office the next day, and he stated that the company would regret this act. Digitized by Microsoft® 355 Immediately after this Mr. Rice published the pamphlet called 'Black Death.' P. B. Sqtjiee. "Sworn and subscribed before me the date aforesaid. "[SEAL. J F. W. LOTPTMAW, ^^ Notary Public.'''' Q. (By Mr. Farquhak ) Is there any way of impeaching the credibility of the man who makes this affidavit? (No answer.) Q. (By Mr. Smyth.) Is be still in the employ of the Standard Oil Company? A. Yes. Q. What position does he occupy? A. He is one of the officers of the Standard Oil Company of Ohio ; whether vice president or treasurer I do not recall ; but he is an officer of the Standard Oil Company of Ohio. Q. Occupying a position of trust and responsi- bility? A. Yes. Q. He lives in Ohio? A. Yes. Q. (By Mr. A. L. Harris.) Of the former Stand- ard Oil Company of Ohio; have you a Standard Oil Company in Ohio now? A. Yes. Q. Of Ohio? A. Of Ohio. iQ. Organized under the laws of Ohio? A. Yes. Q. Doing business in Ohio? A. Yes. Q. As such? A. Yes ; he is the man Mr. Rice refers to as having made such an offer. Q. (By Mr. Clarke.) Did Mr. Rice increase the capacity of his refinery and the value of his property between the times of those two proposi- tions? A. I do not know. Digitized by Microsoft® 356 NO FEEIGHT CONCESSIONS IN VIOLATION OF THE INTERSTATE-COMMERCE LAW. In the foregoing I have tried to pick out and deny positively the different allegations made by Mr. Rice in regard to freight discriminations by various devices, which railroads, both prior to and since the passage of the interstate-commerce law, have given to the Standard Oil Company against himself and other oil shippers. I would say that since July, 1889, as vice-president of the Union Tank Line Company, I know the facts regarding •the freight business of the Standard Oil Company, rates, shipments, etc., with the various railroads of the United States. I wish to deny positively that during that time we have received any re- bates or concessions from tariff rates contrary to either the letter or spirit of the interstate-com- merce law. While from Mr. Rice's testimony one might assume that the oil tonnage of the United States was about the only tonnage trans- ported, yet the total consumption of oil in tons in the United States is less than one-half of 1 per cent, of the total tonnage moved by the railroads of the United States, and it is ab- surd to either argue or conclude that so small a percentage of the traffic moved by the railroads of the United States should be of such controlling influence over railroads and their officials as is so often alleged by Mr. Rice. I wish to present a letter to Mr. Moseley, secre- tary of the Interstate Commerce Commission, dated December 1, and his reply of December 6, 1899, in which he refers to the statistics compiled by the Interstate Comnf^VdWtMMm^mn for the year end- 357 ing June 30, 1898, showing that the tons carried by the railroads of the United States were 879,- 006,307 tons. The total consumption of petroleum produced in the calendar year 1898, from the very best sources that can be obtained, was a little less than 24,000,000 barrels; 24,000,000 barrels is equivalent to about 4,000,000 tons, and 4,000,000 tons is less than one-half of 1 per cent, of the total tonnage carried by the railroads. "December 1, 1899. "E. A. MosELEY, Esq., '■'■Secretary, Interstate Commerce Commission, Washington, D. C. "Dear Sir: In the advance copy of your twelfth annual report, dated January 11, 1899, you give the earnings of the railways of "the United States. On page 79 of this report you say that you have returns of 720 lines, representing 97 per cent, of the operated mileage in the United States. You then show that of the earnings there was $874,- 835,487 received from freight service. "Have you any tonnage figures showing, the number of tons carried by the railroads which earned this $874,000,000. ? If so, I would be very much obliged if you would advise me of the number of tons (2,000 pounds to the ton) at your early convenience. "Yours, truly, "Howard Page." "Interstate Commerce Commission, "Oeeice oe the Secretary, "Washington, December 6, 1899. "Mr. Howard Page, "g^ Broadxoa'pifitMenbyWiomh^ftM. Y. "Dear Sir: I beg to acknowledge the receipt 358 of your letter of the 1st instant, requesting certain tonnage information bearing upon the freight earn- ings of railways as shown in the advance copy of the Twelfth Annual Report of the Interstate Com- merce Commission. In reply, I would say that we have not the exact tonnage figures referred to, as such data are not compiled for the preliminary report. On page 67 of the advance copy of the 'Statis- tics of Railways in the United States for the year ending June 30, 1898, tons carried as reported are shown as 879,006,307; tons carried 1 mile, 114,- 077,576,305. "A copy of the volume referred to is sent you under a separate cover, page 67 of which is at- tached hereto. Very respectfully, Edw. a. Moseley, Secretary. Mr. Archbold filed here with you letters from about 20 of the principal railroads of the United States, in which, without exception, they stated that since the passage of the interstate commerce law, no concessions or allowances from tariff rates had been made to the Standard Oil Company in any manner or form. It is impossible to believe that men of the character of President Callaway, of the N3w York Central; President Newman of the Lake Shore; President Mellen, of the Northern Pacific; Mr. A. J. Earling, vice-president then, and now president of the St. Paul road; President Burt, of the Union Pacific ; and the chief traffic officials of lines like the Burlington, Pennsylvania, Baltimore and Ohio, Cleveland, Cincinnati, Chi- cago and St. Loi^g^^4t(gi),jg9gg^opeka and Santa Pe, Southern Pacific, Louisville and Nashville, 359 Boston and Maine, and otber railroads whose let- ters were presented, would all unanimonsly state tliat we had obeyed the law, both in letter and spirit, if the facts were to the contrary. We might be asked why (in view of the known fact that some of the railroads, since the passage of the interstate commerce law, have paid rebates to large shippers) we have not received same. We have not done so because, in the first place, it was against the law", and secondly, because we knew from past experience that if we received cut rail- road rates other oil shippers would receive the same, and we felt, as we now feel, that from a business standpoint alone it has been, and is now, to our interest to have tariff rates maintained. The Standard Oil Company does not need any freight advantages to maintain its business, and all it wants is to be required to pay the same rates as other oil shippers from and to the same points. THE standard's ADVANTAGE IN HAVING MANY DISTRIBUTING POINTS — THE CONSUMER GETS THE BENEFIT. In reference to Interstate Commerce Commis- sioner Prouty's remarks in regard to the Standard Oil Company, when Mr. Prouty appeared before the Commission early in October, which testimony I heard: Commissioner Prouty's arguments seem to be to the effect that the Standard Oil Company had advantages, by reason of having its refineries and distributing plants at Chicago and the Atlantic seaboard, as well as at Lima, Buffalo, and other middie-State points, as compared with a refiner who had his works only at Cleveland or in the Pennsylvania oil°M|f6fe(^'"^Wradmit that by hav- 360 ing refineries and distributing plants at Chicago for the West; at Buifalo, Lima, and Parkersburg for the middle States and the South, and at the Atlantic seaboard for the East and New England, we have decided advantages over a refiner Who has his works only at one point, and who tries to com- pete with us in selling oil throughout the country. We claim, however, that such an advantage is a fair one, and can not be overcome by any fair or reasonable adjustment of freight rates. We further claim that by having our refineries and distribut- ing plants located .at various points throughout the country, we can and do distribute more cheaply and sell the oil at a less cost to the consumer, and it is more to the interests of the country at large for the consumer of oil to get it at a low cost than it is to try to fix freight rates on any basis that will permit one manufacturer at one point to disr tribute his products throughout the United States. That, gentlemen, closes all that I have prepared. I am perfectly open and glad to answer any ques- tions you gentlemen have. ADVANCE IJSr OAWADIAM" FREIGHT EATKS. Q. (By Mr. Jenks.) We had some testimony here a little time ago with reference to the freight rates on American oils from the United States into Canada, in which it was said that very lately there had been a very decided increase in the freights on American oil going into Canada. This was thought to be much to the disadvantage of those who had to ship oil from the United States into Canada ; can you explain tons that matter of freight rates? A. I can say that I know there was an advance in freight rates froiffsfJ^^MIfWd'^oledo and Buffalo 361 and other frontier points on oil from the United States into Canada. I can further add that we pay those advanced rates, and that we ship 80 per cent, of the oil that is exported from the United States into Canada. We, therefore, pay four times as much as all the balance of the oil shippers together. Q. What proportion of your sales in Canada are shipped from the United States, and what propor- tion are sales from the Canadian product? I understand that the Standard Oil Company owns practically all of the Canadian refineries? A. I do not so understand it, and I do not know the rela- tive shipments from the United States compai'ed with the consumption of oil manufactured in Can- ada. I do know, though, that shipments from the United States intO' Canada have increased in the last year; in fact, since that advance in rates as compared to the old situation. Q. Do you know what proportion of the refin- ing industry of Canada is owned by the Standard Oil Company? A. No; T do not; T do not know that the Standard Oil Company owns any interests in Canada. PEKDIWG SUITS FOE ALLEGED FREIGHT DISCRIMINA- TION — CHARGES ON OIL IN BARRELS. Q. "We have had some evidence with reference to suits that were brought against the railroads by independent refiners in western Pennsylvania, in which they claimed that the railroads had been dealing unfairly with them in the charging of freight rates — suits that are still pending, can you tell us anything E^HklS^mSMi^^^ those suits? A. I do know that several years ago — I do not 362 recall how many — the Interstate Commerce Com- mission decided that the weight of the barrel, when loaded with oil, should be carried by the railroad free. In other words, they should not charge for the barrel when it contained oil. An order was entered to that effect, which the railroads declined to obey. The Interstate Commerce Commission have since that time gotten some evidence from the plaintiffs in that case as to the volume of their shipments in barrels within a certain period, and fixed the amount of damages which they claim the railroads should pay back to those shippers of oil in barrels. The railroads also declined to pay that, and that case is now, I believe, before the United States Court in Pittsburg and is still pend- ing. I would say in connection with it that at the time when the shipments were made in barrels by these plaintiffs and the rate of freight was charged on the weight of the wood, the Standard Oil Company was making shipments of oil in barrels and paying for the weight of the wood. In other words, there was no difference in the rule or the rate that was applied on the shipments of the plaintiffs and upon the shixaments of the Standard Oil Company. Q. Was this custom of the roads one that was brought about in any way, to your knowledge, by the action of the Standard Oil Comj)any officials? A. No. Q. What was it? A. In the iirst decision of the Interstate Commerce Commission in regard to the relative rates that should be charged on oil in bar- rels and oil in tank cars, the commission decided, by Judge Cooley^.j^j^iji^-^j^lJ^per 100 pounds in 363 carloads, on oil in tank cars or on oil in barrels, including the weight of the barrels, should be alike. The railroads adopted that order. Then on the second case, after Judge Cooley had left the bench, some other commissioner decided that the barrels should be carried free; and that the railroads declined to follow. Q. The commission practically reversed its own decision? A. They tried to reverse their own decision before the United States circuit court at Pittsburg. Q. I say, practically reversed its former de- cisions? A. Yes. Q. But it was under the first decision that the charges were made? A. Under the first decision that the charges were made. THE MOST OF THE STANDAED'S OIL IS FINALLY DISTRIBUTED IN BARRELS. Q. Do you recall what proportion of the ship- ments of the Standard Oil Company at that time, before the second decision was rendered, was in tank cars, and what in barrels? A. Yourqaestion involves the whole country ; and I should say that the shipments, as a whole, of the Standard Oil Company in barrels exceed the shipments of the Standard Oil Company in bulk in tank cars ; you must bear in mind that when the Standard Oil Company ships its oil in tank cars to a distributing station, it is barreled there to a very large extent, and it goes out in barrels, and it is a part of the barrel sales of oil. I think lam correct in that statement, and it is the best that I can give ; that Digitized by Microsoft® is all. 364 Q. That is so at the present time? A, It is true still. Q. (By Mr. Clarke.) Therefore, very much of the oil which is shipped is shipped part way in tanks and the rest of the way in barrels? A. It is ; when it comes to local country points on the line of a railroad. The rule that the com- mission made there, if applied to oil, would naturally apply to every other package that might be put around any other commodity that was susceptible of any other mode of shipment. Q. (By Mr. Smyth.) Lubricating oil, I suppose, is shipped in barrels, is it not? A. It is shipped in tank cars to some extent — yes. so FAR AS THE WITNESS'S EXPERIENCE GOES, THE STANDARD NEVER DICTATED FREIGHT RATES TO BE CHARGED TO OTHER SHIPPERS. Q. (By Mr. Phiilips.) You admit, Mr. Page, that the Standard Oil Company did receive large rebates before the passage of the interstate com- merce act? A. I admit that. Q. From your knowledge and belief and in- formation? A. My knowledge and belief and actual experience, Mr. Phillips, was that prior to the interstate commerce law we got as low rates as we could. Q. That amounted to very considerable worth to the Standard Oil Company during that period, no doubt? A. It meant that we got lo\yer than tariff rates, the same as all other shippers ; not onlj^ shippers of oil, but all other people. We could get them and did get them. I can add this, that as far as my own experience goes, prior to the interstate comra&m^iwe secured lower 365 than tarifif rates, it nev^er was in any instance a part of an agreement what the railroads should charge. Any other oil shipper could get as low a rate as we could, or lower, if the railroad saw fit to give it. We attend simply to our own business. Q. (By Mr. A. L. Harris.) That was the uni- versal rule of the Standard Oil Company? A. Which? Q. Not to interfere with "the rates of anyone else? A. I can only speak in that regard, so far as my own knowledge goes; and so far as my own knowledge goes it is true. Q. Yon do not know anything about the rule which seemed to have prevailed in what is known as the Marietta and Cleveland Railroad, do you? A. I have no knowledge of that, sir. I believe that case has been fully explained, and prior to the interstate-commerce law my residence and knowl- edge was confined in the business of the Standard Oil Company in Louisville in Kentucky. Q. The only reason that I asked that question was that you made your answer broad. A. I an- swered from my own knowledge. Q. (By Mr. Smyth.) Do you know of any other oil company besides the Standard Oil Company that received rebates prior to the interstate law? A. I do, sir. Q. You think, then, that it was the general custom, as far as your knowledge goes? A. I know it, and in some cases we found where they had a lower rate than we had. VPHERE OTHER SHIPPERS GOT LOWER RATES THAN THE STANDARD. Q. You believ©/g*&aeiay A&a&ftit was the general 366 custom prior to the passage of the interstate-com- merce law? A. That very shipper and others got the lowest rates they could from the railroads. Q. (By Mr. Phillips.) Can you name any of those companies who received it? I am not doubt- ing the truth of your statement. A. I know it was shown in some other cases that Scofield, Shurmer & Teagle, of Cleveland, had some lower rates than the tariff.' It has been ten years, Mr. Phillips, and I do not know that I can recall the names, but I recall very distinctly that in one instance it was shown that some large shippers of oil from Memphis to Nashville, out on the roads leading from there, had special rates as against — had lower rates than we were paying from the same points to the same points. We fo^ind it out because people were selling oil cheaper than we were at the same points. DOES NOT BELIEVE THE STANDARD EVER RECEIVED A SHARE OF THE RATE PAID BY OTHERS. Q. Do you know of any instance where there was a higher rate charged to the independent re- finers than to the Standard, and that was divided between the Standard and the railroads? Is there any such testimony? A. I do not know of any insta.nce. I will say no; I do not know of any case. In fact, I do not believe there ever was a case where the Standard Oil received from the railroad a share of the rate that was paid by independent shippers. I know it was not so in the territory which I had anything to do with, and it has never been so since I have been in New York. Digitized by Microsoft® 367 DOES NOT KNOW. Q. You are connected with tlie transportation and linow something about the pipe-line business also of the Standard Oil Company? A. No, sir; I know very little about pipe-line matters. Q. Do you know whether the Standard Oil Company ever placed a premium on oil in special fields where there were independent pipe lines, and by this means caused them to suspend busi- ness, or bought them out? A. I know nothing whatever as to any prices paid for crude oil. Q. Or about the pipe-line business in that re- gard? A. JSTo, sir; I do not. Q. Do you or do you not know whether the Standard Oil Company opposed, after having their pipe line to the seaboard, the passage of the free- pipe-line law in Pennsylvania or in New Jersey? A. I know nothing whatever about it, sir. Q. Do you know whether the Standard Oil Com- pany opposed, directly or indirectly, the United States Pipe Line in securing the. right of way through, the State of New Jersey? A. I know noth- ing whatever about it. Q. You do not know about that? A. No, sir; I am not connected with the pipe-line department in any way. Q. When independent companies shipped abroad did the Standard Oil Company ever obstruct ocean transportation in any way or obstruct them in getting ocean and steamship service? A. Not to ray knowledge, in any way. Q. Have you knowledge or information as to the installation plants or receiving tanks in Germany or other countries? Di^zei iy-Mi&i&m^ sir. 368 Q. Have you any information in regard to the agentswho transferred and sold the Standard oil in foreign countries — Standard agencies abroad? A. I know there are some Standard agencies abroad ; yes. Q. Have you any information in regard to this : to a man in Germany, or v?ho v^as in Germany, recently deceased, by the name of Poth, who handled oil of the independent companies in Ger- many? A. Never heard the name before, sir. Q. You have no knowledge, then, of their pur- chasing all these installation plants abroad, almost wholly in Germany? A. I have no knowledge. EXPORTS — PRICES HIGHER ABROAD. Q. (By Mr. Kennedy.) Have you knowledge of the relative value and prices of oil exported? A. I only know in a general vray that the exports of petroleum products produced by the Standard Oil Company are in excess of their sales within the United States. In other words, a large share of the Standard Oil Company's business is outside of the United States. In regard to the relative prices, I would say that the consumer of oil in the United States gets his oil for very much less than the consumer of that same oil abroad, and that is due principally to the fact that we have facilities within the United States for cheaply distributing the oil tO' the consumer that the company has not got on the other side. Mr. Hice refers to the price of oil at New York for export as compared with the price of oil in Montana and Idaho, and tries to convey the idea that we sell our oil abroad for less money than to the consumer within the United States. I Digitized by Microsoft® 869 submit that the price of export oil at New York is the price for cargoes at the mouth of the refinery, whereas the price of oil in Montana and Idaho must necessarily include expenses of distribution. The freight goes from Chicago, for instance, out to those Western States, and comparing the price to the consumer of a barrel of oil out in the moun- tain districts of Idaho and Montana with the cargo price of export oil at New York is manifestly un- fair. Q. Have you any knowledge of the Standard Oil Company selling oil in the German market be- low the point of prolit for tlie purpose of driving other dealers out of that market and of their being curbed in that practice by the German Govern- ment? A. I have no such knowledge, sir. RXrSSIAK OIL. I have heard, and I believe, that the German Government issued an order within the last year or so requiring the railroads of Germany, which are under governmental control, to burn exclusive- ly Russian oil and not American. Q. (By Mr. Smyth.) Is it not a fact that the great competition you have in England is with the Russian oil, which is backed by the Rothschilds? A. The Russian field is a great competitor of the American petroleum field. The production of oil in Russia is, I believe, to-day equal to that of the United States, and at times has been in excess of it. In fact, I have known of reports of one well in Russia that has produced as much as 100,000 barrels per day, which is as much as the entire Pennsylvania oil field in certain sections, and the price, I do know, of Russian crude oil is very much lower than the pfM^15¥'^ffiWffgln crude oil. 370 Q. (By Mr. A. L. Harris.) What about its quality? A. Its quality is not so good as the Pennsylvania oil. It is more like the Ohio crude. Q. (By Mr. Phillips.) Do you know whether the Russian oil is extensively sold now in Ger- many? A. It is sold in Grermany, and it is sold in Italy, and it is sold in England. Q. Is it sold to any great extent in Germany? A. To as great an extent as they can sell it, sir. OCEAN TRANSPORTATION — FOREIGN MARKETS AND AGENCIES. Q. (By Mr. Pauquhar.) Does the Standard Oil Company own its own ocean lines for transporta- tion of oil to Europe? A. I am not very familiar with that part of it, Mr. Farquhar; but I know in a general way that they do own or have an interest in certain bulk tank ships and also some schooners. The tank ships are used for the transportation of the bulk oil from the United States to certain points in Europe where there are tank facilities for receiving it, and -the ships are used for the shipment of case oil to the far East. Q. Can you tell the commission how many countries in the world the Standard Oil Company sells its oil to? A. I think it would be easier to name those that we do not, or that we do not try to. I think we sell, sir, all over the world; as far as we can. Q. Will you kindly state the means of trans- portation for the Asiatic trade? Is that by steamer or sail? A. By sail, usually, and against very severe competition of the Russians. They have tank steamers by which they transport tank Digitized by Microsoft® 371 oil from Batoum to India, ^nd even to China and Japan. Q. The statement has been made that the Standard has sold oil in foreign markets — in Asi- atic countries — where they have had a return of only one-third of the price of the oil in the market itself; do you hnow anything about that? A. I do not know as to that, sir. Q. You know nothing about the price of oil and competition of other oils used in Asiatic countries? A. 1 only know we have shipped oil there, and still do, as against Russian competition. As to what the prices are there, I do not know ; but I do know, from information and belief, as I have be- fore stated, that the consumer of oil abroad pays very much more for his oil than the consumer within the United States. Q. (By Mr. Smyth.) Testimony has been giv6n here that the Standard Oil Company has over 360 agencies throughout the world, every one of which is in charge of an American citizen. Do you think that is correct? A. I do not know. I do know that we have many agencies, but how many I do not know. I do know in a general way that we send Americans to take charge of those departments, but how many there are I cannot say. Q. (By Mr. Phillips.) Do they exert a very considerable influence on our consuls abroad? A. I have no knowledge of it, sir. THE STAWDAED WOULD MAKE PRICES TO KEEP THE TRADE. Q. You spoke some time ago of the advantage the Standard Oil Company has over others by hav- ing refineries at m^m/n ^MeiB&af^oints in the United 372 States in the lessening ©f freights, etc. There are quite a number of the independents that have such advantage, too, in localities ; that have advantages, perhaps, over the Standard Oil Company in certain localities. Is it or is it not, has it or has it not been, the practice of the Standard Oil Company where independent oil was being distributed to ship their oil in and sell it lower than the usaal price or make it unprofitable for others? Do you know of any such instance as that? L. I can only say in a general way, Mr. Phillips, that we doubt- less ship the oil from the nearest point and try to. sell it. Q. Do you know or do you not know that when the independent refineries recently began to distribute oil in New York the Standard dropped prices very greatly so as to make it un- profitable? A. I do not know that, sir. Q. Or Philadelphia? A. I do not know it. Q. (By Mr. Jenks.) You said a moment ago that of course — A. (Interruj)ting.) It goes without saying that we are in the business and we try to keep our trade, and we make prices that will also keep it. Q. So, speaking generally, you would presume it was true that competitive prices are lower than where you have no competition? A. To a reason- able degree, yes ; but I will say that the object and the success of the Standard Oil Company has been due to the fact that their effort is continually to reduce the cost of manufacturing and distributing of oil ; and we sell it as cheaply as we can, based on that cost, to the consumer, and thereby increase the volume of our business by cheapening the cost to the consumer. rr •*• .^ ^ ««• t^ u^J u±j.^ ^^^^ Digitized by Microsoft® 373 STATEMENTS FURNISHED TO THE COMMISSION. Q. (By Mr. Phillips.) I am informed that the independent companies have recently made a statement of their business affairs to this commis- sion through Professor Jenlts. Would you be willing to advise the Standard Oil Company to make such a statement of their business? A. I do not know v^hat kind of a statement the inde- pendent people have made, and I would not take it upon mysel'f to do so. I think it would be rather impertinent for me-, as a subordinate, to ad- vise the officials in charge ol the Standard Oil Company matters what kind of a report they should make. THE TEXAS OIL FIELD. Q. (By Mr. Kennedy.) I should like to ask you something about the new Texas oil field. Does the Standard Oil Company own that field, and where is the product refined, and to what part of the country is it shipped? A. I do not know that the Standard Oil Company owns that field. I know there is a refinery at Corsicana, Tex. Q. A Standard refinery? A. It is not known in any way as the Standard Oil Company, and I do not know that it is. Q. (By Mr. A. L. Harris.) I understood the witness to say that he knew of no instance in which the Standard Oil Company had interfered in any way or concerned themselves in any way with what other companies might get in the way of rebates, etc. Is that true? A. I said that no arrangement prior to the interstate commerce law, through which we got lower than tariff rates, was ° Digitized by Microsoft® 374 predicated in any way upon what that same rail- road should give in the way of rates or rebates to other oil shippers. Q. Do yoa know anything about the case of Handy and another, trustee, against the Cleveland and Marietta Railroad Company? A. T do not. Q. Would you care to liave the syllabus of that case read so as to get it in evidence? A. As I have no knowledge of it, Mr. Harris, I dp not know what my testimony would be worth on the sub- ject. Q. It would be mere! y to show that your statement in regard to the action of the Standard Oil Com- pany against other companies was probably not entirely correct? A. I, of course, can speak and only can speak of my own knowledge, and my knowledge in the time prior to the passage of the interstate commerce law was confined to the Louis- ville business and South. Q. You desire tp have your testimony limited to your own knowledge, and not to be broader than your own knowledge? A. I supposed that went without saying. Q. I would like, for the benefit of the commis- sion, to read the syllabus : "(Circuit Court, S. D., Ohio, E. D., 1887,) "1. EAILEOAD COMPANIES — EEC KI VERS BISCEIMI- NATIONS. "The receiver of an insolvent railroad company can not unjustly discriminate in the charges im- posed upon rival shippers over his road in order to increase his revenues, and, if guilty of discrimina- tion, may be removed by the court therefor. Digitized by Microsoft® 375 "2. SAME — REMOVAL. "The Standard Oil Company having threatened to store its oil until it could lay a line of pipes to Marietta, unless the receiver of a railroad com- pany should give it a special rate, the receiver agreed to carry its oil at 10 cents per barrel, to charge rival shippers 35 cents per barrel, and to pay 25 cents per barrel of the sum collected from rival shippers to the Standard Oil Company. Held to be such gross and wanton discrimination on the part of the receiver as to require his re- moval." This is on page 575, Trust Proceedings of 1888. (Testimony closed). John D. Rockefeller. AKSWEBS TO INTERROGATORIES. 1. Q. What was the first combination in which you were interested of different establishments in the oil industry? A. The first combination of dif- ferent establishments in the oil industry in which I was interested was the union of William Rocke- feller & Co., Rockefeller & Andrews, Rockefeller & Co., S. V. Harkness and H. M. Flagler, about the year 1867. 2. Q. What were the causes leading to its forma- tion? A. The cause leading to its formation was the desire to unite our skill and capital in order to carry on a business of some magnitude and importance in place of the small business that each separately had heretofore carried on. As time elapsed and the possibilities of the business became apparent, we found further capital to be necessary, obtained -, Digitized by Microsoft®, i j . -, the required persons ana capital, and organized 376 tlie Standard Oil Company with a capital of $1,000,000. Later we found more capital could be utilized and found persons with capital to interest themselves with us, and- increased our capital to $3,600,000. As the business grew, and markets were obtained at home and abroad, mope persons and capital were added to the business, and new corporate agencies were obtained or organized, the object being always the same, to extend our busi- ness by furnishing the best and cheapest pro- ducts. 3. Q. Did the Standard Oil Company or other affiliated interests at any time before 1887 receive from the«i'ailroads rebates on freight shipped, or "other special advantages? A. The Standard Oil Company of Ohio, of which I was president, did receive rebates from the railroads prior to 1880, but received no special advantages for which it did 1 not give full compensation. The reason for rebates '-was that such was the railroad's method of busi- ness. A public rate was made and collected by the railway companies, but so far as my knowledge extends, was never really retained in full, a por- tion of it was repaid to the shippers as a rebate. By this method the real rate of freight which any shipper paid was not known by his competitors nor by other railway companies, the amount being in all cases a matter of bargain with the carrying company. Each shijpper made the best bargain he could bat whether he was doing better than his competitor was only a matter of conjecture. Much depended upon whether the shipper had the ad- vantage of competition of carriers. The Standard Oil Company of Ohio, being situated at Cleveland, had the advantage of different carrying lines, as „ Digitized by Micrasoft®. •' " ' well as of water transportation in the summer, and 377 taking advantage of those facilities made the btst bargains possible for its freights. All other com- panies did the same, their success depending largely upon whether they had the choice of more that^ route. The Standard sought also to offer advan- tages to the railways for the purpose of lessening' rates of freight. It offered freights in large quan- tity, carloads and train loads. It furnished load-^ ing facilities and discharging facilities. It ex- empted railways from liability for fire. For these services it obtained contracts for special allowances on freights. These never exceeded, to the best of my present recollections, 10 per cent. But in al- most every instance it was discovered subsequently that our competitors had been obtaining as good, and, in some instances, better rates of freight than ourselves. 4. Q. If so, in what years were these advantages largest, and from what roads were they received? A. To the best of my recollection the greatest rebates were paid from 1877 to 1879. Daring that time we had an agi'eement for a special 10 per cent. commission. I think that agreement was made with the Pennsylvania, the Erie and the New York Central Roads. Large rebates were also paid during the summer of 1878, amounting I believe to 64 1/2 cents on refined oil to equalize eastern ship- ments by rail with shipments by Erie Canal. But these rebates were paid to all who shipped by rail. They were not discriminatory rates. lam not now sure whether any other road than the Pennsylvania collected the full amount and paid these rebates. The Erie and New York Central made the same re- ductions in rates to meet canal shipments, but my impression is^hal^i^k^M^msisAmst did not collect 378 the Mgher rate from shippers and rebate it as did the Pennsylvania. 5. Q. Abont what percentage of the profits of the Standard Oil Company came from special ad- vantages given by the railroads when these were greatest? A. No percentage of the profits of the Standard Oil Company came from advantages given by railroads at any time. Whatever advantage it received in its constant efforts to reduce rates of freight was deducted from the price of oil. The advantages to the Standard from low freight rates consisted solely in the increased volume of its bus- iness arising from the low price of its products. 6. Q. Did the Standard Oil Company or any of its affiliated companies ever receive, nnder any name whatever, any income from any railroad for oil shipped over those roads by any of its competi- tors? If so, give particulars. A. I know of no such instance. It seems that some arrangement of that nature was entered into by one of oar agents in Ohio, being the same case which has been testi- fied to by George Rice. When notice of this agreement was brought to the officers of the com- pany for which it was made it was promptly re- pudiated, and the money received, some small amount, I think under $300. was refunded. And this was done not because of any action in court or judicial opinion, but promptly as soon as reported, and before we had any knowlege of judicial pro- ceedings. 7. Q. Has the Standard Oil Company received any financial favors from any railroad since 1887? A. To my knowledge, none whatever. 8. Q. Has the ownership of stock, in railroad companies by officers of the Standard Oil Company given the StandaPff'ta'fMgpftith those railroads 379 over its competitors? If so,, give particulars. A. It lias not. Stockholders and officers of the Standard have invested in the stocks of railway companies. But in no instance have they done so for the purpose of influencing the policy of the railway companies, nor to the best of ray knowl- edge and belief has any attempt ever been made through such ownership to influence any railway in favor of the Standard. 9. Q. To what advantages, or favors, or methods of management do you ascribe chiefly the success of the Standard Oil Company? A. I ascribe the success of the Standard to its consistent policy to make the volume of its business large through the merits and cheapness of its products. It has spared no expense in finding, securing and utiliz- ing the best and cheapest method of manufacture. It has sought for the best superintendents and workmen and paid the best wages. It has not hesitated to sacrifice old machinery and old plants for new and better ones. It has placed its manu- factories at the points where they could supply markets at the least expense. It has not only sought markets for its principal products, but for all possible by-products, sparing no expense in in- troducing them to the public. It has not hesitated to invest millions of dollars in methods for cheap- ening the gathering and distribution of oils' by pipe lines, special cars, tank steamers, and tank wagons. It has erected tank stations at every im- portant railroad station to cheapen the storage and delivery of its products. It has spared no expense in forcing its products into the markets of the world among people civilized and uncivilized. It has had faith in American oil, and has brought to- gether millions of t^j^^^ MiMfM^^^POse of mak- ing it what it is, and holding its market against 380 the competition of Russia and all the many coun- tries which are producers of oil and competitors against American oil. ]0. Q. What are, in your judgment, the chief advantages from industrial combinations — (a) financially to the stockholders; (b) to the public? A. All the advantages which can be derived from a co-operation of persons and aggregation of capi- tal. Much that one man cannot do alone two can do together, and once admit the fact that co-opera- tion, or, what is the same thing, combination, is necessary on a small scale^ the limit depends solely upon the necessities of business. Two persons in partnership may be a sufiiciently large combination for a small business, but if the business grows or can be made to grow, more persons and more capi- tal must be taken in. The business may grow so large that a partnei'ship ceases to be a proper in- strumentality for its purposes, and then a corpora- tion becomes a necessity. In most countries, as in England, this form of industrial combination is sufficient for a business co-extensive with the parent country, but it is not so in this country. Our Fed- eral form of government, making every corporation created by a State foreign to every other State, renders it necessary for persons doing business through corporate agency to organize corporations in some or many of the different States in which their business is located. Instead of doing busi- ness through the agency of -one corporation they must do business through the agencies of several corporations. If the business- is extended to foreign countries, and Americans are not to-day satisfied with home markets alone, it will be found helpful and possibly necessary to organize corpor- ations in such GOQjQjyi^igiy j^oMMopeans are preju- diced against foreign corporations as are the people 381 of many of our States. These different corpora- tions thus become co-operating agencies in the same business and are held together by common owner- ship of their stocks. It is too late to argue about advantages of indus- trial combinations. They are a necessity. And if Americans are to have the privilege of extending their business in all the States of the Union, and into foreign countries as well, they are a necessity on a large scale, and require the agency of more than one corporation. Their chief advantages are: (1) Command of necessary capital. (2) Extension of limits of business. (3) Increase of number of persons interested in the business. (4) Economy in the business. (5) Improvements and economies which are derived from knowledge of many interested persons of wide experience. (6) Power to give the public improved products at less prices and still make a profit for stock- holders. (7) Permanent work and good wages for laborers. I speak from my experience in the business with which I have been intimately connected for about 40 years. Our first combination was a partnership and afterwards a corporation in Ohio. That was sufiicient for a local refining business. But depend- 'ent solely upon local business we should have failed years ago. We were forced to extend our markets and to seek for export trade. The latter made the seaboard cities a necessary place of business, and we soon discovered that manufacturing for export could be more economically carried on at the sea- board, hence refineries at Brooklyn, at Bayonne, at Philadelphia, 3ing^J^e(^IPo%S^ corporations in New York, New Jersey and Pennsylvania. 382 We soon discovered as the business -grew tliat the primary method of transporting oil in barrels could not last. The package often cost more than the contents, and the forests of the country were not sufficient to supply the necessary material for an extended length of time. Heuce we devoted attention to other -methods of transportation, adopted the pipe-line system, and found capital for pipe line construction equal to the necessities of the business. To operate pipe lines required franchises from the States in which they were located, and conse. quently corporations in those States, just as rail- roads running through different States, are forced to operate under separate State charters. To per. feet the pipe-line system of transportation re- quired in the neighborhood of fifty millions of capital. This could not be obtained or main- tained without industrial combination. The entire oil business is dependent upon this pipe line sys- tem. Without it every well would shut down and every foreign market would be closed to us. The pipe-line system required other improve- ments, such as tank cars upon railways, and finally the tank steamer.. Capital had to be fur- nished for them and corporation-s created to own and operate them. Every step taken was necessary in the business if it was to be properly developed, and only* through such successive steps and by such an industrial combination is America t6-day enabled to utilize the bounty which its land pours forth, and to furnish the world with the best and cheap- est light ever known, receiving in return therefor from foreign lan(^g.^^^jJj^.J^j^OO,000. per year. 383 most of which is distributed in payment of Am- erican labor. I have given a picture rather than a detail of the growth of one industrial combination. It is a pioneer, and. its work has been of incalculable value. There are other American products be- sides oil for which the markets of the world can be opened, and legislators will be blind to our best industrial interests if they unduly hinder by legis- lation the combination of persons and capital re- quisite for the attainment of-so desirable an end. 11. Q. What are the chief disadvantages or dangers to the public arising from them ? A The dangers are that the power conferred by combina- tion may be abused; that combinations may be formed for speculation in stocks rather than for conducting business, and that for this purpose prices may be temporarily raised instead of being lowered. These abuses are possible to a greater or less extent in all combinations, large or small, but this fact is no more of an argument against combinations than the fact that steam may explode is an argument against steam. Steam is necessary and can be made comparatively safe. Combination is necessary and its abuses- can be minimized; otherwise our legislators must acknowledge their incapacity to deal with the most important instru- ment of industry. Hitherto most legislative at- tempts have been an effort not to control but to destroy; hence their futility. 12. Q. What legislation, it any, would you sug- gest regarding industrial combinations? A. First. Federal legislation under which corporations may be created and regulated, if that be possible. Second In lieu tteft^efflly/fttoiefttegislation as nearly 384 uniform as possible encouraging combinations of persons and capital for the purpose of carrying on industries, but permitting State supervision, not of a character to hamper industries, but sufficient to prevent frauds upon the public. John D. Rockefellek. State of New York, County of New York, ss.: I swear that these statements made by me of my own knowledge are true, and that all other statements I believe to be true. John D. Rockefeller. Sworn and subscribed to before me this 30th day of December, 1899. S. Marshall Busselle, Notary Fublic, No. 190. Information Furnished bjr Mr. S. C. T. Dodd. S. C. T. Dodd, solicitor of the Standard Oil Company, furnishes the following additional facts in reply to schedule, of questions : Q. What patents, machines, or processes of any kind formerly used exclusively by one plant are now used by all adapted to use them? A. The following is no doubt an incomplete, but as full aa we can now supply, list of patents, by patent numbers, belonging to the* various companies in 1882, the use of which was open to all. The sub- ject of the patent is given when known : 9406, 104747,145898, 146946, seaming machine; 146947, seaming machine ;148748, machine for stamping and Digitized by Microsoft® 385 bending sheet metal; 149516, sheet metal seaming machine; 150352, soldering-iron heater; 150606, apparatus for the distribution of liquid f nel ; 150607, can-seaming machine; 150887, machine for uniting tinned plates by heat and pressure; 151155, apparatus for uniting tinned plates; 151- ■619, apparatus for heating soldering irons; 152862; 154077; 154877; 155320; 158117; 158il9; 165362; soldering apparatus; 167356, apparatus for facili- tating the lining, etc., "of cans; 169372, liquid-fuel burners; 171164, oil-can nozzles ; 177553, apparat- us for facilitating the conveyance and delivery of boxes; 179135, box-nailing machine ; 182470, ap- paratus for facilitating the examination and pack- ing of cans; 185777, machines for nailing boxes ; 191172, sheet metal can machines; 192278, feeding mechanisms for nailing machines; 194168; 203073; 224843; 227823; 227824; 227825; 227826; 227829; 228553; 228554 ; .230962; 334423; 234803; 234424; 236499; 239981; 240176; 240331; 240332; 240333; 240923; 240936; 2409347; 239618; 3365, design for can ; 7609 ; 23735, seaming ma- chine ; 23736, corrugating sheet metal ; 24472, powder kegs; 38974, sheet-metal can; 39616, soldering cans; 40661, sheet-metal can ; 42355, tin cans; 43326, cans for paint and fruit; 43371, sheet- metal cans; 43079, molding sheet metal; 81692, sheet-metal can ; 82481, bending tops and bottoms; 82766, sheet-metal cans; 86571, sheet- metal cans; 87692, seaming machine; 87704, soldering machine; 88410, soldering machine; 89431, soldering machine; 91248, machijie for metal cans; 192446, sheet-metal cans; 87485, im- provement in the manufacture of lubricating oils from ^etro\euWr''^'MK"® improved pro- 386 cess of preparing petroleum to be used in lubricating wool; 68974, improvement in stills for refining and distilling oils;. 85810; 86535; 137157; 5570; 6871; 7095, improvement in burning heavy hydro-carbon oils ; 7996, improvement in manufacturing of hydro- carbon oils; 7155; 8373; 8374; 43157; 50935; 66594; 79661; 113795; 124917; 148075, piston balance-valve for steam engines; 163710, helicat- cone suction fans; 181814, apparatus for purify- ing paraffin ; 182169, apparatus for the separation of petroleum products; 183909, balanced slide valves; 191279, steam valves; 191430, metallic cartridges; 200310; 211761; 212562; 217063; 229962; 223549; 229297; 265861, method and apparatus for gluing barrels; 237130, horizontal hoop-driving machine; 219228, improvement in barrel-trussing machines ; 4920; 5053; 5652; 7321; 7322 ; 9017 ; 37798 ; 42671 ; 44258 ; 47082 ; 50780 ; 58021 ; 68426 ; 77959, license under Cheesebrough patent; 99500, 174506, process for determining the grade of lubricating oils; 212914; 2960; 4366; 4367; 4375; 32568; 53539; 120539. Q. What by-products, if any, are available to your organization which could not profitably be made by separate plants? A. All products are made by separate plants, but most of them were at one time protected by patents, the use of which became available to all plants. Q. Has there been under the organization any specialization of the plants, further than at time of the organization, giving to each the work for which it is best adapted? Give details, if any. A. Some of the corporations whose stocks were taken Digitized by Microsoft® 387 into the original trust were abandoned because of location or ill adaptation for the desired work. Others were organized at more convenient locations and with superior plants. Those manufacturing oil for export are located at tide water, while those for domestic trade are located at, central shipping points in the interior. Q. Have any plants or o)0B.ces of the organization been closed, shut down, suspended, dismantled, or sold out? If so, give list, with disposition made of each. A. No plants or offices of the organiza- tion have been -closed or sold out. But in the eighteen years all plants of companies have been made new and more effective, and plants have been abandoned at one place because of more effec- tive plants erected in a more suitable place. I am unable to give the particulars of the changes for eighteen years ; suflB.ce it to ■ say that almost nothing now remains of plants of eighteen years ago. Q. Are your prices, in fact, the same through- out the United States, allowing for cost of trans- portation? A. Yes. Q. Are they, in fact, the same in the United States as in foreign countries, allowing for cost of transportation? A. Somewhat lower in United States. Q. Have your agents ever authority to make, or have they ever in fact made, lower prices or re- bates in special sections of the country? A. No authority. Q. Have they done so for the purpose of meet- ing competition or otherwise? A. No doubt prices have been^cgJc^^jj^eeU^wer prices made by competitors. 888 Q. What dividends have you declared? Give complete list, with dates. A. Dividends were paid quarterlj^, and 'have aggregated per annum as- follows : Per cent. 12 1892 12.21 Per cent. 1882 5.25 1891 1883 6 1892 1884 6 1893 1885 10.50 1894 1886 10 1895 1887 . . 10 1896 1888 ....... 11.50 1897 1889 12 1898 1890 12 12 12 17 31 33 30 Q. Give list of stock dividends, with dates. A. May, 1887, 20 per cent. Q. What was the total amount of net profit, or loss, during your last business year? A. Profit, 30 per cent. Q. What distinctions, if any, are made in the distribution of profits between the former owners of closed or dismantled plants and others? A. None. Q. What sums have been added in enlargement or improvement of plant? Specify the use. Give particulars, with dates. A. In 1882 the property of the various companies was estimated to aggre- gate $75,000,000., for which amount trust certifi- cates were issued. ■ In 1892 they were estimated to aggregate $121,631,312. This increase was partly from profits, partly from additional capital invested. Possibly 50 per cent, of the addition was profit. No estimate has since been made, but the addition of profits to capital was in about the same proportion until 1896, since which time Digitized by Microsoft® 389 profits have been divided. The improvements are in the way of greater efficiency in method and in facilities for enlarged output. Q. What has been allowed for annual deprecia- tion? A. An average of 5.77 per cent. Q. What disposition has been made of plants closed or dismantled since the formation of the organization? List, with particulars for each. A. All that was useful of closed or dismantled plants was used in construction of new plants; all else was sold as junk. N"o data are within my knowl- edge or control from which particulars can be given. Q. Give any further particulars which show the work of the organization and its effects. A. About the year 1873 the condition of the refined'-oil busi- ness was disastrous, and failures were of constant occurrence. Leading refiners began to combine for the purpose of making the business successful. The combination was by means of purchase of stocks and interests of various companies, and, until 1882, the combination was solely by stock ownership in the hands of a limited number of in- dividuals, who controlled the corporations, as agen- cies in a common business. In 1882 these owners, whose names appear in ' Exhibit A, entered into the trust agreement. The companies whose stock they owned, in whole or in part, appear in the same agreement. They were not then competing companies. The individuals named as trustees controlled them by virtue of absolute ownership of a majority of their stocks. When the trust was dissolved, in 1892, the same fact existed. The in- dividuals then trustees continued to control the companies by viMr^^MiSWaffie ownership of a 390 majority of their stocks. Consequently the cor- porations named have been, many of them, since 1872, separate agencies carrying on business as a unit for the individuals who are their common stockholders. What they have accomplished in that time may be thus briefly summarized: 1. They have cheapened transportation, both local and to the seaboard, by perfecting and ex- tending the pipe line system; by constructing and supplying cars by which oil is shipped in bulk ; by building tanks for storage of oil in bulk ; by pur- chasing and perfecting terminal facilities for receiv- ing, handling and re-shipping oils ; by purchasing and building steamers and lighters for river a,nd harbor service; by building wharves, docks and warehouses, for foreign shipments ; by purchasing and building ocean steamers for carrying oil in bulk, and by employing in foreign countries the same special methods for storing and transporting oils in bulk, by which means alone the markets of Europe are to-day held for American oil against Russian com- petition. 2. By uniting the capital, skill and acts, and the various processes and patents of a number of persons, as well as their secret processes, and by building up manufactories on a more extensive and perfect scale, with improved machinery and ap- pliances, and by locating them in the centres of the trade they were intended to reach, the manu- facture of oil has been much cheapened and im- proved. By spending large sums in the investigation ol methods of utiligJD^g^j^^,.^^^,^ Indiana oils, and 391 by purchase of various patents, they have suc- ceeded in making a superior article of illuminat- ing oil out of what for some years seemed an al- most worthless product. " 3. By uniting with the business of transporting and refining businesses necessarily collateral there- to, to wit, the manufacture of barrels, tin cans, boxes for inclosing cans, paints, glue, sulphuric acid, etc., and by union of capital and skill, ob- taining the best machinery and manufacturing oh a large scale, they have cheapened these prod- ucts. 4. They have obtained and utilized the best scien- tific skill in investigating and experimenting upon the obtaining of new and useful products from petroleum, and have cheapened illuminating oil and otherwise benefitted mankind by the utiliza- tion of these by-products. 5. They have used their united capital in opening up the markets of the world for American petro- leum, and have held those markets against the fiercest foreign competition. This was rendered possible only by the employment of millions of capital, in the cheapening of transportation at home, across the ocean and in foreign lands, and by the best and cheapest methods of manufac- ture. The proofs of these propositions will be found in the statistics of petroleum, showing its produc- tion, prices of crude and refined, consumption at home, and amount exported to foreign markets. While the Standard does not produce, refine and market all the o5f^1i'^s'^m°r the leader in the 392 business, and competitors have succet,^«d by unit- ing their capital, sl^ill and acts, and following the same methods. It may be asked whether all this could have been accomplished without combination. It could if one man could have commanded the necessary capital and employed the proper means and per- sons. But that was manifestly impossible. It could have been accomplished by one corporation instead of many, but no charter could be obtained authorizing a corporation at once to produce, man- tifacture, transport by pipe line, car and steamer, and deal in oils, and also to manufacture packages, acids, etc. The theory of the combination was that a corporation created by and largely doing business in a State should take its charter from that State. Until charters can be granted by the Federal Govern- ment the agency of different corporations will be required in any business like that of American pe- troleum, which seeks all the markets of the world. S. C. T. DODD. September 18, 1899. Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft®