The great oil octopus

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THE ^

R EAT O I L

OCTOPUS

THE GREAT OIL OCTOPUS

THE
GREAT OIL OCTOPUS

BY

"TRUTH'S" INVESTIGATOR

T. FISHER UNWIN
LONDON: ADELPHI TERRACE
LEIPSIC: INSELSTRASSE zo

(All rights reserved.)

PREFACE

THE appearance in Truth of the articles
which form the greater portion of this
volume has been followed by a wish expressed
in many quarters that they might be republished
in a more permanent and convenient form. The
suggestion has been adopted. The articles have
been carefully revised, some additional matter
has been inserted, and it is hoped that they will
form a useful contribution to contemporary
social and commercial history. The late Mr.
Henry D. Lloyd and Miss Ida M. Tarbell have
each published exhaustive investigations of the
Standard Oil Trust's proceedings in the United
States, and further information is available in
the records of the Missouri litigation, and — in
regard to the flash-point scandal — in British Blue-
books. Hitherto, however, there has been lack-
ing a complete conspectus of all the many
branches of this worldwide subject. One or
other tentacle of the Octopus has been described
in detail, but in this volume an attempt is made

5

Preface

for the first time briefly to describe them all.
It has been necessary to exclude any reference
to many other commercial enterprises — such as
" Amalgamated Coppers " — in which the heads
of the Oil Trust individually figure in order to
concentrate attention on that combination in
the oil trade which first brought them together,
which set the example to so many imitators in
America and Europe, and exhibits most clearly
their business methods and morals in two
hemispheres.

6

CONTENTS

OHAP. PA.OE

I. THE MEN AND THE MONOPOLY . . 9

^*

II. THE SECRET REBATE . . . .25

III. THE RAILROADS AND THE PIPE LINES 43

IV. THE BIRTH OF THE TRUST . . .63
V. BRIBERY: THE ARCHBOLD LETTERS .. 75

VI. ARSON AND ESPIONAGE. . . .89

VII. THE BOGUS "INDEPENDENTS" . . 105

VIII. THE STANDARD "INVENTIONS" . . 123

IX. THE TRUST IN AMERICA AND ASIA . 137

X. RUSSIA, G ALICIA, AND ROUMANIA . 155

XI. THE TRUST IN GERMANY, SWEDEN,

AND FRANCE 171

7

Contents

CHAP. PAGE

xii. THE TRUST'S " TIED HOUSES " IN ENG-
LAND 189

XIII. THE PLASH-POINT SCANDAL .

. 207

XIV. THE ROCKEFELLERS AND THE HOME

OFFICE , 217

XV. THE LUBRICATING OIL TRADE

INDEX

237

. 251

8

THE MEN AND THE MONOPOLY

" The oil business belongs to us."
JOHN D. ROCKEFELLER to an independent refiner.

THE GBEAT OIL OCTOPUS

CHAPTER I

THE MEN AND THE MONOPOLY

r I THERE has lately arisen at Queen Anne's
-L Gate, on the site of a fine Victorian
mansion demolished to make room for it, a
gigantic palace, steel-framed in the up-to-date
style, clad in Portland stone, towering seven
stories high above the neighbouring buildings,
looking down upon Buckingham Palace on the
one side of the park, and standing on pretty
nearly equal terms with the Government Offices
and the Houses of Parliament on the other.
I was interested to learn that it has been
erected for the accommodation of the Anglo-
American Oil Company, which is the English
branch of the famous Standard Oil Trust of the
United States. There were even people who
suggested that in view of the action of the

11

The Great Oil Octopus

United States Government against the Standard
Oil Trust, still pending in the American Courts,
and the influence of Mr. Roosevelt with his
" trust-busting " aspirations, it may possibly be
in contemplation to transfer the headquarters
of the petroleum empire from the present offices
of the Standard Oil Trust in Broadway, New
York, to Queen Anne's Gate, Westminster. As
Constantine transferred the capital of the
Caesars from Rome to Byzantium, so these seers
picture Mr. John D. Rockefeller removing his
seat of government eastward from New York
to London.

Time alone can test the value of this prophecy,
Sufficient unto the day is the evil thereof. The
new Aladdin's Palace that has sprung up in
Birdcage Walk is an eloquent manifestation
of the growing wealth and influence of the
Great Oil Octopus in this country. That is a
cogent reason why the public throughout the
United Kingdom should understand without
loss of time what this Trust is, and what reason
there is for men to be afraid of it. Echoes
reach us of the iniquities charged against Mr.
Rockefeller and his colleagues in America, they
circulate vaguely about the country but make
little impression. On the other hand, strenuous
efforts to convey a contrary impression have
been made with considerable skill. The Trust

12

The Indictment

includes in its scientific organisation an efficient
Press department, and fights with the pen as
well as with other weapons. I have therefore
made it my business to undertake an exhaustive
investigation of the history of the Trust and its
operations, not in America alone, but in Europe
and Asia. There is no great secret about the
subject. But the materials are scattered and
difficult of access. A good deal of new light
has been thrown upon the history of the con-
cern and its ramifications in the United King-
dom and other countries in the course of the
great action of the United States Government
against the Trust in the State of Missouri,
referred to a moment ago. In the Standard
Oil Trust we have exhibited the highest per-
fection yet achieved by a ring of capitalists
in the art of exploiting a great industry. The
machinery that has been created for this pur-
pose is a masterpiece of human ingenuity. The
methods by which it has been employed seem
to express the last word in craft, subtlety, and
unscrupulousness, as employed for the purpose
of amassing wealth. The Trust is consequently
quite a fascinating subject for inquiry and
reflection, apart from the direct interest
which we every one of us have in its
operations.

The indictment against the Standard, put

13

The Great Oil Octopus

briefly, is that its founder, Mr. John D. Rocke-
feller, organised in 1870 a combination of
American oil refiners, who then controlled
less than 10 per cent, of the refining business,
and that he secured from the United States
railroads secret rebates on the carriage of
their oil, and even larger rebates on oil carried
for their competitors. The result was that it
became the interest of the railroads to dis-
courage the shipments of oil by refiners outside
the Trust. Armed with this weapon of the
secret rebate, the Standard Oil Trust was able
to undersell its competitors and to force them
to sell out at heavy loss. In ten years it had
obtained by those method's the control of 90
per cent, of the American oil refining business,
and being almost the sole buyer, it was able
to dictate prices to the oil producers at the
wells. It has since maintained its monopoly
by elaborate espionage of its competitors' busi-
ness, by running ostensibly "independent" oil
companies to take advantage of the anti-Trust
feeling, and by obtaining up to the present
day unfair railway discriminations in place of
the secret rebate. It maintains an expensive
staff of lobbyists at the Legislative Chambers
of many lands, and it has constantly adopted
the methods of bribery (direct and indirect)
in dealing with politicians and publicists. It

U

The Dramatis Personae

has always aimed, not at fair business com-
petition, but at absolute monopoly.

The principal figures in this great combina-
tion deserve a passing word of introduction.
There is first its founder, its creator, Mr. John
D. Rockefeller, who was born on a farm in
New York State in 1839. His father, who was
of Scottish extraction, moved to Ohio, and in
1855 John Davison Rockefeller went into the
town of Cleveland to earn his living as a junior
clerk at four dollars a week. He was clever,
industrious, steady and frugal, and he went
into the produce commission business with a
young Englishman named M. B. Clark. In
1862 he met another Englishman, Samuel
Andrews, who was a mechanical genius, and
had devised improved processes in the infant
oil-refining industry. They joined forces ;
Andrews looked after the refining and Rocke-
feller attended to the pushing of the business,
the buying and selling. The firm grew and
extended at first by legitimate, and then by
illegitimate, methods, and now Mr. Rockefeller
has convinced himself in his retirement that
he has been the agent of Providence, and that
his business career entitles him to moralise
to Sunday schools and Bible classes. " I hope
you young men are all careful. I believe it
is a religious duty to get all the money you

15

The Great Oil Octopus

can ; get it fairly, religiously, and honestly —
and give away all you can." So spoke Mr.
Rockefeller to his son's Bible class in New
York on March 27, 1897, and it gives a com-
plete picture of his life. The combination of
Jekyll and Hyde is well brought out in Miss
Ida M. Tarbell's " History of the Standard Oil
Company," the ablest investigation ever made
of the American activities of this combination.
Miss Tarbell says: —

Mr. Rockefeller was " good." There was no more faithful
Baptist in Cleveland than he. Every enterprise of that Church
he had supported liberally from his youth. He gave to its
poor. He visited its sick. He was simple and frugal in his
habits. He never went to the theatre, never drank wine. He
gave much time to the training of his children, seeking to
develop in them his own habits of economy and charity. Yet
he was willing to strain every nerve to obtain for himself
special and unjust privileges from the railroads which were
bound to ruin every man in the oil business not sharing them
with him. Eeligious emotion and sentiments of charity,
propriety, and self-denial seem to have taken the place in
him of notions of justice and regard for the rights of others.

In a character sketch of Mr. Rockefeller which
she contributed to McClure's Magazine in
January, 1905, Miss Tarbell tells this story:—

Even in his own Church men say, "He's a good Baptist,
but look out how you trade with him." "I have been in
business with John D. Rockefeller for thirty-five years," one

16

The Iron Man

of the ablest and richest and earliest of Mr. Rockefeller's
colleagues once told me in a moment of forgetfulness, " and
he would do me out of a dollar to-day; that is," he added,
with a sudden reversion to the school of cant in which he
had been trained — " that is, if he could do it honestly."

In this picture Mr. Wm. Rockefeller hardly
counts. The next figure in the gallery of oils
is that of the late Mr. Henry H. Rogers, who
died a few months ago — the "Iron Man" of
the Standard directorate. Writing in Chapter
III. of " Frenzied Finance " in Everybody's
Magazine for August, 1904, Mr. T. W. Lawson,
who knew him well, thus described Mr.
Rogers : —

Whenever the bricks, cabbages, or aged eggs were being pre-
sented to " Standard Oil," always was Henry H. Eogers's
towering form and defiant eye in the foreground where they
flew thickest. Whenever Labour howled its anathemas at
" Standard Oil " and the Rockefellers and other stout-hearted
generals and captains of this band of merry moneymakers
would begin to discuss conciliation and retreat, it was always
Henry H. Rogers who fired at his associates his now famous
panacea for all opposition, " We'll see Standard Oil in hell
before we will allow any body of men on earth to dictate how
we shall conduct our business."

In another passage in " Frenzied Finance " Mr.
Lawson wrote of him : —

Rogers is a marvellously able man, and one of the best
fellows living. He is considerate, kindly, generous, helpful,

17 B

The Great Oil Octopus

and everything a man should be to his friends. But when it
conies to business — his kind of business — when he turns away
from his better self and goes aboard his private brig and hoists
the Jolly Eoger, God help you 1 ... He is a relentless,
ravenous creature, as pitiless as a shark, knowing no law of
God or man in the execution of his purpose.

Now that Mr. Rogers is dead, the active
figure in the Trust is Mr. John Dustin Arch-
bold, who was originally a bitter opponent of
the Standard and its rebates. Since he joined
its circle Mr. Archbold has figured in two sensa-
tional episodes. He was one of the defendants
in the charge of conspiring to blow up a rival
refinery at Buffalo, and escaped through the
judge withdrawing his case from the jury. He
was the writer of the famous letters to poli-
ticians which Mr. Randolph Hearst disclosed in
the Presidential campaign of 1908.

Of the rest of these men it is necessary to say
less. They were very diverse in their character.
One of them, Henry M. Flagler, was the pioneer
of the vast hotels which line the Florida coast
and make it a winter resort for rich Americans.
William T. Wardwell, the treasurer of the
Standard Oil Company, was an ardent tee-
totaler, and more than once ran as Prohibi-
tionist candidate for the Presidency before his
connection with Standard Oil was so notorious.
Many of them were Scotch Presbyterians, but

18

The Tentacles of the Octopus

the late Mr. Daniel O'Day, the man who faced
fierce obloquy as the manager of the Standard's
pipe-line monopoly, was an Irish Catholic, who
died a year or two ago, leaving several millions
behind him. The younger generation is growing
old now, and sons of both John and William
Rockefeller have entered the business, carrying
on the traditions of the greatest combine on
earth.

We will now proceed to trace the ramifica-
tions of the vast organisation which these men
have built up and control all over the world.
The full list of the subsidiary companies is so
long that it is impossible and unnecessary to
print all the names. But a selection of them
will indicate the vastness and variety of the
Rockefeller interests. They are taken from the
Report of the United States Government Com-
missioner of Corporations on the Petroleum
Industry (Part I., Table 8, p. 84), supplemented
by one or two other unimpeachable sources of
information. The central company of this
joint-stock octopus is now the Standard Oil
Company of New Jersey, which holds large
blocks of stock in the other companies. It has
a capital of $100,000,000 of common stock and
$10,000,000 of preferred stock. Among its direc-
tors are John D. Rockefeller, William Rocke-
feller, Henry M. Flagler, John Dustin Archbold,

19

The Great Oil Octopus

Wesley H. Tilford, Frank Q. Barstow, Charles
M. Pratt, Edward T. Bedford, Walter Jennings,
James A. Moffet, C. W. Harkness, John D.
Rockefeller, jun., Oliver H. Payne, and A. C.
Bedford. This Company controls nine com-
panies which are principally engaged in refining
oils : —

Capital.
Dols.
Atlantic Kefining Company, Pennsylvania 5,000,000

Solar Refining Company, Ohio 500,000

Standard Oil Company of California 25,000,000

Standard Oil Company of Kansas 1,000,000

Standard Oil Company of Indiana 1,000,000

Standard Oil Company of New York 15,000,000

Security Oil Company, Texas 3,000,000

Standard Oil Company of Ohio 3,500,000

Corsicana Refining Company partnership

Then comes a group
panies : —

of lubricating oil com-

Dols.

Vacuum Oil Company, N.Y 2,500,000

Borne, Scrymser & Co., N.J 200,000

Chesebrough Manufacturing Company, N.Y. ... 500,000

Galena Signal Oil Company, Penn 10,000,000

Swan and Finch Company, N.Y 1,000,000

It will surprise many readers on this side to
find in this list the name of the Chesebrough
Company, which lights the London sky with the
magic word " Vaseline," but for years that
article has paid its tribute to the Standard Oil
Trust. This story was told by Mr. John D.

20

Vaseline

Archbold in evidence in the proceedings by the
United States Government against the Trust in
the State of Missouri, where much evidence, to
which we shall hereafter have to refer, was
taken. Mr. Archbold then stated that the
Standard Oil Trust acquired 2,549 shares in the
Chesebrough Manufacturing Company, which
was a little more than a majority of the stock.
Mr. Chesebrough and the other minority stock-
holders continued to carry on the business in
the old name until the present day. Vaseline,
of course, is a product of petroleum. With
regard to the Galena Signal Oil Company, which
manufactures railway lubricating and signal
oils, it is stated by the United States Commis-
sioner of Corporations in his Report (Part II.
p. x.) that American Railway officials are com-
pelled to purchase the Galena products at higher
prices than their competitors ask, because of
the influence of the Standard Oil interests as
large consignors, or their power in financial
circles, exerted on the railway boards. The
Vacuum Oil Company, which also appears in
this list, became a Standard corporation as long
ago as 1879, and it was the company concerned
in the sensational prosecution of several Standard
Oil men at Buffalo for the alleged conspiracy to
blow up a rival refinery. Its speciality is the
compounding of lubricating oils.

21

The Great Oil Octopus

The list of companies next includes three
crude oil-producing companies and thirteen
pipe line companies. Next comes the Union
Tank Line Company, of New Jersey, capital
$3,500,000, which owns and operates railway
tank cars. Sixteen natural gas companies
follow, and then six American marketing com-
panies, of which the Waters-Pierce Oil Company,
of Missouri, has had, perhaps, the most remark-
able modern history. Next we come to the
following foreign marketing companies, the
first two of which are duly recorded in the files
at Somerset House : —

Anglo-American Oil Company (London)
Vacuum Oil Company, Ltd. (London)
American Petroleum Company (Holland)
Amerikanische Petroleum Company (Germany)
Deutsche- Amerikanische Company (Germany)

Danish Petroleum Company

Konigsberger-Handels Company (Germany)...
Mannheim-Bremen Company (Germany)

Korff Refinery Company (Bremen)

Stettin- Amerikanische Company (Germany)...
Boumanian- American Petroleum Company ...
Socie"t6 ci-devant H. Beith et Cie. (Belgium)...
Italian American Petroleum Company

Vacuum Oil Company (Austria)

International Oil Company (Japan) ...

Imperial Oil Company (Canada)

Colonial Oil Company (Africa and Australasia)

Capital.

jei,ooo,ooo

£55,000

Fl.7,850,000

M.200,000

M.30,000,000

Not stated

M.2,300,000

M.3,000,000

M.1,500,000

Not stated

Lei.12,500,000

Fr. 1,650,000

Not stated

Kr.10,000,000

Yen. 12,000,000

Not stated

$250,000

But even this long list does not complete the

22

Foreign Marketing Companies

companies in this combination. It does not
include many businesses which have been
bought by the Standard and are now run as
parts of one or other of the companies given.
For example, the Devoe Manufacturing Com-
pany, which manufactures all the tin cases in
which oil and petrol are shipped, is now absorbed
in the Standard Oil Company of New York.
Then there is the Oswego Manufacturing Com-
pany, manufacturers of wood packing-cases and
barrels; the American Wick Manufacturing
Company, which made lamp wicks ; and
Thompson, Bedford & Co., who had a large
European trade in lubricating oils before their
absorption. In addition, there should be added
a number of Vacuum Oil companies which have
been established abroad, in Copenhagen, Genoa,
Paris, Hamburg, Moscow, Stockholm, Bombay,
Kobe, and Cape Town.

23

THE SECRET REBATE

" Mr. Kockefeller is the victim of a money-passion which
blinds him to every other consideration in life, which is
stronger than his sense of justice, his humanity, his affections,
his joy in life, which is the one tyrannous insatiable force of
his being."

IDA M. TARBBLL in " McClure's Magazine."

CHAPTER II

THE SECRET REBATE

HOW has this vast combination been built
up? There are those who will tell you
that it has been accomplished because John D.
Rockefeller was thrifty ; there are others who
are persuaded by the Standard's Press Bureau
to believe that it is due to the Standard's
economies in production and improvements in
transport. Neither of these agreeable theories
can explain the mystery, because most of these
improvements were invented and first adopted
by others, and Mr. Rockefeller's savings would
not have enabled him to get control of 80 per
cent, of the American oil refining business in
ten years. The truth is that the secret rebate
trick is the foundation of this great monopoly,
and this it is now proposed to prove from
official sources.

The introduction of the secret railway rebate
or discrimination may or may not have been

27

The Great Oil Octopus

due to Mr. John D. Rockefeller's inventive
genius — it is not absolutely proved to have
been so — but the Report of the United States
Government Commissioner of Corporations (Mr.
J. R. Garfield) on the Transport of Petroleum,
dated May 2, 1906, shows that at any rate the
Standard Oil Company made the practice so
much its own that it may fairly be regarded
as its special system. On page 1 of the report
this is made perfectly clear : —

The general result of the investigation has been to disclose
the existence of numerous and flagrant discriminations by
the railroads in behalf of the Standard Oil Company and its
affiliated corporations. With comparatively few exceptions,
mainly of other large concerns in California, the Standard has
been the sole beneficiary of such discriminations. In almost
every section of the country that Company has been found to
enjoy some unfair advantages over its competitors, and some of
these discriminations affect enormous areas.

Not only has this resulted in great direct pecuniary
advantage in transportation cost to the Standard, but it has
had the far more important effect of giving that Company
practically unassailable monopolistic control of the oil
marJcet throughout large sections of the country.

Of course, it was just as iniquitous for an
American railroad company, with its Govern-
ment charter, to discriminate in favour of a
large customer as it would be for an English
one, or for a Government Department, say the
Post Office, to sell stamps to a favoured few

28

The Railroads Conspirators

under their face value. The very secrecy with
which the discrimination was invariably sur-
rounded both by the railroads that granted it
and the consignors who received it proves
clearly that its illegality and injustice were
recognised on both sides. It was only gradually
that the matter of these secret rebates leaked
out, about a couple of years before Mr. Rocke-
feller consolidated all his refining interests
into the Standard Oil Company, of Cleveland,
Ohio, where much of the oil-refining business
was then carried on. This was in June, 1870.
The capital of the new concern was $1,000,000,
the parties interested in it at that date being
John D. Rockefeller, Henry M. Flagler,
Samuel Andrews, Stephen V. Harkness, and
William Rockefeller. Before this time Rocke-
feller's striking success, which was at first
attributed mainly to his extraordinary capacity
for bargaining and borrowing, had not only
attracted the attention of other Cleveland
refiners, but raised their suspicion. They
argued that they bought crude oil pretty nearly
as cheaply as he, refined it as economically,
and sold it at the same price. Yet they could
not make money at anything like the same rate.
There was only one explanation of it ; he must
be getting cheaper rates of transport from the
railroads.

29

The Great Oil Octopus

The matter was tested, and found to be s
Mr. Alexander, of the well-known refining firm
of Alexander, Scofield & Co., Cleveland, stated
on oath before the Committee of Commerce
of the United States House of Representatives
in April, 1872, that in 1868 or 1869 he went
to the Erie Railroad management and said :
" You are giving others better rates than you
are us. We cannot compete if you do that."
The railroad agent, Mr. Alexander further testi-
fied, did not attempt to deny the allegation, but
simply agreed to give Mr. Alexander a rebate
also. This was 15 cents (7Jd.) a barrel on the
regular published rate of 40 cents (Is. 8d.) on all
oil brought to Cleveland from the wells. A
crude oil shipper, W. H. Doane, made a similar
complaint, without mentioning names ; and the
complaint was stopped by a 10 cents (5d.) reduc-
tion per barrel. The method of granting these
rebates was significant. The full published rate
was paid as usual by the shipper, then at the
end of each month, on forwarding vouchers
for the amount of oil shipped, he received in
cash from the railroad company his 15 cents or
10 cents rebate per barrel, as the case might be.
This, I take it, was a precaution to conceal the
granting of the rebate by keeping documentary
evidence on hand that each shipper had duly
paid the same fixed rate.

30

Qui s'Excuse, s' Accuse

Later on, in 1880, General J. H. Devereux, who
had granted secret rebates as vice-president of
the Lake Shore Railroad in 1868, offered a
defence of his conduct by means of an affidavit
which he made in the case of the Standard Oil
Company v. William C. Scofield et al. in the
Court of Common Pleas, Cuyahoga County,
Ohio, November 13, 1880. This affidavit states
that " such rates and arrangements were made
by the Pennsylvania Railroad that it was
publicly proclaimed in the public print in Oil
City, Titusville, and other places, that Cleveland
was to be wiped out as a refining centre as with
a sponge ; " that the Cleveland refiners, some
twenty-five in number, expressed their fears to
him that they would have to give up their busi-
ness in Cleveland ; but that the Standard Oil
Company made him a definite proposal to
guarantee the Lake Shore Railroad a consign-
ment of sixty carloads a day in return for a
rebate of 10 cents on the 42 cents per barrel
rate ; and that, as this proposal " offered to the
railroad company a larger measure of profit
than would or could ensue from any business to
be carried under the old arrangements," it was
accepted by him. This was a pretty open
confession. One might be permitted to think
that, as the Lake Shore Railroad's profit and
immunity from competition was thus secured,

31

The Great Oil Octopus

it would have been in a position to extend the
reduced rate to the other refiners also, and thus
carry out its duty as a " common " carrier.
But it is obvious that it was the essence of its
agreement with the Standard Oil Company to
give that firm an advantage over its com-
petitors. The cloven hoof is apparent in the
excuse tacked on at the end of the affidavit
that " this arrangement was at all times open
to any and all parties who would secure or
guarantee a like amount of traffic." It was
certainly not open in the sense of being pub-
lished ; it was only avowed by the affidavit in
1880, when the unjust discrimination had
worked long enough to set the Standard Oil
Company definitely ahead of all competition.

It is one of the Standard Oil Company's most
usual contentions that it has reduced the price
of illuminating oil to the consumer. Any one
who takes the trouble to study the matter from
the beginning will see that the Company's
primary object, on which it concentrated all
its early efforts, has always been to raise the
price for the consumer. By 1870 the general com-
petition among oilmen, together with the vast
additional supplies of oil discovered, had brought
prices down enormously since the time oil was
first struck in 1859. Whereas Mr. Rockefeller
had received on an average 58f cents (2s. 5jd.) a

32

How the Consumer Comes In

gallon for the oil he exported in 1865, the year
he went into business, in 1870 he received only
26f cents (Is. IJd.). It was proved beyond
doubt by competent testimony during the
Missouri suit of the United States v. the
Standard Oil Company of New Jersey that a
wholesale price of 1 cent (Jd.) a gallon allows an
excellent margin of profit for an oil refiner.
But in 1870 everybody in the American oil trade
simply despised an " honest livelihood." They
were " out for the dollars," to use Mr. H. H.
Rogers's expressive indication of his own inten-
tions before the Industrial Commission in 1899.
When Mr. J. J. Yandergrift, one of the
Standard Oil directors, was questioned under
oath as to what they meant to do, he replied,
" Simply to hold up the price of oil — to get all we
can for it." And Mr. Rogers declared to the
Industrial Commission in 1875 that " oil to yield
a fair profit should be sold for 25 cents per
gallon!"

Prices being "ruinously low" from the oil-
man's point of view, Mr. Rockefeller and his
friends came forward with a scheme, in January,
1872, for the purpose of holding them up. They
had originated the idea among themselves of
the industrial "trust," and the date is conse-
quently a momentous one in the world's com-
mercial history. This, the first of all industrial

33 c

The Great Oil Octopus

trusts, was originally floated by taking over
the charter of an existing company, the South
Improvement Company, a name which had no
earthly connection with that company's object,
but was an excellent one for Mr. Rockefeller's
purpose, as his object had to be strictly con-
cealed in order to be workable. This object, as
may be gathered from the text of the contract
secretly signed by the Company and the railroads
on January 18, 1872, was to destroy the business
of all others than itself who engaged at any
time in the refining trade. The railroads were
to carry the South Improvement Company's
products for such lower rates than those of
other firms as would inevitably cause the latter
to come a financial cropper. The consideration
held out to the railroads for this service was
an all-round rise in freight rates of about 100
per cent, and the abolition of competition among
themselves by fixing the proportion of oil freight
each road was to get, or to be paid for whether
it got it or not. The discrimination in favour
of the South Improvement Company was to be
effected by a secret return to it of from 25 to 50
per cent, of all the money paid to the roads for
oil freight either by itself or by any firm or com-
pany in the trade. How this iniquitous idea
could ever have been developed, much less acted
upon, it is difficult to imagine from a bald

34

Robbery, not Trading

recital of the facts. But the railroads, I find
from evidence before the Hepburn Committee
in 1879, either believed, or affected to believe,
that the South Improvement Company repre-
sented practically the whole oil trade, was the
oil trade in fact ; other firms were, or were to
be regarded as, merely unrecognised, unquali-
fied practitioners, who carried on their avocation
at their own risk and peril, and whom society
could not take into account in making its
arrangements.

Whatever the genesis of the idea, there could
be no doubt as to its efficacy in disposing of a
trade rival when reduced to practice. Suppose
a competitor consigns as much freight as your-
self, with a 50 per cent, rebate to you and a 50
per cent, drawback paid to you as an involuntary
bounty by the competitor, you can regard a 100
per cent, rise in freight rates with equanimity,
for it leaves your expenditure under this head
exactly what it was before, to say nothing of
the bounty, while your competitor pays exactly
twice as much as he used to do. While in this
position he can be reduced to a state of hopeless
impotence by price-cutting, which can be effected
at relatively small expense. On the supposition
that the competitor's consignments bulk larger
than yours, the bounty received from them
becomes larger, till a point is arrived at when

35

The Great Oil Octopus

your own shipments cost you nothing at all,
and you are in the enviable position not only
of carrying on business without working ex-
penses, but of being paid handsomely by your
rivals for doing so. Something like this reductio
ad absurdum in trading must have been actually
approached in the case now under consideration,
for as a matter of fact the South Improvement
Company did not control one-tenth of the re-
fining business of the United States when its
contract was signed by and with the railroads
on January 18, 1872. Mr. W. G. Warden, of
Philadelphia, secretary of the South Improve-
ment Company, admitted to the Congressional
Investigating- Committee which sat in March
and April following that the aggregate refining
business of the United States amounted to from
45,000 to 50,000 barrels daily capacity, while the
stockholders of the South Improvement Com-
pany when formed owned a combined capacity
of not over 4,600 barrels — less than one-tenth.
This they increased, as we shall see, in three
months' time, to a capacity of one-fifth.

The stockholders in the South Improvement
Company held shares as follows : —

Wm. Frew, W. P. Logan, and J. P. Logan, of Philadelphia,
10 shares each; Chas. Lockhart and Bichard S. Waring, of
Pittsburg, 10 shares each; W. Gr. Warden, of Philadelphia,

36

The Sharing of the " Swag

55

and 0. F. Waring, of Pittsburg, 475 shares each; Peter H.
Watson, of Ashtabula, Ohio, 100 shares ; H. M. Flagler, 0. H.
Payne, John D. Eockefeller and Wm. Kockefeller, of Cleveland,
and J. A. Bostwick, of New York, 180 shares each ; total, 2,000
shares of $100 dollars each, of which the Standard Oil interests
held 900. The contract was signed on behalf of the Company
by P. H. Watson, president, and on behalf of the railroads as
follows : Pennsylvania, J. Edgar Thompson, president ; New
York Central, Wm. H. Vanderbilt, vice-president ; Erie, Jay
Gould, president ; Atlantic and Great Western, General Geo. B.
McClellan.

How completely the railroads were got to
play the game of Mr. Rockefeller and his friends
is made still more evident by two other clauses
of the contract. Ths first is Section 8 of Art. 2,
by which the railroads contracted to send each
day to the South Improvement Company mani-
fests on waybills of all petroleum shipped over
the roads, which manifests

shall state the name of the consignor, the place of shipment,
the kind and actual quantity of the article shipped, the name
of the consignee, and the place of destination, with the rate
and gross amount of freight and charges.

This, of course, gave the South Improvement
Company a full knowledge of everybody else's
business — just what Mr. Rockefeller strove after
from beginning to end of his career — and also
ensured the due payment of the drawbacks by
the roads. The other provision I refer to was

37

The Great Oil Octopus

contained in Art. 4, whereby each railroad was
bound to co-operate

as far as it legally might to maintain the business of the South
Improvement Company against loss or injury by competition,
to the end that it may keep up a remunerative and so a full
and regular business, and to that end shall lower or raise the
gross rates of transportation over its railroads and connections,
as far as it legally may, for such times and to such extent as
may be necessary to overcome such competition, the rebates
and drawbacks to be varied paripassu with the gross rates.

This makes it clear that Art. 3, providing that

rebates hereintofore provided may be made to any other party
who shall furnish an equal amount of transportation and who
shall possess and use works, means, and facilities for carrying
on and promoting the petroleum trade equal to those possessed
and used by the South Improvement Company,

is a mere blind. The South Improvement Com-
pany was to be maintained at all costs and
against all comers by whatever juggling with
the rates should become necessary for the
purpose.

It was admitted by members of the South
Improvement Company, who appeared before
the Investigating Committee appointed by Con-
gress in March, 1872, that the discrimination
would have turned over to the Company fully
$6,000,000 (£1,200,000) annually on the carrying
trade, while the railroads expected to make

38

Was it Graft ?

about $1,500,000 (£300,000) more than on the
previously existing rates. The Company would
thus make four times as good a bargain as the
railroads. It is difficult to see how shrewd
business men like the railroad directors could
be led into a bargain in which they were so
obviously bested. Another point the railroad
directors had to consider in the interest of
their shareholders was this. The avowed object
of the South Improvement Company was to
restrict the output of refined oil in order to
raise its price. The interest of the railroads
was obviously that the prices of oil should be
kept low, so that the refiners would be com-
pelled to ship the largest possible quantity. The
interests of the shippers and of the railroads
which received the shipments were thus dia-
metrically opposed. The former wanted smaller
consignments at higher prices, and the latter
larger consignments at no matter what price.
How the railroad officials could be induced to
sign a contract binding them to help in the
diminution of their own freights it is difficult
to see.

Mr. Frank Rockefeller, brother of John D.
Rockefeller, testified before a Congressional
Committee on July 7, 1876, that it was his
impression at the time that the rebates went
into a pool and were divided up between the

39

The Great Oil Octopus

Standard Oil Company and the railroad officials.
He mentioned four of the latter by name, and
two of them instantly sent a denial to the Press.
Mr. Frank Rockefeller's evidence — omitting the
portion in which he mentions names — is repro-
duced in the late Mr. George Rice's well-known
pamphlet on the Standard Oil Railway Dis-
criminations (p. 25), as follows : —

By the Chairman :

Q. What do you mean by the pool — a pool amongst the rail-
roads or amongst the oil men ?

A. I don't give this as a positive fact, but as I understand
the arrangement, the New York Central, the Erie, the Atlantic
and Great Western, the Pennsylvania Kailroad, the Cleveland,
Columbus and Cincinnati, and the Baltimore and Ohio roads
have a pool — are combined for the purpose of shipping oil,
and oil only — and in this pool the Baltimore and Ohio gets a
certain number of barrels to go over its road, the Lake Shore
so many to go over its road, and the Pennsylvania Company
so many to go over its road, from different points in the
country, and on the oil that is shipped over these roads by the
pool and the Standard Oil Company there is a rebate or a draw-
back from the shipment of so much, which is put into this
pool, over whichever road the oil may go, and that rebate is
divided up between the Standard Oil Company and the rail-
road officials.

Q. The railroad officials, do you say ?

A. So I understand it. I don't say that of my own know-
ledge.

Q. Then it does not go to the railroads themselves ?

A. No, sir.

Q. But to the railroad officials ?

A. To the railroad officials.

40

Was it Graft ?

There the matter was left by the Committee
of Congress, and there it must be left perforce.
If the allegation is true, it would explain how
the railroad directors could be induced to sign
such a bad bargain for the railroads, and if false,
it can presumably be refuted by an exhibition of
the railroad accounts.

41

THE RAILROADS AND THE PIPE

LINES

" A dollar in those days (1871) looked as large as a cart
wheel."

JOHN D. ROCKEFELLER in "Random Reminiscences."

CHAPTER III

THE BAILBOADS AND THE PIPE LINES

THE contract between the railroads and
the South Improvement Company was
signed, and armed with this deadly weapon, Mr.
Rockefeller went round to all the rival refineries
in Cleveland and explained to their respective
proprietors, gently but firmly, that they were as
good as dead men in the oil trade, and that the
only way they could avoid utter ruin was to
turn over their refineries to the South Improve-
ment Company either for stock or cash at the
latter's valuation. It seems scarcely credible, but
it is an historical fact that no less than twenty
out of these five-and-twenty Cleveland refiners —
who, by the way, were approached one by one
and under pledge of secrecy — as soon as they
learnt that they were thus morally dead, pro-
ceeded at once to order their coffins. That is,
they sold up as requested. The Cleveland re-
finers fell at Mr. Rockefeller's feet through sheer

45

The Great Oil Octopus

fright, and thus in less than three months' time
the Standard Oil group absorbed twenty other
refineries and increased its capacity from 1,500
barrels a day to 10,000 barrels — from one-tenth
to one-fifth the total capacity of the United
States.

Of course, the murder was soon out, and the
Oil Regions, which were interested in oil wells
as distinct from refining, which was the
Standard's business, were aflame with indig-
nation. A Petroleum Producers' Union was
formed in opposition. Mass meetings were
held and Congress was petitioned. The Penn-
sylvania Legislature repealed the charter of
the South Improvement Company, and on
March 25th the peccant railroads signed a con-
tract with the Petroleum Producers' Union, of
which the first and chief clause provided —

That all arrangements for the transportation of oil after this
date shall be upon a basis of perfect equality to all shippers,
producers, and refiners, and that no rebates, drawbacks, or other
arrangements of any character shall be made or allowed that
will give any party the slightest difference in rates or discrimin-
ation of any character whatever.

On April 4th General McClellan (Atlantic and
Great Western), Horace F. Clark (Lake Shore
and Michigan Southern), Thomas A. Scott (Penn-
sylvania), and W. H. Vanderbilt (New York

46

Mr. Rockefeller's Indiscretion

Central) all sent emphatic messages to the
Petroleum Producers' Union declaring that their
roads had no understanding of any nature in
regard to freights with the Standard Oil Com-
pany. On April 8th John D. Rockefeller
telegraphed to the Petroleum Producers' Union :
"In answer to your telegram, this Company
holds no contract with the railroad companies
or any of them or with the South Improvement
Company." Yet we now know from a contract
thoughtlessly exhibited by H. M. Flagler seven
years later to a Commission of the Ohio State
Legislature — a contract between his Company
and the railroads — that a rate had been fixed
" From April 1st until the middle of November,
1872, about seven months, $1.25." Now the
corresponding rate openly published and re-
corded in the contract between the roads and
the Petroleum Producers' Union just quoted,
which was signed March 25th, was $1.50. A
rebate of 16f per cent. ! Mr. Rockefeller had it
all the time, in spite of his own assertions and
those of the railroad officials to the contrary.

Mr. Rockefeller has committed very few indis-
cretions in his lifetime, but he did achieve one
at this early date in his career. He talked
under the smart of his rebuff, and so did others
of his colleagues in the late South Improve-
ment Company. He was reported in the Oil

47

The Great Oil Octopus

City Derrick to have said to a prominent man
of Oil City that the South Improvement Com-
pany could work under the charter of the
Standard Oil Company, and to have added that
in less than two months his auditor would be
glad to join him. One of his colleagues simply
said : " The business now will be done by the
Standard Oil Company. . . . We mean to show
the world that the South Improvement Com-
pany was organised for business, and means
business, in spite of opposition." This went the
round of the American Press a few days after
the repeal of the charter, and since then to the
present day the indiscreetly uttered threat has
been stealthily fulfilled to the letter. The South
Improvement Company was formally dissolved
in order to calm the popular indignation, but
the same men continued to operate through the
Standard Oil Company of Cleveland, and, as we
have seen, to receive similar rebates, which
enabled them to build up the Standard Oil
Trust. On May 3, 1910 — to bring the matter
well down to date by a concrete instance — the
United States Court of Appeal confirmed a
decree of the Circuit Court of the Western
District of New York State fining the Standard
Oil Company $20,000 (£4,000) "for accepting
concessions from the published rate of the
Pennsylvania, New York Central, and Rutland

48

The " Terminal Facilities " Weapon

Railroads in violation of Inter-State Commer-
cial Law." But the fine, of course, is an
ineffective flea-bite, and is only worth quoting
to show that the iniquitous conspiracy of in-
justice and robbery entered into by the rail-
roads and the Standard Oil Trust in 1872
still continues to baffle justice in America
and to outrage the moral sense of the civilised
world.

A noteworthy development of the conspiracy
between the Standard Oil Company and the
railroads was what became known as Standard
control of the railroad "terminal facilities."
By terminal facilities is understood the unload-
ing, storing, and handling of oil at the railroad
termini, chiefly in the vicinity of New York
harbour. The railroads handed over the entire
control and management of their oil yards
and wharves to this one favoured oil company,
authorising it to collect the oil-yard charges
from its rivals, and to handle its rivals' oil
consignments according to its own goodwill
and pleasure. Fancy one of our British railway
companies pitting all its railway sidings in
London under the control of a single firm of
Newcastle coal merchants, and allowing this
firm to load or unload, forward or delay the
consignment of rival firms according to its own
convenience or good pleasure ! Fancy the

49 D

The Great Oil Octopus

outcry that would be raised against this
privileged firm when it became known that
the only check upon its dealing unjustly with
its rivals was that, whatever charges it elected
to make for loading, unloading, and storage
at the railway company's sidings, such charges
were to be uniform in all cases ! This last
proviso was a mere mockery. The only
authority appointed to see that no advantage
was given to one competitor over another
was the arch-competitor — the Standard Oil
Company. The companies entering into this
special conspiracy were the Erie, the New York
Central and Hudson River, the Baltimore and
Ohio, and the Pennsylvania railroads at the
Atlantic seaboard. I have before me as I
write copies of the contracts made by all
these railroads, excepting the Pennsylvania,
with the Standard Oil Company, and they make
astounding reading.

This matter of the " terminal facilities " very
naturally received attention in the United
States Government prosecution of the Standard
Oil Company of New Jersey, in the State of
Missouri, when the Court found that the
Company was identical with the Standard Oil
Trust, which had previously been ordered by
the Court to be dissolved as an illegal con-
spiracy in restraint of trade. The effect of

50

Something Best Forgotten

the decision has been suspended by an appeal
to the Supreme Court of the United States,
which would have been decided last spring had
it not been for the death of Judge Brewer,
the presiding judge. The appeal is expected
to be decided under his tardily appointed
successor, Judge Hughes, this spring or early
summer. In the meantime, the finding of the
Missouri Circuit Court, before which the case
was argued, is that of " Guilty." When Mr.
Rockefeller had, with the greatest difficulty,
been haled before this court and asked to
explain these contracts on oath, all he could
urge in his favour was that "the Standard
interests were handling very large quantities
of oil, and were the natural parties to have
control of the warehousing, receiving, and
shipping of oil." Cross-examination could
extract very little from him. He could not
even say when the Standard Oil interests got
possession of the terminals nor how long they
retained them. He admitted that the Standard
levied terminal charges on the oil of inde-
pendents, but did not know the amount. He
relapsed, in short, into that painfully afflicting
condition of amnesia which seems to be con-
stitutional with Standard Oil officials when
subjected to the rude shock of public
examination.

51

The Great Oil Octopus

But, luckily, the written letter of the con-
tracts is now to hand to supplement this
lamentable want of memory. Take, for
instance, that with the Erie Company dated
April 17, 1874, in Section 7 of which the
Standard agrees to pay 5 cents a barrel to
the Erie Railroad for the use of its yards,
and further agrees " to make the charges
uniform to all parties who use the yards or
for whom services are performed therein, and
always as low as any other oil yard, affording
proper facilities for the transfer, storage,
preparation, and shipment of the oil at any
terminus of any railway or other line competing
with the Erie Railway at or adjacent to the
port of New York." There is something like
humour in the phrase " as low as any other
oil yard." Every " other oil yard " was simi-
larly controlled by the Standard. One of its
directors, Mr. Jabez A. Bostwick, stated on
oath before the Hepburn Committee on
October 16, 1879, that the Standard at that
time controlled the terminals of the Erie and
the New York Central railroads, and that the
New York Central had no other oil terminals
at New York Harbour except those controlled
by the Standard. At the time he was testify-
ing he had charge of the New York Central
yards, and declined to answer as to his relation

52

The Claim to Superiority

with the Standard Oil Company in that
connection. The usual atmosphere of mystery !
It is dissipated, however, at the present date,
for we have now the text of the contract
between the New York Central and the
Standard before us, signed January 1, 1876,
and referring to a previous contract of July 22,
1875.

One more point and I have done with the
"terminal facilities." Section 8 of the Erie
contract provides that the Standard Oil Com-
pany shall assume the collection of freights
and charges on all oil received at the yard
and render accounts weekly. " This provision,"
observes the " Brief for the United States,"
given to the Attorney-General in the Missouri
case, " gave the Standard Company the power
to collect the Erie's freight charges for
transportation of competitors' oil, thereby
giving the Standard the great advantage of
knowledge of all competitive shipments and
of the rates of freight, and enabling it to
compel those parties to pay the full rate,
while the Standard could obtain any rate it
might arrange for with the railroad companies,
and it will be shown that the Standard had
rebates from all of them." In the light of all
this, what becomes of the Standard Oil claim
to superior business acumen and cleverness?

53

The Great Oil Octopus

Under the conditions shown, a mere schoolboy
could outstrip and ruin the most seasoned
merchant in the race for commercial success.
The claim to superior business methods is
an absolutely unfounded one, and might as
well be urged by a burglar who can make
a fortune in a night ; but, then, his
avocation is not usually referred to as
" business."

By this time the pumping of crude oil from
the wells through pipe lines had commenced,
first for short distances to collecting points on
the railroads, but later for long distances,
largely superseding the railroads. The Stan-
dard's pipe lines, called the United Pipe Lines,
were under the management of the late Mr.
Daniel O'Day, the big Irishman mentioned in
the first chapter. At first the railroads and
Standard pipe lines worked together to harass
and delay the " independent " shipper and refiner.
Here is evidence of how the Standard Oil Com-
pany's secret agreements with the railroads
made it the interest of the latter to decrease
the shipments of independent oil by refusing to
furnish adequate cars and by delaying delivery.
In 1878 Mr. W. H. Nicholson, the representative
of Mr. Ohlen, a New York shipper of petroleum,
appeared before an investigation ordered by the
Secretary of Internal Affairs of the State of

54

Railroads Boycott Standard Rivals

Pennsylvania and gave evidence upon oath that
he began to have a difficulty in getting cars in
May of that year. One day, he stated, Mr.
Ohlen telegraphed to the officials of the Erie
road to know if he could get 100 cars to run
east. The reply came back, " Yes." About
noon Mr. Nicholson saw Mr. O'Day, the manager
of the United Pipe Lines (Standard Oil property),
in which his oil was stored, and told him he was
waiting to have his cars loaded. Mr. O'Day at
once said he could not load the cars. "But I
have an order from the Erie officials giving me
the cars," Mr. Nicholson objected. " That makes
no difference," O'Day replied; "I cannot load
cars except upon an order from Pratt." Nor
would he do it. The cars were not loaded for
Mr. Nicholson, though at the time he had 10,000
barrels of oil in the United Pipe Lines and an
order for 100 cars from the officials of the Erie
in his hand. "Pratt," of course, was the late
Mr. Charles Pratt, whose refinery was at
this time merged in the Standard combine,
and whose name is memorialised in this
country by the well-known "Pratt's motor
spirit."

High-handed proceedings of this sort by the
'ennsylvania Railroad gradually created such a
lubbub that the State of Pennsylvania instituted
a suit against it. This is the evidence given by

55

The Great Oil Octopus'

Mr. B. B. Campbell, President of the Producers'
Union, on the occasion : —

I never heard of a scarcity of cars until the early part of
June, 1878. I came to Parker (a town in Pennsylvania) about
five o'clock in the evening, and found the citizens in a state of
terrible excitement. The Pipe Lines would not run oil unless
it was sold ; the only shippers we had in Parker of any account,
viz., the agents of the Standard Oil Company, would not buy
oil, stating that they could not get cars; hundreds of wells
were stopped to their great injury; thousands more, whose
owners were afraid to stop them for fear of damage by salt
water, were pumping the oil on the ground. . . . On Saturday
morning I spoke very plainly to Mr. Shinn (Vice-President of
the Allegheny Valley Railroad Company, controlled by the
Pennsylvania), telling him that the idea of a scarcity of cars on
daily shipments of less than 80,000 barrels a day was such an
absurd, barefaced pretence that he could not expect men of
ordinary intelligence to accept it, as the preceding fall (anglice,
autumn), when business required, the railroads could carry day
after day from 50,000 to 60,000 barrels of oil. ... I requested
him to be the vehicle of communicating to the Pennsylvania
Railroad officials my views on the subject, telling him that I
was convinced that, unless immediate relief was furnished and
cars afforded, there would be an outbreak in the Oil Regions.
. . . On the next Monday I returned to Parker. After passing
Redbank, where the low-grade road, the connecting-link
between the Valley Road and the Philadelphia and Erie Road,
meets the Valley Road — between that point and Parker — the
express train was delayed for over half an hour in passing
through hundreds of empty oil cars / "

In August, 1872, Mr. Rockefeller, as the result
of much plotting and planning, succeeded in
persuading about four-fifths of the refining
interest in the United States to go into a

56

The Refiners' Association

National Refiners' Association, with himself as
president, the object being to checkmate the
Petroleum Producers' Union, which had just
exposed the South Improvement Company.
This refiners' association was to operate on
what was known as the "Pittsburg Plan" — so
called from the place where the scheme was
first organised — according to which all the
refineries were subject to a central board. They
were to refine only such an amount as the
board allowed, not to undersell prices fixed by
the board, and to leave their buying of crude
oil and the arrangements for transportation
entirely in the hands of the board. In the
aggregate they would thus form a company,
presided over by one central board ; their parti-
cipation in this company would be expressed in
terms of stock, and each stockholder would
receive dividends whether his plant operated or
not. It was, in short, the germ of a "Trust,"
with Mr. Rockefeller as trustee. The refiners
had put their heads into the lion's mouth with a
vengeance.

The Petroleum Producers' Union was up in
arms at once to protect the price of crude, and
made an heroic effort to do so by restricting
output. They also set up a producers' selling
agency to cut out the Refiners' Association by
refusing to sell it oil except at their own price.

57

The Great Oil Octopus

They were no match in generalship, however,
for Mr. Rockefeller, especially when aided, as
he was, by the hand of Nature. Nature was
unkind enough to send the producers " gushers "
with floods of oil when they wanted it least, and
they found restriction of output practically
impossible. At the same time most of the
producers were badly in want of ready cash,
and the Refiners' Association had the longer
purse.

At the psychological moment Mr. Rockefeller
struck the judicious blow of offering to throw in
his lot with the producers and buy crude only
from the Producers' Selling Agency (and that
at $4.75 a barrel, a clear dollar over the then
current market price), if the producers on their
part would undertake to maintain the price and
sell to no one outside the Refiners' Association.
The coup succeeded, and, half tempted, half
constrained by cash necessities, the producers
were ill-advised enough to trust their enemy
and sign what was known as "The Treaty of
Titusville " on the lines proposed. They at once
received an order from Mr. Rockefeller for
200,000 barrels of crude at $3.25, not quite as
good a price as that first mentioned, but which,
under the circumstances, they were glad to
accept. The " treaty " was signed on December
19, 1872. The producers had shipped about

58

Mr. Rockefeller's " Slimness '

50,000 of the barrels ordered by Mr. Rockefeller,
when, on January 14, 1873, they were suddenly
electrified to hear that that gentleman refused
to take any more of the contract oil!

When taken to task Mr. Rockefeller urged in
his defence the pitiful plea that the producers had
not kept their part of the contract by limiting
the supply of oil. It was true that the Producers'
Union was pledged by its own internal organisa-
tion to limit the supply of crude, but no such
stipulation appeared in the contract signed by
it with the Refiners' Association. It was its
own domestic arrangement. Had the matter
been taken to court it is difficult to see how
an alleged verbal understanding could have
prevailed against a written contract. But no
such step was taken. The Producers' Union
collapsed in utter demoralisation and never
made another united effort for the next five
years. The Refiners' Association also found
itself unable to keep up the internal discipline
it had imposed upon itself. It dissolved in
June, 1873, and Mr. Rockefeller was left sole
master of the situation. He had outgeneralled
everybody.

In 1874 the Erie, Central, and Pennsylvania
Railroads entered into a combination with
certain of the pipe lines, to the effect that
equal rates should be charged by both the

59

The Great Oil Octopus

railroads and the pipe lines in the combination.
The railroads were to starve out the indepen-
dent pipe lines by refusing them the advantages
given to the United Pipe Lines. Both railway
freights and pipage rates were to be raised
simultaneously, and on such a schedule that
henceforth the cost of transport would be
equal to all refiners, on crude and refined,
from all points ! This combination was an-
nounced curtly by a private circular sent out
by James H. Rutter, freight agent of the
New York Central, containing the paragraph:

You will observe that under this system the rate is even and
fair to all parties, preventing one locality taking advantage of
its neighbour by reason of some alleged or real facility it may
possess. Oil refiners and shippers have asked the roads from
time to time to make all rates even, and they would be satis-
fied. This scheme does it, and we trust will work satisfactorily
to all.

The refiners and shippers referred to as com-
placently as if they formed the bulk of the
refining and shipping interest were, of course,
Mr. Rockefeller and his friends, assumed for
the nonce, as in the case of the South Im-
provement Company, to be " the trade."

This astounding circular, commonly referred
to in American Trust history as the Rutter
circular, introduces us to the second species of
unjust discrimination enjoyed by Mr. Rocke-

60

The Rutter Circular

feller, and perhaps — of late years, at any rate —
with an even more disastrous effect than that of
the secret rebate — namely, the "discriminatory
rate." In some cases the discriminatory rate
was secret, in others published. The Rutter
circular projected the idea into a sort of quasi-
publicity as an ostensibly fair one. The brief
for the Government in the pending appeal by
the Standard Oil Company of New Jersey
against the Missouri judgment characterises
these discriminatory rates as follows : —

The testimony in this case will show that in the open pub-
lished rates, as well as in secret and unfilled rates, there was
radical discrimination against the independent shipping points
and in favour of the Standard shipping points. ... It is
impossible that without connivance with the Standard Oil
Company the railroads of this country should have uniformly
made a system of rates whereby with scarcely an exception the
independent shipping points were discriminated against in
favour of the Standard shipping points. ... It is a well-known
fact that this group of defendants is the most influential in
financial circles in the United States. This influence has un-
doubtedly been used to obtain these preferential rates, ^because
it could not be possible that it merely happened in the ordinary
course of business that practically every Standard shipping
point would be favoured with advantageous rates as against
competitors.

This contention has, of course, been already
sustained by the finding of the Missouri Circuit
Court, as it is sustained by the common sense of
any one who takes the trouble to go through

61

The Great Oil Octopus

the schedules of rate charges made by the
railroads recently brought to light. The Stan-
dard Oil Company's main refinery is at Whiting,
in Indiana, a trifle to the south-east of Chicago.
To take a few instances, the rate from Whiting
to Chattanooga, a distance of 849 miles, by the
route actually^used on the road, was fixed by the
railroad at 25.9 cents per hundred gallons, while
the rate from Pittsburg — an independent refin-
ing centre — to Chattanooga, a distance of only
651 miles, was as much as 47 cents per hundred.
In other words, the Standard Oil Company paid

21 cents a hundred less for shipping 200 miles
further. This difference amounts to over 1J
cents per gallon, which is in itself a large profit
on oil. The discrimination against Cleveland
and Toledo — two other independent shipping
centres — on shipments to Chattanooga was
equally great. Again, take the destination of
Birmingham, in the State of Alabama. The
open rate from Pittsburg, a distance of 794
miles, was 51.5 cents ; from Whiting, a distance
of 820 miles, it was 29.5 cents, a difference of

22 cents. Similarly there was an equal dis-
crimination against Cleveland and Toledo on
shipments to Birmingham. And so on to the
end of the chapter of conspiracy all over the
States.

62

THE BIRTH OF THE TRUST

" The American Beauty rose can be produced in its splen-
dour and fragrance only by sacrificing the early buds which

grow up around it."

J. D. ROCKEFELLER, Jun., to the students

of Brown University.

CHAPTER IV

THE BIRTH OF THE TRUST

r I iHE arrangements which have now been
-L described were the foundation on which
the Standard Oil Trust was built. Some time in
the summer of 1874, when he had become sure
that the so-called "equalisation" scheme would
be worked in his favour by the railroads and
leading pipe lines simultaneously, Mr. Rocke-
feller conferred at Saratoga with two of his
old friends of the South Improvement Company
— W. GL Warden, of Philadelphia, and Charles
Lockhart, of Pittsburg — both big refiners, and
agreed with them to form an oil refiners' Trust,
which was to work with absolute secrecy, and
gradually acquire control of all the refineries
in America. The instrument by which this large
order was to be put through was, of course, the
secret rebate and the new " equalisation," or, less
euphemistically, discrimination. Secrecy was to
be maintained by each firm as it came in carry-

65 E

The Great Oil Octopus

ing on business ostensibly as before under its old
style and title, staff, and management, but its
actual business was to be directed solely by the
central board of the Trust, presided over by Mr.
Rockefeller, which would control all operations
of buying, transport, and selling. The refineries
had to become the absolute property, how-
ever, of the Standard Oil Company, their late
proprietors taking stock of that Company in
exchange. We know this from an account of
the Saratoga meeting given at a later period
by Charles Lockhart, of Pittsburg, to Miss Ida
M. Tarbell.

In March, 1875, something leaked out as to
the constitution of the Trust, which was then
spoken of as the Central Association. It
gradually roped in most of the refining firms
in America, the process being effected by one
sensational collapse after another under the
influence of the discrimination and the rebate.
An exception was the huge refinery of Charles
Pratt and Co., of New York, of which the
famous H. H. Rogers was one of the most
considerable assets. This firm sold itself more
or less voluntarily to the Standard Oil for
stock at 265. The absorption of the " Creek "
refineries, i.e.t those in the Oil Regions, was
conducted by the scarcely less famous J. D.
Archbold, who appeared in Titusville as the

66

How it Persuaded its Rivals

representative of a Standard Oil offshoot, since
known to fame as the Acme Oil Company.
Between 1875 and 1879 Mr. Archbold won his
spurs in the Standard by buying out, dis-
mantling, or shutting down nearly every
refinery on the " Creek." The history of this
collapse makes pitiful reading, and I need not
enter into it beyond giving a specimen or two
extracted from contemporary records.

In 1888 Mr. A. H. Tack, a partner of the
Citizens' Oil Refining Company of Pittsburg,
after explaining on oath before the House
Committee on Manufactures how his splen-
didly organised business gradually became
non-paying under the Standard Oil influence,
added : —

In 1874 I went to ['see Eockefeller if we could make arrange-
ments with him by which we could run a portion of our works.
It was a very brief interview. He said there was no hope for
us all. He remarked this — I cannot give the exact quotation —
" There is no hope for us," and probably he said, " There is no
hope for any of us " ; but he says, " The weakest must go
first." And we went!

The case of Scofield, Shurmer and Teagle, a
Cleveland refinery, is evidence of the de-
moralisation of the times. At first the firm
showed fight, and in 1876 brought a suit
against the Lake Shore and Michigan Southern

67

The Great Oil Octopus

and the New York Central and Hudson River
railroads for " unlawful and unjust discrimina-
tion, partialities, and preferences made and
practised ... in favour of the Standard Oil
Company, enabling the said Standard Oil
Company to obtain, to a great extent, the
monopoly of the oil and naphtha trade of
Cleveland." But Mr. Rockefeller persuaded
them to drop their suit and obtain bigger
profits than they were making by becoming
his fellow-conspirators. They signed a con-
tract, consequently, with him for ten years,
the firm putting in a plant worth $73,000 and
its entire time, and Mr. Rockefeller putting in
$10,000 — and his railway discriminations ! The
firm was guaranteed $35,000 a year net profit —
•—about 50 per cent, on capital ; profits over
$35,000 went to Mr. Rockefeller up to $70,000
— about 100 per cent. ; any further profits were
to be divided.

The enormous dimensions of the profits con-
templated in this case — and no doubt afterwards
reaped — would presumably have excited suspi-
cion very quickly among Scofield, Shurmer and
Teagle's acquaintances who had seen them in
their struggling days had not Mr. Rockefeller
been an adept in joining secrecy to fraud as the
basis of his operations. To quote Miss Tarbell
(i. p. 66) :—

" It was the Bold Turpin ! :

According to the testimony of one of the firm given a few
years later on the witness-stand in Cleveland the contract was
signed at night at Mr. Eockefeller's house on Euclid Avenue
in Cleveland, where he told the gentlemen that they must not
even tell their wives about the new arrangement, that if they
made money they must conceal it — they were not to drive fast
horses, "put on style," or do anything to let people suspect
there were unusual profits in oil refining. That would invite
competition. They were told that all accounts were to be kept
secret. Fictitious names were to be used in corresponding, and
a special box at the post-office was employed for these fictitious
characters. In fact, smugglers and housebreakers never
surrounded their operations with more mystery.

" Smuggling," " housebreaking," " burglary "
are all terms that have been used to designate
Mr. Rockefeller's methods, though much has
been made of his mild demeanour and gentle
persuasiveness in dealing with his rivals. To
my mind his persuasiveness is on a par with
that of the bold highwayman sung of in the
" Pickwick Papers " : —

But Dick put a couple of balls in his nob
And perwailed on him to stop.

The Standard Oil Trust has been repeatedly
and publicly charged in America with using in
the pursuits of its ends or the defence of its
interests such weapons as perjury, bribery, open
violence, and arson. They concern, of course,
individual members of the combination rather

The Great Oil Octopus

than the whole combination, and we begin with
that part of the case which concerns Mr. J. D.
Rockefeller personally.

In 1888 the mystery surrounding the ramifica-
tions of the Standard ring caused the Senate of
New York State to order an "Investigation
Relative to Trusts," and before the Commission
entrusted with this investigation Mr. Rockefeller
appeared and was questioned as to the initium
malorum — the South Improvement Company.
I quote from the official report of this investiga-
tion : —

Q. There was such a company ?
A. I have heard of such a company.
Q. Were you not in it ?
A. I was not.

As pointed out in my former articles, Mr. J. D.
Rockefeller was a director with 180 shares in
the concern, and the fact is now absolutely
beyond dispute. The statement above was made
on February 28th, and on April 30th following
Mr. Rockefeller appeared before a Committee of
the House of Representatives at Washington,
and the following colloquy took place : —

Q. I want! the names particularly of gentlemen who either
now or in the past have been interested with you gentlemen
who were in the South Improvement Company ?

70

Hard Swearing

A. I think they were 0. T. Waring, W. P. Logan, John
Logan, W. G. Warden, 0. H. Payne, H. M. Flagler, William
Eockefeller, J. A. Bostwick, and — myself.

A direct contradiction of his own words with-
in the space of two months ! Again, questioned
as to railway rates by the New York Senate
Committee, Mr. Rockefeller was asked if there
had been any arrangements by which the Trust
or the companies controlled by it got transporta-
tion at any cheaper rates than were allowed to
the general public, and his answer was : —

No, we have had no better rates than our neighbours. But,
if I may be allowed, we have found repeated instances where
other parties had secured lower rates than we had.

The Committee, however, was not satisfied,
and returned to the charge later on in the day,
and Mr. Rockefeller, after much wriggling and
evasion, practically admitted the contrary : —

Q. Has not some company or companies embraced within
this Trust enjoyed from railroads more favourable freight rates
than those rates accorded to refineries not in the Trust ?

A. I do not recall anything of that kind.

Q. You have heard of such things ?

A. I have heard much in the papers about it.

Q. Was there not such an allegation as that in the litigation
or controversy recently disposed of by the Interstate Commerce
Commission, Mr. Rice's suit ; was not there a charge in Mr.
Kice's petition that companies embraced within your Trust
enjoyed from railroad companies more favourable freight rates ?

71

The Great Oil Octopus

A. I think Mr. Eice made such a claim. Yes, sir.

Q. Did not the Commission find the claim true ?

A. I think the return of the Commission is a matter of record.
I could not give it.

Q. You don't know it ; you haven't seen that they did so
find?

A. It is a matter of record.

Q. Haven't you read that the Interstate Commerce Commis-
sion did find that charge to be true ?

A. No, sir ; I don't think I could say that. I read that they
made a decision, but I am really unable to say what that
decision was.

Q. You did not feel interested enough in the litigation to see
what the decision was ?

A. I felt an interest in the litigation. I don't mean to say I
did not feel an interest in it.

Q. Do you mean to say that you don't know what the
decision was ?

A. I don't say that. I know that the Insterstate Commerce
Commission had made a decision. The decision is quite a com-
prehensive one, but it is questionable whether it could be said
that that decision in all its features results as I understand you
to claim.

Q. You don't so understand it ? Will you say, as a matter
of fact, that it is not so ?

A. I stated in my testimony this morning that I had known
of instances where companies altogether outside of the Trust
had enjoyed more favourable freights than companies in this
Trust, and I am not able to state that there may not have been
arrangements for freight on the part of companies within this
Trust as favourable as, or more favourable than, other freight
arrangements ; but, in reply to that, nothing peculiar in respect
to the companies in this association. I suppose they make the
best freight arrangements they can.

A commission, known, from the name of its
chairman, as the Hepburn Commission, was

72

Refusal of Evidence

appointed by Congress in 1879 to investigate
the New York railroads, and a number of
Standard Oil officials, notably Messrs. H. H.
Rogers, J. D. Archbold, Jabez A. Bostwick,
and W. T. Sheide, were summoned before it.
Though not so sweeping in their denials as
Mr. Rockefeller, all of them avoided the truth.
Their testimony, in fact, was so evasive that
the Hepburn Commission, in making its report,
characterised the Company as " a mysterious or-
ganisation whose business and transactions are
of such a character that its members decline
giving a history or description of it lest this
testimony be used to convict them of a crime."
The reason that the witnesses themselves gave
for their evasion was — as might be expected — a
different one from that assigned by the Commis-
sion. They stated that the investigations were
an interference with their rights as private citi-
zens, and that the Government had no business
to inquire into their methods. This is a very
interesting plea, for it throws a light on the
general spirit of insubordination to all law and
order consistently evinced by the Standard Oil
Trust throughout its whole career whenever law
and order were found to be in opposition to its
progress. This constant opposition to the public
authority, whether manifested by open contempt
of Court when under examination, or by secret

73

The Great Oil Octopus

bribery to avert or compass legislation, or by
secret acts known to be contrary to law, has
been such as to merit for the Standard Oil con-
spirators the appellation of the anarchists of
commercial life. Opposition to the law, denial
of the law, refusal to be subject to the law, and
attempted corruption of the officers of the law,
indelibly marks their business policy.

Direct lying, however, was employed on occa-
sion when Standard witnesses were under the
necessity of answering questions categorically.
Henry M. Flagler, for instance, swore in 1880 in
the Court of Common Pleas (Standard Oil Com-
pany v. W. C. Scofield et al.) that the Standard
Oil Company neither owned, operated, nor con-
trolled refineries elsewhere than at Cleveland,
Ohio, and Bayonne, N.J., whereas before the
Investigation Relative to Trusts, New York
Senate, 1888, he testified that in 1874 the Stan-
dard Oil Company purchased the refineries of
Lockhart, Frew & Co., of Pittsburg; Warden,
Frew & Co., of Philadelphia ; and Chas. Pratt
& Co., of New York. Mr. Rockefeller also swore
falsely in the Scofield case in 1880, in the same
sense as Mr. Henry M. Flagler. The purchase
and consequent control of the Pittsburg, Phila-
delphia, and New York refineries mentioned
was absolutely secret at the time, and seem-
ingly not likely to be found out.

74

BRIBERY : THE ARCHBOLD
LETTERS

" Solid as a prison, towering as a steeple, its cold and for-
bidding fa9ade seems to rebuke the heedless levity of the
passing crowd, and frown on the frivolity of the stray sun-
beams which in the late afternoon play around its impassive
cornices. The building is No. 26, Broadway, New York City,
home of the Standard Oil."

T. W. LAWSON in " Frenzied Finance."

CHAPTER V

BRIBERY: THE AKCHBOLD LETTERS

Standard Oil people have undoubtedly
-L- practised bribery throughout a long series
of years and on the most comprehensive scale,
and that not merely to avert a temporary
danger or get themselves out of an unex-
pected scrape, but as a matter of ordinary
business routine. They bribed high and low,
in season and out of season. How real the
evil is was revealed in a dramatic manner in
the famous Standard Oil letters which Mr.
Randolph Hearst read during the American
Presidential campaign of 1908. The genuine-
ness of these letters was never questioned,
although the persons implicated made some
feeble attempts to put a less invidious explana-
tion upon them. It was stated that one of the
Standard Oil Company's letter-books had been
stolen, and the Times editorially remarked that
there had been " nothing approaching the dis-

77

The Great Oil Octopus

closures in sensational rapidity of action in the
history of the American Presidential elections."
The principal figure in these epistles of corrup-
tion is Mr. J. D. Archbold. The first letter was
addressed to Mr. J. B. Foraker, Senator for
Ohio, and one of the leading members of the
Republican party. It was as follows : —

26, BROADWAY, NEW YORK,

March 9, 1900.

MY DEAR SENATOR, — I have your favour of last night with
inclosure, which latter, with letter from Mr. Elliott comment-
ing on same, I beg to send you herewith. Perhaps it would
be better to make a demonstration against the whole Bill, but
certainly the ninth clause, to which Mr. Elliott refers, should
be stricken out, and the same is true of House Bill No. 500,
also introduced by Mr. Price, in relation to foreign corpora-
tions, in which the same objectionable clause occurs. Am
glad to hear that you think that the situation is fairly well
in hand.

Very truly yours,

JNO. D. ARCHBOLD.
Hon. J. B. Foraker, Washington, B.C.

[The Mr. Elliott referred to was M. F. Elliott, general counsel
for the Standard Oil Company.]

Here are some more letters of this series : —

26, BROADWAY, NEW YORK,

March 26, 1900.

Hon. J. B. Foraker, 1500, Sixteenth Street, Washington, D.C.
DEAR SENATOR, — In accordance with our understanding, now
beg to enclose you certificate of deposit to your favour for
$15,000. Kindly acknowledge receipt and oblige.

Yours very truly,

JNO. D. ARCHBOLD.
78

The Archbold Letters

26, BROADWAY, NEW YORK,

April 17, 1900.

MY DEAR SENATOR, — I enclose you certificate of deposit to
your favour of $14,500. We are really at a loss in the matter,
but I send this, and will be glad to have a very frank talk with
you when opportunity offers, if you so desire. I need scarcely
again express our great gratification over the favourable out-
come of affairs.

Very truly yours,

JNO. D. ARCHBOLD.
Hon. J. B. Foraker, 1500, Sixteenth Street, Washington, D.C.

January 27, 1902.

MY DEAR SENATOR, — Responding to your favour of the 25th,
it gives me pleasure to hand you herewith certificate of deposit
for $50,000 in accordance with our understanding. Your letter
states the conditions correctly, and I trust the transaction will

be successfully consummated.

Very truly yours,

JOHN D. ARCHBOLD.
Hon. J. B. Foraker, Washington, D.C.

26, BROADWAY,

February 25, 1902.

MY DEAR SENATOR, — I venture to write you a word regarding
the Bill introduced by Senator Jones, of Arkansas, known as
" S. 649," intended to amend the Act to protect trade and
commerce against unlawful restraints and monopolies, intro-
duced by him December 4th. It really seems as though this
Bill was very unnecessarily severe and even vicious.

Is it not much better to test the application of the Sherman
Act before resorting to a measure of this kind? I hope you
will feel so about it, and I will be greatly pleased to have a
word from you on the subject. The Bill, I believe, is still
in committee.

With kind regards, I am, very truly yours,

JOHN D. ARCHBOLD.
Hon. J. B. Foraker, Washington, D.C.

79

The Great Oil Octopus

Senator Foraker, when these letters were pub-
lished, explained that the 50,000 dollars was sent
to him in order to carry out the purchase of an
Ohio newspaper, and that when the deal fell
through he returned the money. The American
public received this explanation coldly, and the
Republican party managers forced Mr. Foraker
to retire from the campaign in order to try and
get rid of so embarrassing an association. It
will be noted that while these large sums were
being sent to the Senator he was being asked
to oppose anti-trust legislation in the interests
of the Standard.

But even the Bench itself was not secure from
the influence of Mr. Archbold. " Th' Supreem
Court is full of Standard He," says Mr. Dooley,
the American humorist, and two other letters
addressed by Mr. Archbold to Senator Foraker
show how that consummation has been

reached : —

26, BROADWAY,

December 18, 1902.

MY DEAR SENATOR, — You, of course, know of Judge Burket's
candidacy for re-election to the Supreme Court Bench of Ohio.
We understand that his re-election to the position would be in
the line of usage as followed in such cases in Ohio, and we feel
very strongly that his eminent qualifications and great integrity
entitle him to this further recognition.

We most earnestly hope that you agree with this view, and
will favour and aid his re-election. Mr. Eogers joins me most
heartily in this expression to you.

With kind regards, I am, very sincerely yours,

JOHN D. ARCHBOLD.
80

The Standard and the Judiciary

26, BROADWAY,

March 20, 1903.

MY DEAR SENATOR, — We are surprised beyond measure to
learn that Smith W. Bennett, brother-in-law of F. S. Monnett,
recently Attorney -General of Ohio, is in the race for the
Attorney-Generalship of Ohio on the ^Republican ticket.

Bennett was associated with Monnett in the case against us
in Ohio, and I would like to tell you something of our ex-
periences and impressions of the man gained in that case. If
you know him at all, I am sure you will agree that his can-
didacy ought not to be seriously considered from any point of
view.

I would esteem it a favour to have a line from you on the
subject.

JNO. D. ARCHBOLD.

Mr. F. S. Monnett, whose brother-in-law is
attacked here, was one of the public officials
whom the Standard Oil Trust failed to bribe — a
most inconvenient record in Mr. Archbold's eyes.
He was Attorney-General for the State of Ohio,
and his activity in enforcing the anti-Trust law
of that State against the Standard earned him
this denunciation. Mr. Monnett described his
personal experiences in the matter to a repre-
sentative of the Press in July, 1899, when on a
visit to London : —

It happened in this way : Mr. Chas. B. Squires is a well-
known business man in Cleveland, president of the Manhattan
Insurance Company, and in no way connected with the
Standard. Owing to my fighting the Insurance Trust in Ohio
I saw a good deal of him. One day a man called on Squires,

81 F

The Great Oil Octopus

saying that he represented Frank Kockefeller (brother of J. D.)
and Charles V. Haskell, both Standard Oil men. This man
asked Squires whether the Attorney-General could be
"reached." Squires replied (according to his story to me)
that if anybody could " reach " him he could. This represen-
tative mentioned the Trust names, and showed Squires a
telegram stating that he had authority to " reach " the
Attorney-General, and that there would be a liberal reward for
him if things were dickered. The man offered Squires $ 100,000.
Squires said that would amount to nothing at all ; that he
would not attempt such a job for less than $500,000. Finally
he was authorised to offer $400,000 (£80,000) to the Attorney-
General if he would let the case stand adjourned over his term
of office [this was the prosecution of the Standard by the State
of Ohio as an illegal Trust] , and $100,000 was for Squires and
the go-between. I was at Washington, and got a telegram
from Squires, " Do nothing till I see you." When I did see
him he made this proposition. . . . This is not the first case of
the kind during this litigation, for one of my predecessors, Mr.
Watson, was offered $100,000 in much the same way. It is,
moreover, quite in accordance with the general policy of the
Trust.

In fact, in that year — 1899 — the Annual Report
of Mr. Monnett to the Governor of the State of
Ohio contains detailed charges of six deliberate
attempts to bribe Mr. David K. Watson, his
predecessor in office, to withdraw suits entered
against the Standard Oil Company of Ohio.
Mr. Watson, however, was not to be bribed ;
neither was he to be intimidated, though
Senator Marcus A. Hanna, the personal friend
and financier of President McKinley, and
one of the most influential Republican poli-

82

"Oil and Gas

55

ticians in America, wrote to him stating that
he had always considered him " in the line
of political promotion," and then went on to
intimate that unless the suit against the
Standard was withdrawn Watson would be the
object of vengeance by the Corporation and its
friends for ever after. As if to clinch his threat
and argument, Hanna wrote, " You have been in
politics long enough to know that no man in
public office owes the public anything." This last
phrase remained a potent weapon in the hands
of Mr. Hanna's enemies till the day of his
death.

But the Hearst letters show that Judge Burket
was not the only judicial candidate Mr. Archbold
favoured. The following letters were written
by him to the Hon. W. A. Stone, Governor of
Pennsylvania : —

26, BROADWAY,

December 5, 1902.

MY DEAR GOVERNOR, — I am sure you will pardon any seem-
ing presumption on my part in writing you on a subject in
which, both personally and on behalf of my Company, I am
greatly interested. It is to urge the appointment, if at all
consistent, of Judge Morrison, of McKeen, to the Supreme
Court Bench, vice Mitchell, deceased. Judge Morrison's
character for ability and integrity needs no word at my hands,
but aside from these great considerations his familiarity with
all that pertains to the great industries of oil and gas in the
important relation they bear to the interests of the Western
part of the State make him especially desirable as a member
of the Court from that section.

83

The Great Oil Octopus

Hoping that it may prove possible for you to favourably
consider Judge Morrison's appointment.

I am, with very high regard, sincerely yours,

JNO. D. ARCHBOLD.
Hon. Win. A. Stone, Harrisburg, Pa.

26, BROADWAY,

September 5, 1900.
Hon. Wm. A. Stone, Harrisburg, Pa.

MY DEAR GOVERNOR, — Will you permit me to say that if it
seems consistent for you to appoint Judge John Henderson, of
Meadville, Pa., to the vacancy on the Supreme Bench caused
by the death of Judge Green, it will be a matter of intense
personal satisfaction to me. I am sure I need not occupy your
time with any argument as to Judge Henderson's fitness, either
as to character or legal qualification.

With high regard, I am, very truly yours,

JNO. D. ARCHBOLD.

Both Judge Morrison and Judge Henderson
were appointed to the Supreme Court of Penn-
sylvania, and the former's familiarity with " oil
and gas" no doubt proved acceptable to Mr.
Archbold. We shall see hereafter that Mr.
Archbold himself and other Standard Oil mag-
nates had good reason to appreciate in the
famous Buffalo refinery prosecution the advan-
tage of having on the Bench a judge who was
familiar with " oil and gas."

These strange letters did not disdain other
rising members of the Bar. Here is a telegram
and three letters addressed to the Hon. J. P.
Elkin, Attorney-General of Pennsylvania — the

84

cc

Our Understandings

officer whose duty it is to act as public prose-
cutor in his State in enforcing anti-Trust legis-
lation. Mr. Elkin's merits have since raised him
also to the Bench of the Supreme Court of
Pennsylvania : —

Telegram.

March 15, 1900.

Hon. John P. Elkin, Indiana, Pa.
Telegram received. Will do as requested.

JNO. D. ARCHBOLD.

26, BROADWAY,

March 15, 1900.

Hon. John P. Elkin, Indiana, Pa.
Personal.

MY DEAR GENERAL, — In accordance with your telegraphic
request of to-day, I beg to enclose you certificate of deposit to
your favour for $5,000, in fulfilment of our understandings.

Very truly yours,

JNO. D. ARCHBOLD.

26, BROADWAY,

February 5, 1900.

MY DEAR GENERAL, — In accordance with the request in your
telegram of to-day, I now beg to enclose you certificate of
deposit to your favour for $10,000, kind acknowledgment of

which will oblige.

Yours very truly,

JNO. D. ARCHBOLD.
To Hon. John P. Elkin, Indiana, Pa.

26, BROADWAY,

May 9, 1901.

MY DEAR GENERAL, — I enclose copy of a measure pending — I
am not sure whether in the House or Senate — being an Act

85

The Great Oil Octopus

to amend an existing Statute, as stated. For reasons which
seem to us potent, we would greatly like to have this proposed
amendment killed. Won't you kindly tell me about it and
advise me what you think the chances are ?

Very truly yours,

JNO. D. ARCHBOLD.

To the Hon. John P. Elkin, Attorney-General,
Harrisburg, Pa.

This is the sort of campaign the Standard Oil
Trust has been carrying on in American Legis-
latures. How would the British people like it
to be extended to the House of Commons ?

Of course, in such a campaign of corruption
the Press is not overlooked. Here are three
interesting letters which show how public
opinion may be manufactured by that pro-
cess : —

26, BROADWAY,

October 10, 1902.
Mr. H. H. Edmonds, Baltimore, Md.

DEAR SIR, — Eesponding to your favour of the 9th, it gives
me pleasure to enclose you herewith certificate of deposit to
your favour for $3,000, covering a year's subscription to the
Manufacturers' Record. — Truly yours,

JNO. D. ARCHBOLD.

26, BROADWAY,

January 17, 1899.
Hon. W. A. Magee, Pittslurg Times, Pittsburg, Pa.

DEAR SIR, — As per understanding, herewith enclosed find
certificate of deposit to your order for 01,250, the receipt of
which kindly acknowledge. — Truly yours,

JNO. D. ARCHBOLD.
86

" Helpful ' Newspapers

26, BROADWAY,

December 18, 1901.
Mr. Thomas P. Grasty, care of Buck & Pratt, Koom 1,203,

27, William Street, City.

DEAR MR. GRASTY, — I have your favour of yesterday, and
beg to return you herewith the telegram from Mr. Edmonds to
you. We are willing to continue the subscription of $5,000 to
the Southern Farm Magazine for another year, payments to be
made the same as they have been this year. We do not doubt
but that the influence of your publications throughout the
South is of the most helpful character.
With good wishes, I am, very truly yours,

JNO. D. ARGHBOLD.

These sums are called " subscriptions," but
their real character appears from the case of
the Southern Farm Magazine, the price of which
is 50 cents a year. Mr. Archbold was therefore
" subscribing " for 10,000 years ! We have only
to remember that the anti-Trust feeling is very
strong in Texas and the other Southern States
to realise why the Standard Oil Trust was
extending its patronage to the remote posterity
of Mr. Thomas P. Grasty, that publicist of such
a " helpful " character.

87

ARSON AND ESPIONAGE

" The Oil Trust is evangelical at one end and explosive at
the other."

HENRY D. LLOYD in " Wealth against Commonwealth."

CHAPTER VI

ABSON AND ESPIONAGE

~T~T will be necessary to return to the subject
J- of bribery when we come to the marketing
business of the Trust. We will now pass to a
few examples of the resort to open violence for
the attainment of the Trust's ends. The Tide-
water Pipe Line was started by Lombard, Ayres
& Co., New York refiners, and others, on the
publication of the Rutter circular ; and Mr.
Rockefeller offered at first to buy them out
— pipes, refineries, and all — but refused finally
to give the price of $15,000,000 they asked.
The Standard's next move was the purchase
of a certain minority of the shares in the Tide-
water Company. On January 17, 1883, the
Standard stockholders held a hugger-mugger
meeting at the Tidewater office in Titus ville,
without notifying the stockholders generally,
voted the turning over of the control to
Standard Oil interests, and took possession of

91

The Great Oil Octopus

the office in the name of that Company. The
president of the Tidewater, however, who had
been absent in New York, met this attempt by
another equally determined. He carried the
office by surprise, barricaded it, and kept forcible
possession till a suit could be brought to declare
the meeting void, which was legally accom-
plished. Previously to this all sorts of material
obstacles had been put in the way of the Tide-
water pipe getting to the sea ; the railroads
constantly opposed the Company's obtaining a
right of way, and mysterious individuals —
obviously representing Standard interests —
constantly cropped up along the proposed
route, acquiring exclusive rights over strips
of land running at right angles to the pro-
posed right of way, some of these tiny ribbons
of land being forty miles long. Finally, the
Tidewater Pipe Line became a Standard Oil
tentacle.

In the case of the United States Pipe Line —
organised by the independent oil producers and
not to be confused with the United Pipe Lines,
which were always a Rockefeller organisation
— it has been clearly shown that the Standard
Oil Company's representatives have resorted to
similar means of obstruction. Physical force
was used on several occasions, a notable instance
being that of the crossing of the Delaware River

92

The Pipe Line Fight

at Hancock under the Erie Railroad bridge in
1893. Erie interests as such were in no wise
affected by the crossing, and the president of the
Erie road, after a conference with Mr. Emery,
manager of the United States Pipe Line, had
informed him that there would be no objection
to going under the bridge, and even sent his own
engineer to Hancock to make arrangements for
the exact location of the pipe. When the con-
nection from both sides of the river was about
to be made, however, the railroad company ran
up two engines and " wrecking cars," with about
seventy-five men, and placed inflammable mate-
rial over the ends of the pipe lines, so that on
any attempt to connect they would be so heated
that connection would become impossible. The
spot was beleaguered by the hostile forces of the
railroad and the pipe line company for three
months, when the latter abandoned the route
and set its pipes seventy miles back to a place
called Athens, Pa. The case for the United
States Government in the Missouri prosecution
says : —

The obstruction came in part directly from the agents of the
Standard Oil Company and partly from the railroads, but there
is every reason to believe that the railroads were acting in the
interests of the Standard Oil Company, as their own interests
would scarcely be injured by the pipe line, and as they had (so
far as the evidence shows) never opposed the construction of
pipe lines by the Standard Oil Company.

93

The Great Oil Octopus

I select another case from the year 1895, when
the United States Pipe Line was getting in
through the State of New Jersey to New York
harbour. The account of it may be best given
in the words of the United States Attorney-
General's brief in the Missouri case : —

When the Delaware, Lackawanna, and Western Eailroad was
reached at Washington, N.J., serious opposition was again
encountered. The pipe line company bought the fee simple
title to land at a point where there was a culvert in the railroad
and placed a pipe through this culvert, and put a force of men
in charge. The next day two locomotives, a wrecker, and 150
men attempted by force to eject the employees of the pipe line
from their position and to tear up the pipes. A hand-to-hand
fight ensued, and finally an agreement was reached by which
the matter was taken into Court. Mr. Emery testifies that
some of the same men who opposed the passage of the pipe
under the tracks of the Erie Eailroad at Hancock, N.Y., some
two years before, were also among the representatives of the
Delaware, lackawanna, and Western Eailroad in the trouble
at Washington, N.J. After a delay of six months the lower
Court decided in favour of the right of the pipe line to cross
the tracks.

In 1879 the owners of the Vacuum Oil Works,
of Rochester, N.Y., Messrs. H. B. and C. M.
Everest, father and son, made over a three-
fourths interest in their concern, which manu-
factured a patent lubricating oil, to the Standard
Oil Company, the Everests remaining managers
on a salary, and also being co-directors along
with Messrs. H. H. Rogers, J. D. Archbold, and

94

The Charge of Arson

Ambrose McGregor, of the Standard Oil Trust,
of which the Vacuum Oil Company was now run
as a subsidiary. The following year three of
the employees, Wilson, Matthews, and Miller,
having got some money together, thought that
they would like to start refining on their own
account, and did so, setting up the Buffalo
Lubricating Oil Company in the town of
Buffalo. C. M. Everest warned them he would
do all in his power to injure their concern. He
tried especially, by an offer of $20,000, to get
Miller, who was the most practical refiner of
the three, to break his contract with his two
new partners, and on June 7, 1881, H. B. Everest
took Miller to the office of his lawyer, Mr.
Greo. Truesdale, in order to come to an arrange-
ment with him. Mr. Truesdale afterwards
testified as follows in regard to this interview
(Proceedings in Relation to Trusts, House of
Representatives, 1888, Report No. 3,112,
p. 864) :—

I told him (Miller) that I did not know the exact terms of
his contract, but if he had entered into a contract and violated
it I presumed there would be a liability for damages as well as
a liability for the debts of the Buffalo party. Mr. Miller and
Everest both talked on the subject, and Mr. Everest says, "I
think there are other ways for Miller to get out of it." I told
him I saw no way except either to back out or to sell out ; no
other honourable way. Mr. Everest says, substantially, I
think, in these words : " Suppose he should arrange the

95

The Great Oil Octopus

machinery so it would bust up, or smash up, what would
the consequences be ? " — something to that effect. " Well,"
I says, " in my opinion, if it is negligently, carelessly done, not
purposely done, he would be only civilly liable for damages
caused by his negligence ; but if it was wilfully done, there
would be a further criminal liability for malicious injury to
the property of the parties — the company." Mr. Everest said
he thought there wouldn't be anything only civil liability, and
said that would — he referred to the fact that I had been police
justice, had some experience in criminal law — and he said that
he would like to have me look up the law carefully on that
point, and that they would see me again.

Shortly afterwards Miller blew up a still in the
Buffalo works twice over by overheating, but
did no further damage beyond spoiling the 175
barrels of oil contained in the still. He ab-
sconded, was kept in idleness, or semi-idleness,
by the Vacuum Company at a salary of $1,500
a year, and the latter company proceeded to
harass the Buffalo Lubricating Oil Company
out of existence by taking one vexatious action
after another against it on the ground of in-
fringement of patents. These were all decided
in favour of the Buffalo Company by the Courts
except in one case, for a purely technical in-
fringement it was condemned to pay 6 cents
(3d.) damages. Finally, the Buffalo Company
turned on its adversary and took an action
against the Vacuum Oil Company directors,
H. H. Rogers, J. D. Archbold, A. McGregor, and
the two Everests for criminal conspiracy, insti-

96

The 0 Fine

tuting at the same time civil suits for damages.
The trial, at which Mr. J. D. Rockefeller and all
the forces of the Standard Oil were mustered,
aided by the most eminent counsel in the States,
came off at Buffalo on May 2, 1886, and Messrs.
Rogers, Archbold, and McGregor escaped owing
to the judge withdrawing the case from the
jury, because, although they were directors of
the Vacuum Oil Company, it could not be
proved that they had advised Miller to cause
an explosion. The two Everests were con-
demned. By various means the Standard con-
trived to stay execution of the sentence until
May, 1888, two years later ; the statute provided
a penalty of one year's imprisonment or $250
fine, or both. Great efforts were made to obtain
a mitigation of the sentence. A petition signed
by forty "leading citizens" of Rochester was
handed in to the judge, praying him, on account
of the " untarnished fidelity and integrity " of
the convicted men, to make the penalty as light
as the Court was authorised by law to fix. In
the result the two Everests were each fined $250
for the criminal offence, and the Vacuum Oil
Company settled the civil suits for $85,000
(£17,000). This is the case on which the late
Mr. Henry D. Lloyd (whose work, "Wealth
against Commonwealth," was the first to expose
the Standard's misdeeds), based the caustic com-

97 G

The Great Oil Octopus

ment : " The Standard Oil Trust is evangelical
at one end and explosive at the other."

It was remarked in a previous chapter that the
unfair advantages conceded to Mr. Rockefeller
by the conspiring railroads afford a sufficient
answer to the Standard Oil Trust's contention
that the secret of its success lies in its superior
business ability. But there is no need to deny
a high level of business ability to Mr. Rockefeller
and his associates. The Standard Oil people
have always enjoyed this legitimate advantage
of knowing exactly what they intend doing.
Granting, however, that the Standard people
are the keenest of business men, it is equally
certain that they have pushed their keenness to
the point where it has become mere unscrupu-
lous cunning and chicanery. This is conspicu-
ously shown in the history of the Trust in its
character of salesmen.

Every local agent for the sale of Standard oil
is required to furnish reports to the statistical
department of the Standard Oil Trust at 26,
Broadway, New York, of all the transactions
entered into by every dealer in his district. His
business, in short, is to know everybody else's
business and to report it. This is done by filling
up printed forms showing in parallel columns
against every retailer's name in the district, be
he shopkeeper or pedlar, the description and

98

The System of Espionage

brand of goods he buys and sells, how the goods
have been transported, their price, and the
name and address of the wholesale dealer who
supplied them. The agent is stimulated in every
way by reproof and reward to obtain the most
intimate and apparently trifling details bearing
upon the above points, and, as is well known in
the United States, is generally converted by the
system into a mere spy, who will not stick at
bribery or any other dirty trick so long as he
can give his chiefs the desired information.
The United States Government agents found
that the Standard's " statistical department "
was presided over by a man named Christian
Dredger — a name which, allied to the occupa-
tion, certainly reminds one of "the man with
the muck-rake." The knowledge that a local
grocer or pedlar is buying elsewhere than from
the Standard is no sooner received by mail
or telegraph at the statistical department than
a Standard agent is told off to swoop down
upon the "irregular trader," and either by
threats of underselling and ruining his business
in case he persists to offer the "independent"
oil, or by promising him a secret rebate on pub-
lished prices, secures his submission. If the
agent can persuade the retailer to countermand
his order from the independent, so much the
better. .

99

The Great Oil Octopus

These accusations are proved beyond question
by extant collections of hundreds of letters and
numerous telegrams received by independent
retailers, and by a superabundance of sworn
testimony from all parts of the States. Just to
show how the thing works, here is a typical
letter received by a retailer who has been
caught ordering oil from an independent, and
has been " persuaded " to countermand the
order : —

DBS MOINES, IOWA,

January 14, 1891.
John Fowler, Hampton, Iowa.

DEAR SIR, — Our Marshallstown manager, Mr. Ruth, has
explained the circumstances regarding the purchase and subse-
quent countermand of a car of oil from our competitors. He
desires to have us express to you our promise that we will
stand all expense, provided there should be any trouble grow-
ing out of the countermand of this car. We cheerfully promise
to do this ; we have the best legal advice which can be obtained
in Iowa bearing on the points in this case. An order can be
countermanded either before or after the goods have been
shipped, and, in fact, can be countermanded even if the goods
have already arrived and are at the depot [anglice, railway
station] . A firm is absolutely obliged to accept a counter-
mand. The fact that the order has been signed does not make
any difference. We want you to absolutely refuse under any
circumstances to accept the car of oil. We are standing
back of you in this matter, and will protect you in every
way, and would kindly ask you to keep this letter strictly
confidential.

Yours truly,

E. P. PRATT.

100

A Short Way with Competitors

Another typical example of Standard methods
is revealed in the following letter addressed to
the Independent Oil Company, of Mansfield,
Ohio, by one of its customers : —

TIFFIN, OHIO,

January 24, 1898.

DEAR SIRS, — I am sorry to say that a Standard Oil man from
your city followed that oil car and oil to iny place, and told me
that he would not let me make a dollar on that oil, and was
dogging me around for two days to buy that oil, and made all
kinds of threats, and talked to my people of the house while I
was out, and persuaded me to sell, and I was in a stew what
I should do, but I yielded, and I have been very sorry for it
since. I thought I would hate to see the bottom knocked out
of the prices, but that is why I did it — the only reason. The
oil was all right. I now see the mistake, and that is of getting
a carload. Two carloads coming in here inside of a week is
more than the other company will stand . . .

Yours truly,

H. A. EIRICK.

Chess, Carley & Co., the Standard marketing
agents at Louisville, Kentucky, are big offen-
ders in this respect. The late Mr. George Rice,
of Marietta, Ohio, a well-known independent,
offered a grocer named Armstrong, in Clarks-
ville, Tennessee, his oil at a lower price than
Chess, Carley & Co. would sell to him at.
Armstrong mentioned the offer to the latter,
and " was scared almost out of his boots," wrote
Rice's agent.

101

The Great Oil Octopus

Carley told him, continues the agent, " he would break him
up if he bought oil of any one else ; that the Standard Company
had authorised him to spend $10,000 to break up any concern
that bought oil from any one else ; that he (Carley) would put
all his drummers in the field to hunt up Armstrong's customers,
and sell his customers groceries at 5 per cent, below Arm-
strong's prices, and turn all Armstrong's trade over to Moore,
Bremaker & Co., and settle with Moore, Bremaker & Co.
for their losses in helping to break Armstrong up, every thirty

The Waters-Pierce Oil Company, the Stan-
dard's Texas and Mexico branch, are equally
bad, and their methods are denounced by their
customers in similar language to that already
quoted. The retailers speak of their threats,
their " cutting to kill " ; they complain that the
Standard agents "nose" about their premises,
ask impudent questions, and generally make
trade disgusting and humiliating.

The system naturally results in bribing em-
ployees, not only of the railroads, but of the
independents themselves in order to gain in-
formation. The bribes seem to have been
generally small in amount, but to have yielded
wonderful results. For instance, in 1893, a
negro boy who was induced by the Atlantic
Refining Company of Philadelphia (Standard Oil
subsidiary), to supply regular details of the
business of the Lewis Emery Oil Company, his
employers, was only paid $90 (£18) for supply-

102

Bribery of Employees

ing information as to the firm's daily ship-
ments for about six months and also for
smuggling his company's price-book to the
Standard managers to be copied out ! Most of
the old legends about a man "selling his soul
to the devil" make Mephistopheles do something
very substantial as his part of the bargain.
But the Standard Oil Trust is capable of giving
his Satanic Majesty many wrinkles in " labour-
saving " methods, and breaks down the moral
sense of the rising generation on much more
economic principles. E. M. Wilhoit, Standard
agent at Topeka, Kansas, from 1891 to 1898,
testified in the Missouri trial that his agency
was allowed $8 (£1 12s. 6d.) a month for paying
railroad employees for information of compe-
titive shipments, Mr. E. P. Pratt, the manager
of the Kansas City branch of the Consolidated
Tank Line Company, forwarding this $8 from
Kansas City by his personal cheque. Mr. Gr.
W. Mayer, who succeeded Pratt, reduced this
amount to $6 (25s.) a month. The cheques
came in blank envelopes without any letter, and
the instructions as to what should be done with
the money were given verbally. The clerks of
five different railways were called upon once
a week for this information, which was gene-
rally written on a small slip of paper and handed
to the drayman who took oil to the railroad.

103

The Great Oil Octopus

I select this case almost at random as a typical
one from an ocean of similar evidence. From
the tempter's point of view it certainly seems
a very cheap line of damnation.

104

THE "BOGUS INDEPENDENTS"

" The very rich are just like all the rest of us ; and if
they get pleasure from the possession of money it comes from
their ability to do things which give satisfaction to some one
besides themselves."

JOHN D. ROCKEFELLER in " Random Reminiscences"

CHAPTER VII

THE " BOGUS INDEPENDENTS."

HE constant policy of the Standard through-
out its whole career has been superabun-
dantly proved to be to cut prices where there
is competition, and where there is none to raise
them to the utmost point that customers will
go to. The Standard has found that this prac-
tice has always caused a deal of talk whenever
it has been recognised, and the Standard hates
talk. It has made a good try to keep the talk
down by spreading the idea about that it is the
Standard's competitors who always begin the
price-cutting, and, on finding it difficult to get
this idea to go down with the public, it one fine
day hit upon the expedient of putting "bogus
independent" companies and pedlars in the
field as stalking-horses to bear the odium of the
price-cutting. Occasionally, especially in the
case of the pedlars, who do a big business in
America, it has involved a deal of stagey

107

The Great Oil Octopus

" business " of all sorts to keep this deception
up, a fact that makes the perusal of the evidence
on this matter very entertaining and at times
even amusing reading. But a very serious pur-
pose and a very serious effect ran through the
whole proceedings for years, which was, in
general, to throw dust in the eyes of the public
as to the game consistently played by the Stan-
dard, namely, to kill competition and extract the
highest possible amount out of the pockets of
its customers. There are two British companies
which were alleged by the United States Govern-
ment counsel in the Missouri litigation to be Stan-
dard Oil tentacles. Their whole history is so
characteristic of Standard Oil tactics that it
merits close and immediate attention. They are
the General Industrials Development Syndicate,
Limited, registered at Somerset House in 1899,
and the London Commercial Trading and Invest-
ment Company, Limited, registered in 1903. As
these were two companies which Mr. J. D. Arch-
bold, in the Missouri proceedings, swore he had
never heard of, their history throws a valuable
light on how the Standard does its business.
Taking the General Industrials first, we are
brought back to an American company, the Man-
hattan Oil Company, of Ohio, which was organ-
ised by Commodore E. C. Benedict and Mr. A. N.
Brady, of New York, in 1890. They laid a pipe

108

The Manhattan Company

line from the Lima oil-fields to Chicago in order to
supply crude oil to the People's Gas Light and
Coke Company of that city, in which they were
interested, at a more reasonable rate than the
Standard would supply it. The Manhattan Com-
pany also had a large number of tank cars
and a refinery in Galatea, Ohio. Evidence was
given before the Inter-State Commerce Com-
mission that independent Cleveland refiners
were met in the Lima oil field by this Manhattan
Oil Company, which cut off their supplies by
paying " premiums " to oil well-owners in cer-
tain districts to send it their oil. The Manhat-
tan Company professed to be independent, but
its proceedings induced the really independent
refiner to suspect that it had become a Standard
auxiliary.

When the United States Government started
the proceedings in the Missouri courts a part of
the truth came to light. Evidence was then given
by Mr. A. N. Brady that in 1899 he sold the
entire stock of the Manhattan Oil Company
for $615,000 to an English company, this
General Industrials Development Syndicate,
Limited, which also took over a mortgage of
$800,000. But Mr. Brady wanted to ensure that
his gas plants in Chicago should have a supply
of gas-oil, and he testified that part of the terms
of his contract for the sale of the Manhattan

109

The Great Oil Octopus

stock to the English company was that the
Standard Oil Company of Indiana (one of the
branches of the Trust) should supply him with
gas-oil.

It was sufficiently remarkable that this un-
known English company should be able to secure
a favourable contract for Brady's gas-oil from
the Standard, but still more remarkable incidents
followed. Immediately after the purchase of
the stock of the Manhattan that company's
refinery at Galatea, Ohio, was bought by the
Solar Refining Company of Ohio (admittedly a
Standard company) ; the Union Tank Line
Company (another Standard company) bought
all the Manhattan's tank cars, and the Ohio Oil
Company (a Standard tentacle which is in the
oil-well business) bought the Manhattan Com-
pany's wells. After this division of its property
the Manhattan Oil Company continued as a
pipe-line company, posing as an independent oil
company and offering these " premiums." Then
came the delicate question as to who owned it !
Here is an extract from Mr. Archbold's cross-
examination : —

Q. Do you know the General Industrials Development Syn
cate, Limited, of London ?
A. I do not.

Q. Of London, England ?
A. I do not.

110

The Anglo-American Oil Company

Q. You know nothing about it ?

A. I do not.

Q. Is it owned or controlled, directly or indirectly, by any
company of the Standard Oil combination ?

A. Not to my knowledge.

Q. You would be apt to know it, wouldn't you, if it was ?

A. I think I would.

Q. Do you know the firm of Budd, Johnson and Jecks, Lon-
don, solicitors ?

A. I don't know them.

Q. Did you ever hear of them ?

A. I may have heard of them in connection with this inquiry.

Q. Do you know Mr. Maxwell ?

A. I do not.

Q. Connected with the firm. Mr. Maxwell or Mr. Herbert
Johnson ?

A. I do not know either of them.

Q. Did you ever hear of them ?

A. I may, in connection with this firm. I don't even recall
the names now.

Mr. Kellogg, counsel for the United States
Government, pointed out that the New York
books of the Anglo-American Oil Company
Ltd., of London, showed that the Company
between 1899 and 1906 loaned over £540,000
to Mr. James McDonald, who was then
its managing director, and he suggested
that it was to provide the money to enable the
General Industrials Development Syndicate to
buy the Manhattan and yet conceal that the
Standard were the purchasers. Mr. Archbold
was in his best non mi ricordo vein. Although

111

The Great Oil Octopus

he was a director of the Anglo-American Oil
Company up to 1907 he could not tell for what
purpose that large sum of money was lent to
Mr. McDonald by the Company. Neither the
auditor nor the comptroller of the Standard
Oil Company in New York could tell why their
London branch did this, and Mr. Archbold did
not even know whether the loan had been
repaid ! He was still more pointedly questioned
about the matter: —

Q. Isn't it a fact, Mr. Archbold, that the Standard Oil Com-
pany, or some of its companies, indirectly owns the Indus-
trials Development Syndicate, Limited, and organised it ?

A. Not to my knowledge.

Q. You keep pretty close track o companies starting business
in competition with you in this country, don't you ?

A. We do.

Q. You seem to be able to produce a list here of every
concern engaged in the oil business in the country, didn't
you?

A. As nearly as we can keep track of it ; yes.

Q. Is this General Industrials Development Syndicate,
Limited, engaged in the oil business anywhere else ?

A. I do not know.

Q. You never investigated it ?

A. I never heard of their being in any place else. They may.
I never have heard of it.

Q. And yet it bought the Manhattan Company and then
caused the Manhattan to sell you the refineries, the producing
wells, the cars, and continued doing business with you, and you
never looked into the Development Company. . . . You never
investigated to find out who the English company was ?

A. No, not beyond that.

112

The Security Oil Company

The last question of counsel is a sufficient com-
mentary in itself on Mr. Archbold's pretended
ignorance of the General Industrials Develop-
ment Syndicate, but further light will be thrown
presently upon the relations of this London com-
pany with the Standard group. In the mean-
time, it will be convenient to consider, at the
same time, the second of these English companies,
the London Commercial Trading and Investment
Company. Evidence was given in the Missouri
prosecution by Mr. H. Bayne, the son of a well-
known New York banker, that all the stock of
the Security Oil Company of Texas, another pro-
fessedly independent concern, had been ac-
quired by this London company. Texas has a
very rigid anti-Trust law, and therefore there
was an additional reason for caution in allowing
the real purchasers to become known. Mr.
Archbold was as discreet as ever. Mr. Kellogg
put it to him that cheques drawn by the Anglo-
American Oil Company to the order of the
National Provincial Bank of England in London
were by that bank turned over to the Bank of
England, and that cheques were then drawn on
that bank to solicitors to pay for the Security
Oil Company's stock. Now, although Mr. Arch-
bold had been for many years a director of the
Anglo-American Oil Company, he could neither
confirm nor deny this remarkable story. He

113 H

The Great Oil Octopus

had never heard of such a transaction, and
when asked whether the Standard directly or
indirectly owned or controlled the London
Commercial Trading Company he could only
reply, "Not to my knowledge."

It is time, in considering this painful case
of ** loss of memory," to turn to the records of
these two companies in the Registry of Joint
Stock Companies at Somerset House. They
present singular features of resemblance ; in
fact, save for the disparity in age, they might
be twins. Both companies have as solicitors
and large original shareholders the members
of the firm of Budd, Johnson and Jecks, of
24, Austin Friars, E.C., whose names Mr.
Archbold was unable to recall. Both com-
panies have the same offices — 27, Walbrook ;
the same secretary — Mr. J. Morgan Richards
Francis ; and the same auditor. Both com-
panies have adopted the idea of issuing share
warrants to bearer for the whole of their
capital, by which device they avoid returning
any subsequent list of shareholders to Somer-
set House. Both companies hit upon the idea
of having but one director, and both were
fortunate enough to select for that onerous
task the same gentleman — Mr. Horace Maxwell
Johnson, barrister-at-law, of Hickwells, Chailey,
Sussex. But these strange coincidences do not

114

Light at Somerset House

end here. The first list of shareholders in each
case contains some remarkable resemblances.
In the case of the General Industrials Develop-
ment Syndicate it was as follows : —

Shares.

Henry Hassall, 82, Dartmouth Park Road 1

E. G. Flower, Elm Villa, Elm Eoad, Sidcup 1

Robert Cave, 26, Beversbrook Road, Tufnell Park ... 1
Sydney Lowenthal, 59, Sidney Street, South Kensington 1
Francis Glover Sharpe, 16, Foyle Road, Westcombe Park 1
Ernest Luff Smith, 73, Ramsden Road, Balham ... 1

Horace Maxwell Johnson, 1, Dr. Johnson's Buildings,

barrister ... ... ... ... ... ... ... 1

John Wreford Budd, \

Murray Johnson, all of 24, Austin Friars,

Herbert Walter Johnson j solicitors, jointly ...399,993

Arthur Statham Jecks J

400,000

Turning to the London Commercial Trading
Company, we find the following names : —

Shares.

Henry Hassall, 5, Florence Road, Finsbury Park ... 1

E. G. Flower, 279, High Road, Lee ......... I

Robert Cave, 26, Beversbrook Park, Tufnell Park ... 1

F. G. Sharpe, 27, Walbrook ............ 1

E. Luff Smith, 73, Ramsden Road, Balham ...... 1

John Rayner, 8, Woodside Villas, Ewell Road, Surbiton 1

G. Dudley Colclough, 47, Inverness Terrace ...... 1

John Wreford Budd,

of 24> Austin Priars' J°intly. 722,502
Herbert Walter Johnson

Arthur Statham Jecks

722,507
115

The Great Oil Octopus

(On February 23, 1904, 2,493 more shares were allotted to
Messrs. Budd, Johnson and Jecks, making up the total capital
of ,6725,000.)

It must be understood, of course, that the
appearance of the names of English lawyers
in these lists neither conveys any reflection of
any kind upon them nor identifies them in
any way with the operations of the Standard
Oil Trust in the United States or elsewhere.
Messrs. Budd, Johnson and Jecks are a well-
known and highly respected firm ; and it must
be assumed that they only appear in these
transactions between the companies in their
professional capacity.

We find, therefore, that out of the original
shareholders in the General Industrials, nine
appeared in the list of the London Commercial
four years afterwards. A tenth, Mr. Horace
Maxwell Johnson, the managing director,
appeared on October 2, 1903 (Mr. E. G. Flower's
share was transferred to him). In both cases
almost the entire assets of the Company are
represented in the balance-sheet by shares of
foreign companies. In the case of the General
Industrials, out of its £100,526 assets £94,613
represented such shares, while in the case of
the London Commercial this item represents
£718,685 out of total assets of £734,979.

There is only one difference in the history

116

Remarkable Coincidences

of these companies. While the London Com-
mercial has increased its original capital of
£110,000 to £725,000, the General Industrials
has reduced its capital. It consisted at first
of 400,000 £1 shares, but in June, 1901, the
capital was reduced to £230,000 by the re-
payment of 8s. 6d. on each share. On
December 13, 1905, the capital was further
reduced to £120,000 by the repayment of a
further 5s. 6d. on each share, and on August
10, 1906, this was further reduced to £100,000
by refunding a further Is. per share. This world
is full of strange coincidences, but it is dis-
tinctly worth noting that the capital of the
Manhattan Oil Company showed a synchronous
tendency to fall. From an exhibit put in by Mr.
Kellogg in the Missouri case it appeared that
the capital of the Manhattan Oil Company was
reduced from $2,000,000 (£400,000) to $500,000
(£100,000) on May 23, 1902, and to $150,000
(£30,000) on October 23, 1905.

Mr. Brady testified that when Mr. Herbert
Johnson, of London, came to him in New York
he said the General Industrials were "in the
oil business, but wished to purchase a going
company, with wells, and land, and cars, and
pipe lines."

Q. And refineries ?

A. Refineries.

117

The Great Oil Octopus

Q. Now if he wished to purchase a going business, why did
they sell their wells and tank cars and refineries ?

Mr. Milbnrn (Standard Oil counsel) : Does Mr. Brady know
that?

Q. Do you know ?

A. No, I do not know that they did.

One other remarkable feature about this
General Industrials Company may be men-
tioned. Mr. Brady produced at this trial the
following cable that he received : —

August 31, 1899, London. To A. N. Brady, 54, Wall Street,
N.Y. — Syndicate accepts options. John H. Cuthbert, its
agent, will call on you to arrange details and payment. He
has full authority. — JOHNSON.

This was signed by Mr. Herbert W. Johnson,
the London solicitor, who, with the assistance
of several other solicitors, a barrister, and an
accountant, was going into the oil business
on this large scale. But, to use a once-famous
American political phrase, Mr. John H. Cuth-
bert was "the nigger in the wood-pile." It
is his presence that finally "gives away" the
carefully hidden origin of the General Indus-
trials. When Mr. J. D. Archbold was first
questioned about Mr. Cuthbert he was as for-
getful as ever: —

Who was Mr. Cuthbert ? Do you know him ?
A. I knew a Mr. Cuthbert.

118

A Standard Oil Agent

Q. In 1899 he was in the employ of the Standard Oil Com-
pany, wasn't he — John H. Cuthbert ?

A. I do not recall that he was.

Q. He had been in your employ, hadn't he, in some of your
companies ?

A. I do not recall that he had been,

Q. Do you know him ?

A. I did know him.

Q. Where was his place of business ?

A. My recollection would be that he was employed with
the Tide Water Oil Company.

Q. Didn't he use to be employed by one of the Standard
Oil companies ?

A. He may have been earlier, away back. I do not remem-
ber distinctly. I am inclined to think that he was — in the
earlier years — employed by one of our companies.

After the luncheon adjournment on the same
day, however, Mr. Archbold's memory some-
what improved : —

Q. Isn't it a fact that Mr. John H. Cuthbert was the
Standard's representative in the Tide Water Company as
director ?

A. He went there not specially as our representative, but
left our employ and went to them, because I imagine they
offered him greater inducement in the way of salary. I know
of no other reason.

Q. Is it not a matter of fact that he solely represented
the Standard Oil Company as a director in the Tide Water
Company ?

A. I think he was there as a servant of the business.

The truth about Mr. John H. Cuthbert's position

119

The Great Oil Octopus

in relation to the Standard Oil Trust is clearly
shown by the following extract from the Report
of the United States Commissioner of Cor-
porations on the Petroleum Industry (Part I.
page 54) : —

About the sam time (1881) Standard interests succeeded in
acquiring a minority interest in the Tide Water Company's
stock. This move, coupled with the continual hostility of
the railroads, led to a virtual surrender of the Tide Water
interests, and an agreement was reached in 1883 by which
they substantially became, and have since remained, a part
of the Standard Oil system.

To sum up the history of this General Indus-
trials Development Syndicate, we have an
American oil company sold to a London com-
pany with no list of shareholders, with a
managing director who is a barrister, after
an examination and valuation of the property
by a Standard Oil employee. We find as one
of the terms of the deal that the Standard Oil
Company — who, according to Mr. Archbold,
had no interest in this transaction — should
guarantee a supply of crude oil at a low rate
for ten years to the vendors' Chicago gas
company. Then we find all the assets of the
Manhattan Company transferred to various
Standard Oil companies, except the pipe lines,
and these pipe lines used for the purpose of

120

An Obvious Conclusion

collecting oil for Standard companies, and
paying premiums to producers to prevent them
supplying oil to independent refineries which
the Standard desires to kill. All this, taken
with the evasive and obviously untruthful
answers of Mr. Archbold, can lead to but one
conclusion as to the real origin of the General
Industrials. When the facts are considered
with regard to the parallel case of the London
Commercial Trading Company, that conclusion
is strengthened still more.

121

THE STANDARD'S "INVENTIONS

"From controlling the production and sale of oils, it was
out a natural progression to rise to the control of legislatures,
judges, and the executives of the State and Federal Govern-
ments. Members, or servants, of this modern industrial
Camorra have been Cabinet ministers of the Supreme Ad-
ministration in Washington. They have had Presidents of
the Eepublic at their beck and call."

Investors1 Review, 1897.

CHAPTER VIII

THE STANDAKD'S "INVENTIONS"

THE Standard achieved other ends by its
system of creating bogus competitors,
besides avoiding public odium. It was enabled
by their operation to carry on a competitive
warfare cheaply. The " bogus independents "
bought oil from the genuine independents,
and proceeded to retail it at the wholesale
price. As the genuine independents then came
down a peg or two in their retail price to meet
this competition, and lowered their wholesale
price correspondingly, the bogus concerns
bought more at the new wholesale level, and
then retailed it at that, and so ad infinitum —
or, rather, ad infimum — till the bottom was
reached, without their losing a cent in the
process. Meantime the Standard virtuously
kept its prices up to its own customers in
that particular district, and protested against
the ruin that was being brought upon the

125

The Great Oil Octopus

trade by underselling. Thus the function of
the " bogus independent," whether company or
pedlar, was not to make money for the
Standard, but to kill off its competitors. It
was an instrument of assassination pure and
simple. And just as a particularly diabolical
murderer arranges the time and manner of his
victim's death, so that it shall seem to be self-
inflicted, so the Standard arranged by the
working of these bogus concerns that the
genuinely independent firms outside its own
charmed circle should seem to the public to
be perishing as the result of their own " cut-
throat competition." It was a subtle game,
and played with devilish cunning and per-
sistency for many years before it was definitely
shown up in its true light. And it was helped
by the fact that many of the bogus concerns
worked in this way had once been genuinely
independent concerns which the Standard had
secretly bought up.

Charles E. Farrell testified as a Government
witness at the Missouri trial — and no attempt
was made to rebut his evidence — that he had
been a tank-wagon driver for the Standard Oil
Company until events took place as follows
About March, 1899, he was approached at his
home at night by the Standard's agent at Troy,
N.Y., who told him that McMillan, the

126

The Tank Wagon

Standard's manager at Albany, had some im-
portant work for him to do which must be
kept entirely secret even from Farrell's own
family. At his instance Farrell met McMillan
and Mason, the Standard manager at Bing-
hamton, N.Y., who told him that the Standard
had competition at Oneonta, N.Y., from the
Tiona Oil Company, which had got the bulk
of the trade, and that they wanted to get it
back, and for that purpose to set the store-
keepers fighting with one another. He was
directed to go to the Tiona Oil Company at
Binghamton, N.Y., and buy twenty-five barrels
of oil, and have it shipped to Worcester,
as the Tiona would not sell him oil to
sell at Oneonta, where it was already doing
business. He was then to reship it from Wor-
cester to Oneonta, where he was to peddle it
about, putting the sign "Tiona Oil" on his
wagon, at 8 cents (4d.) a gallon, the same price
he had to pay the Tiona for it at Binghamton.
Strict secrecy was enjoined as to whom he was
working for. Farrell carried out the manoeuvre
till the merchants cut against one another down
to 2 cents a gallon retail, and one even put out
a sign : " Free oil ; come and get your cans
filled." Later Farrell could not succeed in
getting any more Tiona oil ; then the Standard
supplied him with its own oil, cautioning him

127

The Great Oil Octopus

not to sell too much of it, but only to bell the
low price about. Farrell was suspected at last
by the Tiona people of being sent by the
Standard, but, acting on instructions, denied it
through thick and thin.

This nefarious game went on for six months,
during which time Farrell carried on his
correspondence with Mason at Binghamton
by addressing the letters to a man named
George Craven at a certain post-office box in
Albany, and Craven forwarded them to Mason.
Most of the letters sent by Mason in reply were
on plain paper and unsigned, but not all. In
one which is signed, and which was exhibited in
court, Mason says : —

I have your various letters. . . . Our salesman who visits
Oneonta knows nothing whatever of who you are, nor does
any one except those you saw in our office, and under no
circumstances whatever do we want any one to get the
slightest hint that we are in any way concerned in this matter.
The Tiona people are denying that they have anything to do
with it, and claiming that we started you there. Of course,
we are denying this, and you must be very cautious, and not
allow any one to try to pump you. . . . You are doing first-
rate and carrying out the plan excellently, and very much to
my satisfaction. ... As soon as you have read this, set a
match to it and burn it up. . . . Don't tear it up, for some
person might get hold of the pieces of paper and put them
together, but if you burn it with a match, then it is out
of the way wholly. . . .

A further advance in Farrell's commercial

128

Pretended Standard Inventions

education and moral edification took place six
months after the Oneonta episode. The poor
fellow, selected no doubt for his blind fidelity,
was told by his employer at Albany, McMillan,
that a man called Starks at Troy, who had
formerly been buying oil from the Standard,
was then buying from Dauchy, an independent
wholesale dealer, and that he must buy oil from
Dauchy too, and cart it round after Stark's
wagon and sell it at the wholesale price of 8
cents. In this way Farrell got about half of
Starks's trade away from him, when the latter
repented of his ways and recommenced buying
from the Standard. On the prodigal's return
Farrell was called off. I select a peddling case
of this sort to justify my assertion that no low
trick is too dirty or mean for the Standard's
agents ; to use a Transatlantic expression, they
would take its candy from a two-year-old kid.

The idea of the " bogus independent " worked
as a system is a most ingenious one, and could
hardly have been invented by minds of any
ordinary calibre. Here, however, the inventive
genius of the Trust seems to end. It has been
argued on behalf of the Trust that its com-
mercial success has been in part due to the
various new technical processes and other im-
provements which it has introduced — to the
benefit alike of the trade and the consumer.

129 i

The Great Oil Octopus

For this theory there is no visible foundation,
though it constitutes the staple material of the
ordinary Standard Oil apologist. Long articles
have appeared in American and English maga-
zines, illustrated by pictures of the Standard's
wonderful processes, and filled with majestic
figures of the pipe lines, and tank steamers, and
tank cars that it owns. The impression is
adroitly left that the Rockefellers found a
world of crude oil and made their millions by
showing ignorant and backward competitors
how to turn it into kerosene, lubricants, vaseline,
and petroleum wax. The truth about this
imaginative literature is gradually leaking out.
Pipe lines for oil transport are described as
if they were a Standard invention. As a fact, as
early as 1862 a company was incorporated in
Pennsylvania for carrying oil in pipes or tubes
from any point on Oil Creek to its mouth or
to any station on the Philadelphia and Erie
Railroad — the first record we have of the idea,
which thus suggested itself within a reasonably
short time after oil was first struck — namely,
in 1859. Now, as we have seen, Mr. Rockefeller
only went into the oil trade as his sole business
in 1865, though he put money into it as early
as 1862. Three short pipe lines were working
in 1863 (Tarbell, vol. i. p. 17), and they were
first made an undoubted success by a man

130

Tank Cars and Ships

named Samuel van Syckel, who completely
revolutionised the oil business in 1864, the year
before Mr. Rockefeller definitely took to it, by
first pumping oil from the wells to the railroad
through a 2-inch pipe at the rate of eighty
barrels an hour.

The tank car has also been claimed as a
Standard invention. Wooden oil tanks were
first built (Tarbell, vol. i. p. 12) by a young
Iowa school teacher almost immediately after
oil was first struck, and they continued to be built
by him for about ten years, when, finding that
iron tanks were bound to supersede him, he
retired from that business. Wooden and iron
tanks, whether stationary or set on cars, were
consequently a very natural development to
meet the necessities of the oil-carrying trade,
and, as far as I can make out, were probably
running in 1869. Tank ships were an English
invention, and their adoption for the Suez
Canal was strongly opposed by the Standard
in 1891.

Lubricating oil, also claimed as a Standard
invention, is due to Mr. Joshua Merrill, a
chemist, of the Downer Works. In 1869 he
discovered a process for deodorising petroleum,
and thus rendering it fit for lubricating pur-
poses. He patented his process, and by it
increased the sale of the Downer Works' lubri-

131

The Great Oil Octopus

eating oil by several hundred per cent, in a
single year (Tarbell, vol. i. p. 22).

A whole batch of these shadowy claims was
disposed of once and for all by Mr. J. D.
Archbold's admissions under cross-examination
in the Missouri case. Here is the official record
of evidence on these points : —

Q. The Standard Oil Company did not discover the process
at all, did it?

A. Oh, no.

Q. The process of making paraffin wax was in existence as
early as thirty years ago, wasn't it ?

A. Oh, it has been in existence a long time from the co
shales.

Q. Now, in the matter of a great many of these by-products,
the independent refineries, so called, have done the same
you have, haven't they ?

A. Oh, they have, undoubtedly.

Q. Take many of those that you testified to the other
day — for instance, cylinder oil. The earliest manufacturers
of cylinder oil were at Binghamton, N. Y., were they not — ;
Mr. Brill?

A. There was a very early concern there — a small concern.

Q. And he is still in business, isn't he, in Philadelphia?

A. I don't know,

Q. Leonard and Ellis were very early manufacturers
cylinder oil; isn't that true?

A. They were — yes.

Q. Then lubricating oil — it was made from the petroleum
stock before 1870, wasn't it ?

A. It was to an extent — yes.

Q. Spindle oil, I think, is one thing you testified about the
other day. Wasn't that first introduced bylthe Downer Manu
f acturing Company, of Boston ?

132

The Trust in the Dock

A. I think it likely. I do not know definitely. It probably
was.

Q. Wool oil — wasn't that sold or manufactured by Paine,
Ablett & Co., long before the Standard Oil Company com-
bination or interests got hold of it ?

A. It may have been. I could not say.

Was not vaseline made as early as 1860 by chemists in
Cincinnati, Ohio, from petroleum products ?

A. If it was I never heard of it. I did not know of it.

Such being the Standard Oil people's methods
of dealing with their neighbours, how have
their neighbours dealt with them ? The plain
answer to this is that their neighbours have
simply " howled for their blood " for the past
thirty-nine years, since the time, in fact, when
the beginnings of the great conspiracy came to
light in the detection of the South Improvement
Company scheme in 1872. Since then the Stan-
dard Oil concern has had to face one public
prosecution after another and to witness a long
series of hostile demonstrations on the part
of the public and of public inquiries directed by
the Legislature that would have shamed any
concern capable of ordinary decent feeling out
of existence long ago. In 1879 the Standard Oil
Trust was indicted for fraudulent conspiracy
in Pennsylvania at the suit of the Petroleum
Producers' Union, who were thick-headed and
weak-kneed enough to accept a settlement out
of court. In 1887 the Standard Oil Company of

133

The Great Oil Octopus

Ohio was prosecuted by the State Attorney-
General — Mr. David K. Watson — for belonging
to the Standard Oil Trust, an illegal combination
in restraint of trade, and in 1892 judgment was
rendered prohibiting it from being a party to
any such Trust agreement. Ostensibly the liqui-
dation of the Standard Oil Trust followed ; in
reality it pursued the even tenor of its way. In
1898 the Standard Oil Company of Ohio was again
prosecuted by the State Attorney-General, this
time Mr. Frank S. Monnett, for failing to obey
the 1892 judgment, and the suit, or series of suits,
was prolonged by every device on the part of
the Standard till his term of office came to an
end in January, 1900. His successor, John M.
Sheets, suppressed the suits, but matters had
been made so hot for the Standard Oil Trust
that it took advantage of the lax company law
existing in the State of New Jersey to change its
style and title (including all its subsidiaries) into
that of the Standard Oil Company of New
Jersey. As such it carries on its old conspiracy
against public law and the common weal just as
before. In 1907 it was again prosecuted in the
person of one of its subsidiaries, the Standard
Oil Company of Indiana, for the same old
charges of unjust and illegal railway discrimi-
nations, and condemned on August 3, 1907, to
pay a fine of $29,240,000 (£5,848,000). This fine

134

The Five Million Fine

was set aside on appeal on the ground that it
had been assessed on the capital of the Standard
Oil Company of New Jersey instead of on that
of the Standard Oil Company of Indiana. On
November 15, 1906, the prosecution, already
more than once referred to, of the Standard Oil
Company of New Jersey by the United States
Government was commenced in the Eastern
Judicial District of Missouri Circuit Court.
The Company was convicted of conspiracy ; it
appealed, and the appeal was fixed for hearing
in the Supreme Court of the United States
during the October term of 1909. It was further
postponed, however by the death of Judge
Brewer, of the Supreme Court, and is now
expected to be decided in a few weeks.

135

THE TRUST IN AMERICA
AND ASIA

" I know of nothing more despicable and pathetic than a
man who devotes all the waking hours of the day to making
money for money's sake."

JOHN D. BOCKBFBLLER in " Random Reminiscences"

CHAPTER IX

THE TRUST IN AMERICA AND ASIA

HITHERTO we have been dealing with the
history of the Standard Oil Trust on its
native heath, the United States of America. It
is now time to pass in brief review some of
its operations in foreign countries. It appears
in many lands, this Protean conspirator, and
always in some new guise. Here it is the
pioneer and prophet of native oil ; there it is
the importer of vast floods of foreign oil.
Itself protected by a heavy tariff in the United
States, it poses in other lands as the chief of
the apostles of free trade. It demands alike
freedom to enter foreign oil-fields as a prospector
and foreign oil markets as a retailer. In one
country it is the advocate of high prices ; in
another it is the ruthless undercutter of its
competitors. Always preferring secrecy to
daylight, its underground agitations embrace
the Press, the politicians, and the public. It

139

The Great Oil Octopus

is not always easy at first to discover who is
behind a Standard oil agitation, but I shall
give a few clues which may assist the student
of oleaginous origins.

Turning first to Mexico, we find that the
Standard's operations there have been con-
ducted under the name of the Waters-Pierce
Oil Company of Missouri, which is now after
many years of falsehood admitted to be a
tentacle of the Trust. The history of the re-
entry of the Waters-Pierce Company to the
State of Texas is a good example of the
Standard's methods. There sits in the United
States Senate one Joseph Bailey, a Democrat
of the deepest dye. A lawyer, an orator, one
of those pure-souled patriots who denounce in
public the trusts and monopolies, Senator Bailey
was exactly the man the Standard wanted.
The full facts are given by Miss Ida M. Tarbell
in an article in the American Magazine for
January, 1908. The Texas Legislature passed
a sweeping anti-Trust law; under it the Waters-
Pierce Company was prosecuted from court t<
court until finally in March, 1900, the Unite<
States Supreme Court sustained the decisions
of the Texas courts, and the Company was
ordered to close up its business and get out.
At this point Senator (then Congressman)
Bailey appeared, and for a fee of $3,300 (charged

140

The Trust in Mexico

on the Company's books to "profit and loss")
succeeded in obtaining from the Democratic
Attorney-General of Texas two months' grace.
The Waters-Pierce Company finally transferred
itself to a new Company of the same name,
which took over the entire business of the
original company, and Mr. Henry Clay Pierce,
the manager, applied for a charter for the new
one. He swore that it was in no way connected
with the Standard Oil Trust, and that he owned
3,996 out of 4,000 shares. Largely through the
influence of Congressman Bailey the new charter
was granted. Four weeks later Bailey, who
was always regarded as a poor man, was able
to buy the splendid Grape Vine Ranch at Dallas,
Texas, of 6,000 acres— a singular coincidence,
to say the least.

The new Waters-Pierce Oil Company went on
trading until in the Missouri proceedings in
1906 Mr. Henry Clay Pierce, the managing
director, was at last forced on to the witness-
stand. He there admitted that he only owned
1,250 shares of the new Waters-Pierce Company,
and that the Standard owned 2,750. He
admitted quite frankly that in order to evade
the anti- Trust law of the State of Texas the
Standard's 2,750 shares stood on the books in
his name from May, 1900, to September, 1904.
During this period the dividends were sent to

141

The Great Oil Octopus

Mr. Bayne, of the Seaboard National Bank of
New York — a gentleman whose name my
readers will recall as appearing in connection
with the Standard's carefully concealed owner-
ship of the Security Oil Company of Texas.
In June, 1904, Mr. H. C. Pierce was asked to
transfer these 2,750 shares to Mr. Van Buren,
who happens, oddly enough, to be the son-in-law
of Mr. J. D. Archbold, whose name has appeared
so often in previous chapters.

During all this time that the Waters-Pierce
Oil Company was posing as an "independent"
business it was carrying on a very large and
profitable trade in the adjoining Republic of
Mexico. Although there are large natural
deposits of petroleum in Mexico, the Waters-
Pierce Company preferred to import crude oil
from Texas and Oklahoma, refine it in Mexico,
and sell it at a price which returned a profit
of 600 per cent, on the invested capital. But
the Mexican Government desired to develop
the natural resources of the Republic, and as
they were quite tired of the high prices of the
Standard, which had a monopoly, they
granted large oil concessions to the Pearson
interests, which are headed by Lord Cowdray.
The Pearson firm had executed large railway,
waterworks, and harbour contracts for the
Mexican Government, and they developed the

142

The Trust's Press Bureau

petroleum resources of Mexico so rapidly that
the Standard, which was hampered by a duty
of $4J a barrel on all the crude oil they im-
ported, soon began to feel the pinch.

Then ensued the rate-war which lasted so
many months in Mexico, but which is reported
to be now compromised. The Waters-Pierce
Company built a refinery in Mexico, and spent
large sums in buying Mexican oil lands. They
cut prices so heavily that they sold oil under
cost, but the natural advantages of the Pearson
interests were so great as to render them
impregnable, and the Eagle Oil Company was
successfully launched on the London market
by Lord Cowdray's firm to carry out extensive
developments on the oil-bearing lands they
own. During the bitter contest there was
plenty of evidence of the existence of the
Standard's Press bureau, the head of which
gets the liberal salary of $12,500 a year.
Articles appeared in London financial news-
papers predicting the imminent ruin of the
Pearson interests, and obviously intended to
stop the English investor from backing their
flotations. According to a statement recently
published in the United States, a more subtle
campaign seems to have been carried out
against President Diaz, who favours the
Pearson interests. Many officials of the Govern-

143

The Great Oil Octopus

ment, including a son of President Diaz, have
become shareholders of the Pearson local oil
company, being naturally desirous of developing
their national resources and of fighting this
American monoply. Now under the title of
"Barbarous Mexico," an ostensibly humani-
tarian campaign was opened in newspapers
and magazines of the United States of America
against the alleged harsh treatment of the
Yaqui Indians by the Mexican Government. In
the Cosmopolitan Magazine of March, 1910, it
was categorically asserted by Mr. Alfred H.
Lewis, one of the foremost American magazine
writers, that this campaign had been inspired
by the Oil Trust. They were determined to
be revenged on President Diaz, and therefore
they induced a number of well-meaning
Americans — who haven't time to put down
the public lynching of negroes in the United
States — to plead the cause of the unfortunate
semi-enslaved Yaqui Indians. I cannot prove
this charge, but Mr. Lewis says it is believed
by Americans resident in Texas and Mexico.
From the nature of the case this allegation
is difficult to substantiate, but for the present
purpose it is a sufficiently significant fact that
a writer of Mr. Lewis's reputation should
believe that such a Machiavellian scheme is
possible. That the Standard will stick at

The Railway Rebate in Canada

nothing appears from the fact that when
Lord Cowdray visited New York in June, 1910,
he was shadowed by their detectives. The
Standard Oil Trust issued a formal denial of
this charge, but Lord Cowdray repeated it and
reaffirmed it in the Daily Mail.

Turning next to Canada, we find that the
British flag has been no protection against the
Standard's invasion. Here, too, railway dis-
crimination was the principal weapon employed,
and this was aided by the legislation which
the Standard obtained at Ottawa permitting
them to ship their oil along the international
waterways and the Canadian canals in bulk
steamers to Canadian ports, where it was easy
to transfer it to tank cars. In 1898 the late
Mr. Henry D. Lloyd, author of "Wealth Against
Commonwealth," wrote as follows to the present
writer with regard to these discriminations : —

My information came direct from the attorney of one of the
principal Canadian refiners. This refiner carried on his busi-
ness with my book at his elbow, and he told his attorney that
precisely the things that I had exposed in that book were
there and then being done to him. The discrimination was
managed by some manipulation of the rates with regard to
shipments in barrels. The Oil Trust had barrelling works of
its own at certain points, from which it received rates at dis-
criminations that killed the profits of the home refiners who
did not have these central stations. The refiner I speak of was
prosperous, liked the business, and would have continued in it

145 K

The Great Oil Octopus

but for this railroad discrimination. He made every possible
effort by appeals to the railroad people in Canada to remedy the
wrong, but found them as determined to favour the American
Trust as railroads in the United States.

Finally the Standard clinched the matter by
purchasing a Canadian refinery, which it runs
as the Imperial Oil Company, a nice patriotic
sort of name which no doubt appeals to the
Canadian public. With this refinery and the
railroad discriminations they are as powerful
in Canada as they are in the United States.

When one turns to the Far East it is
surprising to discover that the Standard has
not had things all its own way. It does a
huge business in China and Manchuria in case-
oil, but it has there had to fight, first, Russian
oil shipped in bulk, and, when that fell off,
the competition of the Dutch East Indies.
Several of these islands are very rich in
petroleum, and, in my opinion, its failure to
secure a footing there was the Standard's
first great defeat. The story is told with
commendable bluntness and candour by Mr.
Robinson, British Consul at Amsterdam, in his
annual report for the year 1897 (Foreign Office
Consular Reports, No. 2,054). He says: —

At present a very important question has been raised by
the attempt of the well-known American monopolist under-

146

The Benzine Battle in the Far East

taking, the Standard Oil Company, to acquire a footing in
the Dutch East Indies by the purchase of the shares of the
Moeara Enim Company, an important concession in Sumatra.
An extraordinary general meeting of the latter company was
to have been held in the last days of February for the purpose
of ratifying the agreement with the Standard Oil Company,
but the Dutch Government has interfered by the categorical
declaration that no concession will be granted to a company
under the control of the American monster monopoly, and
the meeting has naturally been postponed. It remains to be
seen whether the financial power of the Standard Oil Company
can be effectively resisted by such steps, but the Government
seems quite determined to use all possible means to this end,
and the course which it has adopted will certainly be a popular
one, threatened as Netherland India is by an "imperium in
imperio " of this description. The agitation against the
Standard Oil Company's monopoly, in so far as this inflicts
on this country all the dangers and disasters caused by an
exclusive supply of low-flashing oil, is a constantly increasing
one.

The result was that the Moeara Enim Com-
pany were unable to sell, and the Standard
has never been able to get into the Dutch
Indies. Worse still, the Moeara Enim and
two other Dutch petroleum companies were
absorbed by the Royal Dutch Petroleum Com-
pany, and this in its turn became in 1907
allied with the Shell Transport and Trading
Company of London, of which Sir Marcus
Samuel is the head.

Briefly, the present position is that two new
companies have been created, in which the

147

The Great Oil Octopus

Royal Dutch and the Shell Company hold all
the shares. The Bataafsche Petroleum Maat-
schappij is a Dutch company with a capital
of 80,000,000 florins, which carries on all the
pumping and refining operations of the combine
in the Far East, while a new English company,
the Anglo-Saxon Petroleum Company, with a
capital of £4,000,000, owns all the petroleum
fields in which they operate, and also the
very large fleet of tank steamers formerly
owned by the Shell Company, in which their
products are carried. They send into London
alone 80,000 tons of petroleum spirit annually
through the Asiatic Petroleum Company, their
marketing agents. Last year the same com-
bination sent 10,000,000 gallons of this motor
spirit into the United States, supplying firms
who were competitors of the Standard Oil Trust.
In 1909 the Royal Dutch-Shell combine took
over the business of many of their agents.
For this purpose the Shell Company provided
additional capital amounting to £440,000,
the Royal Dutch put up £660,000, and the
Asiatic Petroleum Company £200,000, making
an additional outlay of £1,300,000 for one
branch of their business. A large Roumanian
oil company, the Astra, has been secured, and
the Shanghai-Langkat Company, which oper-
ates refineries in Borneo, has also been bought

148

The Secret of the " Oil War "

out since the amalgamation of 1907. That
amalgamation has apparently been profitable
to those engaged in it, for the Shell Company's
dividend, which had been only 5 per cent,
per annum between 1903 and 1906, rose to
15 per cent, in 1907, 20 per cent, in 1908, and
22J per cent, in 1909.

Now the awkward part of this chain of events
so far as the Standard is concerned is that the
whole petroleum world has been turned upside
down by the motor engine. In 1897 Mr. Paul
Babcock, director of the Standard, told the
Select Committee on Petroleum that they had
in New York tanks full of naphtha which they
could not sell. Mr. Bergheim, a well-known
Galician oil producer, told a City meeting the
other day that he could recall the day when
his firm gave the naphtha to any one who
would take it away. Then the Standard with
its control of the tank installations and the
selling agencies for reaching the consumer of
illuminating oil (or kerosene) was the master
of the world. Now the consumption of kero-
sene is threatened by electricity among the
rich and slot-gas meters among the poor, and
it is the despised naphtha (or benzine) which
is in demand. Motor-cars, motor-cycles, motor-
omnibuses, motor-lorries, aeroplanes, all these
engines are demanding petrol, and it is the

149

The Great Oil Octopus

good fortune of the Shell combine that its
crude oil provides a larger percentage of ben-
zine than the Standard's American. While
huge quantities of benzine, for which there is
an increasing demand, are being sent to Europe
by the Shell combine, the Standard is left with
its monopoly of kerosene, for which the demand
is decreasing. At the same time, the Sumatra
and Borneo crude produces a very profitable
percentage of petroleum wax, for which there
is also an increasing demand, and there is a
big market for the residue all over the Far
East as fuel oil. This is the real secret of the
recent " oil war," which has broken out chiefly
because the Standard finds its supremacy
challenged by wealthy and vigorous com-
petitors, and is trying to use its vast accumu-
lated profits in a "rate-cutting" war. The
latest news in this connection was the intelli-
gence that the Standard is attempting to repair
its initial failure of thirteen years ago by ob-
taining petroliferous areas in Java and Sumatra.
It proposes to do this through the medium of
the Holland-American Petroleum Company of
Amsterdam, which being nominally a Dutch
company can legally acquire this property.
Whether the Dutch Government which took
so strong a stand against the Standard's inva-
sion in 1897 will consent to be fooled by such

150

A Calumny

an obvious device as this remains to be seen.
But the fact that the scheme has been initiated
indicates the desperate straits to which the
Standard is reduced for benzine.

This is not the first time the Standard has
come into collision with the Shell. In Sep-
tember, 1904, the New York Herald published
an interview with Mr. W. H. Libby, the foreign
marketing agent of the Standard in New York.
This was a long " puff " of the Standard, and
contained the allegations that in the " rate-
cutting " which had then been going on the
Shell Company had been reduced to serious
financial straits, and were selling oil falsely
branded. As these allegations were entirely
false, the Shell Company brought an action
against the New York Herald in the English
Courts for libel, which ended in 1905 in a
complete victory for the victims of Standard
Oil calumny. Mr. J. Eldon Bankes, K.C. (now
Mr. Justice Bankes) stated on behalf of the
defendants that they had made inquiries into
the matter and found that the statements
could not be substantiated, and ^therefore
withdrew, apologised, and paid the plaintiff's
costs as between solicitor and client. As we
proceed we shall find other points at which
the Standard and the Shell have collided, but
the vital factor in the present oil situation is

151

The Great Oil Octopus

the Sumatran benzine, which the Rockefellers
failed to secure in 1897.

Passing to India, the Standard had to fight
for years with the Russian oil exported in bulk
through the Suez Canal, and is now pressed
hard *by the Burma Oil Company, an under-
taking mainly under Scotch control, which has
until recently had a monopoly of the Burma
oil output. As there is a tariff on American
oil in India from which Burmese oil is exempt,
it was obviously to the interest of the Standard
— which thoroughly believes in tariffs at home
— to get behind that obstacle by being able to
refine Burma oil and vend it in India. There
is another reason, and that is the large per-
centage of petroleum wax which the Burma
crude contains. There is a large and increasing
demand all over the world for wax, which is
used for candles, chewing-gum, the water-
proofing of fabrics without rubber, and for
many other commercial purposes. In its desire
to get a footing in this promising field the
Standard Oil Trust applied to the Indian
Government for an oil-prospecting licence in
Burma, and was much grieved when the Indian
Government refused it. We come across that
same Mr. W. H. Libby flitting about India.
In November, 1902, the Calcutta correspondent
of the Financial News reports that this gentle-

152

Standard Philanthropy

man was trying to induce the Bengal Chamber
of Commerce to support his little scheme
against the Indian Government. The corre-
spondent gives us a pretty picture of Mr.
Libby's virtuous protestations : —

The representative of the Standard Oil Company seems to
wish the Bengal Chamber of Commerce to believe that the
motives of his Company were not wholly mercenary — that, on
the other hand, they were philanthropic, inasmuch as he says
that " it was the intention of the Standard Oil Company to en-
courage as many Burmese natives as possible to enter the pro-
ducing business, by aiding them in the employment of modern
machinery and modern methods, by providing them with an
immediate cash market for their crude oil, and by loans, if
necessary, at very moderate rates of interest, to the end that
production might be stimulated and an important industry
created. The Standard hoped to derive its own profits by
economies in refining, by materially improving the quality and
value of the manufactured products, and by distributing the
said products in India and other Oriental markets, where
aggressive efforts might largely increase existing consump-
tion."

We know, of course, that the Standard has
always been willing to encourage other people
to undertake the risks of oil-well sinking, but
the idea of stimulating this speculative business
for the benefit of the natives of a semi-bar-
barous country is novel as well as captivating.
When Mr. Libby's campaign failed in India
he came to London, and his claims were pressed
on the India Office by the United States Am-

153

The Great Oil Octopus

bassador in London, the Hon. Joseph Choate.
As the Ambassador had often appeared for
the Standard when at the American Bar, and
as he had himself once stated that he was a
shareholder in the Trust, we may be sure that
his advocacy of the Standard's schemes in
Burma did not lack either zeal or ability. But
it failed, and the Trust cannot get into Burma.
The imports of all classes of oils from Burma
into Madras Presidency during 1909-10
amounted to £317,868, as compared with
£212,982 in 1908-9. In the same period the
imports of American oils decreased from
£241,128 to £189,362.

154

RUSSIA, GALICIA, AND ROUMANIA

"One of our greatest helpers has been the State Department
in Washington. Our ambassadors and ministers and consuls
have aided to push our way into new markets to the utmost
corners of the world."

JOHN D. EOCKBFBLLER in "Random Reminiscences"

CHAPTER X

RUSSIA, GALICIA, AND ROUMANIA

PASSING next to Russia, there is no doubt
that in the past this was a far more
dangerous competitor of the Standard than it
now is. The Baku output was at first so
tremendous that it seriously disarranged the
Standard's calculations, and when first Russian
shipowners and afterwards Sir Marcus Samuel
proposed in 1891 to ship Russian oil in bulk in
tank steamers to the Far East, a perfect panic
seized the Standard. Immediately one of those
bogus agitations, in which it excels, broke out
with great virulence. Not only was the ship-
ping community thrilled by the supposed
dangers to other vessels of conveying oil in bulk
through the Suez Canal, but the British nation
was once more warned of the dark and male-
volent designs of Russia against " our highway
to India." Nothing could be more amusing
than this waving of the Union Jack over the

157

The Great Oil Octopus

designs of the Standard Oil Trust, but we shall
see the same " patriotic " imposture reappear
in the flash-point agitation a few years later.
The Standard was at this time supplying its
Far Eastern markets with " case-oil," packed
in tin cans, which was, of course, a more expen-
sive method of transit than the large tanks
of the bulk-oil steamers, and the agitation
against the new scheme was carried to the
Foreign Office. The story is told (without
unduly emphasising the Standard's share in it)
in Mr. J. D. Henry's well-known work, " Thirty-
five Years of Oil Transport" (Chaps Y. and VI.).
Messrs. Russell and Arnholz, solicitors, wrote
to the Foreign Office, urging the Government
to use their influence through the British
directors of the Suez Canal Company to prevent
the transit of bulk oil. Lord Salisbury asked
them for whom they were acting, and received
this very significant reply : —

In view of the opposing commercial interests engaged, and
the fact that the true promoters of bulk transit have not yet
declared themselves, we respectfully submit that without
pleading the privilege of our profession it would be imprudent
on our part to permit our clients to disclose their names.

In the reply which the British directors of
the Suez Canal Company forwarded to Lord

158

The Foreign Office

Salisbury, this coyness on the part of the
Standard was thus commented on : —

They decline to give your lordship any clue for the present
as to the names of their clients, but an expression in their
letter of November 10th, which describes the passage of petro-
leum in bulk as a disturbance of the regular and safe case
trade, leads to the inference that they are pleading the cause
of parties engaged in sending petroleum through the canal
packed in cases, and whose interests they appear to think may
be damaged by facilities being given for the more economical
conveyance of petroleum by these tank ships.

The Foreign Office then informed Messrs.
Russell and Arnholz that Her Majesty's Govern-
ment could not take action in the direction they
desired without full information as to what
British interest they represented in the matter.
As the Foreign Office thus declined to become
a Rockefeller catspaw, somebody organised a
memorial by merchants and tinplate manu-
facturers in Wales, where the Standard still
buys most of the material for its cans, and
another by shipowners who at that time were
being chartered to carry case-oil to the East
for the Standard. Finally, Sir Frederick Abel
and Mr. (now Sir) Boverton Redwood prepared
a report for those British shipowners who were
hostile to the bulk carriage of oil through the
Canal. Sir Frederick Abel was a chemist who

159

The Great Oil Octopus

constantly gave evidence on behalf of the
Standard Oil Trust when it needed an expert,
and Mr. Boverton Kedwood had been from 1870
till just before this period (1889) the salaried
chemist of the Petroleum Association, a trade
body whose members vended the Rockefeller
oils. Mr. Redwood was subsequently for a
considerable period regularly employed to test
oil cargoes on behalf of the Anglo-American
Oil Company, and he gave evidence against
raising the flash-point of lamp oil before the
Petroleum Committee of 1896. His presence on
the scene is sufficient to satisfy anybody in the
oil trade as to what was the real origin of this
benevolent agitation against tank steamers.
While this gentleman was still in Egypt Sir
Marcus Samuel artfully published in the Times
an extract from a paper Mr. Redwood read to
the Institution of Civil Engineers, in which he
said : —

The tank storage of kerosene oil has undoubtedly a great
advantage over barrel or case storage in the event of fire.

Mr. Redwood was thus rather neatly cornered,
for he had to admit in his report that this
statement was still true. So he had to lay
the chief stress on the danger of burning oil
escaping on to the water — which the experience

160

Safe Transit

of nearly twenty years has proved to be a very
trifling risk. The directors of the Suez Canal
Company took a very accurate measure of this
report when they replied : —

Without entering into the question whether the work of Sir
F. Abel and Mr. Boverton Kedwood is not merely a criticism
of our regulations bearing too exclusively the impression of
the anxiety of parties interested in the present mode of trans-
porting petroleum to the East, we, &c.

After this the agitation fizzled out, and the
transport of oil in bulk still continues. The
subject was referred to at the Institution of
Civil Engineers in February, 1894, when Mr.
(now Sir) Fortescue Flannery invited Mr.
Boverton Redwood to state how his prophecies
on the carriage of bulk oil through the Canal
had been fulfilled. Mr. Redwood replied thus
(Proceedings Inst. C.E., vol. cxvi. p. 250) : —

He could only say that if, as appeared to be the case, the
transport of petroleum through the canal had been going on
with entire absence of anything approaching to an accident, he
was very glad to hear it. He did not know, however, that
that was to be taken as absolute proof that no risk existed.
Time alone, and a longer time than had as yet elapsed, would
demonstrate that.

Nearly twenty years have now elapsed; the
Standard Oil Trust itself has tank steamers

161 L

The Great Oil Octopus

which convey oil through the Canal, and Mr.
Henry in his work shows that between 1892
and 1906 2,000,000 tons of oil were thus trans-
ported.

With the collapse of its artfully engineered
agitation on this subject the Standard next
turned its energies to diplomacy. It devoted
great arts to Ludwig and Manuel Nobel, the
millionaires who had grown rich out of the
"gushers" of Baku, and cherished dreams of
becoming the Eockefellers of Russia. The
Standard's emissaries played on their vanity
and induced the Nobels to form the Russian
Refiners' Union, which 80 per cent, of the trade
had entered in 1894. The idea was that the
Russian export output should be limited to an
amount agreed with the Standard, and that
Nobel Brothers were to be the sole agents in
Europe. Each refiner was to send out a certain
quantity of oil according to the capacity of his
refinery. At the same time there were certain
distributing firms in Europe which had been
dealing chiefly in Russian oils, and as Nobel
Brothers did not require them, the good, kind
Standard agreed to buy them up. It is in this
way that the Italian Petroleum Company, the
Bremen- American Company, and Reith & Co.
of Antwerp (all mentioned in my list of

162

The Nobel Agreement

foreign marketing companies) came under the
control of the Standard. At the same time
they acquired the Kerosene Company, which
had a great storage installation close to the
Anglo-American plant at Purfleet. The Trust
continued to run these businesses in their old
names, and it was some time before the truth
began to leak out. Production in Baku was at
that time so tremendous that before the three
years during which the union was to last had
expired, the Russian refiners were quite tired
of it. Then the pleasing result was realised
that, with the exception of Nobels, none of them
had any selling organisation in Europe, and
that the Standard had so perfected its control
of the kerosene trade that people who wanted
Russian oil could only get American. The first
firm to take action were the Paris Rothschilds,
who are the owners of the Caspian and Black
Sea Company at Baku, and next to the Nobels
the largest refiners in Russia. They established
in 1898 in this country at vast expense a new
selling organisation called the Anglo- Caucasian
Oil Company, afterwards merged in the Con-
solidated Petroleum Company, and a vigorous
contest took place for their share of the English
kerosene trade.

The Russian oil trade has always been a
commercial switchback. At the time just

163

The Great Oil Octopus

mentioned the Rothschilds and Nobels were
exporting largely to Europe, and the Man-
tascheffs were sending large quantities of
Russian oil to the Far East. Then came the
Baku riots of 1905, when murder and
incendiarism stalked through the oil-fields and
the production fell off tremendously. It was
a stroke of luck for the Standard, for it crippled
their (at that time) strongest rival. Since
that day the exports of petroleum from Baku
have not been large, most of the reduced output
being consumed in Russia, where oil fuel is
used far more extensively than it is here. Then
early last year came the Maikop " boom," a vast
number of French and English companies being
floated to work oil on the borders of the Black
Sea. The majority of them will never produce
a barrel of oil, but the good properties will
soon be pumping oil, and their product is
bound to have its effect on the European
market. Hence no doubt the Standard's second
reason for embarking on the recent oil war —
the desire to stifle these infant companies at
their birth, when they are still subject to the
diseases of inexperience, experimental work, and
bad management.

Passing next to Austria, we find the Standard
operating in the Galician oil-field, the production
of which has risen from 214,800 tons in 1895

164

to 1,734,235 tons in 1908. The story is told in
the Foreign Office Report on Austria-Hungary
for 1908 (No. 4,355 Consular Reports). JThere
was an enormous production in 1908, but the
State railways could not use the raw oil in
its locomotives until the benzine was extracted.
This is our Consul's narrative (p. 15) : —

The Producers' Association, however, had not the capital to
build the necessary works for this process or the new reservoirs
required, and at this stage the Standard Oil Company of
America saw an opportunity to extend its influence in Austria.
The American company entered into negotiations with the
association and offered to erect the factory for extracting the
benzine, and further to build the new reservoirs and lease them
to the producers, who would, in return, have to supply raw oil
to the Standard Oil Company's representatives in Austria at a
special price. An arrangement on these lines, which would have
given the American Combine a predominating influence in the
Austrian oil industry, was on the point of being signed when
the Austrian Government intervened hi June, 1909, to prevent
it by undertaking to carry out the necessary works itself on
much easier terms for the producers. . . .

By this arrangement the Standard Oil Company has been
entirely excluded from the business of supplying the State rail-
ways with oil ; but the Austrian Government has gone further
in its desire to protect the Austrian oil industry from the com-
petition of the American Trust, which is represented here by
an affiliated company [i.e., the Vacuum Oil Company, of
Austria, a branch of the Vacuum Oil Campany, of Kochester,
N.Y.] , and has introduced a Bill in the Reichsrat containing
various provisions aimed directly at the Standard Oil Company.
Thus a concession will in future be necessary for carrying on
the business of storing, handling, and refining raw oil, and the
provincial authorities are able to refuse this at their discretion.

165

The Great Oil Octopus

Further, the distribution of petroleum by means of tank carts
is only to be allowed by permission of the Ministry of Com-
merce. The tank carts were recently introduced into Austria
by the representatives of the American Trust, but met with
great opposition on the part of the trade because they rendered
the middleman superfluous, and there is little doubt that the
Ministry will not give the permission required.

The Times Vienna correspondent on Sep-
tember 14, 1910, reported further developments
of this war against the Standard. It appears
that there is also operating in Galicia a certain
Limanova Petroleum Company, which, though
registered as an Austrian company, has about
£500,000 of French capital invested in it. It
has been working " in some sort of unconfessed
relationship with the Vacuum Oil Company,"
and the Times correspondent tells us how the
Rockefellers have been forced to swallow their
favourite medicine. He writes : —

The object of the Standard Oil and its affiliated companies in
Austria (as in other countries) is to obtain control of the
Galician oil-fields, which are worked chiefly by a large number
of Austrian producers and refiners organised in a loose ring or
trust. The tactics of selling oil at or below cost price cur-
rently employed by the Standard Oil Company to kill its
competitors or to bring them to their knees appear to have
been employed both by the Vacuum and the Limanova Com-
panies.

Some months ago the Austrian Government intervened to
protect the Austrian producers and refiners, and applied to
the Limanova Company in particular methods of adminis-

166

i

:

A Rebuff

trative chicanery and railway discrimination strikingly similar
to those which made the name of the Standard Oil Company a
byword in the United States. The tactics of the Austrian
authorities are as indefensible, or as defensible, as are those of
the Standard Oil Company.

The Standard did not enjoy railroad discrimi-
nations applied to itself, and it not only made
unavailing representations to the Austrian
Government through the United States Minis-
ter at Vienna, but, acting through the French
shareholders in the Limanova Company, they
induced the French Minister to Demonstrate
with Austria.

These representations having produced little effect, the
French Government is now stated to be about to adopt
measures of retaliation, and to impose a prohibitive tariff
upon Austrian petroleum imported into France.

In order to help the Standard Oil Trust to
crush out the Galician oil industry, the French
consumer was to pay more for the petroleum
products, ozokerit, &c., that he buys from
Austria. But this scheme has failed, for on
November 9, 1910, it was announced in the
Neue Freie Press (quoted here by the Financial
Times) that the Limanova Company had sur-
rendered. It has agreed to give up all business
transactions with the Vacuum Company, not
to sell directly or indirectly to them either crude

167

The Great Oil Octopus

oil or the products of petroleum, and not to
make use of the selling agency of the Vacuum
Oil Company for the sale of its own products.
It has further agreed not to undersell the other
Galician refiners, and the Austrian Government
has therefore cancelled the discriminations
referred to which it employed against the
Limanova Company. Deserted thus by its
French ally, the Vacuum Company has to
rely on itself, and it is announced that the
United States Government has sent a special
envoy to Vienna to discuss with the American
Ambassador, among other things, the differ-
ences between the Austrian Government and
the Vacuum Oil Company. It looks as though
the Austrian Government is going to win in its
struggle with this unscrupulous monopoly, and
that the Vacuum Oil Company will have to
climb down.

In the neighbouring country of Roumania the
Standard has waged a bitter war for the control
of the oil industry. The output of oil in
Roumania has been increasing very largely —
it trebled in quantity between 1895 and 1900
and as it has a high flash-point the Standard
wanted to get control of the field in order to
supply ita Italian and Mediterranean market.
When its agents appeared first on the scene,
Roumania had one large refining company — the

168

" Boodle ' at Bucharest

Steana Bomana — which dealt with about two-
thirds of the native crude oil. The wells were
all, or nearly all, in the hands of small pro-
prietors who were unable to sink them deep
enough, and whose ability to market their oil
was hampered by the high railway rates and
deficiency of tank cars. The Standard came
forward with a proposal to build a pipe line
from the fields to its proposed refinery, but
fortunately for Roumania its statesmen had
heard of the Standard's American record, and
they refused to allow it to thus obtain entire
control of the national output. It was allowed
to build a refinery, and it bought certain oil-wells
from the owners, but the pipe-line project was
decisively ruled out. Strange conversions went
on at Bucharest when the Standard's lobbyists
put in their fine work. Politicians and news-
papers which had opposed the Standard were
converted from the error of their ways in the
manner with which Mr. Archbold has made us
familiar, but the Standard was unable to secure
any special privileges. By this time the Deut-
sche Bank, which controls the Steana Romana,
had taken an active interest in the matter, and
formed some sort of alliance through the Euro-
pean Petroleum Union with the Shell-Royal-
Dutch combine, and the Rothschilds, the
Mantascheffs, and Gukasoffs of Baku. The

169

The Great Oil Octopus

terms of this alliance are unknown, but very
keen rivalry has been going on in tbe
Roumanian oil-field, and only last year the
Shell-Royal-Dutch party purchased a large
Roumanian oil company, the Astra, which is
now valued at £1,200,000. In the spring of 1907
the Standard came to a "selling arrangement"
with the European Petroleum Union, and this
was followed by a similar arrangement with the
Asiatic Petroleum Company, whose capital is
equally held by the Shell Company, the Royal
Dutch, and the Paris Rothschilds. Just how far
the European Petroleum Union is involved in
the " rate-war " which has broken out between
its twin the Asiatic and the Standard is
unknown, but as the Deutsche Bank is largely
interested in Galician oil-fields where such a
bitter fight has been going on with the Stand-
ard for some months, it is probable that the
whole combination must ultimately be involved
if the " oil war " lasts much longer. Sir M.
Samuel has stated that the Bataafsche Petro-
leum Maatschappij and the Anglo-Saxon Petro-
leum Company, Ltd., distributed in dividends
in 1909 £1,500,000, and that the profits for 1910
will not be lower, so that apparently that
contest has not seriously affected the Shell-
Royal-Dutch combine.

170

THE TRUST IN GERMANY,
SWEDEN, AND FRANCE

"We are always short of men to do the things we want to
do — young men who are honest and therefore loyal, men
to whom work is a pleasure ; above all, men who have no
price but our price. To such men we can afford to give the
only things they have not got — power and money."

H. H. ROGERS to T. W. Lawson in " Frenzied Finance."

CHAPTER XI

THE TEUST IN GEEMANY, SWEDEN, AND
FEANCE

IN Germany the Standard was artful enough
to strengthen its position by acquiring
existing oil companies and retaining certain
prominent German oil merchants as share-
holders, thus breaking to some extent the
force of the natural outcry against itself as
an alien corporation. In the case of its English
companies, very few shares are held by any-
body resident in England, and even these are
mostly Americans, but in Germany they are
more cautious. There has been a great con-
troversy as to the adoption of tank railway
wagons and tank installations on the Prussian
State railways. It is obvious that these methods
will cheapen the transit of oil, but it is also
obvious that they will play into the hands of
the Standard, which with its vast capital is
able to establish extensive installations of this

173

The Great Oil Octopus

kind, and to prevent its smaller competitors
from reaching the market.

Public opinion is the more suspicious of these
gentlemen because of the remarkable reve-
lations made last year with reference to their
branch — not included in the list given in
Chapter I. — which is called the German Vacuum
Oil Company. The disclosure in question is
so thoroughly in keeping with what is already
known of the doings of the Standard in other
parts of the world that it fully bears out the
opinion already expressed, that the great
octopus is always one and the same in its
methods irrespective of time and country. It
goes all the lengths it is permitted to go. It
has gone, as will be seen, pretty far in
Germany, though the State railway system
renders rebates impossible there, and as Ger-
many is so close to our own doors the lesson
is one we may well take home to ourselves.

In the early autumn of 1909 Mr. F. Hilde-
brandt, the editor of the Hamburger Fremden-
blatt, whose attention had been called to the
doings of the German Yacuum Oil Company,
and who had been led to investigate the matter,
published a vigorous attack on that Company
in his columns. We of course know that
the Vacuum Oil Company, Ltd., is in England
merely a tentacle fixed on the body of John

174

German Vacuum Oil Company

Bull through which suction is applied from
26, Broadway, New York. But the Hamburg
Chamber of Commerce were in blissful ignor-
ance until quite recently that the German
Vacuum Oil Company was only the particular
limb of the monster that had settled down on
Germany. It reported not so long ago to the
Friedrichsort Torpedo Works at Kiel that the
Vacuum was a German company, though it
might have learnt differently if it had taken
the trouble to look into the Handelregister,
or German public registry of commercial com-
panies. There it would have found among the
names of the chief shareholders Messrs. J.
D. Archbold, C. M. Pratt, and C. M. Everest,
the well-known Standard men who were regis-
tered as the original directors of the Vacuum
Oil Company of Rochester, N.Y, the Company
whose connection with the Buffalo arson pro-
secution has been explained in Chapter VI.
Their connection with the Vacuum Oil Com-
pany, Ltd., of London will be explained in a
later chapter. Two other shareholders of the
German Vacuum Oil Company, J. C. Moffet
and C. E. Bedford, also belong to the Standard.

The main allegation put forward in the
Fremdenblatt by Mr. Hildebrandt was that
the German Vacuum Oil Company was selling
precisely the same quality of lubricating oil

175

The Great Oil Octopus

under various fancy names and at different
prices, according to differently imagined utili-
ties to its German customers, and securing
preference being given to its goods by bribing
engineers and foremen right and left to advise
their employers in their favour. The simple
change of a label seemed to have such a mar-
vellous effect on the intrinsic quality of the
Vacuum lubricator that in some cases it justi-
fied a rise of 25 per cent, in price, and even
higher. The "Etna" brand of lubricating oil,
for instance, was a poor thing that sold at 41
marks per 100 kilos for ordinary smearings,
but when an important firm gave an order for
a superior article such as the " Gas Engine E "
or " Viscolite " oil they received the same old
" Etna " oil duly labelled " Gas Engine E " or
"Viscolite" at the correspondingly superior price
of 56 marks and 62 marks respectively. Acting
on this denunciation, the Public Prosecutor in-
tervened, ordered an inquiry, and summoned
Mr. Hildebrandt to produce his evidence, but
not before Dr. Oscar Ruperti, a director of the
Vacuum in Hamburg, had taken a personal
action for libel against Mr. Hildebrandt, who
in his turn had taken an action against Mr.
E. L. Quarles, the American manager of the
Vacuum in Hamburg, and Dr. Polchau, who
was both legal counsel and brother-in-law to

176

Re-Branding

Dr. Ruperti. These personal actions appear to
be still pending, but the action instituted by the
Public Prosecutor was carried as far as a judg-
ment, of which the following is a translation : —

Eecord Number : F. IV., 360/10.

JUDGMENT.

On the motion of the Public Prosecutor, the accused,
Edward Louis Quarles, is discharged with reference to the
accusation of fraudulent practice, on the ground of insuffi-
cient proof. The costs of the action are charged to the State.

GROUNDS.

The preliminary inquiry was opened against the accused
on his appearing suspect at Hamburg and elsewhere —

1. Of having in the years 1906-08, in conspiracy with the
merchant E. 0. Wader, now absent, defrauded the State
Electrical Works at Kiel of 2,826 marks 5 pfennigs by
delivering to the works, instead of the brand " Vacuoline,"
which was ordered, at the price of 75 marks per 100 kilos,
the description " Fusoline," which only cost 44 marks per
100 kilos, under the brand of " Vacuoline."

2. Of having, since the year 1905, defrauded numerous
customers of the German Vacuum Oil Company by repre-
senting in the Company's price-list that the descriptions of
oil " Gas Engine E and F " and " Gas Engine I and Heavy "
are a more valuable article than the descriptions "Etna "
and " Fusoline," quoted in the price-list at 44 marks per 100
kilos, whereas the two latter descriptions are identical with
the two former respectively.

As to the charge of fraudulent conspiracy to the detriment of
the Kiel Electrical Works, it has not been proved that the
accused Quarles bears the responsibility of changing the
cheaper brand " Fusoline " into the dearer brand " Vacuoline."
The order to effect this change in the branding was given at a
time when the accused Quarles had not as yet a seat upon the

177 M

The Great Oil Octopus

board of the German Vacuum Oil Company, and had nothing to
do with the Hamburg branch. At the end of 1906 or the beginning
of 1907 the accused had, of course, learnt of the changes being
made in the brandings from the then manager of the Hamburg
branch, Earnshaw. But at that time also the accused had
nothing to do with the Hamburg branch office, and was not
called upon to prevent what was in his view an incorrect
rebranding. Also, he had nothing to do himself with the
changing of the brand. It has not been proved that after the
accused had taken a seat upon the board of the German
Vacuum Oil Company that the rebranding of " Fusoline " as
" Vacuoline " was still carried out with the knowledge and
consent of the accused.

As to the rebranding of the cheaper descriptions of oil
"Etna" and "Fusoline" as "Gas Engine E and F" and
" Gas Engine F and Heavy " respectively, the preliminary
inquiry has tended to show that " Gas Engine I and Heavy"
consist of different components to the other brands, and are
consequently not identical with them.

The brands "Etna" and "Gas Engine E" are, of course,
identical, as is " Fusoline " and " Gas Engine F." But a
fraudulent method of trading could only be found to exist in
the different branding if it were established that these like
descriptions were delivered under different brandings and
different prices to one and the same customer. It has not
been possible to establish that. The accused also cannot rebut
the allegation that he gave it as his opinion that the differentia-
tion in prices was justified by the different way in which the
two oils were used, the higher running expenses for " Gas
Engine E and F," and greater risk encountered by the users
of these two brands.

Hamburg, May 30, 1910.

The Landgericht, Second Criminal Chamber,

(Signed) GOSLICH, LOHMBYER, SICK.

For the correctness of the copy :
Hamburg, July 9, 1910.

The Chancery of Public Prosecution,

(Signed) Voss, Chancery Clerk.

178

Bribery

It will be seen at once that the judgment
exculpates Mr. Quarles personally, but obviously
inculpates the German Vacuum Oil Company,
by assuming that the practices alleged had
taken place, though there was not evidence to
connect Mr. Quarles with them.

Mr. Hildebrandt makes great capital, in a
pamphlet he has published, out of the regular
Standard Oil practice of bribery, with which
the German public seems to have been quite
unfamiliar, but in which their education must
now have been pretty well completed, to judge
from the mass of evidence adduced in the
Hildebrandt book. Some of it is entertaining
enough and edifying enough for British con-
sumption, particularly as it relates to a cousin-
German of one of our own Standard Oil sub-
sidiaries. Here is the text of an affidavit made
by Mr. Hans Schnell, who had formerly been
a representative of the German Vacuum Oil
Company : —

I, the undersigned, hereby declare and am ready to testify
on oath that from September 15, 1906, to March 31, 1908, I
was in the employ of the German Vacuum Oil Company v of
Hamburg, as representative for the Dresden branch, and later
for Lower Silesia, on a fixed salary of 200 marks a month and
also confidential expenditure and commission. This commis-
sion I had for the most part to pay over to machine-men,
partly in cash, partly in goods, in order to bring off new
business, and in some cases to maintain business relations

179

'he Great Oil Octopus

heretofore existing. I was told by Mr. Naerger, the corre-
spondent for Breslau, in the branch office hi that city of the
German Vacuum Oil Company of Hamburg, the names of
the firms whose machine-men were to receive bribes from me.
Also Mr. A. S. Mie, of Dresden, director of the Vacuum Oil
Company, told me in a way that could not be misunderstood
that I was to expend these commissions in this way, and that
if I had paid over no bribes in money or goods to the machine-
men of the firms I had to call on I would have had scarcely
any new orders, and would have lost the old business con-
nection.

Dresden, November 4, 1909.

(Signed) HANS SCHNBLL.

The above signature of Mr. Hans Schnell, Wilhelmruh, near
Berlin, merchant, was done in my presence, and I hereby
officially certify that it is genuine.

Dresden, November 5, 1909.

(Signed) HORST VON MUBLLER-BERNECK,

Boyal Saxon Notary, Dresden.

In further illustration of Mr. Mie's efforts,
Herr F. Hildebrandt publishes a photographed
bill of expenses incurred by that gentleman in
establishing and keeping up the German Vacuum
Oil Company's business connections, and no doubt
incidentally of establishing a reputation for him-
self among engineers and machine-men generally
of being a thoroughly jolly fellow. This
document will, perhaps, help us to understand
why so many working engineers select the
Vacuum oils, when no chemical test known to
science will indicate any superiority. Its trans-
lation is as follows : —

180

Schmiergeld '

M.
Evening with Mr. Pampel and Obersteiger Hohner ... 42

Evening with Mr. Mie 28

[NOTE. — We had invited these gentlemen, and threw
about a good deal of money in order to
accomplish something. Besides the M. 28
entered here I added M. 48 out of my own
pocket, which I have had entered in my
own account. — (Signed) MIE.]

Cash, Mr. Muller, foreman 100

Cash, Mr. Plaintz, engineer, of Gustav Toelle 50

Foreman of S. Wolle 5

Cigars for foreman Muller 12.50

Cigars for foreman Hortenbach 6.25

Carriage and beer — call on Hortenbach 10.30

Wine, dinner, cigars, &c., with Hortenbach 35.20

Cash, Mr. Hortenbach 20.00

Total M. 309.25

Mr. Hortenbach seems to have taken a good
deal of lubricating. Apparently his machinery
remained immovable under the influence of
wine, dinner, and cigars, and it became neces-
sary to put twenty marks in the slot in order
to make him work.

How Mr. Hildebrandt got hold of this bill,
or petty-cash ticket, he does not say, but he
evidently takes a sinister view of the junketing
disclosed, and regards the money spent upon
it as so much " Schmiergeld," to use the appro-
priate word employed by Mr. Schnell in his
affidavit. The only English translation for

181

The Great Oil Octopus

" Schmiergeld " is " bribe " — no doubt a very
frigid and colourless word. " Smearing-money "
would be more descriptive and picturesque as
well as literal, though for absolute neatness of
expression joined to pregnancy of meaning the
Italian circumlocution for the ugly word "bribe'
of " oglio di palma," or palm-oil, beats the
German. "Lubricating oil "seems an apt English
equivalent.

Mr. Hildebrandt also publishes a letter on
this subject from one of the Vacuum Oil Com-
pany representatives, which seems to have
attracted some attention in Kiel : —

KIEL, November 12, 1903.
The German Vacuum Oil Company, Hamburg.

I beg to acknowledge receipt of yours of the 10th of this
month, the contents of which I note. With reference to my
expenditure as your representative, I gave the Flensburg Ship-
building Company last month alone some 190 marks for gra-
tuities and introductions to the three foremen. Then I gave
50 marks to the head man at the Kiel Electrical Works. As
to the smaller expenses incurred as your representative, I
cannot remember them now, but they will be found in my
memoranda of extra expenses.

Yours truly,

HUGO COHR.

The Vacuum Oil people have always liked
to be on good terms with the engineer

182

Foremen's Gratuities

the actual mechanic who has to see to the
application of the lubricating oils to the
machinery, and whose opinion on their merits
is naturally deferred to by his employers.
Mr. Heinrich Gremmler, a director of the Ger-
man Vacuum Oil Company, and manager of
the Berlin branch, wrote, under date June 20,
1908, by way of instruction to one of his
agents, in one of the letters photographed
by Mr. Hildebrandt: "Try and get at what
you want through the foremen — that is, by
indirect means. There is no need at all for
me to tell you on what spot you may put
your hand upon success." Mr. Hildebrandt
took all this up in a very unkind spirit to-
wards the German Vacuum Oil Company, and
spoke of it as bribery, whereupon Mr. Gremmler
called upon him, he says, and denied indig-
nantly that the Company practised bribery.
In fact, the Company published a document in
its defence against this charge signed by Dr.
Ruperti, one of its directors, in which, while it
did not go so far as to state that it never prac-
tised bribery, it declared, at any rate, that "it
was incorrect to say that the German Vacuum
Oil Company had introduced the gross prac-
tice of bribery into German trade as a system,
and that it had succeeded by means of bribes
in obtaining permanently higher prices for

183

The Great Oil Octopus

its oils." The studious moderation of this
defence strikes me as remarkable. The Com-
pany, however, also took occasion to state
that it never put any employee into its selling
business except on a contract containing this
passage : —

You pledge yourself in dealing with the employees of our
customers most carefully to abstain from any transaction that
has even the appearance of corrupt influence. Any action con-
trary to this regulation is a special reason for instant dismissal.

But Mr. Hildebrandt unkindly suggests that this
is only another way of saying "Don't nail his
ears to the pump." He also says that after
the publication of the Hugo Cohr letter in
Kiel, the Vacuum Oil Company was struck
from the list of those invited to tender for
the supply of oils to the municipality. The
British public and the proprietors of British
engineering works must form their own
judgment in the matter, but they will at
any rate see that, for one reason or another,
the Vacuum Oil people have conceived a deep
affection for the German working man.

These revelations are the more interesting
because there are similar stories from other
countries where the Vacuum methods hav
been introduced. The Morgenblad, of Stock
holm (quoted in the English shipping organ

184

The Swedish Navy

Fairplay of July 22, 1909), gives an account
of the methods of the Vacuum Oil Company,
of Sweden, another of the Everest group.
The Stockholm newspaper states that the Civil
Commission appointed to inquire into the
buying of naval stores has in its posses-
sion several letters from the Vacuum Oil
Company of Sweden to engineers in the
Swedish Navy. These letters contain advice
to enable the engineers to prove to their
superior officers, who possess less knowledge
of the subject, that other lubricating oils are
inferior to those vended by the Vacuum
Company. One letter runs : "It is very easy
to do this by only tightening the nuts a little,
and the bearings will soon become hot."

The sensation created by the publication of
these letters caused the Chancery of Justice, the
highest judicial authority in Sweden, to order
the Chief of the Criminal Police in Stockholm
(Mr. Lars Stendahl), who is also an officer of the
Municipal Treasury, to hold a general inquiry
with plenipotentiary authority as to the sum-
moning of witnesses. This was on May 18, 1909,
and on June 5th following the King of Sweden
confirmed this Commission, and added two other
Commissioners, Messrs. J. Th. Akerstrom and
Fr. S. Eriksson. In the beginning of September,
1909, Mr. Stendahl's report was issued, which

185

The Great Oil Octopus

proves by an abundance of sensational and at
times amusing evidence that the so-called
Swedish Vacuum Oil Company is identical with
that of Rochester, U.S.A., that it has evaded
Swedish taxation, fraudulently rebranded
cheaper as dearer oils, and by a very curiously
concealed system of bribery induced engineers
of the Royal Navy to diminish the effectiveness
of their service.

In the result the Company lost all its Govern-
ment contracts, but escaped further proceedings,
as Swedish commercial law in its previous
innocence of the " real smart " methods now
introduced to backward old Europe by the
Standard Oil apostles, had utterly failed to pro-
vide penalties to meet the case. From Norway,
in September, came the news that the last
independent refinery had been acquired by the
Standard, that much public indignation had
been aroused among the hardy Norsemen, and
that steps were being taken with the support
of the Government to build at once an inde-
pendent refinery.

In France, where there is a heavy duty
on refined petroleum, the Standard has estab-
lished a refinery, which has given it a
monopoly of the benzine trade. The latest
news last September was that the French
Government has been induced to reduce the

186

France, Sweden, and Norway

import duty on Dutch East Indian benzine
from £1 to 10s., and this has enabled the
Royal Dutch combine to start a refinery in
France for the purpose of competing with
the Standard. As I have explained, the
Sumatran and Borneo crude provides a higher
percentage of benzine than the Standard's
American crude, and there is no doubt this
move will prove a very awkward one for the
latter.

187

"According as you put something into the Church or the
Sunday-school work the greater will be your dividends of salva-
tion."

JOHN D. EOCKEFELLBE in a Sunday-school address.

CHAPTER XII

THE TRUST'S "TIED HOUSES" IN ENGLAND

I HAVE reserved until the end of my survey
the examination of the Standard Oil Trust's
operations in Great Britain, because, as they
have not been investigated so closely here as
they have been by various Legislative Commit-
tees in the United States, there is less official
testimony to proceed upon. Many of the Trust's
intrigues and agitations here can only be under-
stood by remembering what has been proved
by direct testimony to have taken place in
similar circumstances in the United States. In
this way our preceding examination of the
secret rebate, the bribery, the underselling,
and all the other machinery of the Trust in
its native home, will help us to understand a
few things which are still obscure here.

During the time when the Trust was growing
up in America, the British consumer and the
British oil-dealer were alike blissfully uncon-

191

The Great Oil Octopus

scious of what was in store for them. For the
first English news of the Trust we must turn
to the evidence provided by Mr. (now Sir)
Boverton Redwood, the distinguished chemist,
whose subsequent appearances at so many
public inquiries as a Standard Oil witness have
been fitly rewarded by his selection as Petro-
leum Adviser to the Home Office !

This takes us back to the years 1877-8, when
Mr. Boverton Redwood was the Secretary of
the Petroleum Association, and visited America
at their request to induce the American refiners
to adopt the Abel (closed) tester in standardising
their oil, and also to complain of certain impuri-
ties which were appearing in their consign-
ments. With regard to the first, Mr. Redwood's
report to his association shows that he con-
ducted experiments with the Petroleum Com-
mittee of the New York Produce Exchange
which satisfied them with the Abel tester, and
we read that Mr. Paul Babcock took great
interest in these experiments. Mr. Babcock
was then a director of the Devoe Manufacturing
Company, about this time bought by the Trust,
and twenty years later he and Mr. Boverton
Redwood met in London, both giving evidence
before the Commons' Petroleum Committee
against raising the flash-point of kerosene.
Mr. Redwood met in 1877 a number of other

192

Mr. Redwood in America

persons whose names will be familiar to readers

of my narrative. He, for example, visited the

refinery of Messrs. Charles Pratt & Co.,

through the kindness of Mr. H. H. Rogers,

and when he left New York he carried letters

of introduction from Mr. Wm. Rockefeller,

Vice-President of the Standard Oil Company,

to Colonel Payne, its Treasurer, in Cleveland,

Ohio. Indeed, Mr. Redwood's tour seems to have

been in the main a Standard Oil excursion, for in

Philadelphia he visited Messrs. Warden and

Frew (who were in the Trust), at Pittsburg

he saw Mr. Charles Lockhart, of Lockhart and

Frew (another Trust firm), and then at Cleveland

he was taken over the Standard Oil works by

Mr. Samuel Andrews (John D. Rockefeller's first

partner). When he returned Mr. Redwood was

the bearer of a letter from Mr. Wm. Rockefeller,

dated December 19, 1877, couched in the best

Standard Oil vein : —

It is our desire to furnish at all times refined oil that will be
acceptable to the trade of all countries. It is our wish and in-
tention that our products shall always reach the highest excel-
lence.

Whatever their wish might be, the prospect
of making more money proved too strong for
these philanthropists, and complaints continued
from the English traders as to the bad quality

193 N

The Great Oil Octopus

of the oil sent here. In 1879 and again in
1884 Mr. F. W. Lock wood, a saponaceous
Standard Oil expert, was sent here to gammon
the Petroleum Association with some cock-and-
bull story. The second visit is referred to by
Mr. Boverton Redwood in a report to the
Petroleum Association, published in the Grocer
of May 3, 1884. In it he explained that Mr.
Lockwood attributed the complaints about the
oil to the use of damp-clogged or hard lamp-
wicks. This great discovery was too much even
for Mr. Redwood, who has never been a harsh
critic of the Standard Oil Trust methods. He
thus reported : —

In conclusion, I desire to record as strongly possible
my individual opinion that in their own interest the American
refiners should forthwith institute such arrangements as will
ensure the future maintenance of a satisfactory standard of
quality. Considerable injury to the petroleum trade results
from the distribution of such oil as is the subject of this report,
consumers in many cases relinquishing the use of petroleum
oil in favour of some other sort of light. Moreover, the
American refiners should bear in mind that even now they
have not a monopoly of the supply of mineral burning oil in
this country, and they will find it necessary to pay much
greater attention than heretofore to the quality of the oil
they manufacture.

As an impartial testimony to the then quality
of the Standard's illuminating oils and the

194

"Bad Wicks"

wonderful processes of manufacture which their
Press Bureau now tells us they invented, I
should give that document a high place. But
to do them justice, the American refiners were
not above taking a hint from other manufac-
turers. A gentleman with long experience in
the oil trade once told me how Mr. H. H. Rogers
about this time came to England. Up in the
North there was a manufacturer of lubricating
oils who had by his own ingenuity and skill
developed some excellent ideas. He used to
blend American oils, and Mr. Rogers asked
one of the importers who dealt in their goods to
introduce him. They went over the works
together, and the proud owner showed them
all his special processes and his little inventions
and blends. Rogers was a practical refiner, he
kept his eyes open, and after he returned to
America the Standard's first lubricating oil
branch, the Thompson and Bedford Company,
of New York, began to export here some of
the specialities which the North countryman
had made. As brain-pickers the Standard men
have no equal.

The first appearance of the Standard in this
country was rather sudden. There came here
an American gentleman named Frank E. Bliss,
who had been connected with the business of
Charles Pratt & Co. Nobody knew what

195

The Great Oil Octopus

his London business was, but one day there
appeared in the Financial News the brief record
of the registration at Somerset House on April
27, 1888, of the Anglo-American Oil Company,
Limited. It had a capital of £500,000 in £20
shares. The first list of signatories contained
several clerks and agents, but it also bore
the name of Frank E. Bliss, and that told
those who were in the trade what was coming.
The first list of directors subsequently filed at
Somerset House included such sound, reliable
Standard Oil names as H. H. Rogers, J. D.
Archbold, W. H. Libby, J. G. Gregory, and
Wesley H. Tilford, all of 26, Broadway, New
York, and Frank E. Bliss, of London. The
precise significance of the word "Anglo" in
its title becomes clearer when it is stated that
the articles of association provided that the
directors' meetings should be held in London,
but that if a majority of the directors so
decided they might be held in New York or
any other part of the United States of America.
As there was only one director resident in
England, it is not hard to guess where most
of the directors' meetings took place, This
also helps us to appreciate the amount of
truth in Mr. J. D. Archbold's Missouri evidence
that he did not know why the Anglo-American
Oil Company made loans amounting to £500,000

196

Standard's First English Company

to its managing director, Mr. James A. Mac-
donald. Mr. Archbold was a director of the
"Anglo" from the outset until somewhere
between July, 1907, and July, 1908. In 1893
its capital was increased to £520,000, and at
this time Mr. John D. Rockefeller's name first
appears on the share list as the owner of
6,867 shares out of a total of 26,000. In July,
1899, the share list of the Anglo-American Oil
Company contained the names set out below.
As will be seen, many of them have appeared
in the course of my story, and the list con-
tains a great deal of "American" and very
little "Anglo." Where no address is given
below, the return at Somerset House has "26,
Broadway, New York," which is the central
address of the Standard: —

AMERICAN SHAREHOLDERS.

Shares.

H. M. Flagler and J. D. Archbold 10,239

John D. Kockefeller 6,867

C. W. Harkness, 611, Fifth Avenue, N.Y 1,542

Mrs. Mary Pratt, Chas. M. Pratt, and Fred B. Pratt ... 1,336

Oliver H. Payne, 2, West Fifty-seventh Street, N.Y. ... 1,068

H. M. Flagler (separately) 748

H. H. Eogers 503

Laman V. Harkness, Greenwich, Conn 349

W. L. Harkness, 10, West Forty-third Street, N.Y. ... 347

Wm. Kockefeller 347

Chas. Lockhart, Pittsburg 820

John D. Archbold 213

197

Shares.

W. Everitt Macy 199

Mrs. Esther Jennings, 48, Park Avenue, N.Y 146

Miss A. B. Jennings, 48, Park Avenue, N.Y 68

Oliver Jennings 63

Walter Jennings 64

Mrs. Mary B. Jennings, Fairfield, Conn 53

Mrs. Elmira D. Brewster 53

George S. Brewster 53

F. F. Brewster, Newhaven, Conn 53

B. Stanton Brewster 53

J. M. Constable, draper 82

H. Melville Hanna, Cleveland, Ohio 80

Wesley H. Tilford 80

C. F. Heye 98

J. S. Kennedy 80

Ed. T. Bedford 66

Ambrose M. McGregor 53

Louis H. Severance 142

C. M. Chapin 26

H. C. Folger, jun 26

W. H. Macy, jun 13

W. T. Ward well (treasurer of the Standard Oil Trust) ... 21

Daniel O'Day, banker, N.Y. 47

Hugh J. Jewett, Morristown, New Jersey 32

J. H. Alexander, Elizabeth, New Jersey 18

Mrs. Emma B. Auchinloss, 17, West Forty-ninth Street,

N.Y 63

L. S. Thompson, Eedbank, New Jersey 29

W. P. Thompson, Eedbank, New Jersey 34

Mrs. Mary E. Thompson 37

Mrs. Eliz. T. Preston, 1,228, Wood Avenue, Colorado

Springs 26

Mrs. Helen James 63

Mrs. Salome Jones, Boston, Mass. 29

Joseph Seep, banker, Oil City, Penn 26

C. F. Akerman 1

198

Resignations

Shares.

A. J. Pouch 1

T. C. Bushnell 1

Livingston Koe 1

LONDON SHAREHOLDERS.
Frank E. Bliss 1

James Macdonald 1

J. H. Usmar 1

W. A. Hawkins 1

There have been various changes in the share
list, and on June 30, 1910, the following were

the principal shareholders : —

Shares.

Standard Oil Company of New Jersey 49,993

Trustees Standard Oil Trust 1

Frederick D. Asche 1

J. H. Usmar, 22, Billiter Street, E.G., merchant ... 1

Francis Edward Powell, 22, Billiter Street, merchant ... 1

Thomas H. Hawkins, secretary, 22, Billiter Street ... 1

James Hamilton, 22, Billiter Street, merchant ... ... 1

William E. Bemis, 26, Broadway, New York 1

50,000

The capital of the Company was at that date
£1,000,000 in £20 shares. It is worthy of
notice that in 1907-8, at a period when Mr.
Roosevelt and his party were out after the
Trusts, Mr. Archbold, Mr. Rogers, and nearly
all the American directors of the Anglo-
American resigned. In June last the directors
were Mr. J. H. Usmar, Mr. Thomas H. Hawkins,
Mr. F. E. Powell, Mr. William P. McKendrick,

199

The Great Oil Octopus

of 22, Billiter Street, E.G. (the London address
of the Anglo-American Oil Company, until it
moved last autumn to St. James's Park), and
Mr. F. D. Asche, of 26, Broadway, New York.
Mr. Fred D. Asche is a clerk in the export
department of the Standard in New York.
Thus, while in 1889 there were five directors
resident in New York and one in London,
in 1910 there were four directors resident in
London and one in New York — a somewhat
significant reversal of the ratio. Mr. Jas. A.
Macdonald, the gentleman already mentioned,
ceased to be managing director in 1906, when
his one share was transferred to the Standard
Oil Company of New Jersey.

The advent of the Anglo-American Oil Com-
pany was the beginning of troubled times in
the English petroleum trade. Mr. Rockefeller's
motto, "Pay nobody a profit," was put into
force, and the Trust began to buy out or to
starve out the varies groups of middlemen
who had hitherto been vending their oils to
the English consumer. Some evidence on that
point was given to the Select Committee on
Petroleum in 1897 by Mr. W. J. Leonard, of
Carless, Capel and Leonard, Pharos Oil Works,
Hackney Wick. Mr. Leonard stated that
London was then the only "free market"
for other oil than Standard, since, although

200

there were independent dealers in Liverpool,
they had for several years a " selling agree-
ment " with the Anglo-American Oil Company.
Then came these answers : —

The Chairman : I want to know what there is to prevent
you importing oil into Liverpool in competition with the
Anglo-American Oil Company ?

A. If we did this of course the Anglo-American Oil Company
would at once put down their price, so that we should have to
sell at a ruinous loss, and we cannot afford to compete with
them ; I mean, we are all afraid of them. If we sent oil to
Liverpool the Anglo-American price, instead of being nearly
f d. a gallon more than the price in London, would probably
be something like f d. a gallon less than the price in London.
That would be the immediate effect.

Q. Yes, but is there not a regular importation, and an
increasing importation, of Eussian oil ?

A. No, it is not an increasing importation ; it is not,
certainly. Of course the Anglo-American Company are
getting the whole business practically (Eeport and Evidence,
1897, Q. 4,834).

This is how an "independent" oil merchant
talked of the colossal power of the Standard
Oil Trust at that date, and their influence
extended even to the smallest transactions.
When a great proportion of oil was still im-
ported in barrels, at least one London firm
did a very good business buying up the empty
oil barrels from the hawkers and small dealers,
who used to collect them at the consumer's

201

The Great Oil Octopus

premises. The barrels were well made, and
the Standard gladly bought the empties to
use again. But it found somebody else was
making a living. This would never do. At
once the Standard began to offer small induce-
ments to the hawkers, and the barrels went
to them direct, so that the small factor's busi-
ness was killed.

Very interesting evidence was given by Mr.
W. T. Rigby, Secretary of the Liverpool Oil
Dealers' Association, who was called in support
of the Standard's opposition to the raising
of the flash-point. He said the members of
his association objected to the Anglo-American
Company supplying so small a quantity as five
gallons to small shops which had formerly been
supplied by the small wholesaler. He went
on : —

In the first instance, when the Anglo-American put their
tanks on the ground they gave us their word that no less a
quantity than twenty gallons would be delivered, but when
they found that the retail dealers of Liverpool would not
embrace the new system of tank-wagon delivery, but pre-
ferred to take it in the old style of barrels, they, in the words
of their Liverpool manager, were forced to administer a stab
in our backs — this is, go really behind us and secure that trade
which legitimately belonged to the Liverpool chandler doing
a small wholesale business, and that is why they [his associa-
tion] are objecting to the delivery of anything less than ten
gallons of oil (Eeport and Evidence, 1897, Q. 6,052).

202

" Tied Houses '

But some of the wholesalers, especially where
in the provinces they had built up a good
business which it would be difficult for the
Standard to capture, were allowed to remain
as "tied houses" in the trade. Some evidence
was with difficulty extracted by the Lord
Advocate and Mr. M'Killop, M.P., at the same
committee from Mr. Geo. Base, a large "inde-
pendent" oil dealer of Norwich, who had come
up to give evidence in support of the Standard's
views against raising the flash-point : —

Mr. M'Killop, M.P. : Have you any freedom to use any
class of oil you like ? — We prefer American oil. In fact, we
have dealt in nothing else.

Have you a general freedom to use Eussian oil, for example,
if you choose ? — We don't like Eussian oil.

Are you bound to any particular dealer? Are you bound
to use American oil ?— Yes, that is so. That is largely because
of choice.

You are under contract ? — Yes.

You are not allowed to sell any other ? — Yes, that is so.

Mr, Ure, M.P. : What do you mean by contract ? — I mean
I have an arrangement at present in distributing American
oil.

Do you mean that you have a binding agreement with the
Standard Oil Company to sell nothing but their oil for a
specified period ? — No, not for a specified period.

For an indefinite period ? — There is no period specified
whatever.

Do you mean that you have a signed agreement to this
effect, " signed, sealed, and delivered " ? — If it is a binding
agreement, it does not matter whether it is signed or not.

203

Is that a common type of agreement with the American
Company and its customers ? — I don't know.

Does it specify any price ? — No.

Does it preclude you from dealing in the oil of any other
company ? — Well, yes, it does to a certain extent.

What happens supposing you have oil from any other com-
pany ? — That I can hardly say, but I am perfectly at liberty
to determine the agreement at any time I choose.

Do you mean that breach of the agreement would not entail
a claim for damages ? — No.

Then what " consideration " do you get for entering into such
agreement ? — The consideration is the larger volume of busi-
ness.

But you can without an agreement deal in it ? — Yes.

Why? You go into this agreement, and can give me no
reasons for it. Is it in writing? — In print.

So that a great number of people enter into the same kind
of agreement, apparently? — No, I think not. Of course, I
have no personal knowledge (Keport and Evidence, 1897, Q.
3,475 et seq.}.

We have only to read the evidence of Mr.
Leonard and Mr. Rigby, and the American
evidence already given, to understand why these
"tied houses" exist.

In one portion of the United Kingdom the
Standard has never been able to obtain com-
plete control. Scotland is the earliest home of
the mineral oil industry, and patriotism and
caution alike induced the Scottish users of
burning oils to prefer the high-flash oil which
the Scottish oil companies refine to the danger-
ous low-flash petroleum imported by the Stan-

204

The Scottish Refiners

dard. Although the cheapness of the latter's
product has made considerable inroads on the
former's trade in kerosene the Standard has never
been able to kill it, and it has of late made various
proposals to the Scottish companies to take over
their whole output of kerosene and to distribute
it by the tank system. The Scottish oil com-
panies (who do a barrel-oil trade) are unwilling
to supply the Standard with all their output,
for they know that the Standard would by the
tank distribution system kill the middlemen.
Then when it had made itself the sole channel
by which kerosene could reach the scattered
Scotch consumers, it might decline to buy any
more Scotch oil and simply force its own oil
on the purchaser. The Standard people are
now attempting to push their own oils by the
tank distribution system on Scotland, but are
meeting with strong opposition.

But the strength of the Scottish companies is
not patriotic so much as economic. They refine
their oil from the shale, a soft, greasy, slate-like
stone. Now so long as kerosene was the only
thing the refiner troubled about, the Americans
had the advantage because Nature had done
half the work of distillation for them in her
own laboratory, and instead of mining a stone,
they got petroleum as a liquid. But the bottom
is falling out of the kerosene trade, as I have

205

The Great Oil Octopus

already explained, and the Scottish companies
are recouping themselves on their by-products.
At the time of writing burning oils (kerosene)
and lubricants are lower than they have ever
been, and it is certain that no profit is being
made out of them in Scotland. But the Scotch
shale in distillation yields sulphate of ammonia,
which is in good demand as a fertiliser, and is
not obtainable from either American or Russian
crude. Naphtha is also selling at a fairly good
price owing to the development of the motor
industry — in fact, the Standard has been buying
large quantities of it from certain Scotch com-
panies. In the past the Scotch refiners have
been greatly assisted by the considerable per-
centage of paraffin wax which their crude
yields, but in the last three or four years they
have lost some of this advantage owing to the
increased output of paraffin wax in Galicia.
The Boryslav and Tustanovitch fields m that
country produce an oil which yields from 1 to 7
per cent, of paraffin wax, and the production
of paraffin wax has shot up very suddenly—-
which is no doubt one reason why the Standard
has been fighting so hard in Galicia. The net
result is that the Scotch companies have a hard
struggle to maintain themselves against the
Standard monopolist tactics, but that on th
whole they hold their own.

206

THE FLASH-POINT SCANDAL

" The flash-point of 73 deg. was badly founded, because it
is the flash-point of a substance which is being burned at
temperatures commonly above 73 deg., and, therefore, you
are dealing in every lamp so used with an oil beneath your
flame which is in a condition of danger."

PROFESSOR ATTFIELD, F.B.S., Select Committee on
Petroleum, 1896 Report.

CHAPTER XIII

THE FLASH-POINT SCANDAL

IT is now time to devote a little attention to
one of the Standard's great triumphs in
this country — the staving off until this present
day of the legislative raising of the flash-point
of petroleum. I desire to make this explana-
tion short and simple. The flash-point is the
temperature at which an oil will give off vapour,
which, mixed with air, is explosive. In other
words, it is the point at which a flame brought
close to its surface will cause it to explode —
the explosion being, of course, small in a 2-in.
deep test-cup, but serious when a lamp or a
barrel is in question. The test depends on the
presence of vapour. It is obvious, therefore,
that any test-cup which allows the vapour to
escape before the flame can be applied is useless.
The advocates of safe oil have always demanded
a test-cup which would retain the vapour, and

209 O

The Great Oil Octopus

the petroleum traders in Europe and America
have always pushed some kind of cup which
would allow as much as possible of the vapour
to escape.

The story of the juggle with the flash-point
begins in 1868, before the Standard Oil Trust was
born, and for its initial stage it is only fair to
admit that it can have no responsibility. The
Fire Protection Committee of 1867 recommended
that the flash-point should be 110 deg. Fahr.
The Petroleum Association — which was then
an independent body of importers of American
oil— asked for a flash-point of 100 deg., and
the Home Secretary called in the " three
chemists" — Dr. Lethaby, Professor Attfield, and
Professor (afterwards Sir Frederick) Abel — to
advise as to the flash-point and the method of
determining it.

The three chemists recommended that 100
deg. should be conceded provided it was ascer-
tained by a test-cup which they recommended.
That tester, called "the three chemists' cup,"
gave results which it is now admitted were
identical, within 3 deg. of those shown by the
present Abel tester. What followed is suc-
cinctly narrated by Mr. Ure, K.C., M.P. (now
the Lord Advocate), in his draft report pre-
sented to the Petroleum Committee (1898
Report, p. xxxvi) : —

210

The Three Chemists

The Eeport [of the three chemists] was accepted by the
Home Office and the standard and test were embodied in
the Notices of Motion and Orders of the Day for the 8th of
June, 1868. A week later it will be found from the Notices
of Motion and Orders of the Day that the test prescribed by
the three chemists, and accepted by the Government on the
8th of June, had undergone a very material change. , In the
interval the Petroleum Association approached the Govern-
ment and requested that the three chemists' test be modified.
The Government remitted to Sir Frederick Abel to consider
the question thus raised. He was comparatively new to the
subject of flash-point investigation. Dr. Lethaby and Dr.
Attfield had for years devoted special attention to it. Both
were in London at the time, and available for consultation.
Neither was consulted or even apprised of the proposed
change.

Sir Frederick Abel was enjoined by the Government not
to give way on any point affecting the efficiency of the test.
He did give way ; and in the result a test was prescribed
which he himself subsequently described as " untrustworthy,"
"open to manipulation," and "not of such a nature as uni-
formly to ensure reliable and satisfactory results." Why Dr.
Lethaby and Dr. Attfield were not consulted has not been
explained to your Committee. It is certain that if they had
been consulted, the change could never have been made.
Whenever it came to his knowledge Dr. Attfield at once
informed the Government that the test was far less stringent
than that prescribed by the three chemists, that it would be
a fertile source of disputes, and that the public would not be
protected.

That 100 deg. flash-point, with the inaccurate
tester of the Petroleum Association, went into
the Act of 1868, and the mischief was done. But
the most extraordinary and audacious chapter
in this strange story took place ten years later

211

The Great Oil Octopus

when the disputes and blunders which Dr. Att-
field had foretold had occurred. Sir Frederick
Abel then devised the Abel (close) tester, which
is an efficient one; but he showed that an oil
flashed in that tester at a point 27 deg. lower
than that at which it flashed in the Petroleum
Association cup legalised in 1867.

In 1879 the new Act legalised Sir Frederick
Abel's tester and then fixed the flash-point at
what was called the "equivalent" of the old
100 deg. — in other words, it reduced the
flash-point by 27 deg., the amount of the inac-
curacy of the old tester. The effect, of course,
was to perpetuate the blunder of the 1867 Act
in another way. It is as though a man, finding
that his watch lost 27 minutes in a day, bought
a new and accurate timekeeper and then pur-
posely put it back 27 minutes.

The history of this bureaucratic juggle was
effectively summarised by Mr. Ure in the House
of Commons, March 15, 1899 : —

In 1862 there was a correct flash-point (100 deg.) fixed, and
no tester for ascertaining it.

In 1868 there was a correct flash-point (100 deg.) and an in-
correct tester for ascertaining it.

In 1879 there was a correct means (the Abel tester) of finding
out an incorrect flash-point (73 deg.).

Now we demand a correct flash-point (100 deg.) and a correct
means of finding it out.

212

An Audacious Change

To this day all petroleum which flashes at
73 deg. Fahr. in the Abel tester is subject to no
restrictions of any kind, and lamp accidents
and oil fires have carried off hundreds of lives
since 1879. Lord Kelvin, surely a high authority,
said to the Select Committee in 1906 : —

It seems to me that the logical outcome of Sir Frederick
Abel's work ought to have been to declare that the 100 deg.
test in force in the 1871 Act must be fulfilled by a proper close
test. I cannot think how Sir Frederick Abel dropped from
100 deg. to 73 deg.

Professor Silvanus P. Thompson, in his " Life
of Lord Kelvin " (vol. ii. p. 962), tells us :—

Lord Kelvin felt strongly on this question. In 1868 an
open test-cup was legalised which in practice proved to be
erroneous to an average extent of 27 degrees. In other
words, oil which was actually giving off explosive vapour at
73 Fahr. did not flash in this open cup until it reached 100
deg. The number of fires due to paraffin lamps increased
owing to the introduction of cheap low-flash oils. In spite of
this, in 1879, when a new and more efficient test was adopted,
the flash-point was by a scandalous manoeuvre reduced to
73 deg.

It is interesting to recall that in the experi-
ments which Sir Frederick Abel made during the
period when the Abel tester and the difference
between its results and those of the 1868 tester
were under investigation, he was assisted by Mr.

213

The Great Oil Octopus

Boverton Redwood, the chemist of the Petroleum
Association. But the delicate operation of sub-
stituting a lower flash-point when the tester was
made more accurate seems to have been carried
out mainly by the assistance of the then Chief
Inspector of Explosives, the late Colonel V.
Majendie, a soldier and a gentleman, who was
no match for the adroit and suave agents of the
petroleum trade. It was perhaps not unfitting
that the administration of the laws relating to
Mr. Rockefeller's low-flash petroleum should have
been placed under the Explosives Department
of the Home Office, but it had this disadvantage,
that Colonel Majendie, well acquainted with
military explosives, knew nothing about petro-
leum. He once declared at the Imperial Insti-
tute in my hearing that he had learned all he
knew about petroleum from Mr. Redwood. How
completely he was guided by his mentor in this
matter appears from a memorandum of July 18,
1878, in which he gives his reasons for supporting
the reduction of the flash-point from 100 deg. to
73 deg. In it he wrote : —

The figure is one to which the Petroleum Association, the
body really interested, are prepared to assent, and although
the Scottish Mineral Oil Association desire a higher flashing-
point, it is really a matter in which they have very little
concern, except in so far as the adoption of a higherflashing-
point will tend to injure their trade rivals (the Petroleum

214

Sir V. Majendie

Association). I think, therefore, that as the matter cannot be
usefully carried further, the Abel test of 73 deg. Fahr. flashing-
point should be accepted.

Mr. Redwood was at this period the paid
secretary of the Petroleum Association, and had
returned only six months before from his
American trip. Sir Vivian Majendie seems never
to have been able to consider the public ; in his
view it was all a trade squabble between the
rival oil traders. I ought to explain here, by the
way, that the Scottish refiners have always kept
their oil up to a flash-point of 100 (Abel), their
reason being that they desired to maintain a
perfectly safe standard. They have always
complained of the invasion of this 73 deg.
American petroleum, not on ordinary com-
mercial grounds, but because they held that its
dangerous and explosive character was prejudi-
cing the public mind against all classes of
burning oils, and neutralising their own efforts
to give the public confidence in them.

215

THE ROCKEFELLERS AND THE
HOME OFFICE

" You have been in politics long enough to know that no man
in public office owes the public anything."

SENATOR MARK HANNA to the Ohio Attorney-General.

CHAPTER XIV

THE EOCKEFELLEES AND THE HOME OFFICE

"XTATURALLY the juggle by which the low
-Ll flash-point was thus stereotyped in the
Act of 1879 had its effects. The number of
petroleum accidents began to increase, and so
Sir. V. Majendie was sent to visit 242 places
in England and the Continent and then to
America. In both these series of visits he was
accompanied by Mr. Boverton Redwood, Secre-
tary of the Petroleum Association, "who was
good enough to accompany me and render me
great assistance," as Sir Vivian put it. I have
no means of knowing whether Mr. Redwood
was able to obtain the same letters of intro-
duction from Mr. Wm. Rockefeller which he had
secured in 1877, but I do know that there was
one subject the pair did not inquire into. It
appears in Colonel Majendie's examination
before the Select Committee on Petroleum by

219

The Great Oil Octopus

Captain Hope (Report and Evidence, 1894, Q,
206-212) :—

Q. Are you aware that in Scotland, where Scotch oil has been
mostly in use, there have hitherto been very few fires or lamp
accidents ?

A. No, I have no statistics of lamp accidents. I have only
a general knowledge derived from newspapers and from those
who have given to the subject a larger study.

Q. When you were making your inquiries in America did you
go into the question of the frequency of lamp accidents ?

A. Not lamp accidents, I think, at all.

While this surprising omission was occurring
lamp accidents continued to go up. In London
they rose from 45 in 1873 to 271 in 1890. In
that year the twin brethren, Sir. F. Abel and
Mr. Redwood, were directed by the Home Office
to make an inquiry into the subject, and they
discovered that it was all due to bad lamps.
This ingenious theory set every one — Press,
coroners, County Council, Home Office — in full
cry after a lovely red-herring, and diverted
attention for several years from the Standard's
explosive oil. When Mr. Lockwood came over
in 1877 it was the bad wicks ; now, in 1890,
it was the bad lamps. The objections to
attempting to secure immunity from petroleum
lamp accidents by any lamp law are these : —

1. Nobody has yet guaranteed any absolutely safe lamp.

2. Nobody can guarantee that a safe lamp will remain safe in

220

The Standard at Westminster

wear, or can compel its owners to buy a new one when it is in
bad repair.

3. In both Scotland and America, where petroleum is pro-
duced and refined, the remedy has been sought, not in a lamp
law, but in raising the flash-point.

While the British officials were chasing the
lamp-law will o' th' wisp Mr. Rockefeller was
sending over here petroleum oil which could
not be sold in most of the States of the Union,
and the number of lamp accidents here was
still rising. In London they rose from 271 in
1890 to 473 in 1895. By this time an inquiry
could not be avoided ; the Select Committee to
which I have referred began to sit, and between
1894 and 1898 to take evidence and report.

The evidence before that Committee in
support of the Standard Oil Trust's conten-
tion was extensive and peculiar. There was
Sir Frederick Abel, who admitted to the Com-
mittee that as chemist to the War Office he
had recommended the adoption of 100 deg. or
105 deg. oil for use in barrack-rooms. Yet he
was prepared to maintain that 73 deg. was
sufficiently high for a lamp in a crowded tene-
ment house, where obviously the chances of
accident are far greater than in the strictly
regulated and disciplined barrack-room. Then
there was Mr. Boverton Redwood, and he too
declared that the flash-point of 73 deg. was

221

The Great Oil Octopus

sufficiently high for public safety. The mosl
remarkable thing about his evidence was th<
damaging admissions he was compelled to make,
which gave away his whole case. Here arc
two : —

In my opinion a considerable proportion of the lamp acci-
dents which occur would not happen if only oil of 120 deg. or
even 100 deg. Abel test were used (Q. 1,824, 1896 Blue Book).

Undoubtedly in a sense the higher the flashing-point the
safer the oil, and from that point of view oil of 100 deg.
flashing-point must be safer than oil of 73 deg. flashing-point
(Q. 1,893).

Another very entertaining Standard Oil
witness was Professor C. F. Chandler, of New
York, who explained that he had been coming
to Europe for a holiday, and was asked by the
Standard Oil Trust to give evidence against
raising the flash-point. He gave that evidence,
and was confronted with this passage in a
report he made to the New York State Board
of Health in 1871 :-

There is a strong inducement to turn the heavier portions of
the naphtha into the kerosene tank so as to get for it the price of
kerosene. It is therefore the cupidity of the refiner that leads
him to run as much benzine as possible into the kerosene,
regardless of the frightful consequences of the frequent
explosions.

As this was exactly what the Standard was

222

The Orange Barrel

doing, this was rather awkward for the Pro-
fessor, but he cynically explained that it was
" a reckless statement " made when he was
a " reformer." He admitted that he had never
withdrawn it publicly until that very date in
1896, but he went on to swallow it whole.

But the prize witness on that side was Mr.
Paul Babcock, whom we saw in 1877, and who
as one of the American directors of the Trust
came to tell the Select Committee that the 73
deg. oil — the brands known to the trade as " Tea
Rose " and " Royal Daylight " — were as safe as
the 105 deg. oil — the brand known as " White
Rose." Thereupon Mr. Ure, M.P., produced a
little folding card just then issued by the
Anglo-American Oil Company, Limited, a copy
of which lies before me as I write. On the front
page of this little Rockefeller tract — which, I
grieve to say, is not now in circulation, so that
mine has become a " rare edition " — there are
two big orange-coloured barrels, and the words
" White Rose American Lamp Oil." Inside there
is an artless panegyric on "White Rose," of
which we are told : —

Its fire test is so high as to make it the safest petroleum
lamp oil in the world. Explosion is guarded against and
families can burn White Rose Oil with the same assurance of
safety as they can gas ... a really safe and reliable illu-
minant, &c.

223

The Great Oil Octopus

Of course, all this clearly proved that th<
Anglo-American Oil Company, whatever il
might say at Westminster, did not believe ii
Billiter Street that 73 deg. oil was as safe a*
" White Rose." But Mr. Paul Babcock was a cool
hand. He turned the card over carefully, an<
then remarked that it was " merely advertising
bankum," and that it was issued by the Anglo-
American Oil Company, " who no doubt bought
the oil of us." This was fairly cool in view of
the fact that the Standard owns all the shares
in the Anglo-American, but it is even cooler
when we examine the orange-coloured barrel
in the picture. The barrel bears at its head a
label, " Kings County Oil Works, Sone and
Fleming Mfg. Co., Limited, New York." Now
Mr. Paul Babcock was himself general manager
to that very Sone and Fleming Company, in
addition to being a director of the Standard,
which, since 1877, had controlled it. That
incident is a fair specimen of the Standard's
evidence at this inquiry.

On the other side evidence was given by Lord
Kelvin (the greatest scientific man of his day),
Sir Henry Roscoe, Professor Ramsay, Professor
Attfield, Dr. Stevenson Macadam, Professor D.
Mendeleef (who represented the Russian Govern-
ment and the Russian petroleum industry), and
Dr. Hermann Kast (of Karlsruhe), all denouncing

224

More Standard Agitation

the 73 deg. flash-point and advocating its being
raised. Sir Henry Roscoe said : —

I think that Americans send over so much mixed oil of the
character of this " Tea Hose " oil only because our flash-point
is so low.

Lord Kelvin told the Select Committee :

I am clearly of opinion that in order to avoid accidents the
flash-point must be raised, and that no construction of lamp
will meet the difficulty.

The Select Committee at last reported in
favour of raising the flash-point, and an
agitation started by the Star newspaper in
support of this course received the adhesion
of a large number of newspapers, coroners,
and of the London County Council. At the
same time the Standard Oil Trust started its
own characteristic agitations. Petition forms
were sent to every oil retailer with requests
to obtain signatures in opposition to raising
the flash-point. And according to the state-
ment of Mr. Jasper Tully, M.P., in the House,
some of these men in Ireland were threatened
that they would get no more oil if this was not
done. The result was that M.P.s were bom-
barded with petitions from their constituencies,

225 p

The Great Oil Octopus

and Standard Oil agents filled the lobbies. A
well-known Standard Oil "expert" contributed
anonymously a long article to the Times, in
which it was represented that the safe-oil
agitation was due to a desire to secure "pro-
tection" for the Scottish trade. It is amusing
to recall that one of the strongest supporters
of this theory was the Right Hon. Jesse Collings,
who in four short years was to become an
ardent convert to the theory of "Protection,"
not only for Scotch oil, but for everything
else.

While the Standard was playing up to free-
trade opinion in this way, it was working the
" patriotic " dodge in a very nicely got-up anony-
mous pamphlet sent to every M.P. In this it
was shown that the effect of raising the flash-
point would be to stop our cousins across the
Atlantic from sending us oil, and to play into
the hands of Russia, which had always been
hostile to us. The old Russian bogey was still
alive in the days before the Russo-Japanese War,
and this waving of the Union Jack no doubt
affected some soft-headed M.P.s.

There is a characteristic story which relates
that somebody, on hearing that the site had
been acquired for the new palace now com-
pleted in Queen Anne's Gate, rang up one of
the heads of the " Anglo " on the telephone.

226

" Lobbying '

" You are making a mistake," said he ; " you
ought to be near the City." " Oh ! the City
doesn't matter," replied the Standard voice on
the telephone ; " what we want to be near is the
House of Commons." There the policy of the
Standard Oil Trust is crystallised in a sentence.
The Trust is the most gigantic lobbyist in the
world. No other association of private capi-
talists maintains such an espionage system ; no
other body of that kind has its lobbyists at so
many centres of government. In most of the
American State Legislatures the Standard Oil
lobbyist is as well known as the Speaker.
At Washington, at Ottawa, in the House of
Commons, in Berlin, in Bucharest, to name but
a few capitals, you will find the representatives
of the Rockefellers. Their proceedings and those
of the rivals who sought to checkmate them
elicited a severe rebuke from that cautious
journal the Spectator on the occasion of the
debate upon the Flash-point Bill. Writing on
March 25, 1899, my contemporary observed: —

The decision as to the proper flash-point for mineral oils
really involved a possible monopoly of the supply of safe oils,
a monopoly worth many millions, and the signs of excited
personal and pecuniary interest in the lobbies were noticed by
many observant members of Parliament.

It declared that the practice of "lobbying"

227

The Great Oil Octopus

tended to " grow into a peculiarly subtle am
dangerous form of corruption": —

It has so grown both in America and France, and it may
grow here. What with the tendency to create monopolies, the
incessant variations of the tariff in some great States, and the
masses of capital at the disposal of individuals or companies,
the profits and losses consequent on a new law may amount
to millions, and among the owners or expectants of those
millions there may be some of the most unscrupulous of
mankind. They have paid secret commissions all their lives,
especially for " information," and they do not see why they
should not pay them to induce hostile legislators not to vote
against them.

The end of this combined attack was that when
the Flash-point Bill came up for second reading
in March, 1899, it was rejected, on the pledge of
Mr. Collings, then representing the Home Office,
that the Government would deal with the whole
subject of the storage of petroleum and of
lamp accidents. Since that date nothing has
been done, and although all the members of the
Liberal Cabinet who were in the House of
Commons in 1899 voted for the Flash-point
Bill, they have never found time or courage
to tackle the Standard Oil monopoly in explo-
sive oil. As Lord Kelvin's biographer, Professor
Silvanus P. Thompson, says in the chapter
already quoted : " The scandal of the free sale
of dangerous low-flash oil continues."

228

The Home Office

No doubt Ministers have been hampered by
the obstruction of the Home Office bureaucracy.
Before even the Select Committee had reported,
the late Dr. Dupre, chemical adviser to the Home
Office, said at Sutton (in November, 1897) : —

If people thought they would get legislation on the subject to
raise the flash-point they would be very much mistaken, for
legislation would not so upset the trade. What was wanted was
education and better lamps.

We have seen how Colonel Majendie was
constantly sitting at the feet of Mr. Boverton
Redwood on this question, and his influence was
steadily against the flash-point being raised.
His successor, the late Captain Thomson, fol-
lowed the same tradition, and actually published
with Mr. Redwood a "Handbook on Petroleum."
This volume, which is ostensibly a guide to local
petroleum inspectors in carrying out their duties,
branches off into a defence of the 73 deg. flash-
point, and contains all the old Standard Oil
tags. One of its points is that more people are
killed by falling downstairs than by lamp acci-
dents— I only cite that absurdity to show the
boldness which the Home Office staff have
shown in their determination to obstruct the
recommendation of the Petroleum Committee.
The final climax has been the appointment of
Sir Boverton Redwood as Home Office Adviser

229

The Great Oil Octopus

on Petroleum. Nobody questions for an instant
the great scientific abilities of Sir Boverton
Redwood, or his thorough acquaintance with
the petroleum industry, but he has taken too
long and too active a part in opposing the
raising of the flash-point for his advice to be a
safe guide on the question. It would be exactly
like appointing Mr. Pretyman to advise the
Inland Revenue on the drafting and circulating
of Form IV.

The Home Office has made another attempt
to divert public attention from the flash-point
of kerosene by appointing a departmental com-
mittee to consider the storage and transit of
petroleum spirit, which body has just published
its report and evidence. The fact is, of course,
that this is a difficult and complicated subject,
affecting large numbers of small oil and spirit
dealers, on which it will be almost impossible
to come to an agreement. The raising of the
flash-point of kerosene is a simple, clear issue,
which can be done by a Bill of one clause,
and the only people who will really be affected
by it will be the Standard Oil Trust. At the
same time the Oil Trust, with its vast capital,
does not greatly object to restrictions on the
storage and transit of either oil or spirit,
because these mean capital expenditure which
it can easily defray, and they will at the same

230

The Naphtha

time hamper all its smaller competitors. Now
in a time of congestion of Parliamentary busi-
ness, when it is admittedly difficult to drive even
a wheelbarrow through the House, the Home
Office bureaucracy deliberately selects the long
and complicated subject for its activity, and
ignores the simple one. Why?

It is instructive to note that during the years
that have elapsed since the Flash-point Bill was
rejected in 1899, half the Standard's argument
against raising the flash-point has been killed
by itself. It asserted that it could not take
out that proportion of naphtha which made
its 73 deg. oil so explosive and dangerous
without adding to the cost to the consumer.
Since then there has arisen the demand for
benzine or petrol for the motor industry, and
the Standard finds that it can take out that
naphtha. Accordingly a friend of mine who
has studied this subject as a chemist tells me
that whereas the " Tea Rose " oil used to have
a flash-point nearly down to the legal minimum
of 73 deg., samples recently tested have a flash-
point of 78 deg. or 79 deg. The Trust have made
their oil to that extent safer to suit themselves,
and it is notable that side by side with this the
number of petroleum lamp accidents has been
falling. What is now wanted is that they shall
l}e forced by Parliament to make it safer still*

231

The Great Oil Octopus

As Lord Kelvin said to the Select Committee
in 1896:—

The principle of safety is that oil should never in a lamp
reach the temperature of the close test flash-point. I advise
the Committee to fix a flash-point which shall be higher than
oil is likely to reach under ordinary conditions of ordinary
use.

One of the achievements of the Home Office
during the controversy was the cooking of a list
of legal flash-points in American States by which
it was sought to discredit the statement that
this country is a dumping-ground for American
low-flash oils that the Rockefellers cannot sell
at home. Although Mr. Jesse Collings has
denied that statement in the House of Commons
it is perfectly true. A conclusive proof of its
truth is furnished by that interview with Mr.
W. H. Libby, the Standard's foreign marketing
agent (to which I referred in a former chapter)
appearing in the New York Herald of Sep-
tember 3, 1905. After describing in Mr. Libby's
words their struggles with Russia for the
European oil market, the interviewer goes on
thus : —

It is an open secret among people familiar with the oil
business that the great and important reason for the Standard's
Activity in Europe is largely due to the fact that the European

232

The British Flash-point in India

tests on oil are not as stringent as they are in the United
States. In this country (U.S.A.) the first run of oil, or what is
known as the flash-test at a high rate, is the only oil that is
allowed to be marketed. The second run of oil contains much
more inflammable ingredients, and when tested with the flash will
explode at a much lower temperature. It is this oil that finds
a market abroad, and the laws there do not demand the higher
test of the product. To get rid of its second run the Standard
naturally has to look to other markets than the domestic, and
that is why it is so anxious to extend its operations in Europe
and Asia, as otherwise the oil would be a drug on its hands.

The case against the Standard and its liquid
death could not be more concisely put than in
the foregoing passage, and so far as they are
concerned I leave the case there. But with
regard to the British officials, it should here
be mentioned that the length to which they
have gone in defence of the 73 deg. flash-point
was most conspicuously demonstrated in India.
When the flash-point of 73 deg. was legalised
there difficulties arose with Burma petroleum
which, owing to its large proportion of petro-
leum wax, became solid or viscid at 60 deg.
The Indian authorities wrote home for advice
in this awkward situation, and Sir Frederick
Abel was invited to solve the riddle. Sir
Frederick Abel actually recommended the Indian
Government to melt the samples, then refri-
gerate them down below 73 deg., and then
gradually heat them up again to 73 deg, to

233

The Great Oil Octopus

test them ! Here is the exact language of his
letter : —

For the above reasons the application of the legal flashing
test as prescribed by the Act to the examination of petroleum
samples which are solid or viscid at a temperature about 60
deg. Fahr. must give entirely fallacious results.

Then he goes on to stiggest a " modification "
of the system of testing, of which the material
portion is as follows : —

The oil-cup is then to be placed in a refrigerator, or plunged
up to the projecting collar in water maintained at a sufficiently
low temperature until both thermometers indicate the tem-
perature at which the testing of petroleum is directed in the
Act to be commenced. The oil-cup is then to be removed,
wiped dry, placed in the water-bath, and the testing effected in
the manner prescribed in the Act (Select Committee's Keport,
1896, Appendix, p. 747).

Of course, to the mind of any one but an
official, it would be clear that when oil in a
barrel or a tank was itself normally at a tem-
perature of between 80 deg. or 90 deg., it was
a farce to allow it to enter the country on the
theory that it would not give off explosive
vapour below 73 deg. Fahr. But to admit that
would have been too awkward for the whole
flash-point camarilla, and Sir Frederick Abel,
in the Journal of the Society of Chemical In-
dustry, a few years before the safe-oil agitation

234

Later Agitations

started, stated that oil which in New York was
exported as 73 deg. oil was found in India to
have a flash-point of 66 deg., and advised that
in order to take the flash-point in India it
should be cooled down to 56 deg. Fahr., before
the testing was started. Yet the Standard Oil
agents in India successfully opposed any raising
of the flash-point, and Sir Frederick Abel, in
the letter quoted in the 1896 Blue Book, stated
that public safety did not require it.

Another Standard Oil agitation which was
run here by the Anglo-American was in Febru-
ary, 1900, when the railway companies issued
an amended consignment note for benzine,
petrol, and all varieties of motor spirit, by
which the consignor was required to indemnify
the railway company against all claims for
injury to person or property arising out of the
" inflammable character " of the goods. The
Anglo-American Oil Company first threatened
that it would abandon the importation of
petroleum spirit altogether, but as that " bluff "
did not succeed it issued a circular to owners
of motor-cars and users of petroleum spirit
signed by Mr. Frank E. Bliss, director. It con-
tained this instructive passage : —

There is more likelihood of our protest being heeded if it be
supported by similar protests from all users of petroleum
spirit. We ask, therefore, your co-operation in our endeavour

235

The Great Oil Octopus

to induce the railway companies to revert to their old form oi
consignment note, and we shall be glad if you will address a
letter of protest to your local goods agent of the railway-
company over whose line you have been accustomed to receive
your traffic.

That is the way these spontaneous agitations
are got up.

Of late years the Anglo-American's public
activities have been chiefly concerned with its
attempt to get the Thames Conservancy, and
then the Port of London Authority, to sanction
the bringing of petroleum spirit up the river
in tank barges instead of landing it at Purfleet.
The Thames Conservancy, whose meetings are
open to the Press, steadily refused, but the Port
of London Authority sits in secret, and it would
not be surprising if one day the Standard's
constant efforts succeeded in this most danger-
ous project. " Petroleum spirit," legally, con-
sists of petroleum which flashes below 73 deg.
Fahr. In fact, some of its products will flash
at zero, but all of it is far more dangerous than
the petroleum lamp-oil, which flashes at 73 deg.
or above.

236

THE LUBRICATING OIL TRADE

** Does Mr. Eockefeller know that modesty, benevolence, am
piety are the tricks which deceive the most people the longest

time ? "

IDA M. TARBBLL in " McClure's Magazine"

CHAPTER XV

THE LUBRICATING OIL TRADE

IT is time now to turn to the Standard's other
English branch, the Vacuum Oil Company,
Limited, which posed at first as an American
company entirely independent and unconnected
with the Standard. It was registered at Somer-
set House as a limited liability company, with
a capital of £55,000, on May 13, 1901. Its object
was to take over the business of its parent, the
Vacuum Oil Company of Rochester, N.Y.,
U.S.A., and it purchased all the assets of that
company in the United Kingdom for £29,947.
Up to October, 1905, its five directors were as
follows —

John Dustin Archbold, 26, Broadway, N.Y.
Charles Millard Pratt, 26, Broadway, N.Y.
Charles Marvin Everest, Rochester, N.Y.
Howard B. Case, Norfolk Street, Strand.
Henry Forster Grierson, Farnborough, Hants.

239

The Great Oil Octopus

Charles M. Pratt is a son of the late Mr.
Charles Pratt, who founded the refinery already
referred to in connection with Mr. H. H.
Rogers. C. M. Everest has been mentioned in
the Buffalo explosion prosecution, in which he
was convicted. In 1908 the Company adopted
new articles providing that the number of
shareholders must never exceed fifty, and bind-
ing the directors to refuse to register any
transfer of shares which will have the effect
of increasing the shareholders beyond that
number. The directors are also empowered to
refuse to register any transfer of shares with-
out giving their reasons. The following were
the shareholders on November, 30, 1909 : —

Shares.

Vacuum Oil Company of Rochester, N.Y 50,000

Charles Marvin Everest, Rochester, N.Y 2,000

Howard B. Case, managing director 50

Henry Forster Grierson, Farnborough 10

Louis Chas. Panizzardi, Paris, merchant 50

Edward Prizer, 29, Broadway, N.Y 2,790

Ernest Michaelson, Copenhagen, merchant 50

Everett Oscar Wader, 29, Broadway, N.Y 50

Total ... 55,000

Mr. Archbold and Mr. Pratt have left the
board of directors, which included in Novem-
ber, 1909, Messrs. Everest, Case, Grierson, Prizer

240

The Vacuum and the Trade

Panizzardi, Michaelson, and Mr. George Percy
Whaley, of 29, Broadway, New York. (Prob-
ably 29, Broadway is a copyist's blunder for
26, the Standard's home.)

One complaint which the English trade
makes against the Vacuum Oil Company is
this : through the Anglo-American Oil Company
the Standard sells large quantities of refined
oils to British manufacturers, compounders, or
blenders of lubricants. At the same time,
through the Vacuum Oil Company, it goes to
the customers of these firms and offers to
undersell them, saying that it can supply the
oils direct. A great deal of correspondence
appeared in the Oil and Colourman's Journal
on this subject in 1905. For example, one
correspondent told this story of his experience
with the Standard. He was dealing in illumi-
nating oil, getting all his supplies from the
Anglo-American Oil Company. In 1898 his
trade was 60,000 gallons per annum, then the
" Anglo " sent tank wagons to his customers,
and in 1905 it was less than 15,000 gallons.
He was persuaded then to devote his attention
to motor-car spirit. After he had spent a con-
siderable sum on bricks, concrete, iron doors,
&c., for storage purposes, the Anglo-American
began delivering broadcast motor spirit to
cycle agents. This merchant, when he saw his

Q

The Great Oil Octopus

kerosene trade vanishing, put up plant for
blending, filtering, and refining for the lubrica-
ting oil trade. Then he found the Vacuum Oil
Company underselling him with his own cus-
tomers. Of course, it was quite obvious that if
the Vacuum Oil Company could by these tactics
secure the whole trade of the British lubrica-
ting oil blenders, the price of lubricants would
go up as suddenly as the price of kerosene
always did when the Standard had killed
competition. This fact was pointed out in the
trade Press, and I understand that the Vacuum's
great campaign in 1905 has not destroyed the
British makers of lubricants.

A gentleman connected with the lubricating
trade wrote me the other day of the latest
methods of these people. The Standard ships
large quantities of oils for lubricating to the
Anglo-American by the ordinary steamship
lines. In a very attractive little booklet which
I have before me, entitled "The Light that
Fails Not," issued by the Anglo-American Oil
Company in 1902, it is stated that their import
of lubricating oil in a year was 462,000 barrels.
This is now larger, and is a valuable freight,
and so the Vacuum people go to the principal
steamship lines, and say, " We give you this
freight; you must let us lubricate your boats
in return." The result is that the freight which

242

Vacuum on Tramways

the English maker of lubricants pays on what
he buys from the " Anglo " is used to secure
business for his trade rivals, who are under-
cutting him with owners of engines. This
may be the American idea of " business,"
but it will take a great deal of acclimatising
here, and the Vacuum is not growing in
popularity.

But the Vacuum does not always undersell.
Complaint is made that in some of the large
tramway undertakings, especially municipal
ones, no other lubricant but the Vacuum oils can
get accepted, although other oils of equally
good lubricating quality can be and are pro*
duced by British firms at lower prices than the
Vacuum obtains. The reason for this pheno-
menon is simply that the engineers in charge
of the plants refuse to use any other than
Vacuum oils. Of course they must be able to
supply a plausible reason for this to their
superiors, and such an explanation is provided
in the " Official Circular " of the Tramways
and Light Railways Association for April
and May, 1905. This " Circular" reports a
paper read at a meeting of the Associa-
tion on April 28, 1905, by Mr. William E.
Parish, jun., chief technical expert of the
Vacuum Oil Company, on " Friction as
Affected by Lubrication." The keynote of Mr,

213

The Great Oil Octopus

Parish's paper may probably be found in these
lines : —

It is possible to exactly duplicate a fine lubricating oil on
the basis of chemical tests with an improperly manufactured
article. The results from the use of both oils, while the
chemical readings show they are exactly the same, are widely
different when applied to actual work.

Translated into plain English this means that
the lubricants supplied by the Vacuum's com-
petitors (manufactured out of the Standard
Oil Trust's own oils) are by every recognised
chemical test as good as theirs, but yet that
it is right and proper that the engineer who
actually uses the lubricants on the machinery
should prefer the Vacuum oils — a very satis-
factory doctrine for both the Vacuum Company
and the engineer !

Further on in his paper Mr. Parish was
good enough to give various tables and experi-
ments relating to what he called

A full efficiency test of a textile mill where an effort is being
made to reduce the total horse -power by means of applying
lubricants more suited to the work than the oils in use.

That means, in plain English, by applying
Vacuum oils, whose chemical readings are
exactly the same as those of their competitors,
and whose virtues can only be discovered by

244

the engineer. In the debate on the paper I
notice that Mr. W. Scott Taggart, while con-
gratulating Mr. Parish on his paper, let fall this
very valuable observation : —

I must say there is only one thing that spoils these tests for
a society like this or any other society of a scientific character,
and it is that these tests are all made by a person or an
engineer responsible to the oil company making them. I
think they would be of much greater value if carried out by
some unprejudiced engineer.

In replying afterwards on this important
point, Mr. Parish urged that comparative
testing was very difficult, and that

Engineers for work of this kind absolutely cannot exist out-
side the large oil companies, where they have practically all
the world to operate in, and the unpublished knowledge of
many experienced men in this particular line of work to draw
upon.

Whether this reply is scientifically sufficient
I do not know, but it is obvious that it is not
likely to satisfy the competitors of the Vacuum
Oil Company, who regard all these novel
scientific merits, which cannot be distinguished
by any recognised chemical tests, as so much
clever " advertising bunkum " — to use Mr. Paul
Babcock's language about the Anglo-American
Oil Company's orange-barrel advertisement.

245

The Great Oil Octopus

But it can hardly be doubted that tramway
arid other engineers find such papers as that
read by Mr. Parish, jun., before their technical
association a very useful argument in justifying
their exclusive use of Vacuum lubricants.

Before I leave this subject I may note that
Fairplay, the well-known shipping journal, has
drawn attention to another aspect of this
question, and that is how the Inland Revenue
collects income-tax from this combination. As
the Vacuum Company is a branch of the
Standard it can buy its oils at a high price and
sell them at cost, so that its books would show
no profit assessable to income-tax. That profit,
of course, would have really vanished into the
balance-sheet of the Standard Oil Company of
New Jersey. The same applies to the Anglo-
American Oil Company, which, according to the
evidence in the Missouri case, sells oil here on
commission. The lower the commission the
"Anglo" accepts from the Standard Oil Com-
pany of New Jersey, the lower its profits on its
balance-sheet, and the less income-tax. But I ad-
vise Mr. Lloyd George to look after the " richest
Baptist on earth." I fear that he is not paying
his proper share towards the expenses of the
country where he makes so many millions.

Such, then, is the evidence, summarised of
course, which has accumulated in all parts of

240

the world against the Standard Oil Trust. In
the examination of this evidence, which has
now been completed, I claim to have established
the following propositions : —

1. That the Standard Oil group have always
aimed, not at fair competition, but at absolute
monopoly.

2. That they secretly obtained from the
United States railroads rebates on the carriage
of their own oil, and even larger rebates on
all the oil carried for their competitors — thus
rendering it to the interest of the railroads to
decrease the shipments of "independent" oil,
by refusing to furnish adequate cars, and by
delaying delivery.

3. That by means of these rebates they were
able to undersell their competitors, and either
to ruin them or force them to sell out at
heavy loss.

4. That, whereas in 1870 they controlled nearly
10 per cent, of the American oil refining busi-
ness, by means of these rebates they had
secured in 1880 control of 90 per cent.

5. That when the petroleum well owners
constructed pipe lines to pump their oil to the
seaboard refineries, the Standard used vexatious
litigation, and even open violence, to obstruct
the work, and when it was completed bought
up a majority of the stock.

247

The Great Oil Octopus

6. That although they were legally " common
carriers," the Standard constantly refused to
pipe oil for other refiners, and thus forced the
well owners to sell their crude oil to them at
their own price, as in practice the Standard had
become the only buyer.

7. That an elaborate system of espionage
has been established by which information is
corruptly obtained from employees as to ship-
ment of independent refiners' oil ; and that the
oil dealer who receives such oil is then under-
sold by Standard agents.

8. That in districts where the feeling against
the malpractices of the Trust is strong, the
Trust runs "bogus independent " oil companies
and "anti-Trust" oil shops, and uses them to
undersell the oil dealers who really attempt to
sell non-Trust oil.

9. That although the rebates are not paid on
all the railroads now, there existed as late
as 1907 — and probably still exist — widespread
railroad discriminations giving the Standard
advantages over other refiners.

10. That although the Standard constantly
claims credit for improving the processes of
manufacture and transport, most of the im-
portant inventions of the industry were
invented by others. The main thing the Trust
invented was the secret rebate.

248

Summary of the Indictment

11. That in regard to the Standard's claim
to have reduced the price of illuminating oil
to the consumer, the Hepburn Congressional
Committee found that it had only done so when
fresh supplies of petroleum had come on the
world's markets, or in order to kill competition.

12. That Mr. Rockefeller and his associates
have frequently made on oath before Congres-
sional Committees and in judicial proceedings
false statements about the Trust.

13. That the Standard Oil group has system-
atically adopted the methods of bribery (direct
and indirect) in dealing with politicians and
newspapers.

14. That in Great Britain it has successfully
obtained official support for the maintenance
of a dangerously low flash-point of illuminating
oil, which enables it to dump here "export
oil " that it is not allowed to sell in the majority
of the American States.

15. That the Trust has been successfully
prosecuted in the courts of its native land,
and that in every country that it enters it
is the enemy of legitimate commerce. It either
ruins the dealers in its commodities, or reduces
them to the position of " tied houses."

In fine, the Standard Oil Trust is the most
unscrupulous, as well as the most ambitious
and successful, combination of capitalists that

249

The Great Oil Octopus

the world has yet seen. The men it has ruined,
the businesses it has wrecked, the little
children it has roasted in its oil-fires —
all these constitute a hideous record of death
and destruction which not all the long prayers
and the huge alms of John D. Rockefeller
should ever induce the world to forget.

250

Index

ABEL, Sir F., 159, 210, 220, 233
Acme Oil Company, 67
American Wick Company, 23
Ammonia in Scotch shales, 206
Andrews, Samuel, 15, 29, 193
Anglo-American Oil Company,
Ltd., 11, 22, 111, 196,
241

,, Caucasian Oil Company,
Ltd., 163

„ Saxon Petroleum Com-
pany, 148, 170
Archbold, John D., 18, 19, 67,

78, 94, 97, 110, 175, 196, 239
Asiatic Petroleum Company,

148, 170
Atlantic Refining Company

(Standard), 102
Attfield, Professor, 208, 210,

224

BABCOCK, Paul, 149, 192, 223
Bailey, Senator, and the Trust

in Texas, 140
Baku Refiners' Union,

11 Barbarous Mexico " (its in-
spiration), 144
Base, Greo. (on Standard agree

ments), 203
Bataafsche Petroleum Maat-

schappij, 148, 170
Bayne, H. (and Security Oil

Company), 113
Benzine, its influence on " the

oil war," 149
Bliss, Frank E., 195
Bostwick, J. A., 37, 52
Brady, A. N. (Manhattan Oil

Company), 109
Bribery charges, 77, 181
Buffalo Refinery explosion, 97
Burma petroleum, 152, 233

CHANDLER, Professor C. F. (of

New York), 222
Chesebrough Manufacturing

Company (Vaseline), 21
Choate, Hon. Joseph, 154
Collings, Right Hon. Jesse, 226,

228, 232

251

Index

Consolidated Petroleum Com-
pany, Ltd., 163

Cowdray, Lord (shadowed in
New York), 145

Cuthbert, John H. (alleged
Standard Oil agent), 118

DEVEREUX, General J. H., on

rebates, 31
Devoe Manufacturing Company,

23, 192
Diaz, President of Mexico, and

the Trust, 144
Dupre, Dr. (the late), 229
Dutch Government excludes the

Standard, 147

EAGLE Oil Company (of Mexico),

14
ELkin, P. J. (Attorney-General

of Pennsylvania), and the

Archbold letters, 84
Erie Railroad rebates, &c., 87,

40, 50, 53, 55, 59
Everest, C. M., 94, 97, 175, 239

FLAGLER, Henry M., 18, 29, 74,

197
Flash-point scandal in Great

Britain, 209
„ in India, 233
Foraker, Senator, J. B., 78

GALEN A- SIGNAL Oil Company

and American railways, 21
Galicia, discriminations against

the Standard, 166

Garfield, J. R. (United States
Commissioner of Corpora-
tions), 28

General Industrials Develop,
ment Syndicate (9f London),
108 et seq.

German Vacuum Oil Company,
170 et seq.

Gould, Jay (the late), 37

HAMBURG Court's decision on

" re-branding," 177
Hanna, Senator M. "(the late),

83
Hearst, W. R., and the Archbold

letters, 18, 77
Hepburn Committee (U.S.A.),

35, 56, 72
Home Office and the flash-point,

229

INVENTIONS, the Standard's
claims to them, 129

KELVIN, Lord (the late), 213

LAKE Shore Railroad, 31, 46
Lawson, T. W., on H.;H. Rogers,

17
Leonard, W. J. (Standard tactics

in England), 200
Lethaby, Dr. (the late), 210
Libby, W. H. (Standard lob-
byist), 151, 152, 232
Limanova Petroleum Company,

166

252

Index

Lloyd, Henry D. (the late), 5,

97

Lockhart, Charles, 65, 193
Lockwood, F. W. (Standard Oil

agent), on wicks, 194
London Commercial Trading

and Investment Company,

Ltd,, 118 et seq.

MACDONALD, Jas. H., Ill, 199
Maikop field, the new, 164
Majendie, Sir V. (the late), 214,

219
Manhattan Oil Company, 108

et seq.
Mantascheffs of Baku, the, 164,

169
Mendeleef, the late Professor,

224
Merrill, Joshua (lubricating oil

pioneer), 131
Missouri, proceedings against

the Trust, 135
Moeara Enim Company and the

Dutch Government, 147
Monnett, F. S. (Attorney-
General of Ohio), 81, 134

NEWSPAPERS, Trust subscrip-
tions to, 86

New York Central Railroad, 37,
40, 48, 52, 60

Nobels of Baku, the, 162

O'DAY, Daniel, 19, 54, 198
" Oil War," the, 147

" Orange Barrel," the, 223
Oswego Manufacturing Com-
pany, 23

PARISH, W. E. (of the Vacuum

Oil Company, Ltd.), 243
Payne, Oliver H., 20, 193
Pearson firm (Mexico), 142
Pennsylvania Railroad and re-
bates, 31, 37, 56, 59
Petroleum Association (of Lon-
don), 160,210, 214
,, Committee (recom-
mendation on
flash-point), 225
,, Producers' Union,

the, 46, 133
„ wax, 152, 206
Pierce, Henry Clay, 141
" Pittsburg Plan," the, 57
Port of London Authority and

Standard intrigues, 236
Pratt, Charles, 66

„ Charles M., 20, 175, 239
" Protection," the cry of, 226

RAILWAYS, English, and petrol

agitation, 235
"Re-branding" lubricants in

Germany, 176
Redwood, Sir Boverton, 160,

192, 220, 221, 229
Refiners' Association, the, 57, 59
Rice, George, 71
Rigby , W. T. (Liverpool retailer's

experience), 202

253

Index

Rockefeller, Frank, 39

„ John D., 15, 29, 33,

47, 51, 58, 67,
71, 197
„ John D., jun., 20

William, 19, 29, 37,

193
Eogers, H. H., 17, 33, 94, 97,

172, 195
Romano - American Petroleum

Company, 22, 169
Roscoe, Sir Henry, 225
Rothschilds, the Paris, 163,

170

Royal Dutch Petroleum Com-
bine, 147, 170
" Rutter circular," 60

SAMUEL, Sir Marcus, 147, 157,

170
Scottish oil refiners and the

flash-point, 215
Security Oil Company of Texas,

20, 113
Shell Transport and Trading

Company, 147, 151, 170
Solar Refining Company (Ohio),

20, 110
Sone & Fleming Company, New

York, 224
South Improvement Company,

34, 36, 46, 48
Spectator, the, on "lobbying,"

227
Standard Oil Company, of New

Jersey, 19, 50, 135, 199

Standard Oil Company of Ne>

York, 48
,, ,, of Indiana,

134
„ „ of Ohio, 20,

29, 134

Star newspaper and the flash-
point, 225

Steana Romana, the, 169
Stone, Hon. W. A. (Governor

of Pennsylvania), 83
Suez Canal Company and the

bulk oil agitation, 158
Swedish naval engineers anc
Trust lubricants,

TANK steamers and the Suez

Canal, 158

,, wagons and retailers, 127,
166, 202, 205

Tarbell, Miss Ida M., 5, 16

Thompson, Professor Silvanus
P. (and Lord Kelvin), 213

Thomson, Captain J. H. (the
late), 229

" Three chemists' cup," the,
210

Tidewater pipe lines, 91, 120

Tramway engineers and Stand-
ard lubricants, 243

UNION Tank Line Company,

New Jersey, 22, 110
United Pipe lines, 54, 60
„ States Pipe Line, 92

254

Index

Ure, Alexander, K.C., M.P., 210,
212

VACUUM Oil Company, of Roch-
ester, 20, 21,

94
„ „ Ltd, 239 et

seq.
,, ,, of Vienna,

165

Van Buren (Mr. Archbold's son-
in-law), 142
Vanderbilt, William H., 37,

46
Vandergrift, J. J., 33

Van Syckel, Samuel (pipe line
pioneer), 131

WARDEN, W. G. (South Im-
provement Com-
pany), 36, 65
„ Frew & Co., 74, 193
Ward well, William T. (the late),

18, 198
Waters-Pierce Oil Company

(Mexico), 140
Watson, D. K., Attorney-General

of Ohio, 82, 134
,, P. H., President South
Improvement Com-
pany, 87

255

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ESTABLISHED 1852.

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