Chapter VIII: The Standard’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 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 persistency 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 Standard’s manager at Albany, had some important 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 Binghamton, 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 storekeepers 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 Worcester 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 manœuvre 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 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 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 Starks’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 commercial success has been in part due to the various new technical processes and other improvements which it has introduced--to the benefit alike of the trade and the consumer. 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 magazines, 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 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 purposes. He patented his process, and by it increased the sale of the Downer Works’ lubricating 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 coal shales.

_Q._ Now, in the matter of a great many of these by-products, the
independent refineries, so called, have done the same as 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--a 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 of 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 by the Downer Manufacturing
Company, of Boston?

_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 combination or interests
got hold of it?

_A._ It may have been. I could not say.

_Q._ 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 Standard 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 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 liquidation 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 discriminations, and condemned on August 3, 1907, to pay a fine of $29,240,000 (£5,848,000). This 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.

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. ROCKEFELLER _in_ “_Random Reminiscences_.”