Chapter XV: Conclusion

In conclusion, gentlemen, it appears to me that there is much ground
for encouragement in the belief that your company have in their
possession a raw material from which, by simple and not expensive
process, they may manufacture very valuable products.

It is worthy of note that my experiments prove that nearly the
_whole_ of the raw product may be manufactured without waste, and
this solely by a well-directed process which is in practice one of
the most simple of all chemical processes.

There are suggestions of a practical nature, as to the economy of
your manufacture, when you are ready to begin operations, which I
shall be happy to make, should the company require it; meanwhile, I
remain, gentlemen,

Your obedient servant,

B. SILLIMAN, JR.,
_Professor of Chemistry in Yale College_.

NEW HAVEN, April 16, 1855.

NUMBER 2 (See page 1044)
FIRST ACT OF INCORPORATION OF THE STANDARD OIL COMPANY

_KNOW ALL MEN BY THESE PRESENTS_: That we, _John D. Rockefeller_,
_Henry M. Flagler_, _Samuel Andrews_, and _Stephen V. Harkness_, of
_Cleveland, Cuyahoga County, Ohio_, and _William Rockefeller_, of
the _City_, _County_, and _State_ of _New York_, have associated
ourselves together under the provisions of the Act of the
Legislature of the State of Ohio, entitled An Act to provide for the
creation and regulation of incorporated companies in the State of
Ohio, passed May 1, 1852, and the Acts supplementary thereto passed
April 8, 1856, and the Act to amend the last-named Act, passed
February 14, 1861, and other laws of the State of Ohio applicable
thereto, for the purpose of forming a body corporate for
manufacturing petroleum and dealing in petroleum, and its products
under the corporate name of _THE STANDARD OIL COMPANY_.

And we do certify that the purpose for which said body corporate is
formed is the manufacture of petroleum and to deal in petroleum and
its products.

That the capital stock necessary for said company, and the amount
agreed on as composing the capital stock, is the sum of _One Million
Dollars_.

That the amount of each share of capital stock is _One Hundred
Dollars_.

That the name of the place where said manufacturing establishment
shall be located for doing business is _Cleveland City, Cuyahoga
County, State of Ohio_.

That the name and style by which said manufacturing establishment
shall be known is _THE STANDARD OIL COMPANY_.

JOHN D. ROCKEFELLER,
HENRY M. FLAGLER,
SAMUEL ANDREWS,
STEPHEN V. HARKNESS,
WILLIAM ROCKEFELLER.

CLEVELAND, OHIO, January 10, 1870.

NUMBER 3 (See page 1047)
AFFIDAVIT OF JAMES H. DEVEREUX

[In the case of the Standard Oil Company _vs._ William C. Scofield
_et al._ in the Court of Common Pleas, Cuyahoga County, Ohio.]

J. H. Devereux, being first duly sworn, says that he is forty-eight
years of age, and is president of the New York, Pennsylvania and
Ohio Railroad; that in 1868 he became vice-president of the Lake
Shore Railroad, and remained in that position as well as president
and general manager till 1873. That he has heard read the statements
of Robert Hanna and George O. Baslington, in their affidavits filed
herein in respect to transportation of oil, and in regard thereto he
has to say that his experience with the oil traffic began in 1868
when he went upon the Lake Shore Railroad as vice-president,
succeeding Mr. Stone who retired from ill health; that the only
written memoranda connected with the business of the company with
which he was furnished was a book in which it was stated—probably in
Mr. Stone’s handwriting—that the representatives of the various oil
interests of Cleveland would agree to pay a rate of 1 cent. per
gallon on crude oil moved from the regions to Cleveland; that in
addition to the inevitable friction arising from the competition of
these refiners of Cleveland—probably aggregating twenty-five in
number, was the further difficulty of the patent right which the
Pennsylvania Railroad claimed to the transportation of oil, and the
peculiar differences made by them in the rates given to refiners at
Titusville, Pittsburg, and other places all thoroughly in
competition with the then very limited refining capacity of
Cleveland; that he took up the subject as to whether the Lake Shore
Railroad could hope to compete for the transportation of oil, and
the end of the matter was that the Jamestown and Franklin Railroad
was extended from Franklin to Oil City, the then centre of the
producing district, and a sharper contest than ever was produced,
growing out of the opposition of the Pennsylvania Railroad in
competition; 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, and without
exception the oil refiners of Cleveland came to affiant as a
representative of transportation, and with a single exception
expressed their fears that they would have either to abandon their
business here or move to Titusville or other points in the Oil
Regions; that the only exception to this decision was that offered
by Rockefeller, Andrews and Flagler, who on its assurance that the
Lake Shore Railroad could and would handle oil as cheaply as the
Pennsylvania Company, proposed to stand their ground at Cleveland
and fight it out on that line. That later, about 1870, the first
move was made to transport refined oil by rail regularly and
throughout the entire year from Cleveland to New York. That prior to
that time the export business from Cleveland was comparatively
limited and was confined to the summer months, most of that portion
of the traffic refined at Cleveland in competition with Pittsburg,
Titusville, and other places being shipped by lake and canal, and as
affiant remembers at a rate of about one dollar per barrel, and with
a certainty of its being reduced to ninety cents. That the rail rate
was nominally two dollars on refined oil from Cleveland to New York.
That Mr. Flagler, at this time representing Rockefeller, Andrews and
Flagler, proposed to make regular monthly shipments by rail
throughout the year provided a proper rate could be made for the
business then offered, this rate to cover transportation of crude
from the region to Cleveland, and when refined from Cleveland to New
York. Rockefeller, Andrews and Flagler being the only refiners here
who proposed to compete for the export business or offered oil for
the entire haul from the regions to Cleveland and thence to New
York; that Mr. Flagler’s proposition was to assure to the Lake Shore
Railroad sixty carloads of refined oil per day[83] from Cleveland to
New York at a rate of $1.75 per barrel from the regions to New York,
being thirty-five cents per barrel for crude from the regions to
Cleveland and $1.30 per barrel for refined from Cleveland to New
York; and Rockefeller, Andrews and Flagler were to assume all risk
and losses from fire or other accidents. That affiant took this
proposition into consideration and made careful computation of the
cost of this transportation to the railroad, which cost is the
proper basis in fixing the rate to be charged; that affiant found
that the then average time for a round trip from Cleveland to New
York for a freight car was thirty days; to carry sixty cars per day
would require 1,800 cars at an average cost of $500 each, making an
investment of $900,000 necessary to do this business, as the
ordinary freight business had to be done; but affiant found that if
sixty carloads could be assured with absolute regularity each and
every day, the time for a round trip from Cleveland to New York and
return could be reduced to ten days, by moving these cars in solid
trains instead of mixing oil cars in other trains, as would be
necessary when transported in small quantities and by moving the oil
trains steadily without regard to other cars; that by thus reducing
the time to ten days for a round trip, only six hundred cars would
be necessary to do this business with an investment therefore of
only $300,000. That the regularity of the traffic would insure
promptness in the unloading and return of the cars; that upon these
considerations affiant concluded that Mr. Flagler’s proposition
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, and such proved to be pre-eminently the case; that the
proposition of Mr. Flagler was therefore accepted, and in affiant’s
judgment this was the turning-point which secured to Cleveland a
considerable portion of the export traffic. That this arrangement
was at all times open to any and all parties who would secure or
guarantee a like amount of traffic or an amount sufficient to be
treated and handled in the same speedy and economical way, the
charges for transportation being always necessarily based upon the
actual cost of the service to the railroad, and whenever any shipper
or shippers will unite to reduce the cost of transportation to the
railroad, to refuse to give them the benefit of such reduction would
be to the detriment of the public, the consumers, who in the end pay
the transportation charges. Affiant says that this legitimate and
necessary advantage of the large shipper over the smaller he
explained to Mr. Hanna and Mr. Baslington, and they recognised its
propriety, and affiant offered them the same terms if by themselves
or with others they would assure him like quantities with like
regularity, thus securing like speed and economy in transportation.
And further affiant saith not.

J. H. DEVEREUX.

Subscribed in my presence and sworn to before me this thirteenth day
of November, 1880.

J. C. CANNON,
_Notary Public in and for Said County_.

NUMBER 4 (See page 1055)
TESTIMONY OF HENRY M. FLAGLER ON THE SOUTH IMPROVEMENT COMPANY

[Proceedings in Relation to Trusts, House of Representatives, 1888.
Report Number 3112, pages 289–290.]

_A._ ... Neither of the Messrs. Rockefeller, Colonel Payne, nor
myself, nor any one connected with the Standard Oil Company, ever
had any confidence in or regard for the scheme known as the South
Improvement Company. We did not believe in it, but the view
presented by other gentlemen was pressed upon us to such an extent
that we acquiesced in it to the extent of subscribing our names to a
certain amount of the stock, which was never paid for. The company
never did a dollar’s worth of business, and never had any existence
other than its corporative existence, which it obtained through its
charter. Through its president it negotiated certain railroad
contracts, which, as I remember now, were signed by the company and
by the officers of the railroad. Those contracts were held in escrow
a few weeks and were destroyed or cancelled by mutual consent.

_Q._ Who presented these views to you gentlemen? Who was the person
that had charge of this South Improvement Company’s scheme?

_A._ I think Mr. Warden and the Messrs. Logan were the great leaders
in the South Improvement Company policy.

NUMBER 5 (See page 1062)
CONTRACT BETWEEN THE SOUTH IMPROVEMENT COMPANY AND THE PENNSYLVANIA
RAILROAD COMPANY, DATED JANUARY 18, 1872

[Proceedings in Relation to Trusts, House of Representatives, 1888.
Report Number 3112, pages 357–361.]

Agreement made and entered into this eighteenth day of January, in
the year eighteen hundred and seventy-two, by and between the South
Improvement Company, a corporation organised and existing under the
laws of the State of Pennsylvania, party hereto of the first part,
and the Pennsylvania Railroad Company, on its own behalf and on
behalf of all other railroad companies, whose roads are controlled,
owned, or leased by it, or with which it has sufficient running
arrangements, which other roads are herein described as the
connections of the said Pennsylvania Railroad Company, party hereto
of the second part.

WITNESSETH:

_Whereas_, the party hereto of the first part has been organized for
the purpose, among other things, of increasing, facilitating, and
developing the trade in and the conveyance and transportation of
petroleum and its products, and for that purpose proposes, among
other things, to expend large sums of money in the purchase,
erection, and construction of, and maintaining and conducting works
for storage, distillation, and refining, warehousing and
transportation, and in various other ways, upon the inducement,
among other things, of this contract.

_And Whereas_, the magnitude and extent of the business and
operations proposed to be carried on by the party hereto of the
first part will greatly promote the interest of the party hereto of
the second part, and make it desirable for it, by fixing certain
rates of freight, drawbacks, and rebates, and by the other
provisions of this _agreement_, to encourage the outlay proposed by
the party hereto of the first part, and to facilitate and increase
the transportation to be received from it.

_And Whereas_, it has been agreed by and between the party hereto of
the second part, for itself and its connections, the Erie Railroad
Company, for itself and its connections, and the New York Central
Railroad Company, for itself and its connections, that the business
of transporting, by railroad, crude petroleum and its products,
toward the Atlantic coast, from the points of production and
refining, on their lines of road, shall be allotted by the party
hereto of the first part, to the said three companies, in the
proposition of forty-five (45) per cent. of the whole to the
Pennsylvania Railroad Company, for itself and its connections,
including the Philadelphia and Erie Railway, the Northern Central
Railway, the Alleghany Valley Railroad, Camden and Amboy Railway,
the Pennsylvania Company, and all other railroads which are, or may
be, controlled, owned, and leased by it, or with which it has, or
may have, sufficient running arrangements; twenty-seven and a half
(27½) per cent. of the whole to the Erie Railway Company, for itself
and its connections, and twenty-seven and a half (27½) per cent. of
the whole to the New York Central Railroad Company for itself and
its connections, and that the transportation beyond Cleveland and
Pittsburg over the railroads of the said companies and their
connections, in other directions than toward the Atlantic coast,
west from said points of production and refining, shall be allotted
by the party hereto of the first part, in the proportion of
one-third thereof, to the party hereto of the second part, for
itself and its western connections, and the remainder to other
railroads.

Now, therefore, this agreement witnesseth: That the parties hereto
for themselves and their successors, in consideration of the
promises, of the mutual execution hereof, and of the mutual
advantages hereby conferred, have covenanted and agreed, and hereby
do covenant and agree each with the other, as follows:

ARTICLE FIRST

The party hereto of the first part covenants and agrees:

1. To furnish to the party hereto of the second part for
transportation, such a proportion of the crude petroleum and its
products, owned or controlled by the party hereto of the first part,
as shall give to the party hereto of the second part forty-five (45)
per cent. of all the crude petroleum and its products, sent from the
points of production and refining toward the Atlantic coast, by the
said Pennsylvania, the Erie, and the New York Central railroads and
their connections, and thirty-three and one-third (33⅓) per cent.
that which is sent west of Pittsburg and Cleveland by those
railroads and their connections.

2. To provide suitable tankage at the points where petroleum is
produced, on the railroads of the party hereto of the second part
and its connections in which to receive crude petroleum preparatory
to shipment, with the necessary pipes, pumps, racks, and other
appliances for its convenient transfer in bulk into railroad cars.

3. To deliver to the railroads of the party hereto of the second
part, and its connections, at the places of shipment, and to receive
from them, at the places of destination, all crude petroleum and its
products transported over their roads for the party of the first
part.

4. To provide at the places of destination on the seaboard,
necessary and suitable yards, wharves, warehouses, sheds, tanks,
pipes, pumps, and motive power, for the reception of petroleum and
its products, and loading vessels therewith.

5. To provide, maintain, and operate the works necessary to refine
crude petroleum upon the largest scale practicable, and with such
skill, and on such a system of organisation and division of labour,
as will secure both efficiency and economy; and for that purpose and
for the purpose of developing and increasing the petroleum trade of
the country, to provide and maintain all suitable and necessary
means and facilities.

6. To keep records of the transportation over the railroads of the
party hereto of the second part, and its connections, and so far as
it can obtain the same, over the Erie and the New York Central
railroads and their connections, of all petroleum and its products,
showing the number of barrels of forty-five gallons each in bulk,
and the number of barrels of forty-seven gallons each in barrels,
carried by each road with the points of receiving and delivery, and
the amount of freight received by each road for such transportation,
which records shall at all reasonable times be open to the
inspection of the duly constituted representatives of the party
hereto of the second part.

Monthly abstracts of all such records shall be regularly sent to the
party of the second part.

7. To pay the party of the second part weekly for all transportation
over its roads and its connections, of petroleum and its products,
such gross rates and half-rates of freight as are hereinafter
specified, less the rebates and drawbacks hereinafter provided to be
retained by the party hereto of the first part for its own use.

ARTICLE SECOND

The party hereto of the second part covenants and agrees:

1. That the party hereto of the second part will pay and allow to
the party hereto of the first part, for its own use, in all
petroleum and its products, transported over the railroads of the
party hereto of the second part and its connections, for the party
hereto of the first part, rebates, and on all transported for
others, drawbacks, at the rates hereinafter provided, except in the
case specified in Article Third.

2. To deliver to the party hereto of the first part all petroleum
and its products in packages, transportation over the railroads, of
the party hereto of the second part, and its connections, by
whomsoever shipped, and consigned to the party of the first part, at
the warehouses of the party of the first part, at the seaboard, and
inland, at the depots of the party of the second part, at the places
of destination, and to deliver all petroleum and its products, in
bulk, owned by or consigned to the said party of the first part, at
any point required on the line of the railroads, of the party of the
second part and its connections.

3. To transport and deliver petroleum and its products over the
railroads of the party of the second part and its connections, at
gross rates, which shall at no time exceed the following, without
the consent of both parties hereto.

From any point on the Oil Creek and Allegheny River Railroad to Oil
City, Union, Corry or Irvineton, which are herein designated as
_common points_, on each barrel of forty-five gallons in bulk, and
on each barrel of forty-seven gallons in barrels, thirty cents.

ON CRUDE PETROLEUM

From any common point to Cleveland, for each barrel of 45 gallons $0.80 From any common point to Pittsburg, for each barrel of 45 gallons .80 From any common point to New York, for each barrel of 45 gallons 2.56 From any common point to Philadelphia, for each barrel of 45 gallons 2.41 From any common point to Baltimore, for each barrel of 45 gallons 2.41 From any common point to Boston, for each barrel of 45 gallons 2.71

All other points, except those on the Oil Creek and Allegheny River
Railway, to the places of destination last named, the same rates as
from the _common points_.

ON REFINED OIL, BENZINE, AND OTHER PRODUCTS OF THE MANUFACTURE OF
PETROLEUM

From Pittsburg to New York, for each barrel $2.00 From Pittsburg to Philadelphia, for each barrel 1.85 From Pittsburg to Baltimore, for each barrel 1.85 From Cleveland to Boston, for each barrel 2.15 From Cleveland to New York, for each barrel 2.00 From Cleveland to Philadelphia, for each barrel 1.85 From Cleveland to Baltimore, for each barrel 1.85 From any common point to New York, for each barrel 2.92 From any common point to Philadelphia, for each barrel 2.77 From any common point to Baltimore, for each barrel 2.77 From any common point to Boston, for each barrel 3.07

From and to all points intermediate between the points aforesaid,
such reasonable rates as the party of the second part shall from
time to time establish, on both crude and refined.

From Pittsburg, Cleveland, and other points, to places west of
Pittsburg and Cleveland, such reasonable rates as the party of the
second part may deem it expedient from time to time to establish.

4. To pay and allow to the party hereto of the first part, on all
petroleum and its products, transportation for it over the railroads
of the party of the second part and its connections, the following
rebates, and on all transported for other parties, drawbacks of like
amounts, as the rebates from the gross rates, the same to be
deducted and retained by the party hereto of the first part, for its
own use from the amounts of freights, payable to the party of the
second part.

ON THE TRANSPORTATION OF CRUDE PETROLEUM

From the gross rate from any common point to Cleveland, a rebate
per barrel of $0.40
From the gross rate from any common point to Pittsburg, a rebate
per barrel of .40
From the gross rate from any common point to New York, a rebate
per barrel of 1.06
From the gross rate from any common point to Philadelphia, a
rebate per barrel of 1.06
From the gross rate from any common point to Baltimore, a rebate
per barrel of 1.06
From the gross rate from any common point to Boston, a rebate per
barrel of 1.06

From the gross rate from all other points, and the six places of
destination last named rebates the same as on the rates from the
common points.

ON THE TRANSPORTATION OF REFINED OIL, BENZINE, AND OTHER PRODUCTS OF
THE MANUFACTURE OF PETROLEUM

From the gross rates from Pittsburg to New York, a rebate per
barrel of $0.50
From the gross rates from Pittsburg to Philadelphia, a rebate per
barrel of .50
From the gross rates from Pittsburg to Baltimore, a rebate per
barrel of .50
From the gross rates from Cleveland to Boston, a rebate per
barrel of .50
From the gross rates from Cleveland to New York, a rebate per
barrel of .50
From the gross rates from Cleveland to Philadelphia, a rebate per
barrel of .50
From the gross rates from Cleveland to Baltimore, a rebate per
barrel of .50
From the gross rates from any common point to New York, a rebate
per barrel of 1.32
From the gross rates from any common point to Philadelphia, a
rebate per barrel of 1.32
From the gross rates from any common point to Baltimore, a rebate
per barrel of 1.32
From the gross rates from any common point to Boston, a rebate
per barrel of 1.32

From the gross rates to and from all points, intermediate between
the above points, a rebate or drawback of one-third of the gross
rate, shall be paid.

From the gross rates from Pittsburg, Cleveland, and other points, to
places west of the meridians of Pittsburg and Cleveland, a rebate or
drawback of one-third of the gross rate shall be paid.

5. To charge to all other parties (excepting such as are referred to
in Article 3d) for the transportation of petroleum and its products,
rates which shall not be less than the gross rates above specified,
and should at any time any less rate be charged, directly or
indirectly, either by way of rebate, commission, allowances, or upon
any pretext whatsoever, the same reduction per barrel shall be made
to the party hereto of the first part, from the net rates provided
for them, on all transportation for them during the period for which
such reduction shall be made to others.

6. To permit the party hereto of the first part, if, in its
judgment, the currents of trade should so require, temporarily to
increase or diminish the proportion, as herein provided to the party
hereto of the second part, for itself and its connections, as the
whole business of transporting petroleum and its products, as
between the party hereto of the second part, the Erie Railway
Company and the New York Central Railroad Company. The party of the
second part in such case, to receive from the party hereto of the
first part, in full payment or indemnity, for the excess or
deficiency, one-half the net schedule rates on such excess or
deficiency; the other half to be paid _pro rata_ to the said other
companies, whose apportioned quantity of transportation shall thus
be varied; but such diversion of business shall not, at any time,
exceed one week, nor be repeated without an interval of at least
sixty days, unless with the consent of the party hereto of the
second part. Also, that whenever from time to time, as aforesaid, a
temporary diversion of a part of the apportioned transportation of
the party of the second part, to the other railroads aforesaid, or
to either of them, shall become necessary, cars of the party of the
second part may be loaded by the party of the first part, and sent
away over such other railroads, or either of them, but the cars so
sent away shall be returned without unnecessary delay, and in as
good order as when taken to the railroads of the party of the second
part, and mileage at the usual rates paid for their use while
absent.

7. To furnish with as much regularity as possible, at all times,
good and sufficient cars, and other means suitable and necessary for
the safe and prompt transportation of all crude petroleum and its
products, either in bulk or in barrels, which the party hereto of
the first part shall desire to send from one point to another (and
which shall be supplied with as much regularity as possible), on or
over the railroads of the party of the second part and its
connections.

8. To make manifests or way-bills of all petroleum or its products,
transported over any portion of the railroads of the party of the
second part or its connections, 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, and to send daily to the principal office of the party of
the first part, duplicates of all such manifests or way-bills.

ARTICLE THIRD

And it is hereby further covenanted and agreed by and between the
parties hereto, that the rebates hereinbefore provided for the party
hereto of the first part, 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 party
hereto of the first part.

ARTICLE FOURTH

And it is hereby further covenanted and agreed by and between the
parties hereto, that the party hereto of the second part shall at
all times co-operate, as far as it legally may, with the party
hereto of the first part, to maintain the business of the party
hereto of the first part, against loss or injury by competition, to
the end that the party hereto of the first part 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 the party of the first part to be
varied _pari passu_ with the gross rates.

ARTICLE FIFTH

It is hereby mutually agreed by and between the parties hereto that
for the purpose of meeting such exigencies as may from time to time
require change of the rates of transportation herein provided, each
party, on ten days’ written notice from the other, shall appoint a
person on behalf of such party, and the two persons thus appointed,
shall have power to change and adjust the rates, which shall go into
effect on being approved by the said parties hereto.

ARTICLE SIXTH

It is further mutually agreed by and between the parties hereto that
the gross rates of freight to the party hereto of the first part
shall at all times be kept as near to the net rates as is consistent
with the interests of the party hereto of the first part, and that
whenever in the judgment of the party hereto of the first part it is
expedient to lower the rebate below the rate above specified, it may
do so, and from time to time raise the same again, not, however,
above the rate hereinbefore specified. The party hereto of the first
part, from time to time shall notify the party of the second part in
writing of the change required, whereupon the party hereto of the
second part shall forthwith make a corresponding change of such
gross rates.

ARTICLE SEVENTH

It is further mutually agreed by and between the parties hereto,
that this agreement shall continue and remain in force for the
period of not less than five years, and shall not then, nor
thereafter terminate, until one of the parties shall have given
twelve months’ written notice to terminate it.

ARTICLE EIGHTH

It is further mutually agreed by and between the parties hereto,
that if any doubt, question, difference, cause, or suit shall at any
time or times, hereafter, arise or happen between the said parties
to these presents, touching the construction of these presents, or
any clause, matter, or thing herein contained, or any other matters,
cause, or thing whatsoever, in any wise relating to or concerning
this agreement, and such doubt, question, difference, or dispute,
shall not be fully settled by the parties to these presents within
one calendar month after the same shall arise, then, in every such
case, upon the request in writing of either of the said parties
hereto, specifying such doubt, question, difference, or dispute, it
shall be committed and referred to the hearing and arbitration of
three disinterested persons; one of them to be chosen by the party
of the first part, another of them to be chosen by the party of the
second part, and each party on ten days’ notice in writing from the
other, shall make such choice, and appoint a disinterested person in
behalf of such party, but, if either party on such notice shall
within such ten days fail to make an appointment, the person
appointed by the other party shall choose the second disinterested
person, and the third disinterested person shall be chosen within
one calendar month next after such request; and the award, order, or
determination of the said three persons, to be chosen as aforesaid,
or any two of them, shall be binding and conclusive on the parties
hereto, and shall be performed and kept by them, without any further
suit or trouble whatsoever; provided such award, order, or
determination, be made in writing, under the hands of the said three
persons, or of any two of them, within the space of sixty days after
all the persons shall be so selected, as aforesaid. And for the
further and better enforcing the performance of the award, so to be
made, as aforesaid, the reference or submission for or in respect of
the same, may, at the option of any of the parties to these
presents, from time to time be made as a matter of course, a rule of
court in any court of record.

In witness whereof, the said South Improvement Company and
Pennsylvania Railroad Company have caused their respective corporate
seals to be hereto affixed, and these presents to be subscribed by
their respective presidents, the day and year first above written.

[SEAL]

SOUTH IMPROVEMENT COMPANY.
By P. H. WATSON,
_President_.

[SEAL]

PENNSYLVANIA RAILROAD COMPANY.
By J. EDGAR THOMPSON,
_President_.

Attest: JOSEPH LESLEY, _Secretary_.

NUMBER 6 (See page 1063)
STANDARD OIL COMPANY’S APPLICATION FOR INCREASE OF CAPITAL STOCK TO
$2,500,000 IN 1872

_To the Secretary of the State of Ohio_:

The undersigned, being a majority of the Board of Directors of _THE
STANDARD OIL COMPANY OF CLEVELAND, OHIO_, do hereby certify that on
the first day of January, A.D. 1872, at the annual meeting of the
stockholders of said company held at its office in Cleveland,
Cuyahoga County, Ohio, by a vote then and there taken, all the
stockholders of said company being present and voting therefor, it
was resolved and agreed by each and all of them, that the capital
stock of said company be increased the sum of _One Million Five
Hundred Thousand Dollars_, thereby making the capital stock of said
company _Two Millions Five Hundred Thousand Dollars_, which action
of the stockholders was as follows, to wit:

_Resolved_, and it is hereby agreed by each and all of us, that the
capital stock of this company, namely, _The Standard Oil Company of
Cleveland, Ohio_, be increased to the sum of _Two Millions Five
Hundred Thousand Dollars_, and it is also agreed, and the proper
officers of the company are hereby instructed to take the requisite
steps to so increase said capital stock.

JOHN D. ROCKEFELLER, O. B. JENNINGS, B. BREWSTER, WILLIAM
ROCKEFELLER, S. V. HARKNESS, H. M. FLAGLER, T. P. HANDY, S.
ANDREWS, A. STONE, JR., S. WITT, _Stockholders_.

_Cleveland, O., January 1st_, A.D. _1872._

_And afterward said meeting was adjourned._ HENRY M. FLAGLER,
_Secretary_.

And we further certify that the whole amount of such increase of
capital stock has been paid to said company, in money, that no note,
bill, bond, or other security has been taken for the same, or any
part thereof, and that the credit of the company has not been used
directly or indirectly to raise funds to pay the same or any part
thereof.

_IN WITNESS WHEREOF_, We hereunto set our names at _Cleveland,
Ohio_, this ninth day of February, A.D. 1872.

JOHN D. ROCKEFELLER, HENRY M. FLAGLER, SAMUEL ANDREWS, STEPHEN V.
HARKNESS, _Directors_.

NUMBER 7 (See page 1067)
AFFIDAVITS OF GEORGE O. BASLINGTON

[In the case of the Standard Oil Company _vs._ William C. Scofield,
_et al._, in the Court of Common Pleas, Cuyahoga County, Ohio.]

In the spring of 1869, they (Hanna, Baslington & Company) began the
construction of refining works just above the Atlantic depot on the
west side of the Cleveland and Columbus Railroad track, and invested
in the construction of the works about $67,000, which works were
completed so as to commence the refining business about the first of
June, 1869, and from that time up to about the first of July, 1870,
the works had netted a profit of $40,000 over all expenses of
running said works, being about 60 per cent. on the capital invested
per annum, and from that time on up to the first of April, 1872,
said firm cleared $21,000, being about 30 per cent. per annum on the
investment from the time that said firm commenced business.

Some time in February, 1872, the firm received a message from the
Standard Oil Company requesting said firm to have an interview as to
the disposal of the refining works of said firm; that they were
indisposed to enter into any arrangement for the disposition of said
works because the investment of capital in said works had proved
abundantly profitable to their satisfaction and they had no
disposition whatever to part with the works; but upon investigation
they were somewhat surprised to find that the Standard Oil Company
had already obtained the substantial control of the different
refineries in the City of Cleveland; that it had obtained such rates
of transportation of crude and refined oil from the different
railroads that it was impossible for them to compete with it, and
upon an interview which was had by Mr. Hanna and affiant with Mr.
Rockefeller who was at the time president of the Standard Oil
Company. Mr. Flagler, the secretary of the company, being present,
Mr. Rockefeller in substance declared or said that the Standard Oil
Company had such control of the refining business already in the
City of Cleveland that he thought said firm of Hanna, Baslington &
Company could not make any money; that there was no use for them to
attempt to do business in competition with the Standard Oil Company.

Affiant further says that after having had an interview both with
Mr. Watson, who was the president of a company called “The South
Improvement Company,” and Mr. Devereux, who was the general manager
of the Lake Shore Road, he became satisfied that no arrangement
whatever could be effected through which transportation could at
least be obtained on the Lake Shore Road that would enable their
firm to compete with the Standard Oil Company, the works of said
Hanna, Baslington & Company, being so situated that they could only
obtain their crude oil through the line of the Lake Shore Road. And
finding that the Standard Oil Company had such special rates of
transportation that unless the firm of Hanna, Baslington & Company
were enabled to bring as much oil as the Standard Oil Company, that
it was impossible for said firm of Hanna, Baslington & Company to
obtain a fair competing rate with the Standard Oil Company. They at
least came to the conclusion that it was better for them to take
what they could get from the Standard Oil Company and let their
works go.

And affiant further says that under these circumstances they sold
their works to the Standard Oil Company, which were on the day of
the sale worth at least $100,000, for $45,000 because that was all
they could obtain from them, and works too which in cash cost them
not less than $76,000, and which with a fair competition would have
paid them an income of not less than 30 per cent. per annum on the
investment.

Affiant further says that at the interviews which he had with Mr.
Rockefeller, Mr. Rockefeller told him that the Standard Oil Company
already had control of all the large refineries in the City of
Cleveland and there was no use for them to undertake to compete
against the Standard Oil Company, for it would only ultimate in
their being wiped out, or language to that effect.—(November 1,
1880.)

* * * * *

George O. Baslington being duly sworn (November 12, 1880) says: That
the firm of Hanna, Baslington & Company, the first year they were in
business, made profit amounting to a little less than $40,000 and
from the end of the first year up to the time of the sale to the
Standard Oil Company they made no profit at all. At the time of the
sale the firm reserved the privilege of running the works to close
up and run them up to about April 1, 1872, and during that time they
made profit to the amount of about $21,000. At the time my former
affidavit was drawn by Mr. Tyler, I stated these facts to him.

In the sale of the works to the Standard Oil Company we were given
the option to take cash or to take stock in the Standard Oil Company
at par. We decided to and did take cash, and one reason that
influenced us to take cash was that we were fearful that refining
oil at Cleveland might not be successful, and if so, the cash was
better than the stock, and affiant wanted the cash to enable him to
embark in other pursuits.

NUMBER 8 (See page 1072)
ORGANISATION OF THE PETROLEUM PRODUCERS’ UNION OF 1872

[From “A History of the Rise and Fall of the South Improvement
Company,” pages 8–10.]

1. The territory forming the Pennsylvania petroleum field shall be
divided into sixteen districts....

2. The producers in each district shall meet at some convenient
place and choose one or more (not to exceed five) men, from their
own number, through whose hands they shall pledge themselves to sell
all their crude oil.

3. It shall be the duty of these committeemen to sell the crude oil
coming into their hands: First, to the local refiners; second, to
the agents of the refiners located in distant cities, as may be
designated by the executive committee; and third, to such shippers,
dealers, and exporters as may be named by the executive committee,
and it shall be the further duty of said local committeemen to keep
the executive committee fully posted as to what is being done in
their respective districts with reference to the sale and removal of
all crude oil.

4. There shall be an executive committee composed of members of the
Petroleum Producers’ Union, to consist of one from each of the
sixteen districts, to be chosen by the local committee, whose duty
it shall be to meet from time to time, and take all necessary
measures to fully carry out this plan in all its details.

5. That for the purpose of paying the expenses of this committee,
one cent a barrel on all the crude oil shall be levied, collected,
and paid over by the local committeemen to the executive committee,
of which the executive committee shall keep an account to be
rendered to the producers at a future meeting.

6. It shall be the especial duty of the executive committee to take
such measures as they may find necessary to secure uniform mileage
rates of freights on all oil and merchandise of every kind, to and
from the Oil Region, and employ all lawful measures for the
abolition of the railway system of rebates or drawbacks.

PLEDGE

“I do hereby agree to sell all my production of oil through, or with
the consent of, the committee of the Petroleum Producers’ Union.”

_First._—That an organisation shall be immediately formed for the
exclusive purpose of advancing money to producers upon their
depositing proper Tank or Pipe Company receipts therefor with the
organisation or its agency.

_Second._—That the name of the organisation shall be the “PRODUCERS’
PROTECTIVE ASSOCIATION.”

_Third._—That its capital shall be one million dollars, with power
in the directors to increase it to such an amount as in their
judgment shall be necessary to accomplish the objects of the
organisation.

_Fourth._—That its headquarters shall be in Oil City, and its
co-operative agencies shall be located at all principal producing
points.

_Fifth._—That its stock shall be divided into shares of $100 each,
which stock shall be transferable only upon the books of the company
at its headquarters, with the consent of the board of directors.

_Sixth._—That the chairman of the general committee be requested to
appoint one person in each of the sixteen producing districts, who
shall open books to receive, and every producer, manufacturer, or
other party, directly or indirectly interested in our home
industries be invited to subscribe to the capital stock of this
organisation not exceeding fifty shares, or such part thereof as he
shall elect, and no person shall, at any time hold more than said
number of shares.

_Seventh._—That when the sum of one million dollars shall have been
subscribed and ten per cent. thereof paid to five trustees to be
appointed by the chairman of the general committee, the said
chairman shall give notice of an election of officers, who shall be
elected by the votes of the subscribers, each share being entitled
to a vote.

_Eighth._—That said officers shall consist of a president,
vice-president, and such a number of directors as shall give each
district a fair presentation.

_Ninth._—That the board of directors shall appoint some bank or
banker in each district its co-operative agency; or in the absence
of a bank or bankers such agencies be established as shall be most
convenient for the producer, which bank or agency shall, as
necessity requires, by draft or otherwise, obtain its funds from the
headquarters of the company, and be held strictly accountable
therefor.

_Tenth._—That every producer shall be entitled to go to his most
convenient agency, and deposit his certificate or receipt for oil,
which shall be passed to his credit, and he shall receive such an
advance thereof as the board of directors in their discretion shall
deem prudent to make.

_Eleventh._—That the association shall from time to time sell the
oil belonging to it, or held as security for advances overdue in
such quantities and at such prices as legitimate demand will justify
said prices to be daily telegraphed from headquarters to the several
agencies.

_Twelfth._—That every producer depositing oil in the hands of the
association on which no advance is made, may, if he so elect, have
his oil held until such time as he shall direct its sale, and that
the appropriation of oils sold from day to day shall be as follows:
First, all oils ordered sold by its owner, and the balance _pro
rata_ on oils on which advances have been made and shall then be
overdue.

_Thirteenth._—The association shall charge a reasonable rate of
interest on all advances made, such interest to be used in defraying
the expenses of the association and the surplus, if any, shall be
declared as dividends upon the full paid stock. That any surplus
stock remaining in the hands of the association shall be the
property of the association until taken and paid for by some party
entitled thereto under the foregoing provisions, but always at par.

_Fourteenth._—When the producers of each district shall have
appointed their committees, as provided in the second section of the
Producers’ Union, and have elected their chairman, he is requested
to send to the chairman of the general committee the names thereof.

_Fifteenth._—And it shall be the duty of the person appointed by the
general committee, as provided in section five, to use due diligence
in the circulation thereof, for subscriptions, and within one week
from the receipt thereof, he shall collect the ten per cent. of each
subscription, as provided by section seventh, and report the same to
the chairman of the general committee, together with a list of the
subscribers and the amount subscribed.

NUMBER 9 (See page 1078)
CHARTER OF THE SOUTH IMPROVEMENT COMPANY

[From The Laws of Pennsylvania for 1872.]

An Act to incorporate the South Improvement Company: