Chapter XIX: Section 1: Be it enacted by the Senate and House of Representatives (3)

V. There shall be an advisory board to consist of one member elected
by each local association and approved by the Council. The members
of the advisory board shall be admitted to the meetings of the board
of directors and shall be entitled to all the privileges of
directors, except that of voting. Any member of the advisory board
may be removed for any abuse of his trust, or for official
misconduct, by a vote of three-fourths of the Council at a regular
meeting.

VI. The local associations may appoint committees to solicit and
receive subscriptions to the capital stock; they may also appoint
responsible trustees to receive payments on account of such
subscriptions, to whom the subscribers shall pay at least ten per
cent. upon their subscriptions at the time of subscribing. The
committees of the local associations shall advise the president of
the Council, from day to day, of the amount of subscriptions
received by them, and whenever the sum of at least one million
dollars shall have been subscribed in good faith, and approved by
the Council, and the organisation of the Agency legally completed,
subscribers shall be notified to hold an election of directors. The
directors shall, as soon as practicable after their election,
proceed to elect a president, secretary and treasurer. The trustees,
appointed by the local associations to receive subscriptions, shall
thereupon be required to pay over to the Agency the amounts received
by them on account of subscriptions to the capital stock. The Agency
shall not be responsible for any subscriptions paid to the trustees
appointed by the local associations until the same shall have been
paid over to the Agency or its authorised representatives.

Subscriptions to the capital stock may be received, payable in oil
at five dollars per barrel, delivered on the cars or in the tanks of
the Agency at any sub-agency on the line of the railways; provided,
however, that no certificate of stock shall be issued in any case in
which payment is made in pipe-line receipts until the oil shall have
actually been received upon the order by the Agency or its agents.
But a special guaranty of the order shall be required from the
subscriber with an agreement that the stock shall be retained as
security for the delivery of the oil on demand, and the demand shall
be made within thirty days after the order for the oil is received
by the Agency.

VII. Members of the Petroleum Producers’ Association shall sell
their oil only to the Agency. The Agency shall purchase all the oil
offered by members of the Association and shall pay therefor at
least five dollars per barrel for oil of standard grade, and for the
heavy oil of the fifth district. Payment for oil purchased shall be
made as follows: If the market will take the entire supply as fast
as offered, the full market price shall be paid in cash on delivery;
but if the board of directors, or the Council, shall determine that
the oil daily offered to the Agency is in excess of the demand, the
Agency shall pay three dollars in cash and give the seller a
certificate entitling him to the net proceeds of the oil when sold,
less the amount advanced thereon.

VIII. The Agency shall sell no oil for a less price than five
dollars in cash, on delivery per barrel without the consent of the
Council of the Petroleum Producers’ Association.

IX. To the redemption of the certificates, on and after the tenth of
the month succeeding that in which they were issued, shall be
applied the proceeds of all the oil sold and delivered during that
month, less the amount advanced and the amount required to tank the
surplus oil. For the unpaid balance of the certificate the holder
shall, upon the surrender of the same, be entitled to a tank receipt
representing his interest in the amount of surplus oil in store and
tankage.

X. The Agency shall be entitled to receive for buying and selling
the oil such commissions per barrel as the Council may allow,
applicable first to the payment of expenses, second to the payment
of dividends on the capital stock, which shall be six per cent.
semi-annually, free of taxes.

XI. All the net proceeds of surplus oil sold shall be applied
specifically to the redemption of the tank receipts at their value,
the surrender of which shall be at the option of the holder.

XII. The Agency shall establish sub-agencies at such points within
the oil-producing district for the receipt, storage, and shipment of
oil as may be necessary to facilitate the convenient and economical
transaction of the business of the region, subject to the approval
of the Council.

XIII. The Agency shall provide all storage necessary to hold the oil
on sale and the surplus oil in store.

XIV. The price on the cars of oil of the standard grade shall be
uniform at all the sub-agencies on the line of the railways within
the oil-producing district, provided it be practicable to so arrange
with the railroads.

XV. A barrel shall be uniformly forty-two gallons.

XVI. Whenever the production of petroleum shall be permanently in
excess of the demand the Council of the Petroleum Producers’
Association shall determine at what time the production shall be
restrained and shall take such measures as may be practicable,
necessary, and lawful to prevent the drilling of oil wells, but it
shall confine its orders, so far as practicable to preventing the
starting of new wells, allowing those already in process of drilling
to be completed.

XVII. Whenever in the opinion of the board of directors it may be
advisable they may, subject to the approval of the Council, provide
such refining capacity as may be required to maintain the highest
price for crude petroleum consistent with the consumptive demand.

XVIII. The Agency shall not at any time sell to, or contract with,
or make any arrangement whatever, with any individual, organisation,
combination, or association, by which they may have a monopoly,
inside rate, advantage or preference over, or to the prejudice of,
any present or future competitor for the purchase of the crude oil
coming into, or passing through its hands; provided, that nothing in
this section shall be so construed as to prevent the Agency, with
the sanction of the Council, from making such temporary
discrimination as may be necessary for the purpose of protecting or
promoting the interests of producers by securing higher prices for
crude oil, increased consumption of refined oil, or decreased
margins between the price of crude and refined oil.

XIX. The Agency, with the approval of the Council, may take such
measures as may be expedient to increase the consumption of
petroleum by securing its application to new uses.

XX. The Agency shall publish daily a correct statement showing the
amount of oil purchased, the oil sold, and oil placed in store
during the day; also showing the points at which the same was done
and the amounts at the time in store at the various sub-agencies;
also the destination of the oil sold.

XXI. The Agency shall publish tri-monthly, full and complete reports
of all its transactions and showing its condition at the date of the
report; the correctness of the report shall be verified in such
manner as may be prescribed by the Council.

XXII. A committee may be appointed by the board of directors, or by
the Council of the Petroleum Producers’ Association, at any meeting,
for the purpose of investigating the condition and management of the
affairs of the Agency; and it shall be the right and duty of such
committee, duly appointed, to thoroughly investigate everything
affecting the interest of the Agency, to examine its books, accounts
and vouchers; its safes, vaults and tanks; and to make a true and
faithful report of the condition and management of the affairs of
the Agency as they may be found, which report shall be published at
the expense of the organisation which appointed the committee. It
shall be the duty of the Council to see that such committee is
appointed and such examination and report made and published at
least once in every year.

XXIII. The Agency shall establish a bureau of statistics and
information, which shall carefully collect and publish facts,
relating to the business of producing, refining, marketing and the
consumption of oil. The rooms of the bureau shall at all times be
open to the members of the Petroleum Producers’ Association, and the
Agency shall hold itself open for daily communications by telegraph
with local associations.

NUMBER 17 (See page 1123)
CONTRACT BETWEEN PETROLEUM PRODUCERS’ ASSOCIATION AND PETROLEUM
REFINERS’ ASSOCIATION

[From the Oil City Derrick.]

The contract between the producers and refiners read as follows:

_Whereas_, The necessities of trade call for co-operation between
the producers and refiners of oil, for purposes of mutual
protection:

_Therefore_, We, the undersigned, representing the Petroleum
Producers’ Association and the Petroleum Refiners’ Association,
hereby enter into the following articles of agreement, which
stipulate as follows:

_First._—Each of the two associations hereby agrees to appoint a
representative committee, which committee shall meet together
weekly, or as often as may be necessary, and at such places as they
may determine.

It shall be the duty of these committees (so far as in their power
lies) to see that the provisions of this agreement are executed in
good faith, and to discharge such duties as are devolved upon them
by this agreement, and in general (within the limitation of their
authority) to act for the mutual advantage of the trade, whose
interests it is the purpose of this agreement to secure.

_Second._—The Producers’ Association shall appoint a comptroller,
who shall have the right to examine the books of the Refiners’
Association, and its daily reports so far as they relate to the
purchase, sale, and shipments of crude and refined oil, and who,
together with the auditor of the Refiners’ Association, shall make
joint reports daily to both associations.

The Refiners’ Association shall appoint a comptroller, who shall
have the right to examine the books of the Producers’ Association
and its agencies, and their daily reports, so far as they relate to
the purchase, sale, and shipments of crude and refined oil, and who,
together with the secretary of the Producers’ Association, shall
make joint reports daily to both associations of all sales and
shipments.

_Third._—Each association agrees that it will keep accurate books of
account, which shall show all purchases, sales, and shipments of
crude and refined oil, which shall also be open at all reasonable
hours to the inspection and examination of the authorised agents of
each association, as hereinbefore provided.

_Fourth._—The Refiners’ Association agrees to admit all existing
refiners to membership, and to a participation in the future
benefits of the association on equal terms with present members, and
the Producers’ Association agrees to allow all producers to join its
association on the same terms with the present members.

_Fifth._—The Producers’ Association agrees to sell (through its
regular appointed agencies) crude oil exclusively to the Refiners’
Association and its members, and the Refiners’ Association and its
members agree to purchase crude oil exclusively of the Producers’
Association or its appointed agents.

_Sixth._—The Producers’ Association agrees that all producers
enjoying the benefits of this contract shall be required to bind
themselves to sell their oil exclusively through the Producers’
Association.

_Seventh._—The Refiners’ Association and its members agree that they
will not until after sixty (60) days from the date of this contract
sell any portion of the crude or refined oil now held by them,
except so far as they shall have previously purchased the equivalent
of crude oil to take the place of the oil so sold.

They further agree to buy from the Producers’ Association daily such
quantities of crude oil as the markets of the world may take of
them, the same to be determined from time to time by the
representative committees herein provided for.

_Eighth._—The price of crude oil so purchased and sold to be
conditionally five dollars per barrel of forty-two gallons each, at
“common points,” payment to be made as follows:

When refined oil is sold in New York at twenty-six cents per gallon,
no additional amount is to be paid; but for every one cent per
gallon of advance in the average price of sales of refined oil in
New York, twenty-five cents per barrel shall be added to the price
of so much crude oil as shall be the equivalent of refined oil sold
at such advance until the price reaches five dollars per barrel. A
proportionate addition to the average price of crude oil shall be
paid for each fraction of one cent per gallon increase in the
average price of sales of refined oil at New York, by members of the
Refiners’ Association.

The price of refined oil in New York and of crude oil at common
points to be adjusted by the representative committee herein
provided to be appointed.

_Ninth._—The representative committees may at any time, when it may
be necessary to do so, reduce the prices of crude and refined oils
below the minimum or advance them above the maximum prices above
named, the increase and reduction in price and the cash payments on
crude oil to be determined by said committees.

_Tenth._—Settlements to be made to the end of each calendar month
and balances to be paid not later than the fifth of the succeeding
month.

_Eleventh._—The profits on all crude oil sold for export by members
of the Refiners’ Association shall be credited to the Producers’
Association in the next succeeding regular monthly settlement after
delivery of said oil.

_Twelfth._—Either association may discontinue this agreement at any
time by giving to the president of the other association ten (10)
days’ notice in writing of its purpose to do so.

_Thirteenth._—This agreement to remain in full force and effect for
and during the term of five years from this date, unless sooner
terminated in the manner provided in section twelve (12) of this
agreement.

_Fourteenth._—Amendments and alterations may be made at any time by
the representative committees, subject to the approval of the
respective associations.

In testimony whereof, the Petroleum Producers’ Association, by its
executive committee, and the Petroleum Refiners’ Association, by its
president and secretary, have hereunto set their hands this
nineteenth day of December, A.D. 1872, in the City of New York.

Petroleum Producers’ Association, by C. V. CULVER, A. H. BRONSON,
SAMUEL Q. BROWN, WILLIAM PARKER, B. B. CAMPBELL, _Executive
Committee_.

Petroleum Refiners’ Association, by JOHN D. ROCKEFELLER,
_President_.

NUMBER 18 (See page 1132)
TESTIMONY OF GEORGE R. BLANCHARD ON REBATES GRANTED BY THE ERIE RAILROAD

[Report of the Special Committee on Railroads, New York Assembly,
1879. Volume III, pages 3393–3395.]

October 1, 1872, when I first became general freight agent of the
Erie Railroad, no oil was produced in the Bradford District, and all
petroleum then transported by the Erie Railway eastward came from
the Atlantic and Great Western Railroad. At that time, Adnah
Neyhart, of Tidioute, Pennsylvania, represented by W. T. Scheide,
afterwards by H. C. Ohlen at New York, shipped small quantities of
refined oil, for which he received a rebate of over $7,000 on his
shipments for the prior month, to wit, September, 1872.... I looked
for the reasons, and found the agreement next prior to that time as
to shipments and rates was the one already in evidence between
producers, shippers, refiners and railroad companies, dated March
25, 1872; I asked why that contract was not observed, and was then
convinced in reply that the agreement of March 25 lasted less than
two weeks, and that at that early date the Empire Line was receiving
a large drawback or commission from the Pennsylvania Railroad, which
was either being shared with its shippers or an additional amount
was being allowed to them, besides that which the Empire Line itself
received from the Pennsylvania system; and as the Empire Line also
owned the Union Pipe Line, its shippers had advantages which our
company and its shippers did not even jointly possess. At the close
of that calendar year (1872), the entire petroleum traffic for the
five months of the administration of President Watson, the former
president of the South Improvement Company, to January 1, 1873, was
but 265,853 barrels, or but about 53,000 barrels per month; while
the Pennsylvania Railroad was carrying about six times as much, or
300,000 barrels per month, and the New York Central was carrying the
entire refined oil sent from Cleveland to New York. The
representations then made to me also convinced the Atlantic and
Great Western Company as to what our rivals were doing, and that
railway company and our own decided to continue to pay the
twenty-four cents per barrel drawback then being paid on the rate of
$1.35 provided by this producers’ agreement of March 25, 1872.

It is therefore clear that one of the largest of the shippers, who
signed that March agreement, did not feel that it bound him to pay
the rates he had agreed to pay, and he gave convincing reasons to
believe that others, signers and parties to that agreement, did not
pay them, and possessed equal or greater advantages by way of rival
routes. Early in 1873 Mr. Scheide came to our line with Mr.
Neyhart’s crude business, under the circumstances Mr. Scheide has
stated, but being yet without any shippers of refined oil, and
believing that the Empire Line would pay a rebate on refined, as I
now know from Mr. Scheide’s testimony, they had paid Mr. Scheide on
crude, I opened negotiations to increase our traffic, which resulted
in an agreement, with the concurrence of the Atlantic and Great
Western, as follows:

ERIE RAILWAY COMPANY,
OFFICE OF SECOND VICE-PRESIDENT.

NEW YORK, March 29, 1873.

MEMORANDUM

Between John D. Archbold, Mr. Bennett, and Mr. Porter, and Mr.
Osborn, and self. Rate for March, 1873, to be 132½ from Union.
Rate thereafter to be 125 from same point as the maximum for
1873. If the common point rate is made from Titusville at any
time in 1873, on _bona fide_ shipments, Erie and Atlantic and
Great Western will make same rate from same date. With this rate
the refiners agree to give us their entire product to New York
for the year, and the preference always at same rate as actual
shipment by other lines.

(Signed) JOHN D. ARCHBOLD.
G. R. BLANCHARD.

This Mr. Bennett was also one of the signers to the agreement of
March 25, as a refiner, and from these gentlemen I also learned at
that time that this producers’ agreement was exploded by the action
of the Producers’ Union before that time.

Notwithstanding this agreement of March 29, 1873, with its reduced
rates, its signers left us in November, 1873, and gave the Empire
Line their entire shipments; and we were then left with but one
small shipper of refined oil, Mr. G. Heye, whose consignments were
small, and to retain even this small business, against similar
solicitations by our rivals we were compelled to make his rate $1.10
in November, 1873, instead of $1.50, as provided by this producers’
agreement.

These facts effectually refute the testimony of Mr. Patterson that
the agreement of March 25 continued for two years, or any other
period beyond three weeks, at the rates it stipulated, and show that
at least two of its signers did not feel bound to pay the rates it
named, and that they and others by other lines endeavoured
immediately after it was signed to obtain, and did secure reduced
rates, as usual before its execution and peddled their oil among
different railroads wherever they could secure an advantage, however
small, over each other or the railroads.

NUMBER 19 (See page 1133)
TESTIMONY OF W. T. SCHEIDE

[Report of the Special Committee on Railroads, New York Assembly,
1879. Volume III, pages 2774–2777.]

_Q._ Why were you shipping over the Pennsylvania road and not over
the Erie?

_A._ For the reason that the Pennsylvania was most eligibly situated
for our purposes.

_Q._ How did you come, then, to ship over the Erie at all?

_A._ We came to ship over the Erie because of what we considered
very bad treatment on the part of the Pennsylvania Railroad.

_Q._ What was that bad treatment that you received at the hands of
the Pennsylvania road?

_A._ It consisted, principally, in a discrimination against us in
furnishing us with cars.

_Q._ They refused you transportation?

_A._ Yes, sir.

_Q._ Were they refusing you transportation in the interest of the
combination?

_A._ In the interest of a peculiar idea that they had, that all
shippers should be placed upon the same basis.

_Q._ And in consequence of that peculiar idea, they gave to other
shippers transportation and did not give it to you?

_A._ Yes, sir.

_Q._ And that was the practical way in which that corporation
carried out that idea?

_A._ Yes, sir; you will allow me to explain, please?

_Q._ Yes; go on.

_A._ The oil business differs from other business in this, that it
is a daily crop; there is a certain amount of oil produced that has
to be shipped every day; the consumption, however, is not equal to
the daily production of our trade; the consumption varies and the
demand varies; the consequence is that there are seasons of the year
when a man engaged in shipping oil ships oil really at a loss
because there is no demand for it, and there are other seasons when
there is a large profit; now the Pennsylvania Railroad always
insisted upon having a large number of shippers; this large number
of shippers would ship only when there was profit, and when there
was no profit somebody else had to ship; we had been their shipper
for a number of years.

_Q._ When you speak of their shipper—their leading shipper, do you
mean?

_A._ Yes, sir; we did their business between Philadelphia and
Baltimore and New York.

_Q._ Were you their evener, so to speak?

_A._ We did not have any eveners in those days.

_Q._ Did you practically stand in the position of an evener?

_A._ No, sir; we were simply their shipper of crude oil.

_Q._ When you speak of their “shipper,” in the singular, do you mean
that you were their sole shipper, as you subsequently became on the
Erie?

_A._ I mean we had better rates of freight than anybody else could
have obtained over the Pennsylvania Railroad at that time.

_Q._ And therefore monopolised the business; go on?

_A._ And the consequence is that in consequence of this change in
the demand that when there comes a season that there is a little
money in it, the Pennsylvania Railroad would encourage these
numerous small shippers who would come in and they would pro-rate
cars with them; they would only allow us to put in a requisition for
a certain number of cars and they would allow anybody else, an
entire stranger, a man who never shipped any before, to put in an
equal requisition, and they would pro-rate with him, and the
consequence was in the paying business we were out and in the
unpaying business we were in.

_Q._ And you left it?

_A._ Yes, sir.

_Q._ Because you could not get rates better than other people?

_A._ No, sir; because we could not stand it; because we were losing
money.

_Q._ On the same basis that other people were?

_A._ No, sir; other people were not shipping except when there was a
profit.

_Q._ Why did you ship when there was not a profit?

_A._ Because that was our business; we were shippers of petroleum.

By the Chairman.

_Q._ I don’t understand why you were obliged to ship at a loss?

_A._ That is the reason why we left the Pennsylvania Railroad.

_Q._ I don’t understand why you were obliged to ship at a loss?

_A._ We were in the petroleum business and shippers of petroleum,
and we had contracts; in order to keep the cars running it was
necessary for us to make a contract for one, two, three, five, or
six months ahead.

By Mr. Sterne.

_Q._ Isn’t it true that upon the basis of your having better rates
than anybody else, you proceeded to make contracts to extend your
business?

_A._ Yes, sir.

_Q._ With the Pennsylvania road?

_A._ Yes, sir.

_Q._ And that the moment that you were placed in the position of
having——

_A._ No transportation.

_Q._ No transportation equal to your expectations, with your special
rates?

_A._ I had to buy oil in New York.

_Q._ That was the real fact?

_A._ Yes, sir.

_Q._ The business was based upon the rate of transportation?

By the Chairman.

_Q._ Why did you have to buy oil in New York?

_A._ To fill my contract.

_Mr. Sterne._—He had made his contract upon the basis of his special
rate.

_The Witness._—And there was a certain supply of transportation
which was given to me.

By Mr. Sterne.

_Q._ Practically an exclusive supply of transportation you had at
one time over the Pennsylvania road, hadn’t you?

_A._ Yes, sir.

_Q._ And when they changed their policy in that respect and gave
other people transportation, you could not fill the orders upon the
basis of which you had made your contracts?

_A._ You will excuse me; this would seem as though this was a sudden
arrangement; it was not; it lasted three or four years.

_Q._ You had reason to suppose that it would last, had you not?

_A._ This policy of theirs.

_Q._ This policy.

_A._ Yes, sir.

_Q._ That drove you on the Erie?

_A._ Yes, sir.

NUMBER 20 (See page 1133)
STATEMENT OF AMOUNTS PAID FOR OVERCHARGES AND REBATES ON OIL DURING THE
YEAR 1873 BY THE NEW YORK, LAKE ERIE AND WESTERN RAILROAD

[Report of the Special Committee on Railroads, New York Assembly,
1879. Volume V, page 275 of Exhibits.]

NAME. ERIE PRO.
A. Neyhart $188,127.78
Gust. Heye 7,235.31
J. J. Vandergrift 929.11
Durant and Company 145.95
Dutilk and Company 815.95
S. D. Karns 7,089.69
Standard Oil Company 469.11
H. B. Everest 6.66
Lyman and Williams 13.44
J. H. Willever 32.98
L. Van Duzer 3.50
H. Roach and Son .29
L. Y. Wiggins and Brother 24.11
P. A. Stebbins, Jr. 4.53
C. P. Prince and Company 2.69
E. L. Houghton and Company 45.24
McKirgan and Company 2.70
Marks and Bean 45.82
McManagle and Rogers 18.27
Theodore Merritt 4.56
W. F. Smith 3.86
Vacuum Oil Company 8.80
Vandusen Brothers 38.88
Woodbury, Morse and Company 5.40
Ward, Leonard and Company 88.06
Young and Borden 7.97
———————————
Total $205,170.66

NUMBER 21 (See page 1135)
AGREEMENT OF 1874 BETWEEN THE ERIE RAILROAD SYSTEM AND THE STANDARD OIL
COMPANY

[Report of the Special Committee on Railroads, New York Assembly,
1879. Volume III, pages 3398–3402.]

Agreement concluded this seventeenth day of April, A.D. 1874, by and
between the Erie Railway Company and the Atlantic and Great Western
Railroad Company, parties of the first part, and the Standard Oil
Company, of Cleveland, Ohio, party of the second part, _witnesseth_:

_First._—The parties of the first part (Erie Railway Company and the
Atlantic and Great Western Railroad Company) agree to furnish a
sufficient number of good and suitable cars for the purpose of
transporting petroleum and its products from the refineries now
owned by the party of the second part (Standard Oil Company), at
Cleveland, Ohio, and Oil City, Pennsylvania, and any others they may
hereafter control or own, to Weehawken Oil Yards, in New Jersey.

_Second._—The parties of the first part agree to transport said
products of said refineries, and deliver the same in cars (if
destined for the New York market) at and upon the side tracks
connected with said Weehawken Oil Yards, in good order and
condition, except as provided for in Article Four (4), and do all
switching of cars at said oil yards necessary to the prompt and
rapid discharge and handling of cars employed in said business. They
also agree to haul said cars (whenever practicable) in full trains
over their respective roads, with promptness and uniformity of
movement, and accept compensation therefor as hereinafter provided.

_Third._—Rates of freight on all said products to be made from time
to time between J. H. Devereux, president of the Atlantic and Great
Western Railroad Company, and the Standard Oil Company; the same to
be to the satisfaction of the said J. H. Devereux, president; to be,
however, no higher than is paid by the competitors of the said
Standard Oil Company, from competing Western refineries to New York
by all rail lines—each of said railway companies accepting its _pro
rata_ proportion of the through rate thus made.

_Fourth._—The party of the second part agrees not to ship more than
fifty (50) per cent. of the product of its said refineries by any
other line or lines Eastward, to be shown by monthly statements
verified by its president and secretary. It also agrees to assume
all risks and losses of its property by fire when in the charge or
custody of the parties of the first part, whether said property is
being moved in trains or stored, or lying at any station between
place of shipment and destination (both included). It further agrees
to assume all losses from natural leakage or breakage, except the
same is caused by collisions or the wrecking of cars by unavoidable
accidents. It also agrees, at its own cost, to safely load at places
of shipment all of said products, and unload the same when delivered
at the said Weehawken Oil Yards, and furnish said products for
shipment with as great regularity as possible.

_Fifth._—In the event of unavoidable detention, occasioned by the
elements, or by strikes of employees of the parties of the first
part, or either of them, whereby said first parties are unable (for
the time being) to fulfill their covenants under this agreement,
then it shall be the duty of said first parties to immediately
notify the second party of such casualty or strikes, and such
casualty or strike shall be considered good and sufficient cause for
delay in the execution (for the time being) of the provisions of
this agreement. And said first parties, and each of them, shall be
saved from all obligation for the fulfillment of this agreement
during the period of such detention, anything in this contract to
the contrary notwithstanding. It shall be the duty of said first
parties to proceed forthwith to put themselves in position to resume
their obligations under this agreement, giving notice at the
earliest possible moment to the second party of their ability to
resume.

_Sixth._—The Erie Railway Company for itself hereby stipulates and
agrees to and with the second party, that on or before the first day
of May, A.D. 1874, it will give full and complete possession of the
property known as the Weehawken Oil Yards, in New Jersey, together
with all buildings, erections, docks and appurtenances thereunto,
belonging unto the second party to have and to hold, with all
revenues derived therefrom, from and after the said first day of
May, A.D. 1874, or until the expiration of this agreement, as
otherwise herein provided. The Erie Railway Company further agrees,
at its own cost, on or before the first day of May, A.D. 1874, to
put said buildings, erections and appurtenances in good repair;
after which said second party shall maintain the same in like good
order, and to do all dredging required to provide and preserve the
requisite depth of water.

_Seventh._—In consideration of the possession of said Weehawken Oil
Yards, the second party hereby agrees to and with the Erie Railway
Company as follows: to wit: To pay weekly to said Erie Railway
Company the sum of five (5) cents on each and every barrel (of 45
gallons) of crude oil, and the same sum on each and every barrel
(not to exceed 46 to 48 gallons) of the products of petroleum
passing through or into the aforesaid yards; the rate of five (5)
cents to be absolute on all said refined products, but subject to
rateable reductions on crude oil, in case the terminal charges on
crude oil are reduced, taking present schedule of rates thereon
(adopted November, 1872), a copy whereof is hereto annexed, as the
standard; the Erie Railway Company retaining the right to reduce
said schedule of rates on crude, to meet competition; the second
party further agrees to conduct said warehouse business in the name
of the Erie Railway Company, at its own cost and expense, to assume
such risks on the oil, while in its possession, as the Erie Railway
Company, or the Atlantic and Great Western Railroad Company would be
responsible for to forwarders, consignees, or owners after its
arrival and delivery in cars at yards; 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 the terminus of any railway, or other line competing with the
Erie Railway, at or adjacent to the port of New York, and generally
so to manage the premises as to give all patrons of the road fair
and equal facilities for their oil business at uniform cost, to
retain and pay the present superintendent and other officers and
employees of the yard, so long as their duties are satisfactorily
performed, and from time to time to appoint such other officers as
shall not be objected to by the Erie Railway Company, to maintain
the buildings, erections, and mechanical appliances of the premises
in as good order as when possession is given, natural wear and
unavoidable (by due diligence) damages from the elements excepted,
to make no rules or regulations discriminating against any other
shipper or shippers, or receivers. It is understood and agreed that
the consent of the Erie Railway Company is to be obtained before any
refined or crude oil shall be received at the Weehawken Oil Yards,
which arrives from the west via any transportation line competing
with the Erie Railway.

_Eighth._—It is further agreed that the second party shall assume
the charge and collection of freights and charges—accounts to be
rendered and adjusted, and paid weekly—Erie way-bills to govern
quantities received, except when the same are shown to be incorrect,
or loss in transit (except from natural leakage) has occurred
through fault or neglect of said railway companies, or either of
them. Any new fixtures which the party of the second part may add to
the property shall be and remain its property, and they may remove
the same at their cost, at the expiration of this agreement, unless
mutually satisfactory terms of purchase and sale can be agreed to.

_Ninth._—This agreement to take effect and be binding upon the
parties hereto, on the first day of May, A.D. 1874, and to continue
until the first day of May, A.D. 1877, provided, however, that
either party may terminate the same upon giving notice in writing to
the other party six (6) months in advance of its intention so to
terminate; and provided further, that within thirty days after the
election of a new board of directors, of either the Erie or Atlantic
and Great Western Railway Companies, the second party shall have the
right to terminate this agreement, by giving notice in writing to
the other party one month in advance of its intention so to
terminate, and upon the expiration of either of said periods, this
agreement shall be then at an end.

_Tenth._—In consideration of the premises, the party of the second
part agrees to pay to the Erie Railway Company, weekly, the sums
which such weekly settlement shall show to be due to the said first
parties, as freight on its property delivered at the Weehawken Oil
Yards.

_Eleventh._—It is hereby expressly understood and agreed that
neither of the said parties of the first part shall be liable for
the acts or defaults of the other; and that each shall only be
liable for its own acts and defaults, on and over its own line and
premises.

* * * * *

_In Witness Whereof_, the parties hereto have affixed their hands,
this twentieth day of April, 1874.

(Signed) THE ERIE RAILWAY COMPANY,

By G. R. BLANCHARD, _Second Vice-President_.

(Signed) THE ATLANTIC AND GREAT WESTERN RAILROAD COMPANY,

By J. H. DEVEREUX, _President_.

(Signed) STANDARD OIL COMPANY,

By WILLIAM ROCKEFELLER, _Vice-President_.

NUMBER 22 (See page 1139)
AGREEMENT OF 1874 BETWEEN THE RAILROADS AND PIPE-LINES

[Report of the Special Committee on Railroads, New York Assembly,
1879. Volume III, pages 3431–3437.]

Memorandum of agreement entered into this fourth day of September
A.D. 1874, by and between the following parties, viz.:

_First._—J. J. Vandergrift, G. V. Forman, and John Pitcairn, Jr.,
partners themselves, and agreeing that they have authority to
represent all other partners in the association trading under the
name of the United Pipe Lines, and holding themselves individually
responsible to the other parties hereto that they have such
authority.

_Second._—The Union Pipe Company by Charles P. Hatch, manager.

_Third._—The Antwerp Pipe Company and the Oil City Pipe Company,
each being corporations under the laws of the State of Pennsylvania.

_Fourth._—The American Transfer Company, a corporation under the
laws of the State of Pennsylvania.

_Fifth._—The Grant Pipe Company, a corporation under the laws of the
State of Pennsylvania.

_Sixth._—The Karns Pipe Line Company, a corporation under the laws
of the State of Pennsylvania.

_Seventh._—The Relief Pipe Line Company, a corporation under the
laws of the State of Pennsylvania.

_Eighth._—The Pennsylvania Transportation Company, a corporation
under the laws of the State of Pennsylvania.

_Ninth._—J. J. Vandergrift, G. V. Forman, and John Pitcairn, Jr.,
trading under the name of Vandergrift, Forman and Company, and
owning and representing the Milton and Sandy Pipe Lines.

_Whereas_, The pipe lines owned and controlled by the parties hereto
have a joint capacity for transportation more than twice as great as
the total volume of petroleum produced in the district traversed by
said lines; and whereas, the separate and discordant relations now
prevailing among the parties hereto, lead to a needless
multiplication of extensions, branches, and other matters involving
heavy cost, which ultimately becomes in some shape a charge upon the
business transported, and also leads to the offering of open or
secret inducements of an illegitimate nature, such as rebates,
special rates, selling oil for less than its cost and full pipage
rates, and in other ways hereby to attract an under share of traffic
to the respective lines represented herein; and

_Whereas_, it is believed to be desirable both for the interests of
the parties hereto and those of the public whom they serve, that all
needless expenditure and all illegitimate inducements should cease;
now,

_Therefore_, for those purposes and for other valuable
considerations mutually moving the parties hereto, they do each
respectively agree with each other, as follows:

_First._—The parties hereto do not by these presents create in any
respect a partnership with each other, but each party is to be
wholly and solely responsible for all of its own acts in the conduct
of its business for its certificates, receipts, and collection of
its charges, its expenses, shortages, maintenance, and management of
its property, and of its engagements and obligations of every sort.

_Second._—The pipe-lines which are covered by this agreement are
those which are or may be owned by any of the parties hereto, and
which are situated south of Oil City, and which terminate at any of
the following points, viz. points on the Franklin branch of the
Atlantic and Great Western Railway, points on the Jamestown and
Franklin branch of the Lake Shore and Michigan Southern Railway,
points on the Alleghany Valley, between or at Oil City and
Pittsburg, points on the Schenango and Alleghany Railroad and points
on the Butler branch railroad, excepting two small pipe lines, one
owned by F. Prentice and Company, running from Mount Hope to Foster,
and one owned by Vandergrift, Forman and Company, called the
Franklin Pipe Line, running from the heavy oil district to Franklin,
Pennsylvania.

_Third._—Each party hereto shall retain eight (8) cents per each
forty-two (42) gallons remaining after deduction of allowances for
shortage and sediment, on all of the oil it actually pumps; also,
all allowances made it on such oil to meet shrinkage and sediment,
and also all of its other receipts of every description, except as
stated in the next article.

_Fourth._—Each party shall account monthly to the executive
committee hereinafter provided for, at the rate of twenty-two (22)
cents for each forty-two (42) gallons of petroleum (after deducting
shrinkage allowances) received by it for transportation during such
months; which twenty-two (22) cents shall be considered by said
committee as a common fund to be cleared and divided on the basis
hereinafter designated.

_Fifth._—The executive committee shall consist of one representative
from each of the parties hereto.

Each representative to be appointed by the party he represents to be
changeable from time to time by such party, at its pleasure; the
said committee shall faithfully execute such provisions of this
agreement as are by its terms confided to them.

Their action must, in all cases, be unanimous before it shall be
binding upon any party hereto.

They shall keep a record of their proceedings, to which each of the
members shall have free access, and whenever desired by any, a full
transcript, or any part thereof.

The members of said committee shall, until changed, as hereinbefore
provided, be as follows: Charles P. Hatch, representing the Union
Pipe Company; A. M. Hughes, representing the Antwerp Pipe Company
and the Oil City Pipe Company; D. O’Day, representing the American
Transfer Company; R. B. Allen, representing the Grant Pipe Company;
S. D. Karns, representing the Karns Pipe Line Company; F. Prentice,
representing the Relief Pipe Line Company; H. Harley, representing
the Pennsylvania Transportation Company; E. Hopkins, representing
the United Pipe Lines, Milton Pipe Line, and the Sandy Pipe Lines.

_Sixth._—Each party hereto shall furnish to the executive committee,
on or before the fifth of each month, a report of its business for
the month next preceding, duly verified by the affidavit of its
proper officer or agent; and the amounts found due by the executive
committee from any of the parties hereto shall be paid by them
through the executive committee to the parties to whom they may be
due, on or before the tenth of the month in which the report is
made.

_Seventh._—The committee shall prescribe the form of said return,
and shall act as a clearing house thereof. They shall have power to
verify the same by inspection of books and records, and shall make
to each party hereto, on or before the tenth day of each month, a
full exhibit of the results of the returns and clearings for the
next preceding month.

_Eighth._—The committee shall prescribe and enforce uniform rates
and conditions for the reception, storage, and transportation of
oil, including substantially uniform wordings of certificates and
gaugers’ tickets; uniform conditions for the accepting of tanks
owned by other parties; uniform conditions as to responsibility for
losses through unavoidable causes, such as lightning; and uniform
rates of allowances for shrinkages. Until changed by said committee,
the rates for transportation shall be as follows:

For each forty-two gallons remaining after deducting allowance for
shrinkage and sediment, viz., from all points which, by any
pipe-lines represented herein, which terminate at Oil City or on the
various railways as hereinbefore described, thirty (30) cents;
excepting, _First_, on oil reached by pipes terminating on the
Alleghany Valley Railroad south of Oil City, and north of Parker
City. _Second_, on oil from the west side of the Alleghany River,
not pumped from north of Bear Creek. _Third_, on oil pumped from
Sheakley to Monterey by the United Lines, and from south of Bear
Creek, and north of Sheakley district by the Union and Karns lines,
all of which shall be twenty-five (25) cents. But the rates on oil
covered by the third exception shall be made thirty (30) cents on or
before January 1, 1875. The only remaining exceptions to these rates
on such private contracts at different figures, as each party may
now have, a list of which together with any special conditions
appertaining thereto shall be filed with the executive committee on
or before September 1, 1874; no new contracts for transportation or
storage or tankage shall be made by any party whatever, except at
the regular rates as herein fixed, or as shall be, from time to
time, fixed by the executive committee. All rates less than thirty
(30) cents may be at any time advanced to thirty (30) cents by the
party subject thereto.

_Ninth._—The committee shall adopt all proper and practicable
measures to secure the transportation by each line of a share of the
total oil pumped each month by all the lines, equal in percentage to
the share of the common fund allotted to each herein, having
reference to the facilities of each party for doing the work; they
shall assign to each party, and as early in each case as possible,
such share of the duty of making extensions and connections with
wells as most legitimately appertains to it, or as may be required
by the well owner, or by the contracts of each party; but constant
reference shall be had to maintaining for each party its share as
heretofore described of the total oil to be transported, and to
distributing the total cost involved as nearly as practicable in the
proportion of the common fund assigned to each, and no other party
shall make such improvements except by consent of said committee.
The committee shall arrange with a chief gauger and the needful
assistants (all of whom shall be under oath to act honestly and
impartially), to gauge from time to time all tanks with which the
lines of the parties hereto are or may be connected, or car tanks
which they may load; and may collect the expense thereof from the
parties hereto in proportion to their respective shares in the
common fund; and may also assess upon the trade such reasonable
charge for car gauging, or may wholly waive such charge as they may
deem judicious. The committee shall have general power to inaugurate
and carry into effect any other features than those especially named
herein which will not be inconsistent with and which will in their
judgment more effectually accomplish the purposes and spirit of the
agreement.

_Tenth._—The division of the common fund shall be as follows:

The United Pipe Lines, twenty-nine and one-half (29½) per cent.

The Union Pipe Company, twenty-five and one-half (25½) per cent.

The Antwerp Pipe Company and Oil City Pipe Company, seven (7) per
cent.

The American Transfer Company, seven (7) per cent.

The Grant Pipe Company, seven (7) per cent.

The Karns Pipe Line Company, seven (7) per cent.

The Relief Pipe Line Company, seven (7) per cent.

The Pennsylvania Transportation Company, seven (7) per cent.

The Sandy Pipe Line and Milton Pipe Line, three (3) per cent.

_Eleventh._—All parties hereto agree to faithfully carry out the
spirit and purposes of this agreement, and to do nothing between the
date of its execution and the date of its taking effect,
inconsistent therewith, and it is mutually agreed that from the date
of its taking effect until it is terminated, any violation thereof
by any party will work an injury to the whole interest of not less
than ten thousand ($10,000) dollars; and if any such violation shall
not be fully rectified by the offending party within thirty (30)
days after written notice shall have been given to the said
offending party by the executive committee, through its secretary,
upon a vote of all of said committee except the representative of
the offending party, it is agreed that ten thousand ($10,000)
dollars shall be the stipulated and liquidated damages for each and
every such violation so unrectified, which damages shall be
collected by the executive committee, and shall be divided among the
other parties hereto in the same relative proportion as the common
fund is divided. This contract shall take effect on the first day of
October, A.D. 1874, and shall continue for two (2) years, and shall
continue after the expiration of said two (2) years until after
three (3) months’ written notice shall have been given by either of
the parties hereto, to the executive committee, through its
secretary, of a wish to have it terminate, at the expiration of
which notice it shall cease and determine.

_In Witness Whereof_, the parties hereto, by their representatives,
have affixed their signatures this fourth day of September, A.D.
1874.

The United Pipe Lines: J. J. VANDERGRIFT, GEORGE V. FORMAN, JOHN
PITCAIRN, JR., by GEORGE V. FORMAN, _Attorney for themselves and
others_.

The Sandy and Milton Lines: J. J. VANDERGRIFT, GEORGE V. FORMAN,
JOHN PITCAIRN, JR., by GEORGE V. FORMAN, _Attorney_.

For the Relief Pipe Line Company: F. PRENTICE, _President_.

For the American Transfer Company: DANIEL O’DAY, _Superintendent_.

For the Union Pipe Line Company: CHARLES P. HATCH, _Manager_.

For the Grant Pipe Company: R. B. ALLEN, _President_.

For the Karns Pipe Line Company: S. D. KARNS, _President_.

For the Antwerp Pipe Company and the Oil City Pipe Company: E. C.
BRADLEY, _President_.

For the Pennsylvania Transportation Company: HENRY HARLEY,
_President_.

NUMBER 23 (See page 1141)
THE RUTTER CIRCULAR

[Proceedings in Relation to Trusts, House of Representatives, 1888.
Report Number 3112, page 363.]

THE NEW YORK CENTRAL AND HUDSON RIVER RAILWAY COMPANY, GENERAL FREIGHT
AGENT’S OFFICE, GRAND CENTRAL DEPOT.

NEW YORK, September 9, 1874.

_Dear Sir_: Commencing October 1, 1874, the following rates on
refined and crude oil shall govern all lines:

The rates on refined oil from all refineries at Cleveland,
Titusville and elsewhere in and adjacent to the Oil Region shall be
as follows:

PER BARREL.
To Boston $2.10
Philadelphia 1.85
Baltimore 1.85
New York 2.00

Net rate on Albany fifteen per cent. less, from which shall be
refunded the amount paid for the transportation of crude oil by rail
from the mouth of the pipes to the said refineries, upon the basis
of fourteen barrels of crude oil to the refineries for every ten
barrels of refined oil forwarded by rail from them (the refineries)
to the Eastern points named.

Settlements of this drawback to be made on the refined oil forwarded
during each month.

No rebate on these rates will be paid on oil reaching refineries
direct by pipes.

On crude oil the rates from all initial points of rail shipments in
the Oil Region shall be as follows:

PER BARREL.
To Boston $1.75
Philadelphia 1.50
Baltimore 1.50
New York 1.50

Net rate on Albany fifteen per cent. less, from which shall be
refunded twenty-two cents per barrel only on oil coming from pipes
which maintain the agreed rates of pipage.

A barrel shall in all cases be computed at forty-five gallons.

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 satisfied. This scheme does
it, and we trust will work satisfactorily to all.

Respectfully yours,
J. H. RUTTER,
_General Freight Agent_.

NUMBER 24 (See page 1148)
STANDARD OIL COMPANY’S APPLICATION FOR INCREASE OF CAPITAL STOCK TO
$3,500,000 IN 1875

_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 tenth day of March, A.D. 1875, at a special 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 Dollars_,
thereby making the capital stock of said company _Three Million Five
Hundred Thousand Dollars_, which action of the stockholders was as
follows, to wit:

_Resolved_, and it is agreed by each and all of us that the capital
stock of this company, viz.: _THE STANDARD OIL COMPANY OF CLEVELAND,
OHIO_, be increased to the sum of _Three Million Five Hundred
Thousand Dollars_, and it is also agreed and the proper officers of
this company are hereby instructed to take the requisite steps to so
increase said capital stock.