?s ■^ij??. THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW GIFT OF U-C. L. U. m. ■■■■ , ^ '-' ^3 h •^■- ■^:v^'5r:^';;5vr?^r''':'?r^r>::^^^^ 5i fl?".. '1 11^- V^ Sii' •" •w^^"- PURE OIL TRUST vs. STANDARD OIL COMPANY, BEING The Report of An Investigation BY THE United States. Industrial Commission, Compiled From Private and Official Sources By The. Oil City Derrick, 1899=1900. 1901: DERRICK PUBLISHING CO., PRINTERS, OIL CITY, PA. „2 P X ^^ PREFACE. A desire for fair play has caused the compilation of this volume. After the Industrial Commission, authorized by the United States Con- gress by an act approved June 18, 1898, had got fairly started in its work, the commission began an investigation of trusts and industrial combinations. It soon became evident that the Standard Oil Company was to be the chief subject of this investigation. Vice-Chairman Thomas W. Phillips, who has amassed a large fortune in the oil industry, and who for years has been an active competitor of the Standard Oil Company, presided at nearly all of the meetings of the commission in the absence of Senator Kyle, the chairman. It will be remembered that, as a member of Congress, Mr. Phillips introduced a bill which, with slight modifications, became a law, by which the Industrial Commission was authorized. The Standard Oil Company, realizing that a selfish incentive naturally animated its competitors in the oil business, who, headed by Vice-Chairman Phillips, were to attack it through the commission, took an active interest in w-atching the proceedings of that body as soon as the investigation of trusts and industrial combinations was commenced. In order that it might be fully informed of the proceedings it made arrangements to secure a stenographic report of the testimony taken by the commission. Apparently it was the only industrial combination that so carefully looked after its interests on that occasion, and it did so because it thoroughly understood the selfish motives of its competitors. The efforts of the competitors of the Standard Oil Company to injure that company resulted in a farce. Excepting Attorney-General Monnett, of Ohio, the main witnesses who testified against the Standard Oil Company were the competitors who were stockholders in, or prominent as managers of, the Pure Oil Trust of New Jersey; discharged and disgruntled employes and men who, even while the commission was holding its investigation, were attempting to sell their oil properties to the Standard at extortionate prices or were seeking an agreement for the division of territory in order to get rid of competition. Mr. Archbold testified that even Mr. Phillips, vice- chairman of the commission, had sought officials of the Standard Oil Com- pany for the purpose of making an agreement with them for a division of territory for the sale of oil by the Standard and the Pure Oil Trust, which was clearly in restraint of trade and in violation of the Sherman anti-trust law. When he went on the stand, Mr. Phillips did not deny that he had sought such an agreement, but attempted to justify his act. A large number of producers and refiners of oil, many of whom were associated with Mr. Phillips in business, were brought before the commis- sion to give their "testimony," which in almost every case, was an attack on the Standard Oil Company in the form of sensational allegations, most of which were widely circulated through the public press. A very large portion of these statements were in the nature of hearsay testimony. The larger part of them consisted of a reiteration of testimony that had been given in two previous investigations on the subject of trusts, one by the Hepburn Committee, authorized by the Legislature of New York and held in New York City in 1879-80, and another before the Committee on Manufac- tures of the House of Representatives, commonly referred to as the Bacon Committee, held in Washington, D. C. during 1888. A great deal of the tes- timony that had been submitted in the State of Ohio vs. the Standard Oil Company of Ohio, prosecuted by Attorney-General Monnett, of Ohio, was also repeated. 4 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Those whose information concerning the numerous and scurrilous charges that have been made against the Standard Oil Company is based upon detached portions of testimony they have read, can have formed but a very imperfect idea of what this investigation has really shown. It is in order that this class of persons, who may be interested in knowing the facts concerning this investigation and its developments, may readily inform themselves on this subject that this volume has been compiled. That they may not be burdened by the reading of repetitions and unimportant matter, some of the testimony has been eliminated and other portions have been briefly summarized. Care has been taken, however, to give the testimony of Messrs. Thomas W. Phillips, J. W. Lee and Lewis Emery, Jr., complete, as these were the most prominent witnesses in opposition to the Standard Oil Company, who should have made out a "case" against that company if any one could have done so. This compilation is based upon an exceedingly complete and what is believed to be an extremely accurate stenographic report made by Mr. James E. Wilkinson, of Baltimore, Md., who is recog- nized as one of the leading stenographers of the United States. Those who are interested in learning more regarding the attacks that have been made upon the Standard Oil Company than is contained in this volume, are referred to the records of the two investigations and the court trial referred to above, as well as to the official report of the Industrial Commission. The testimony of the Industrial Commission was edited, through which many leading questions and statements by commissioners during the progress of the investigation were eliminated. It was also sub- mitted to the witnesses for their correction and approval. For these reasons the ofiicial report and the report contained in this volume will be found to lack uniformity in many instances. There have also been included in this volume several chapters review- ing the history of the legislation leading up to the formation of the Indus- trial Commission, and some statements concerning the witnesses who testi- fied on the subject of the oil industry, which will probably be read with interest, as it is believed they will tend to elucidate the general subject of the investigation. The commission introduced an innovation in the pre- sentation of the testimony it secured by having prepared a "review" and a "digest" of evidence with the purpose of presenting in a brief form the salient features of the investigation, so that a clear idea could be had of it without the labor of reading the testimony. A short chapter has been devoted to showing some of the misrepresentations contained in both the "review" and the "digest," both of which will be found untrustworthy by anyone wanting to secure a correct understanding of the testimony. This volume will have fulfilled its purpose if it succeeds in inciting something like a thorough investigation of the subject to which it is devoted, in place of that cursory consideration from which opinions are often formed on a partial and very imperfect knowledge of the facts. Doubtless the Standard Oil Company will be very willing to abide by a judgment of its case, when that judgment is based upon a complete knowledge of all facts that have been brought out in the several investigations in which it has figured so prominently. The investigator is warned that a sound judgment can be secured on this, as on every other subject, by a due discrimination between the statements of facts and hearsay testimony and assumptions that are so vague that it is impossible for those entertaining them to cite any foundation for their opinions other than their suspicion. This summary of the evidence in relation to the Standard Oil Company has been made in a way that it is believed will give the reader a clear idea of the whole testimony, without the labor of reading much that is unim- portant or is a mere repetition of statements. This volume is the result of serious work for serious men who really wish to learn the facts relating to this great industry, and who will give no heed to the sensational charges of unsuccessful and disgruntled competitors, or of ambitious demagogues, when wholly lacking evidence of their truth. PRICES or CRUDEand REFINED OIL lA^A m^7 /^^^ M^.<) /fi7^ //?// /^Z? /fi7J /fi74 /87S /67^ /S77 /876 /S79 mo /88I /882 /883 m^ 1885 ms /887\/868 /889\/880 189/ /892 /893 /894 /89S 1896 /897 /898 /899 J900 — ^^------2 • i 1 1 1 |;i| 1/-1I II II 1 1 M 1 1 M 1 1 M III III 111 IN 8 1 I III Mi Ml III III ::ii=f:vH^-^:i:i=::iii::i::i:i::i::i:::iii:i:i:±i:T=:=========i:.^ii f ^ /r^ 'i\ { K ^^ -4+" ^t-p '^^, ^-, ^ dt 1^ <9 ^" i" u ^ ^ ^ "■ ' 2 h- '^ f i ° "^E" " t ' i - ^ 3 V 4 A LiL;vA'-' L 1 r' ~ L i^'- -,J:^^ $-.-. 4 ^^ll^ir^S/v^- ^ 5 -^ -if-t C ^ " " 41 ^ V ^5: \^^ va^l \%^'^^f-^r^^;ii J ^p :. V) T I" : L t ,/^ IT ^3y!p2 1 C-.Ln „L i iL_ 1_ 7 30 -v \ - \ ^ \ >=^ ^^^^"'A -1 '^ ^tX^ ^ i "t ' t 4 ^ 4 -- T ^^ ''A^^ ^ M ^ n^ V.4 • it "^^ " t "' Ja 4 it -r^-'-gi^X ^ _,jTr ^ ^''^^; "^u5 " ^ "^^ 5 -X I iit ./. E„:^j""^' E ^ _i i 4 ?■;-- t [J I ~- t ^4\. I T - 3y,^ nG-^A022ij,3Zj u 1^^ it i"^ -^I^ ^ ^ I L u5iv ^ -gbts=:C t'T'^^t^^^t t 23 / . T 2^^ ^ i 3 ,t I ' t ^-, - - it - B ^ C 7 ^- 01^ Ki^ ^ji 4 ^U 4^ ^vt^ - - E Tch-"-^-^^'^ C"^- t-1 4 t ,j/ - - ■ - '•■ zr^-'-asi-t 3^ ^IP^? '^5 A^ - t^ -Hl.- __± ^^'- _ _ _ _ f ^'^ ^' 4^-^i A3 AT -. ^ 1 J -4 ^ ^ I- ^ -I '- ^\ -i^V ^K n ' /-f A i^ 4 t- \-^U ^ 4 L ^ - 3 Sjv ^^? A^ rrt 7^ ^^27 ti /v_ X Aj v^A ^ 2^ ^H^^t t\,-X t I "^^ ^ ^\ Cr r- A - t \^'^>^ t 1 ^ C^. \ V» f ^ ,v»- ^ ^^^ ^ ^ T ^^ \ L^s,^^ ^^^ , ,, /' /^5S -M—-^^-^T-^--^ ^3-^^^-^^^-:^-====5::^^i3Ji^_-^s-;^2E^: :^- = ^-- = :^=^ — ^\_A_ ^p Z- ir^^ /^ Ml ;s^5;;5:«5::^S==?;:i;^:::=:::r;=z-=^5;;z::::::;^g5Bz:::-^r::sj^°::: ;:EIEEEIE:EIEIEEE:EElE"I::::"?:::iEEE=zeE;Ep:E::|nf::i4:' 1 1 1 M. 1 M 1 1 M 1 1 + zjz xn zL iL i /7» /^/ce of flefyneii O// /n Barre/s /or £xficrf af /Veif yorA C' Ptice of Crt/t^e O// m Bu/M af O,/ C/fy B ' Oiffer>s/?ce defireeft ^andC O' Pnce of Sfani/ard mi/te ///I'm ^Jifiorf ? 0//i m /3arre/^ of A/ett-}ht/( . C/ffc/nna// ■ dremen PRICES OF CRUDE AND REFINED PETROLEUM. DIAGRAM SHOWING COMPARISON OF PRICES OF CRUDE AND REFINED PETROLEUM. The accompanying diagram was prepared by Professor J. W. Jenks, expert of the Industrial Commission, and appears in the Review of Evidence which accompanies the report of the Industrial Commission on the subject of Trusts and Industrial Combinations (Vol. 1, p. 52). This diagram shows that the prices of crude and refined petroleum have run in substantially parallel lines from 1866 to 1900. It shows that when the price of crude oil was extremely depressed the price of refined oil followed it, so that the consumer at all times had the benefit of low prices of crude oil. It shows that the Standard Oil Company, as a refining company, was not benefited by any prevailing low price of oil except co far as such a low price may have increased consumption. The Standard Oil Company itself being a large producer of oil has naturally suffered financial loss when the price of crude oil has been depressed. These indisputable facts are in themselves a com- plete denial of the charges that the Standard Oil Company has sought to depress the price of crude oil for its own gain. The following foot note appears in the industrial report (p. 47) in expla- nation of the data from which this diagram was prepared: "The prices for crude and refined oil for export have been taken from the Der- rick's Handbook of Petroleum, with the exception of those for the last few months, v/hich have been furnished by the Standard Oil Company. The prices of Standard White illuminating: oils at New York, Chicago and Cincinnati have been furnished by the Standard Oil Company. Prices were given in bulk, and 2ii> cents per gallon was added for the cost of the barrel. This cost of the barrel would of course vary slightly, but the rule of 2V^ cents per gallon is one that is laid down in the Hand- book of Petroleum, and is probably a fair general aveiage. The prices of export oils at Bremen were taken from the Handbook for the earlier period, and for the last few months have been furnished by the Standard Oil Company." CHAPTER L INTRODUCTION. Anyone who has carefully perused the testimony given before the United "states Industrial Commission at Washington, D. C, in relation to the Standard Oil Company must have discovered that there was a concensus of opinion on the part of almost all witnesses who referred to the propor- tion of traffic in refined oil handled by the Standard, that that company supplies to-day at least eighty per cent, of the trade of this country. Mr. Archbold gave a statistical report to show that for the five years from 1894 to 1898, inclusive, the aggregate percentage of all business done by the Standard Oil Company was eighty-two and three-tenths as against their com- petitors' seventeen and seven-tenths. The fact that will interest the public is the means that have been pursued in order to bring about this condition. If it is shown that one company has secured even 100 per cent, of a business because it supplies the consumers more satisfactorily than any- one else, no one has been injured except the unsuccessful competitors who are left behind in the race for trade. Mr. G. Waldo Smith, president of the Wholesale Grocers' Association of New York and vicinity, testified on June 12, 1899, that there was a practical monopoly of the trade in baking powders because one company had advertised so extensively that practically everybody used its product. Mr. Smith said; "The Royal Baking Powder is a good deal like a patent medicine that has been extensively advertised: that monopoly is the result of advertising and not combination. They made the people believe, by persistent adver- tising, that their baking powder was the only baking powder. That is legiti- mate. Others have tried it and failed." It is difficult to imagine how a law could be framed that would prevent fifty, sevpnty-five or one hundred per cent, of the people of the country from buying the same article, or would prevent them from buying it from a single producer. But there was a long series of criticism on the part of the vice-chairman of the commission and other competitors of the Standard Oil Company from the fact that they had been unable, during a number of years, to successfully compete with this company in the markets of the world. In th*^ case of the oil industry, no considerable tariff has ever been enacted to keep out of this country foreign competition, and neither the tariff act of 1894 nor of 1897 gave that industry any protection. The officials of the great railroads o^ the United States, covering the sec- tion in which these gentlemen complained they were unable to be suc- cessful competitors, as well as practically the entire country, testified before the commission that, since the passage of the interstate commerce act in 1887, there had been absolutely no discrimination in rates in the handling of oil, so that any shipper might transport this product on equal terms with any other shipper. The witnesses who appeared against the Standard Oil Company laid great stress upon the advantage they alleged that that com- pany had received from freight rate discriminations, and. practically with- out exception, these witnesses seemed to think that the Standard Oil Com- pany had every railroad of the United States under its control. From their remarks one would judse that the transportation of oil was the great sup- port of the railroad systems of this country. The fact is that the oil which passes over the railroads is infinitesimal in amount when compared with the entire amount of freight of all kinds that is handled. As Mr. Howard Page, vice-president of the Union Tank Line Company, testified, "the total INTRODUCTION. 7 consumption of oil in tons in the United States is less than one-half of one per cent, of the total tonnage moved by the railroads of the United States." This statement was based on well-known statistics in the oil industry and the official record of Mr. Edward A. Moseley, secretary of the Interstate Commerce Commission. These figures alone indicate that the railway freight discrimination bug-a-boo. which has frightened hysterical people, is not so tangible as many witnesses, who ought to have known better, endeavored to impress upon the public. The impression the uninformed reader would get from the testimony of the competitors of the Standard Oil Company in relation to the practice of railroads in making special contracts with shippers, involving freight rate discriminations, before the interstate commerce law was passed, is that these discriminations related especially to the oil industry, whereas the fact is they were practiced in all lines of business. So far as the trans- portation of oil was concerned, it would be as reasonable to assume that one shipper got discriminatory rates as well as another. The chief reason pre- sented by the competitors of the Standard Oil Company for believing that that company got lower freight rates than themselves was the fact that it was successful in business while they failed in many instances to secure satisfactory profits. None of them, apparently, either presumed, believed or suspected that they were troubled with that well-known ailment — ineffi- ciency. A careful and comprehensive review of all the testimonj'' that has been taken before the Industrial Commission in regard to the oil industry will indicate that brains, energy and persistent effort, that have been made available by the corporation that refines and distributes most of the oil of the country, have brought about the conditions complained of. The vice- chairman, who complained of the killing competition to which he was sub- jected, is reputed to be a millionaire several times over and to have made every penny of his money in the oil industry. He has been a producer and shipper of oil for a third of a century. He has complained that con- ditions have been made of a character by his competitor that reduce his profit much lower than it should have been. It is probable that very few men connected with the Standard Oil Company have during their lifetimes accumulated greater wealth than has come to him. He did not attempt to testify as to the amount of profit he had received in his business, but apparently he has felt that the millions that have come to him should have been doubled, trebled or quadrupled, and considered himself a poor man compared with the Croesus he might have been had he received what he would have considered to be "reasonable profits." Unquestionably he could not have received greater profits unless he had taken them from the consumer, and that could be done in no way except to have increased the price of oil. It was shown by the testimony that the proposition of Vice-Chairman Phillips, made to the Standard Oil Company, by which he desired to have the Pure Oil Trust and the Standard Oil Company act in unison, was promptly rejected. It will be left to the reader to judge whether such an agreement would not have been in violation of the Sherman anti-trust act. The Standard Oil Company, it has been claimed, has been the main instrument in bringing about the low price of oil. which, after being refined, was retailed practically all over the world, at the time of the investiga- tion, at about ten cents, or less, per gallon. It has been unfortunate for the vice-chairman of the commission and others who have interests in common with him. that this reduction in the price of oil has been brought about, but surely the great mass of people throughout the country can feel little sympathy with this millionaire in his failure to secure what he would term "reasonable profits." The people are to-day having the benefit of cheap oil and are likely to oppose any effort that may be made, from whatever source it may come, for the purpose of making them pay a greater tribute to the oil industry. There is one very peculiar fact in connection with the investigations of the Standard Oil Company. After testimony had been presented to the com- mission from the people best qualified to give it, showing that the Standard 8 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. had enjoyed no peculiar privileges beyond its own ability to do business at a percentage of profit that it has been claimed has been ruinous to its com- petitors, no effort was made to solicit testimony by which the methods of the Standard Oil Company and the Pure Oil Trust, the members of which are commonly referred to as the "independents," could be compared. If the commission had seen fit to go into this question, and if the companies in- volved in it had been willing to describe their methods of handling and refining oil, it would undoubtedly have been shown that the organization of the Standard and the manner in which it conducts its business are re- sponsible for its ability to supply the country with oil at a very low rate per gallon. It is hardly possible that superior methods of this character would be condemned by any fair-minded man. As they are the basis of all suc- cessful business enterprises, it is but reasonable that they should receive the commendation of all men, especially of those who are obliged to purchase and use the products of crude oil. A comparison of this kind was evidently not to the taste of the so-called "independents." Another interesting feature of the testimony is the fact that no effort was made on the part of the vice-chairman, when the oil industry was being inquired into, to discuss the question of wages paid by the various oil pro- ducers and refiners of the country and the conditions under which their employes labor. If the main purpose of Vice-Chairman Phillips was to inquire into the conditions of labor in this country, it is indeed strange that he should have entirely overlooked the subject of labor in the oil industry. Whether or not the so-called independents feared the developments that might have grown out of the exposure of their own methods of hiring help, and of the wages paid by them, can only be surmised. Their attack on the Standard Oil Company has been so methodical that it does not appear probable that their omissions were a result of oversight. It is not intended to suggest that the conditions under which their employes work are to any appreciable extent different from those of the Standard Oil Company, as the labor market in the oil industry would naturally control their dealings with their employes. This omission in the series of their studied attacks on the Standard Oil Company must be interpreted as being at least extremely complimentary to that company, so far as its relations with the labor it employs are concerned. The fact that the Industrial Commission was formed for the avowed purpose of inquiring into conditions of labor should not be lost sight of, Mr. Phillips in his speech in Congress urging the passage of the bill, dwelling almost entirely upon the need of such an inquiry. Prices of labor in the oil industry have .remained practically the same for the last twenty years, so that one who is seeking to ascertain the way in which the price of oil has been cheapened must look beyond the wages of workmen. Cheaper processes of manufacturing, and transportation and economies of utilizing as by-products what was formerly thrown away as refuse, will explain much of the lowering of prices. Crude oil has been subjected to the laws of supply and demand as have all other products, and the abundant supply has taken from that industry the enormous profits that were secured when there was a production that could but partially supply the market. As in all other lines of industry, prospective gain has allured to that business enough capital and energy to bring it on the same level of profit of other industries and improved drilling and means for pumping oil have also further cheapened the product in the market without deducting from the profit of the operators. But in whatever varied ways this cheap- ened profit has been attained it has clearly not come from a cut in wages, and the fact that Vice-Chairman Phillips and his associates made no attempt to show a dei)rossion in wages as one cause of this condition is ample evi- dence that they had no basis for an attack on their competitor on that ac- count. On the other hand, they acknowledged, and they could not have dis- puted the fact, that the Standard Oil Company paid good wages. The concerted attack by the competitors of the Standard Oil Company on that corporation was begun May 11, 189S. when Mr. James W. Lee. the president of the Pure Oil Trust, and for many years the attorney for com- petitors of the Standard Oil Company, appeared before the Industrial Com- FORMATION OF THE COMMISSION. 9 mission. One week later he was followed by Mr. F. S. Monnett, attorney- general of the State of Ohio; Mr. Monnett having a short time previously been the prosecuting attorney in the case of the State of Ohio vs. the Standard Oil Company of Ohio et al. The following appeared in the same interest on the dates indicated: June 8, Mr. W. H. Clark, of Newark, Ohio, a former employee of the Standard Oil Company, who was shown by the testimony of Mr. B. A. Mathews and Mr. Archbold to have been discharged from the company because he was short in his accounts; June 9, Mr. T. F. Davis, of Marietta, Ohio, oil refiner, who endeavored to sell his refinery to the Standard Oil Company immediately after he had given his testimony; Mr. T. B. Westgate, of Titusville, Pa., oil refiner; June 17, Mr. M. L. Lock- wood; September 9, Mr. Thomas W. Phillips, vice-chairman of the Industrial Commission; September 11 and 12, Mr. Lewis Emery, Jr., of Bradford, Pa., producer and refiner of oil; November 11, Mr. George Rice, of Marietta, Ohio, producer and refiner of oil. All of these names will be familiar to those who have read testimony given in former investigations, in which the affairs of the Standard Oil Company were the subject for consideration. In addition to the above, the following witnesses before the commission were asked questions which bore upon the affairs of the Standard Oil Com- pany: Mr. P. C. Boyle, Oil City, Pa., statistician on the oil industry and editor and proprietor of The Oil City Derrick, representing the oil interest in general; Mr. F. B. Thurber, of New York, president of the United States Export Association; Mr. Henry O. Havemeyer, of New York City, president American Sugar Refining Company; Mr. G. Waldo Smith, of Long Island, New York, president Wholesale Grocers' Association of New York and vicinity; Mr. Martin R. Cook, of New York City, wholesale liquor dealer; Mr. Charles C. Clarke, of Peoria, 111., distiller; Mr. George J. Kindel, of Denver, Colo., manufacturer of bedding, etc.; Mr. Samuel Spencer, of New York City, president Southern Railway; Mr. Martin A. Knapp and Mr. C. A. Prouty, Interstate Commerce Commissioners, and Mr. P. E. Dowe, of New York City, president Commercial Travelers' National League. Those who were called to testify in behalf of the Standard Oil Com- pany, and who replied to many of the statements that had been made con- cerning that company, were: Mr. John D. Archbold, New York City, vice- president of the Standard Oil Company of New York; Mr. H. H. Rogers, New York City, vice-president of the Standard Oil Company of New Jersey; Mr. B. A. Mathews, of Marietta, Ohio, manacrer of the Standard Oil Com- pany for central and southern Ohio, and Mr. Howard Page, New York City, vice-president of the Union Tank Line Company. Mr. John D. Rockefeller, president, and Mr. S. C. T. Dodd, solicitor of the Standard Oil Company of New Jersey, submitted to the commission in writing replies to specific questions which were furnished them. CHAPTER II FORMATION OF THE COMMISSION. It was in the Fifty-third Congress that Representative Thomas W. Phillips, of Pennsylvania, introduced a bill which, in its essential features, was similar to the act finally signed by President McKinley, under the au- thority of which the United States Industrial Commission was formed and began its work. Not until the closing hours of the Fifty-fourth Congress was this bill passed. It was taken to President Cleveland a few minutes before 12 o'clock, but, having no time to examine the measure, he refused to sign it. In accordance with his policy that required the enactment of legislation sufficiently early to permit him to examine its provisions. 10 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The action of the Fifty-fourth Congress had resulted in making the bill acceptable to Senators and Representatives who had at first objected to its passage for one reason or another. It was again taken up in the Fifty- fifth Congress and enacted into law in the following form: AN ACT AUTHORIZING THE APPOINTMENT OF A NON-PARTISAN COMMISSION TO COLLATE INFORMATION AND TO CONSIDER AND RECOMMEND LEGISLATION TO MEET THE PROBLEMS PRE- SENTED BY LABOR, AGRICULTURE, AND CAPITAL. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That a commission is hereby created, to be called the "Industrial Commission," to be composed as follows: Five members of the Senate, to be appointed by the presiding officer thereof; five members of the House of Representatives, to be appointed by the Speaker, and nine other persons, who shall fairly represent the different industrial employments, to be appointed by the President, by and with the advice and consent of the Senate. Sec. 2. That it shall be the duty of this commission to investigate questions pertaining to immigration, to labor, to agriculture, to manufactur- ing, and to business, and to report to Congress and to suggest such legisla- tion as it may deem best upon these subjects. Sec. 3. That it shall furnish such information and suggest such laws as may be made a basis for uniform legislation by the various States of the Union, in order to harmonize conflicting interests and to be equitable to the laborer, the employer, the producer, and the consumer. Sec. 4. That the commission shall give reasonable time for hearings, if deemed necessary, and if necessary it may appoint a sub-commission or sub-commissions of its own members to make investigation in any part of the United States, and it shall be allowed actual necessary expenses for the same. It shall have the authority to send for persons and papers and to administer oaths and affirmations. All necessary expenses, including clerks, stenographers, messengers, rent for place of meeting, and printing and stationery, shall be paid from any money in the treasury not otherwise appropriated; however, not to exceed fifty thousand dollars per annum for expenditures under this section. Sec. .5. That it may report from time to time to the Congress of the United States, and shall at the conclusion of its labors submit a final report. Sec. 6. That the term of the commission shall be two years. The salary of each member of this commission appointed by the President shall be three thousand six hundred dollars per annum. Each member of the com- mission shall be allowed actual traveling expenses. Sec. 7. That any vacancies occurring in the commission by reason of death, disability, or from any other cause shall be filled by appointment by the officer and in the same manner as was the member whose retirement from the commission creates the vacancy. That in case the term of a Senator or Representative expires while a member of this commission, said Senator or Representative shall not thereby cease to be a member of said commission, but shall serve until the expiration of the term for which he was appointed, drawing pay from the time his term as Senator or Repre- sentative expires, at the same salary as those members of the commission appointed by the President of the United States. Sec. 8. That a sum sufficient to carry out the provisions of this act is hereby annropriated out of any money in the treasury of the United States not otherwise appropriated. Approved .Tune 18, 1898. The second section of the above act makes it "the duty of this com- mission to investigate questions pertaining to immigration, to labor, to agriculture, to manufacturing, and to business, and to report to Congress and to suggest such legislation as it may deem best upon these subjects." The scope of the investigation provided for in this section, when given a broad interpretation, is practically limitless, but if anyone will read the debates that occurred in Congress when bills to authorize the formation of VICE-CHAIRMAN PHILLIPS' SPEECH, 11 the Industrial Commission were under consideration, it will be made plain to them that the one paramount reason that was urged upon Congress for this legislation was the necessity to provide a means to discover the cause of discontenfamong workingmen that had prevailed in some sections of the country. This discontent was also widespread among the farmers in some States, and among workingmen it had caused numerous strikes and had led to acts of lawlessness that seemed to threaten widespread disturbance of the business interests of the United States. It was desired to ascertain the cause that led to these troubles, and, if possible, to suggest legislation that might improve the condition of workingmen and bring about a much desired harmony between capital and labor. In the minds of members of Congress and of prominent labor leaders throughout the country, this was practically the entire purpose of the bill, if the purpose of its supporters may be judged by their utterances. Labor organizations were anxious for the enactment of this law, and their officials not only secured the signing of numerous petitions to Congress praying for its passage, but they went to Washington and used their influence to secure the passage of the measure. The argument contained in the speech of Representative Phillips, de- livered in the House of Representatives May 21. 1896, in favor of his bill was apparently a complete representation of his views on this question, but as an indication of the course he was to pursue in the investigation, after it was once under way. it was extremely misleading and unsatisfactory. One cannot read that speech without being impressed with the idea that the chief purpose of its author was to relieve struggling humanity, as represented by the wage earners of the country. Throughout it is an appeal for a better treatment of workingmen. There is a hint at the necessity for pro- tecting the. people against unjust discriminations and against unfair com- petition, whatever these terms may mean, but there was no indication of the course he pursued when the work of the commission had been started. In emphasizing the purpose of the law as being in favor of the working people, Mr. Phillips, in circulating his own speech, appended endorsements of the bill, written by Samuel Gompers, president of the American Federa- tion of Labor; H. C. Demming, secretary executive committee. National Farmers' Alliance and Industrial Union; J. W. Boden, chairman, C. R. White, E. M. Warden, conference committee National Farmers' Alliance and In- dustrial Union; J. R. Sovereign, general master workman, M. J. Bishop, G. W. F., John W. Hayes, G. S. T., C. A. French. T. B. McGuire, .1. M. Kenny and H. B. Martin, general executive board Knights of Labor; B. E. Clarke. Order of Railway Conductors; F. P. Sargent. Brotherhood of Loco- motive Firemen; P. H. Morrissey. Brotherhood of Railroad Trainmen; P. M. Arthur. Brotherhood of Locomotive Engineers, and W. V. Powell, Order of Railroad Telegraphers. MR. PHILLIPS' SPEECH. In advocacy of the appointment of an Industrial Commission, delivered in the House of Representatives May 21, 1896, which he has widely circulated, follows: "Mr. Chairman. The bill (H. R. 6119) now before the House is de- signed to better our industrial system. No demand of the people in any age has met with such general response as the demand for a better industrial and social or.ganization of society. "No sentiment has attracted such widespread attention or has had such rapid growth. Our government is republican; and to be effectual and durable it must have proper regard for all departments of human activity. Legislation must have just respect for the wage earner and for the wage payer, for the producer and consumer. This government cannot endure if more than one-half of its people are discontented, distressed and suffering, for it is a government of all and by all. "Mr. Chairman, this bill calls attention to the fundamental principle of our government — the equality of man — and seeks a more equitable dis- tribution of the burdens and benefits of our free government. While it is not the function of the State to guarantee individual happiness, it is its 12 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. function to guarantee each individual the right to pursue happiness, and so enact laws that one class may not be compelled of necessity to work solely for another class, regardless of their personal comfort and improve- ment. Rights do not belong to one class and duties to another. Physical, intellectual and moral ability can not be made equal, but each capacity may be met; each cup, be it large or small, may be filled. Circumstances can not be made equal, but law can be adapted to circumstances. "Mr. Chairman, the danger to this government is not external, but internal. In the progress of human society the battles of the world are shift- ing from conflicts with nations to a conflict within nations for better govern- ment and more equitable laws. We must recognize the fact that more are now peacefully organized and enlisted in the cause of industrial equity than in all the armies of the world. The people of civilized nations will not always continue to flght for national honor and supremacy while their in- dividual rights are not protected within the nation. National glory must henceforth be based more and more upon the prosperity and happiness of the individual citizen. After more than six thousand years of experience the people are beginning to learn that government belongs to them: that they are not owned by the government, but that they own the government, and that it must respect their rights by meeting their just demands. "If laws are derived from the governed, they should meet the just de- mands of all the governed. This Nation took the most advanced stand in civilization, and is the best prepared to meet the industrial issues of to-day by building on the foundation it laid more than one hundred years ago by conforming law to its declared principles of right, freedom, and equa'ity. and thus organize our social and industrial system upon a more just and equitable basis than has yet obtained in the world. "Mr. Chairman, in entering upon the discussion of the subject matter of this bill I wish to make three observations in regard to man, which are stated in the first chapters of Genesis. "First, the unity of the race and equality of man was shown in crea- tion; God created man and gave him dominion as man. He was to 'subdue the earth' and 'have dominion over the fish of the sea. over the fowls of the air, and over every living thing that moveth upon the earth.' But he was not given dominion over his fellowman. "Second, before God created man it was said: 'And there was not a man to till the ground.' "In the third place, man was told by the Creator: 'In the sweat of thy face Shalt thou eat bread till thou return unto the ground ' To all, therefore, who believe in the Bible account of creation, which I believe is also in strict accord with science, fact, and history, these three things are indisputable: "First — That when God created man, he gave him dominion as man. not over his fellowman, luit over beast and bird and fish: over all animate nature below him. "Second — That he was to till the soil as his chief occupation. "Third — That his life was to be sustained by labor. "All this agrees with reason; shows equality in creation; that sus- tenance comes from the ground; that labor is the normal condition of man; and it is a fact that no man enters into rest unless it is upon his own labor or the labor of others. The government, therefore, that does not strive to meet these three great cardinal principles of reason and revelation in the highest possible degree will perish from the earth. "Mr. Chairman, this bill provides for the appointment of a non-partisan commission, to be composed of five members repi'esentatives of labor, five representatives of agriculture, five of manufacturing, and five of business. The importance of labor to our being and well-being can not be overstated. Labor is one of the foundation principles upon which organized society rests. All kinds of labor is necessary, from digging in the ditch to measur- ing space and counting the stars, yet the lower forms of labor are more intimately connected with our existence and needs. The most despised is often the most useful. The man who digs the foundation is more important to the structure than he who frescoes its walls. Without the grading of the roadbed there would be no stockholders, no locomotive, or railroad president. VICE-CHAIRMAN PHILLIPS' SPEECH. 13 If all manual labor were to stop, if all wage earners were to cease work, there would be no value in property and a large part of the race would perish. "That our relations are most intimately bound up with the wage earner is shown by the many strikes and lockouts in recent years which have en- tailed great suffering and loss of property, as well as the sacrifice of life. "I sumbit a summary from Hon. Carroll D. Wright, Commissioner of Labor, on the subject of strikes and lockouts from January 1, 1881, to June 30, 1894, being a period of thirteen and a half years. For this period it will be seen that there were 14,390 strikes; that there were 69,167 establishments involved; that there were 3,794,406 employees thrown out of employment: "It will also be seen that the loss to strikers was $163,807,866 "For the same period in lockouts the loss to employes was 26,t585,.516 "Assistance to strikers by labor organizations 10,914,406 "Assistance in lockouts , 2,524,298 "Total loss to employes $203,932,076 "Loss to employers for the same period by reason of strikes $ 82,590,386 "Loss to employers for the same period by reason of lockouts 12,235,451 "Total loss to employers $ 94,825,837 "Total loss to both employes and employers $298,757,913 "These figures represent the actual loss to the parties engaged, and do not represent the enormous loss which incidentally came to the com- munity by reason of such disturbances; but the injury to society, the de- moralization, suffering, and death, can not be estimated. All admit that something must be done, and a commission composed of those directly in- terested in this great labor problem, in my judgment, is the proper means through which to seek the cause of this violent disturbance and propose a remedy, as our legislative bodies are not meeting the issue. Again, Mr. Chairman, the agricultural industry is the most important of all industries. All civilized life depends upon the products of the soil. All food and clothing come from the soil; yet this most important industry is greatly depressed. The constant settling in the value of farm products and farm lands in recent years in a large portion of the United States has made great discontent and unrest among farmers. Many of them can not hope to have their children succeed them in husbandry, and they are exhausting their limited means to fit them for pursuits in the crowded town or city. "In 1870 the value of farm lands in the United States was $ 9,262,803,861 "In the same year the total value of all property in the LTnited States was 30,068,000,000 "The value of farm lands was, therefore, about 33 per cent, of the value of all property. "In 1880 the value of farm lands in the United States was $10,197,096,776 "In the same vear the total value of all property in the United States was 43,600,000,000 "The value of farm lands was, therefore, only about 24 per cent, of the value of property in 1880. "In 1890 the value of farm lands in the United States was $13,279,252,649 "In the same year the total value of all iiruperty in the United States was 65,000,006,000 "The value of farm lands was, therefore, only about 19 per cent, of the value of property in this later period. Thus in twenty years the farm lands settled from 33 to 19 per cent, as compared with the total value of all property, and this notwithstanding the opening up of millions of acres rich in soil. "These are startling figures when we consider that the value of farm lands is not increasing in due proportion to all other property; that agricul- ture is the foundation of all other industries, and that 40 per cent, of the toiling people are engaged in tilling the soil. 14 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. •'No country can prosper when the agricultural interest is suffering. This commission is needed by the farmers not only because of these facts, but on account of their growing discontent as shown by their various or- ganizations and protests against unequal burdens and discriminating laws. Even if the agriculturists had nothing of which to complain or to adjust, they are needed in such a conference as this to aid in seeking a way out of the manifold labor troubles which so vitally affect their interests as well as those of the whole population. "In regard to the importance of the manufacturing industry, I will state that in 1890 the number of persons 10 years of age and upwards en- gaged in all occupations was 22,735,661 "Of this number there were engaged in manufacturing 4,712,622 "Of this number there were engaged in agriculture 8,303,000 "The total wage receivers of all classes were 14,920.525 "The number of manufacturing establishments in 1890 was 355,415 "Capital employed was $6,139,397,785 "Total number of employes was 4,476,884 "Total wages paid was $2,283,516,529 "Cost of materials used was $5,162,044,076 "Total value of manufactured products was $9,372,437,283 "It will be seen trom this statement that of the 22,735,661 of all occu- pations 4,712,622 were engaged in manufacturing and mechanical industries. More people are engaged in this industry than in any other, with the ex- ception of farming. The greatest per cent of actual loss by reason of strikes and lockouts comes to those engaged in manufacturing and their employes. Great good should ultimate to those engaged in this industry by wise con- sideration of the violent disturbances which so vitally affect all concerned. "This commission is designed also to benefit all other business pur- suits. The disturbed condition of affairs has entailed great loss upon the business community. The loss of $298,757,913, as shown in table quoted, in thirteen and one-half years to the laborers and the employers of labor is but a fractional part of the loss sustained by transporters, merchants, and others engaged in business pursuits. Business men have and will con- tinue to suffer great depreciations in value and increasing losses unless a better adjustment is made. Business men need and business interests require a just and more satisfactory settlement of differences with those with whom they deal and upon whose labor and products successful busi- ness must depend. The better labor is protected in all its rights the greater will be the security for earnings. No intelligent business man can oppose any just and fair effort to harmonize conflicting interests in a legal and peaceable way, for all such must know and see from the history of the recent past that the great industrial problem may shortly be met by violence if not worked out in peace by law. "Mr. Chairman, this bill is designed to give an impartial hearing to those who complain of discriminating laws and unequal burdens. It is ex- pected that it will be composed of the ablest and best of each class named. It will bring into conference representative men of labor, agriculture, manu- facturing, and business, thus bringing together the aggrieved and those against whom the grievance is made, whose duty it will be to consider the disturbing causes and recommend laws looking toward a more just distribu- tion of the burdens and benefits of our free government. It is designed to be impartial, non-partisan, seeking exact facts and conditions, and to con- form legislation to the foundation principles of our government — to place all men on an equal footing before the law. "I believe such a commission the most practical way to meet the issue. Our National and State legislative bodies are not so constituted as to give proper time to the consideration of the industrial questions presented in this bill. They have not mot and are not meeting them, as discords, strikes and violence are constantly increasing. These bodies are not made up equally of representative men, such as are proposed by this bill; they are besieged by men lobbying for special privileges, while none are lobbying for the VICE-CHAIRMAN PHILLIPS' SPEECH. 15 good of all. If, therefore, such representative men as are proposed — men who suffer most from the great conflict of interest — can not agree in recom- mending more equitable laws looking to a peaceful solution of the question unsolved, it can not be solved by a free government in a peaceful way. "Mr. Chairman, I believe Congress is the proper body to authorize the appointment of such a commission, as it is composed of members coming from all parts of every State. However jealous we may be of the rights of the States, no one can object to such a commission making recommenda- tions to Congress and furnishing information to the States which may be of the greatest value. "Again, the commission could utilize a large amount of statistical infor- mation gathered at great cost by various agricultural and labor organiza- tions, and especially could use to great advantage the information collected by the various labor committees appointed in recent years, both State and National, in our own country, and by other nations most advanced in civili- zation. The facts so ably compiled by the Hon. Carroll D. Wright, Commis- sioner of Labor for the United States, would be of incalculable value. This, together with the findings of similar commissions appointed by 32 of our different States, could be utilized. It would also have the benefit of the completed work of the English royal commission of labor, and also the pro- gressing work of the higher council of labor established in France, and the higher council of labor appointed in Belgium. Not only would it have the benefit of all such recently accumulated facts, but it would be in position to study the best laws of civilization and the best thoughts of the age, and thus be able to recommend more equitable laws than now exist, looking to the solution of the most vital and pressing political and economic ques- tions of the age. "Labor statistical bureaus are of recent origin, and were first estab- lished in the United States — the first one in Massachusetts in 1869. They have since been established in 32 of our States. The first Commissioner of Labor, the Hon. Carroll D. Wright, was appointed under the general govern- ment in 1885. The English royal labor commission was appointed by royal wawant dated April 2, 1891, and was composed of 27 members. The fifth and final report of this commission was made to both houses of Parliament in June, 1894. The German commission of labor statistics was appointed in 1891, and it consists of 14 members, 168 civil servants, and 84 assistants. The higher council of labor was established in France in 1891. It consists of 50 members, chosen from among manufacturers, workingmen and persons well informed upon economics and social questions. The Belgians' higher council of labor was appointed in 1892. It consists of 48 members, chosen in equal numbers from workingmen, employers and specialists in economic science. Both these latter are authorized to examine into and recommend legislation. These foreign commissions are cited as precedents and to show that civilized nations are progressing along the line of our declared princi- ples of equality which are recalled by this bill. "Mr. Chairman, after referring to these foreign commissions I wish to state that some of the most important results in our own history have been accomplished through the instrumentality of commissions, notable among which was the production of the Constitution of the United States. On the 28th day of March, 1785, the joint commissioners of the States of Virginia and Maryland met at Mount Vernon, under the auspices of Washington. These commissioners prepared the terms of a compact between the two States for the jurisdiction over the waters of Chesapeake bay and the rivers that were common to both States, and conforming to the wishes of Wash- ington, they requested Pennsylvania to grant the free use of the branches of the Ohio river within its limits for establishing the connection between that river and the Potomac. The preliminary object of the commission being fulfilled, they took up matters of general policy and recommended to the two States uniform duties on imports, a uniformity of commercial regula- tions, and a uniformity of currency. George Mason was charged with a report of their doings to the Legislature of his State — Virginia. "In pursuance with this, the Legislature of Virginia invited all the States to appoint commissioners to meet at Annapolis on the first Monday in Sep- 16 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. tember, 1786. This convention became the ground of hope of the Nation. No State north of New York was represented, or south of Delaware, save Virginia. It was a meeting of central States, and it resulted in calling a convention of all the States to meet at Philadelphia on the second Monday of May, 1787. The result of this convention of commissioners was the form- ing of the Constitution of the United States, which saved and perpetuated the Union. "There was great disturbance and distress then, and Congress and the States were powerless to meet the situation. It should not, therefore, be forgotten that it was a commission, an advisory body and not a legislative one, that wrought this great change and perpetuated this government. "Now, under the Constitution, as then, under the Articles of Confedera- tion, neither Congress nor the State governments are meeting the disturbed condition of our new industrial environments, and the only road open to us now, as then, is through a commission, an advisory body. "Mr. Chairman, the Committee on Labor did not consider the commis- sion too large to represent a continent such as ours, with its vast and varied industries. The difference in climate, the difference between plain and mountain, the difference between North and South, East and West, give rise to great industries in one section that are not well understood in another; all of which should have representative men serve on the commission. Even the number provided for will not represent all, but it is believed that it will have reasonable knowledge of all the great pursuits of our country, and will be in full sympathy with all, so as to hear and recommend for the greatest good for the greatest number. (Applause.) "Again, the Committee on Labor do not think the appropriation required by this bill too large to secure and compensate such representative men as it requires. While the government is appropriating millions of dollars for internal improvements, for material development, for defense on land and sea. it should not hesitate to grant such a comparatively small sum to inves- tigate the industrial questions and recommend some remedial legislation for its industrial classes to prevent violent disturbances which cause so many million dollars of loss to the people. ♦ "Mr. Chairman, the question is one of equality. The equality of man was shown in creation, affirmed in redemption and first declared as the foundation of human government in the new world 120 years ago. This is the greatest political question of the Nation and of the world. The barbar- ous ages are passed, feudalism is gone, serfdom has been destroyed, and slavery has perished from the earth, but the question of equality has come to the front and is pressing for solution with irresistible power. "The history of the world teaches that God holds nations responsible to the standard they set up. Our standard was the highest erected since the dawn of time, yet it must now be apparent that this Nation has been as false to its declared principle of equality as it was to its declared principle of freedom. (Applause.) "Mr. Chairman, when this Nation was founded and equality declared there were only 3,000,000 of inhabitants who owned this continent, capable of sustaining in comfort one-half of the inhabitants of the civilized globe; yet in a hundred years we have exploited it and distributed its land and wealth most unequally. We have wantonly destroyed many of its forests, its animals, fish, and birds, instead of utilizing them for the benefit of man, and are now trying to replace them. We have unequally divided the public domain; have been prodigal of land, giving it by the millions of acres for development. This waste fitly ended in a great scramble for the last public lands in Oklahoma, where the strong bore down the weak and the man with the swiftest liorse took possession, not in right, justice or mercy, but by physical force and endurance. "Mr. Chairman, with a continent vast in extent, incomparably rich in soil and mineral, teeming with vegetable and animal life; with its mechani- cally multiplied labor forces, capable of sustaining hundreds of millions of inhabitants; and yet, with only 65,000,000, there have been and are yet large numbers out of work, seeking employment and finding none; many needy, hungry, and poor; all this with granaries and storehouses full of all the com- VICE-CHAIRMAN PHILLIPS' SPEECH. 17 modities of life; yet millions of laborers can not earn and have no money to buy. We have thus recently presented the anomalous condition that in the times of the greatest abundance we have had the greatest want. This can only be accounted for upon the ground of unequal opportunities, unequal privileges, and unequal distribution. "We have been as brave and patriotic as any people; we have fought three foreign wars and the gi-eatest civil war in recorded time; we have been as generous to forgive as we were brave in battle; yet in business we have been prodigal of our inheritance and unjust in its distribution. "Mr. Chairman, the massing of capital and labor which has been caused by the discovery and use of steam and electric power and invention of mod- ern machinery has brought us to face a new industrial problem of the great- est magnitude. History furnishes us with no precedent or example for its solution. This age is one of concentration, corporation, and centralization. It is an age of organization; and if organized capital deals with labor it must expect to deal with organized labor. Organization on the one hand implies organization on the other, so that there may be two equal parties to the agreement, otherwise the first party would dictate and the other sub- mit. Ours is the contract system. While this is the best order of society that has yet obtained in the world, yet men will not continue to contract as freemen while believing that they must submit as slaves. "There must be two parties to the contract. "Industrial corporations largely control the production and exchange of this continent. Massed capital and massed labor are largely controlling production, manufactures, and transportation, the very sources of supply and demand upon which all depend. These are now so frequently in conflict that all the relations of life are being disturbed. Society has rights which must be respected by both these contending forces, and its good order and peace demand a settlement which should be equitable, just and durable. (Applause.) "Again, this centralization of capital and labor has produced a world- wide war of competition in which labor suffers, fortunes are wrecked, and homes are destroyed. Honorable competition is considered the life of trade, but the weapons which are more and more being used are cruel; they are reduction of wages and adulteration and counterfeiting. Low bids are made to secure large contracts, with no other hope to meet them than by the reduction in wages, and labor has lost in all these battles. Another weapon in this competitive battle is adulteration. This occurs in medicine, food and raiment. There are adulterations and counterfeiting in all we eat, drink and wear, thus endangering health, comfort and life. While we have ade- quate laws to punish the counterfeiting of money, the more dangerous and damaging counterfeiting of the commodities of life goes unpimished. If passing pewter for silver or brass for gold is punished, the other should be more severely punished. The first means only loss in value, the latter means loss in value and endangers life and health. Dishonest men engaged in the war for gain grow rich in selling counterfeit commodities, while many honest competitors fail and their fortunes are wrecked. "Mr. Chairman, the war of competition, as now waged, instead of being the life of trade, too frequently means the death of one of the contending parties or a combination in which the people lose. Property won by fair competition or honest toil will be respected; but won by special privileges, unjust competition, or fraud in adulteration can not be respected, and the time is fast approaching when such methods of acquisition will not be tol- erated. The holder of such property can not atone in acts of charity, return- ing in part to the few that which he has wrongfully taken from the many. (Applause.) Philanthropy is one of the noblest traits of man; but it should be expended in teaching, in lifting up the race, in caring for the disabled, the suffering, and the helpless. All that others require is an equal chance in the race of life, with none to hinder and none to handicap. They require justice, not charity. (Applause.) "Mr. Chairman, it is most apparent that our laws have in no sense kept pace with the new discoveries, inventions and developments of the age. The world has made more advancement in physical development and scien- 18 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. tific discovery in the last 100 years than it did in the preceding 6.000. While the founders of this Republic declared new principles, yet the laws they adopted were largely taken from a monarchy, and belonged to a darker age, when labor was oppressed, had no voice in the government, and had not even the right of organization. We thus put our 'new wine into old bottles,' and they are bursting. "We say, 'Government exists for the people.' yet we adopted the laws of those who say that 'the people exist for the government.' New conditions confront us on every hand, in the concentration of capital and organized labor, in new improvements, in the instruments of husbandry, in the mode of manufacturing, transportation, travel and communication. All these have been revolutionized within a generation. We have been offering premiums for inventions, discovery and development, for labor-saving machines and devices of all kinds, until we have changed the whole order of industrial pursuits, of production and distributioa. While we have had thousands inventing and discovering, we have offered no pi-emiums for talent or energy; have had no men studying these new conditions and adjusting laws to our new environments; hence there is friction, discontent and violence, destroying peace, property and life. "Max Muller has stated that the word 'mankind' is not found in human language before Christ. There was nothing in language to express the kin- ship of the race. It was Mede, Persian. Grecian. Roman, bond and free. But since the human race has learned its kinship and the word 'mankind' has expressed this relation — this brotherhood — the laws of society must more and more recognize the obligations and rights gi'owing out of this relation. Our government is one government, our body politic being one body; when, therefore, any 'one member suffers, all members suffer with it.' When a number of the members of the human body suffer, and are not speedily healed, the body dies; so eventually will the body politic die if many mem- bers suffer. By not caring for others we injure ourselves, as. for example, poverty and the want of sanitary conditions breed physical disease. This is true in a community, in a nation, and in the world. Even the world is bound together by ties of humanity which may not be disregarded without injury. Pestilence follows famine. This was recently demonstrated by the outbreak of cholera in Russia, which caused many deaths in other nations, and for a time affected the commerce of the world. If a small portion of the loss sustained by other nations had been spent in promptly relieving want, and caring for the afflicted in Russia, millions of money would have been saved, and the angel of death would not have spread its wings over the world. It must not be forgotten that in our body politic when one member suffers all the members suffer. "In the last analysis of human government it will be found that it must be based upon principles which meet the highest wants and guarantee the best good of all. in view of our common origin, common interests and com- mon destiny. No self-government can exist without a community of inter- ests. Equality can not be denied nor favors granted. Every man according to his ability must contribute part, otherwise he becomes a privileged per- son.* No man can obtain true success who lives and acts solely for self. A purely selfish existence is worse than no existence. The highest happiness is to be and to do for others, and no government of the people and for the people can fulfil its mission unless it has constantly in view the highest good of all. We, in this self-government, have plighted faith to each other. Every loyal citizen must be protected in all his rights, because he is a citizen and a part of this government. No discrimination in favor of any individual, company, or class can be tolerated in such a government, yet the cry of discrimination comes to us from every State and district over the whole continent, and it demands prompt consideration and just action. (Applause.) "Mr. Chairman, the Fifty-third Congress spent the larger part of two sessions discussing the silver question and the tariff issue, and a consider- able portion of this session has been spent discussing the same subjects. These two questions, important as they are, constitute only a part of the great industrial issues; yet upon this fractional part Congress has con- sumed all this time, leaving the greater needs of the people unanswered. VICE-CHAIRMAN PHILLIPS' SPEECH. 19 It will be found that when this labor question — the industrial issue — equality, which is the final problem of the world — is understood, that tariff and the coinage of silver are only a small pait of it. In fact, we have been doing like the Pharisees of old. 'Tithing mint, anise, and cummin,' and have omitted the weightier matter of the law, 'judgment, mercy and faith.' 'These we ought to have done, and not left the others undone.' As important as tithes, tariff, or silver may be, they are not all-important. The laborer and agi'icul- turist are not organizing and protesting on account of the coinage of silver or the tariff issue, but on a question of right; and right, like truth, is eternal and will prevail. The levying of tariff will not settle it. "Protection against the product of the underpaid labor of Europe can never settle the question of equality and just distribution among our people. This has been demonstrated in both tariff and free-trade countries. In European countries, which are not disturbed by tariff agitation or the free coinage of silver, we find the industrial question to the front and threaten- ing the very existence of nations. In all our discussions how often have we heard the rights of the laborer, the farmer, the manufacturer, and business man spoken of except in connection with tariff and free trade or the free coinage of silver? Yet their rights are superior to both, and the disturbed condition of the country can not be settled by the adjustment of these ques- tions. I believe in protection, and have advocated it in this House upon both moral and economic grounds. I believe in bimetallism; in the widest possible use of silver with safety to our business Interests, and that all dol- lars should be equal in value, but do not believe in either one or both of these measures as a cure for all the ills of society. I do not, therefore, believe in 'cure-alls,' but do believe in 'all cures.' (Applause.) "Again, too much of our law is made up of compromise measures. All compromise laws, from the Missouri Compromise to the present time, if not in all time and in all nations, have been disappointing, if not disastrous. If there be any great compromise law in nature, scientists have not yet discov- ered it. If there be any great compromise law in the Bible, theologians have not yet expounded it. We cannot compromise truth or principle, facts or figures. If there be no great compromise principle in nature, reason, math- ematics, or revelation, compromises should not enter so largely into our law. "I believe that in the last analysis of this industrial problem, in view of our common origin, interests, and destiny, the golden rule will be its solu- tion, and that a large per cent of existing laws will be stricken from the records by inserting, 'All things whatsoever ye would that men should do to you, do ye even so to them.' This is in strict accord with our declared principles of freedom and equality, and we must return and build again upon this everlasting foundation of justice, mercy and right. "Mr. Chairman, the rights of woman must be more fully recognized in the future than they have been in the past. She is constantly entering new industrial fields and meeting their requirements with fidelity and ability. Her advancement in intellectual and moral pursuits is without a parallel in history. She is beginning to dominate along all the lines that lead to the betterment of the race. She has built and endowed more institutions of benevolence and charity for the relief of want and suffering in the past .50 years than were established by both sexes in all precedins: time. Yet, not- withstanding all this, many of her sex still toil in sweat-shops, fighting an uneven battle for child and home with avarice and greed. This blot upon civilization must be removed, and woman's rights and influence be recog- nized in any future movement for the betterment of our industrial system. (Applause.) "The requirements of this enlishtened age for a better industrial and social system must be met. Too many of the toiling millions are not prop- erly housed, fed. clothed and educated. "They must have homes, not hovels: must have proper food, clothing, education; must, in our unlimited fields of industry, have a chance to sow and reap and rest after toil; must share in the comforts of life, if they endure its burdens. "Mr. Chairman, it is painful to live in a land of such bounty and see so much suffering. It is distressing to feast while so many are hungry; to 20 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. be clothed in comfort while many are clad in scanty garments or rags; to be sheltered in pleasant homes while so many live in hovels; to meet dis- tress on every hand and be unable to relieve it. Individual effort can accom- plish but little; only by united effort, upon principles of humanity and by doing unto others as we would have them do unto us. can our government be established upon a foundation which no storm can move. "Mr. Chairman, all this can be done and more; not out of our abun- dance, but out of our superabundance. This is sufficient to meet every physical want and relieve all distress that comes from man's inhumanity to man. "Mr. Chairman, while this bill seeks to meet the just demands of all classes, it must, however, be borne in mind that this is not a class govern- ment, not a government of laborers, farmers, manufacturers, transporters, or business men, but is a government of the people. No one class estab- lished this government in eight years of war; no one class saved it in four years of rebellion, and no one class can ever govern it unless it be by despotic rule. "Mr. Chairman, as this Nation was the first on earth to declare the true principles of government, my greatest desire is that it shall be true to these principles and go on winning new fame and glory, through the ages, and that wherever its flag floats on sea or land it may be the symbol not only of freedom, but of equality. (Loud applause.) "I wish to call attention to the general desire of the people, especially of the labor and farm interest of our country, in favor of this measure, as shown by petitions, resolutions, and letters addressed to the Labor Commit- tee of the last Congress, and also to the Labor Committee of this Congress, some of which I append: " "New York, January 7, 1S95. " 'My Dear Sir— It is with more than ordinary pleasure I note that House bill 7756 has been referred to the Committee on Labor, of which you are the lionored chairman, and that the prospects are good for a favoral^le report from the commit- tee to the House. ^ " 'In my report as president of the American Federalion of Labor, to the frjur- teenth annual convention, recently held at Denver, Col., I took occasion to say tlie following in reference to the bill: , " ' "A bill was introduced by the Hon. Thomas W. Phillips in the House for the purpose of creating a commission to be appointed by the President, for the jiur- pose of inquiring into the condition of industry and to what extent the people liave been deprived of the rights guaranteed by the CoiiStitution of the United States and the Declaration of Independence. The bill prescribes that representatives from or- ganized labor, business men and farmers shall be appointed. " ' "Tile executive council endorsed the bill and organized labor generally ap- proved it, forwarding resolutions to their respective Congressmen and Senators certifying to that effect. It is desirable that the bill before its final passage should receive the consideration of this convention to say whether any amendments may be required. " ' "Copies of the bill will be laid before the appropriate committee to which this subject may be referred." " 'The subject matter was referred to the committee on president's report, which subsequently reciuested that a special committee be appointed for the purpose of expressing the sentiments of the convention thereon. The special committee reported in favor of the bill and recommended its endorsement by the convention. It also made the following recommendations: " ' "We would also recommend that, in case the said bill becomes a law, all matters Indorsed by this body requiring Congressional action shall be submitted to the icpresentatives of labor provided for in the bill, and that efforts be put forth by the t-xectUive council to s^-cure the appointment of union men as such representa- tives. " ' "We would further recommend that all budi.'S affiliated with the American Federation of Labor petition their respective Senators and Representatives in Con- gress to vote for the passage of the above-named measure." " 'The report of the committee, I take pleasure in saying, was adopted by the convention by an overwhelming majority. " 'In all likelihood I may be in Washingt(jn during the coming week, and if I am I shall deem it botli a pleasure as well as a duty to call upon you in connection with this bill and other measures in which the organized wage workers of our cotuitrv are interested. " 'Truly yours, " 'SAMUEL GOMPERS. " 'Hon. Lawrence K. McCann. Chairman Committee on Labor, House of Represent- atives, Washington, D. C VICE-CHAIRMAN PHILLIPS' SPEECH. 21 " 'Philadelphia, Pa., December 14, 1894. " 'Sir— Understanding- that your committee have now under consideration H. R. 7756, introduced by Congressman PhiUips, of Pennsylvania, being "A bill authorizing the appointment of a non-partisan commission to collate information and to con- sider and recommend legislation to meet the problem presented by labor, agriculture and capital," I beg leave to offer my personal and official indorsement of the propo- sitions therein contained. It is not possible witliin the prescribed limits of a letter to g've all my reasons therefor, but suffice to say for the present that it seems to me this would be a practicable way not only of securing the best information as a basis for the making of laws conserving the interests of all classes, but would, to a considerable extent, do away with the necessity for various organizations of labor, capital and agriculture sending committees to Washington to influence legislation and lobbying in the interest thereof. The prosperity of the urban working classes is so Closely interwoven with that of the agriculturist and the manufacturer tliat I doubt very much if any of us know where the interests of each begin or end. Such a commission as proposed by the bill would have the combined advantage of being representative of all classes, and securing information hardly accessible under other conditions. " 'The weight of recommendations from such a commission to the lawmaking power of States and Nation would certainly be much greater than similar recom- mendations coming from any other source, inasmuch as it would be non-partisan and representative of all classes. " 'Believing I voice the hearty concurrence of the large constituency I have the honor to be afiiliated with and represent in tlie above indorsement, I am " 'Very truly yours, " 'JOHN W. HAYES, " 'General Secretary-Treasurer. " 'Hon. Lawrence McGann, Chairman Committee on Labor, Washington, D. C " 'Harrisburg, Pa., December 22, 1894. " 'Dear Sir— My attention having been called to House Bill No. 7756, Fifty-third Congress, second session, entitled "A bill authorizing the appointment of a non- partisan commission to collate information and to consider and recommend legisla- tion to meet the problems presented by labor, agriculture and capital," and having examined the said bill with much care, I had it laid before the Farmers' Alliance council of tills county, where it met, after discussion, -tvith unanimous approval. " 'This week it was laid before the council of the Pennsylvania State Farmers' Alliance and Industrial Union, its provisions discussed, and the measure was prac- tically unanimously approved. " 'The bill has been laid before a majority of the members of the executive com- mittee of the National Farmers' Alliance and Industrial Union, and has their ap- proval. " 'Personally, I hope it will become a law at a very early day, as the agricul- tural element of the United States, I am sure, will be greatly benefited by the labors of a commission appointed in the manner proposed by the bill referred to. " 'Very respectfully, " H. C. DEMING, ■■ 'Secretary Executive Committee, " 'National Farmers' Alliance and Industrial Union. " 'Hon. Lawrence E. McGann, M. C, Chairman of the Congressional Committee on Labor." " 'Des Moines, Iowa, December 18, 1894. " 'Dear Sir— H. R. 7756 having been called to my attention, I take great pleasure in informing you that it meets my most hearty approval. " 'It seems to me that the bill promises more for the harmony of conflicting interests at this time than any other measure now pending in Congress. " 'Thanking you for the introduction of so just and timely a measure, and trust- ing for its immediate passage, I am, " 'Respectfully yours, " 'J. R. SOVEREIGN, " 'Grand Master Workman. " 'Hon. T. W. Phillips, M. C, Washington, D. C "'INDORSEMENT OF THE NATIONAL FARMERS' ALLIANCE AND INDUSTRIAL UNION. " 'Washington, D. C. February 7, 1896. " 'A bill known as the "Industrial Commission bill" (H. R.21),has been introduced In the first session of the Fifty-fourth Congress. The position of the National Farm- ers' Alliance and Industrial Union on the pioposition is as follows: 22 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. " 'We favor the appointment of a non-partisan commission to collate informa- tion and to consider and recommend legislation to meet the problems presented by labor, agriculture and capital. Inasmuch as it is to be preliminary to proposed wholesome National legislation, and as the work of such a commission will gather many facts and ligures into official form, all at the expense of the general gov- ernment, we indorse such legislative action. " 'In indorsing' such a commission, however, we are firmly of the opinion that the appointment of the commission should be surrounded by such safeguards as to insure the appointment of members favorable to the industrial classes. The ex- penses of such a commission should be kept within the limits of strict economy. " 'J. \V. BOWDEN, Chairman. " 'C. R. WHITE, " 'E. M. WARDELL, " 'Conference Committee of the N. F. A. and I. U. (Certified copy.) " 'J. W. BOWDEN, Chairman." *' 'Office of General Assembly, Order of Knights of Labor, " 'Washnigton, D. C, January 20, 1896. " 'Gentlemen— We, the undersigned general oflicers of th.e Knights of Labor, acting on behalf of the entire organization, cordially commend to your favorable and prompt consideration the bill, H. R. 21, introduced by Hon. T. W. Phillips, of Pennsylvania, which is entirely acceptable to our members. " 'Most respectfully, " 'J. R. SOVEREIGN, G. M. W. " 'M. J. BISHOP, G. W. F. " 'JOHN W. HAYES, G. S. T. " 'C. A. FRENCH, " 'T. B. McGUIRE, " 'J. M. KENNEY, " 'H. B. MARTIN, " 'Members of General Executive Board. " 'The Committee on Labor, House of Representatives, Fifty-fourth Congress.' "From the report of the committee on president's report, made to the fifteenth annual convention of the American Federation of Labor, held at New York, N. Y., December 9 to 17, inclusive, 1895, the following extract is taken: " 'Renewed efforts should be made to secure the passage of the Phillips bill, which was defeated at the last session of Congress, and a committee should be appointed by this convention to urge the passage of this bill.' ," 'Washington, D. C, March 18, 1896. " 'Dear Sir— We have carefully considered the bill, H. R. 21, commonly known as the bill creating a commission to inquire as to what legislation is necessary to the btst interests of the people, and as it goes to the House from your committee, we gladly lend it our indorsement. " 'It appears to us as a strictly non-partisan and impartial measure, and we commend it because it singles out no class, creed, or party to conduct said investi- gation and proposes no legislation in favor of any class, creed or party. Were it otherwise we would not feel that we could lend it our indorsement or approval. " 'Very truly yours, " 'B. E. CLARK, " 'Order of Railway Conductors. " 'F. P. SARGENT, " 'Brotherhood of Locomotive Firemen. " 'P. H. MORRISSEY, " 'Brotherliood of Railway Trainmen. " 'P. M. ARTHUR, " 'Brotherhood of Locomotive Engineers. " 'W. V. POWELL, " 'Order of Railway Telegraphers. " 'Hon. Thcmas. W. Phillips, Chairman Committee on Labor, House of Representa- tives, Washington, D. C " Not only did the speeches in Congress point to the friction between capital and labor as the great purpose of the bill, but that was the para- mount reason urged for its passage in reports that were made upon it. On Fel)ruary 26, 1895, during the third session of the Fifty-third Congress, Mr. Phillips made a report from the Committee on Labor of the House of Representatives on the bill introduced by him (House Bill 8494). The chief reasons urged in the report for enactment of this bill follow: VICE-CHAIRMAN PHILLIPS' SPEECH. 23 "Because there is wide-spread dissatisfaction with the laws governing labor, as shown by discontent, strikes and violence, causing great misery, loss and danger to society. "Because of the growing discontent among farmers, as evidenced by their various organizations — their protests against unequal burdens and tasks, discriminating charges in transportation and exorbitant charges of middlemen in disposing of their commodities. "Because the business men and best interests require a just and more satisfactory settlement of differences with those with whom they deal and upon whose labor and products successful labor must depend. "Because it is expected that this commission will be composed of ex- perts, the ablest and best of each class named, bringing into conference representative men of labor, agriculture and business, whose duties will be to recommend laws looking toward a more just distribution of the burdens and benefits of our self-government. "Because our laws have not kept abreast with the rapid pace of de- velopment. New conditions confront us on every hand in the massing of labor and capital; in new improvements in the instruments of husbandry (making great changes in agricultural pursuits) ; in the mode of manu- facture, transportation, travel, and intercommunication. "All have been revolutionized within a generation. "We have been offering premiums for invention, discovery and de- velopment, and we have had 10,000 men burning midnight oil inventing labor saving machines and devices of all kinds until we have changed the whole order of industrial pursuits, but we have offered no premium for talent or energy in ameliorating the altered conditions of labor, established no com- missions to bring up our laws to meet these new conditions; hence there is friction, discontent and violence, destroying peace, property and life. "Because of the importance of the agricultural pursuit to the welfare and happiness of man. In the very beginning God sent forth man to till the soil as his chief employment. All ci.vilized life depends upon agriculture. Without the farmer the world would be a wilderness. In our marvelous de- velopment the interests of the farmer have not been properly guarded. "Because labor is the base of all wealth and has been from the time when God said: 'In the sweat of thy face shalt thou eat bread.' "Without labor none can accumulate and all development would cease. The claims of the laborer must be justly met so that in bearing the great burdens of life you will share more equally in its enjoyments. "Because business men have and will continue to suffer great depre- ciation and increasing loss unless a better adjustment is made. "Because the good of society demands it in that so much of vital im- portance of its well-being and peace is bound up in massed capital and mass- ed labor, so frequently in conflict and which now largely control production, manufactures, transportation and development, the very sources of supply and demand upon which the good order of society depends. The commis- sion proposed is non-partisan, impartial, and designed to meet the wants of the people. "Because we declared equal rights and millions of our citizens are complaining that they have not been pi'otected in them. Rights are as eternal and immutable as truth. There is always a way to do right and a way to right wrongs. If wrongs exist, they should be righted. Rights must be guarded and maintained. Right is eternal, and. like truth, will pre- vail. • The commission is important because of its inquiry along the entire line of its fundamental principle of our government and therefore the de- mands of the people require such work as is proposed by this bill." The report continues to give reasons why a commission such as was proposed in the bill before the House would be better adapted to the w'ork of making an inquirj'- into industrial conditions and recommending legisla- tion for their improvement, than would be the National or State legislative bodies, and refers to the exceptional facilities offered by statistical bureaus of the government on labor questions. Concluding the report says: "In addition to these reasons, we beg to call attention of the members of Congress to the general wish of the people, especially of representa- 24 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. tives of the laboring and farming interests of our country as witnessed by petitions and resolutions favoring the passage of the bill, from which we give several extracts below." This report was also accompanied by endorsements of officials of the leading labor organizations of the country. The debates in Congress that led up to the passage of the Phillips bill are of great interest, as they indicate the view that Senators and Repre- sentatives took of the measure at that time and the purposes they thought were to be accomplished by the Industrial Commission. There had been no opportunity in the Fifty-third Congress to secure a discussion of the bill, which was only introduced in the third session of that Congress. Mr. Phil- lips, on February 14, 1896, (First Session Fifty-fourth Congress) again in- troduced his bill for the appointment of an Industrial Commission. On June 1st, 1896, Mr. Bartlett, of New York, criticised the manner in which the commission was to be organized and the propriety of delegating to it what he considered legislative powers, claiming that the bill was un- constitutional. Mr. Henderson, of Iowa, supported the bill, saying: "I say to this House that the labor interests and the agricultural inter- ests of this country with united voice ask for the passage of this bill. * * * * *" Mr. Gardner, of New Jersey; Mr. Belknap, and Mr. Howe spoke on the measure. Whenever its purpose was referred to by these gentlemen it was in connection with its relation to the problem of the strained relation be- tween capital and labor. After the passage of the bill by the House, numerous attempts were made to get it before the Senate for consideration. On February 20, 1897, Senator Quay called it up. Senator Piatt, of Connecticut, criticised the method prescribed in the measure for forming the commission, saying that the manufacturers certainly asked for no commission. Continuing, he said: "The demand then for this legislation comes from labor and agriculture, two classes of our citizens, and they have asked that each of these classes shall have three commissioners. * * *" Senator Quay stated that he called the bill up at the request of the representatives of the great labor organizations of the country. Speaking of the bill, March 3, 1897, Senator Hoar said: "Here is a proposition to investigate within two years' time all the great subjects which affect the happiness of the workingmen of our counti'y who are in substance and effect the country itself. * * *" A substitute for the House bill had been placed before the Senate and on March 3, 1897, it was passed by that body by a vote of 44 to 6. Just before the vote was taken Senator Shoup, emphasizing the bill as a labor measure, stated that there were "10,000,000 toiling men and women inter- ested in this measure." The bill was returned to the House, which promptly passed it in the form in which it had gone through the Senate. It failed to become a law be- cause, as stated. President Cleveland received it only a few minutes before 12 o'clock on March 4, and he declined to sign so important a measure when he had no time to examine it. The measure was again introduced in the Fifty-fifth Congress in the form in which it had previously received favorable consideration and was passed in June, 1898, receiving the signature of President McKinley on the 18th of that month. Acting under this authority President McKinley appointed the follow- ing members of the Industrial Commission: SENATOR JAMES H. KYLE, Aberdeen, South Dakota. SENATOR BOISE PENROSE, Philadelphia, Pennsylvania. SENATOR LEE MANTLE, Butte, Montana. SENATOR STEPHEN R. MALLORY, Pensacola, Florida. SENATOR JOHN W. DANIEL, Lynchburg, Virginia. REPRESENTATIVE JOHN J. GARDNER, Atlantic City, New Jersey. REPRESENTATIVE WILLIAM LORIMER, Chicago, Illinois. REPRESENTATIVE L. F. LIVINGSTON, Kings. Georgia. GARBLED TESTIMONY. 25 REPRESENTATIVE JOHN C. BELL, Montrose, Colorado. REPRESENTATIVE THEOBOLD OTJEN. Milwaukee. Wisconsin. MR. ANDREW L. HARRIS, Eaton, Ohio. MR. S. N. DEXTER NORTH, Boston. Massachusetts. MR. ELLISON A. SMYTH, Pelzer, South Carolina. MR. JOHN M. FARQUHAR, Buffalo, New York. MR. EUGENE D. CONGER, Grand Rapids, Michigan. MR. THOMAS W. PHILLIPS, New Castle, Pennsylvania. MR. CHARLES J. HARRIS, Dillsboro, North Carolina. MR. M. D. RATCHFORD, Indianapolis, Indiana. MR. JOHN L. KENNEDY, Washington, D. C. In the spring of 1899 Mr. North resigned from the commission to accept an appointment in the Census Bureau, and Mr. Albert Clarke, of Massa- chusetts, was appointed in his place. When the Senatorial term of Mr. Mantle expired, on March 4, 1899, he remained for a time on the commission in accordance with a special pro- vision in the act creating it. He resigned in 1900 and Senator Bard, of California, was appointed in his stead. The commission was organized with Senator James H. Kyle chairman, ex-Representative Thomas W. Phillips first vice-chairman, and Representa- tive John J. Gardner second vice-chairman. Very soon after this organiza- tion had been effected a committee on procedure was appointed and made a report on a plan for work which involved the appointment of five sub- commissions, each to take charge of a branch of the investigation to be pursued by the commission, these branches being as follows: On agricul- ture and agricultural labor, on conditions of labor and capital employed in manufacturing and general business, on conditions of labor and capital em- ployed in mining, on transportation, and on statistics. After the commission had begun its work on these lines it determined to begin an investigation of trusts and industrial combinations. No sub- commission was appointed to take charge of this branch of the investiga- tion, it being conducted by the commission, with the assistance of Prof. J. W. Jenks, of Cornell University. Mr. Phillips, the vice-chairman, presided over nearly all the meetings of the commission, owing to the absence of Senator Kyle, the chairman, and it is believed that he was not absent from a single meeting when testimony was being given in relation to the Standard Oil Company. CHAPTER IIL GARBLED TESTIMONY. The garbling of the testimony that was given before the Industrial Com- mission was permitted to such an extent that this testimony, as officially published, gives but a very vague idea of what actually took place when witnesses were on the stand. It would appear that the rules adopted by the commission were drawn in order to secure a truthful report of the testimony of witnesses, but they were either violated or the commission itself permitted changes in the testimony to an extent that would astonish any Congressional committee which is accustomed to having testimony re- ported without being garbled by the witnesses or any other person. The testimony of Vice-Chairman Phillips and of Mr. J. W. Lee, presi- dent of the Pure Oil Trust, give the most prominent examples of this un- usual liberty in the handling of testimony. While it is quite common for witnesses before Congressional investigating committees to be furnished with the stenographic report of their remarks before it is published, it is customary to limit their power of correction to changes in form of expres- sion and to the correction of grammatical errors, and they are always cau- tioned against any change of the ideas conveyed in their testimony. In the 26 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. case of the witnesses before the Industrial Commission, as shown in the following chapters, questions and answers have been stricken from the testimony when they completely changed the meaning of the answer that had preceded them. It is shown that in numerous instances portions of answers were stricken out when they contained most important features of the testimony and other answers were changed beyond recognition. No attempt is here made to give every case in which these significant changes occur, but enough of them are given to show an entirely unreliable record of the proceedings of the Industrial Commission is contained in the official report of that commission to Congress. It has been possible to show this reckless garbling of the testimony, because an accurate stenographic report, made by a stenographer of National reputation, as explained in the preface, allowed a comparison of what was actually said with the garbled official report, indicating the remarkable manner in which the testimony has been handled. It is hardly necessary to suggest that the questions of the commis- sioners were at least to a large extent suggested by the testimony of the witnesses themselves. It can readily be seen that for a witness to in the slightest degree change the sense of his testimony without allowing an op- portunity for commissioners to ask questions that would be called out by such remarks is misleading and unfair. If Congress or anyone with authority to do so desires additional proof of the great liberty that has been taken in editing the testimony of the Industrial Commission, that might easily be secured by an examination of the reports of the stenographers of the commission, the typewritten copies of which doubtless contain corrections that have been made. If many of these corrections were made when the testimony was in print, a compari- son of the typewritten report with the official report finally published, will show the extent of these changes. It would also doubtless be a very easy matter to ascertain to what extent these changes were made by the com- mission's own editor and by the witnesses themselves. Mr. William E. Sackett. secretary of the commission, in his report on the work of the commission to January 1, 1900, in referring to the instruc- tions given the editor of the testimony, says: "So that he may know how circumscribed his lines are, the commission at the very outset adopted these rules to govern the editor in the treatment of the copy: "1. Errors of grammar should be corrected in all instances. "2. Repetitions which do not serve to emphasize or make clearer matter under examination shall be cut out. "3. Personal opinions of commissioners must be eliminated. "4. The name of the witness, when used in a question addressed to him, must be cut out. "5. Remarks of commissioners immediately preceding questions which do not make the questions clearer to the witness must be omitted. "6. Answers of commissioners to questions asked of witnesses by commissioners must be cut out. "7. Opening remarks of the presiding officer, with explanation to wit- ness of mode of examination, shall not go in the record. '"Complimentary remarks of presiding officer at conclusion of testi- mony are to be omitted ; but the reply of witness to same, if bearing on the well-being of his organization or industry, or to the work of the commission, shall be printed. "8. Leading features fas known in law) of a question should be avoided as much as possible. "9. Where the meaning of the question or answer is doubtful it may be left intact, or submitted to the commissioner asking the question. "10. When partisan politics appear in question or testimony the same shall, in accordance with the rules of the commission, be eliminated. "11. The name of a previously examined witness shall not be printed in questions tending to the contradiction of his testimony. GARBLED TESTIMONY. 27 "12. Witnesses shall not be permitted, without the consent of the com- mission, to eliminate material parts of their testimony or change the form of questions. "When proofs are drawn at the Government Printing Office duplicates are sent to each witness, in order that he may see for himself that he has been correctly reported. The witness is expected to make in his copy only such verbal changes as he thinks necessary for the better expression of his ideas or the better statement of his facts. Witnesses have been permitted to add information not at hand at the time of their appearance before the commission, but in all cases this was agreed upon at the hearing." It will be seen by the above statement of the rules governing the editing of the testimony that the elimination and changes referred to could not properly have been made by the editor nor by the witness without the con- sent of the commission. It is hardly reasonable to suppose that the com- mission itself would have permitted these changes. It would be extremely interesting to know on whom the responsibility of tampering with what should have been an accurate and truthful official record rests. The rules themselves indicate rather a queer style of proceeding with an official investigation of the industrial conditions of the country. Instead of requiring commissioners to avoid "leading questions" Rule 8 provides that: "Leading features (as known in law) of a question should be avoided as much as possible." The fact is that the commission made no effort, if an occasional protest on the part of an individual commissioner is excepted, to prevent the asking of leading questions. The vice-chairman of the commission himself not only at times preceded his question with an argument, but framed them so that they came within the class of questions which were to be avoided under Rule 8. These leading questions very fre- quently secured answers that were little more than a repetition of the question. When the testimony was edited the leading feature of the question was frequently eliminated, while the answer remained with noth- ing to show the manner in which it was brought out. The commission adopted no rule prohibiting the embodying of questions as part of answers of witnesses, but doubtlessly this was because no one ever dreamed of such a mode of procedure. This method is surely far be- yond any system that even shrewd lawyers have attempted to adopt in order to make their witnesses talk as they might desire while on the stand. The use of such a system would be invaluable to a lawyer who might find himself in a tight place and who desired to put words in the mouths of important witnesses. Of course it is not charged that Mr. Phillips or any other particular person either designed or made these changes by which questions were metamorphosed into answers by some mysterious alchemy in the editing or purification of the testimony, but the changes are there and speak for themselves. For all that is known or charged here, the type might have got mixed up while in the galleys. Whether such changes were made by design or by accident, it is es- pecially appropriate that this new manner of arranging testimony for pub- lication should be exemplified in the testimony of a director of the Pure Oil Trust while on the stand and being questioned by another leader in the formation and conduct of the Pure Oil Trust. It has been shown in another chapter that that trust has far out-classed the Standard Oil Com- pany in the trust-like features of its New Jersey incorporation, and it is quite appropriate that through its prominent members there should come suggestions of new rules of evidence that far outclass any suggestion of the kind that can be foimd on record. The conversion of a question into an answer and the generally remark- able method by which the testimony of the Industrial Commission was handled in preparing it for publication is illustrated by the following com- parison of statements, unimportant in themselves, as shown by the stenographic report and as officially published: (This testimony was given by Mr. Lockwood and was in reference to purchases of oil property he said had been made by the Standard Oil Com- pany just before the price of crude oil had been advanced.) 28 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. STENOGRAPHIC REPORT. OFFICIAL REPORT, (p. 403.) Q. (By Vice-chairman PHIL- Q. (By Vice-Chairman PHIL- LIPS.) Was that along about 1896 LIPS.) What was the date of that? or 1897? A. Yes, sir, 1896 or 1897, A. I think it was in 1896 or 1897. after they had bought all the prop- After they had bought all the prop- erty they could the market went up erty they could the market went up very high, as high, I think, as $2.60, very high, as high, I think, as $2.60, and had quite a high range of values and prices remained high for a long for quite a long period. •• period. The above change is not especially significant, but as an example it indicates the method of eliminating leading features of questions from testimony, after they have been given, instead of forbidding the asking of such questions. During the examination of Mr. T. F. Davis, the witness said that the business of producing crude oil was profitable under present conditions as long as there was sufficient production, when the following question and answer occurred: Q. (By Vice-Chairman PHILLIPS.) It depends on what you strike; a thousand-barrel well or a ten-barrel well. A. Yes, sir. This question and answer being one of the numerous arguments throv\-n in the testimony as side remarks by the vice-chairman v/ere stricken from the official testimony, though it is difficult to see why that was done. The question only indicated what was shown on other occasions when tes- timony tended to show that producers of oil were "getting along," on which occasions Mr. Phillips came in' with a question apparently intended to offset the effect of such testimony. Rule No. 7 indicates a clever little trick by which the commission threw out a bait, which is hidden from the reader of the testimony, in order to catch complimentary remarks about itself. Under this rule it is stated: "Complimentary remarks of presiding officer at conclusion of testimon>-, are to be omitted; but the reply of witness to same, if bearing on the well-being of his organization or industry, or to the work of the commission, shall be printed." This rule can only be understood when it is known that the commission adopted a custom of having its presiding officer make a parrot-like state- ment, which was repeated in the case of every witness who appeared before it, and was in effect that the commission was highly gratified because of the very full and accurate statement of the witness relating to his particu- lar industry. The witnesses, not knowing that every one was accorded this complimentary statement, in many instances felt quite flattered that they should have impressed the commission so favorably, and very nat- urally frequently endeavored to reciprocate the compliment by saying something equally flattering in regard to the courteous treatment they had received, or the great benefits that they believed the country would derive from the valuable work of the Industrial Commission. The rule of the commission provided that these remarks should be printed, "If bearing on the well-being of his organization or industry (that of the witness) or to the work of the commission." As his testimony had been on his "organiza- tion or industry," it was not likely that he should revert to that subject in responding to a flattering remark by the presiding officer. The compli- mentary remarks concerning the commission that were secured from wit- nesses by this ingenious device were carefully preserved and published in order that Congress and the public might read them, while they could not understand the little trick by which they were secured, as the compli- mentary remarks about the witness were in all cases eliminated from the report. By referring to the closing paragraphs of Mr. Page's testimony it will be seen that a commissioner, in violation of Rule 6, proceeded in a rather unusual manner to himself become a witness in rebuttal of Mr. Page's testimony by quoting the syllabus of a court case that had occurred prior to the interstate commerce law — that of Handy and others, trustees, vs. the Cleveland & Marietta Railroad Company, about which the witness said he GARBLED TESTIMONY. 29 knew nothing. Yet when Commissioner Kennedy contradicted a state- ment made by Mr. Kindel, this contradiction happening to show that the complaint against the Standard Oil Company as the refiner of oil was not well founded for the reason that the Standard was not refining petroleum at Denver, Col., the home of the witness, the correction was stricken out, while the charge of the witness was allowed to remain as if unchallenged. Mr. Kennedy knew of the facts in this case, as he had recently been in Denver as a member of a sub-commission to inquire into certain matters. It will be seen that Mr. J. W. Lee, president of the Pure Oil Trust, after testifying that the cost of local pipage of oil was only seven or eight cents a barrel, was asked the specific question whether that cost included fixed charges, and he replied that it did not. This question and reply, which entirely modified the effect of his first statement, does not appear in the official report. Again, the following question and answer occurred during the testimony of Mr. Dowe, and strangely enough they do not appear in the official report. "Q. (By Vice-Chairman PHILLIPS.) Then it is quite certain that they (the trusts) cannot produce as cheaply as an individual who is capable of managing his own affairs? A. I don't quite agree with you in that, Mr. Chairman; I would like to agree with you entirely, but it seems to me that they do certainly cheapen the cost of production." These are but examples of numerous eliminations that occur through- out the testimony. To give all such instances here would be but a repetition of what is shown in other chapters of this volume. The Industrial Commission was a unique organization in many respects and in no way was it more so than in the convenient manner in which it secured a quorum. The commission consisted of 19 members, but it is a perfectly safe statement that probably not over five of its members heard any consideiable amount of the testimony that was given before it. The average attendance throughout all the hearings that were held in Wash- ington was probably less than seven, or less than one-third of the entire membership. Yet it will be seen that in its preliminary report of March 1, IPOO, recommendations were made and signed by 17 members, in fact, by all except Senators Daniel and Mallory, Senator Mallory being dangerously ill at the time the report was made. But very few members of the commission having heard the testimony as it was actually given, such information as the other members obtained must have been through reading the garbled testimony as published in the official report, or the misleading "review" and "digest" of the evidence. Anyone who will carefully read these pages can determine to what extent an accurate judgment of the facts in the case, as far as they refer to the oil industry, could be ascertained from the official report of the testimony. When the many discrepancies between the official record and the steno- graphic report of the testimony taken before the Industrial Commission in relation to the oil industry are considered, the complaints of Mr. M. L. Lock- wood, regarding eliminations from his testimony, seem trifling, and yet they called forth, when presented to the United States Senate, severe criticism. The chief elimination complained of by him was his reference to a distin- guished jurist, and this statement was stricken from the official report because it was considered improper to allow an assault on the personal char- acter of a man when no evidence was offered to sustain the charge. This complaint, made in the form of a statement by Mr. Lockwood and published in the Congressional Record of the Fifty-sixth Congress, together with the discussions concerning it, will be found in the report of the proceedings of the Senate of May 28, May 29 and June 1. 1900, and .January 16, 1901. These discussions show that the extent to which testimony, as officially published, does not agree with the stenographic report of it, was not realized by mem- bers of the commission who were United States Senators. Senator Mallory, of Florida, a member of the commission, in replying to criticisms by Senator Allen concerning the power of a commission to revise testimony, declared that from his experience "the case of Mr. Lockwood was the only instance in which there was any ground for such an accusation." The following is from the record of the proceedings of the Senate of May 28, 1900: 30 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. MALLORY. I think the Senator is mistaken in the statement he makes to the effect that the commission excluded such evidence as it thought proper, and retained such evidence as it thought proper. My experience, which extended over some length of time, was that the case of Mr. Lock- wood was the only instance in which there was any ground for such an accu- sation. I did not approve of it myself; but at the same time on an investiga- tion I found that what was excluded from Mr. Lockwood's statement was a series of personalities directed against certain individuals, in which their characters were assailed without any benefit that would come to the public from its publication. Mr. ALLEN. I agree with the Senator that that evidence ought to have been taken out. I said that before the Senator interrupted me. Mr. BUTLER. I will say to the Senator from Florida that I have seen what purports to be Mr. Lockwood's testimony with the parts that have been eliminated marked around, and there are a gi-eat many facts and matter outside of personalities so marked. I do not know whether it was elimi- nated or not, and I can not know until I see the report. Mr. CAFFERY. I ask the Senator from Florida whether the parts stricken out of Mr. LockAvood's testimony embrace only personalities and assaults upon the court? Mr. MALLORY. That is my recollection. I was not satisfied with it, and I did not approve of striking out any testimony; but I examined into it, and I became satisfied that it was nothing which it was material to elim- inate. Mr. CAFFERY. There were no facts eliminated? Mr. MALLORY. No facts with any material bearing on the inve'iga- tion were eliminated. That is my recollection. The following discussion will throw some light on the opinion concern- ing the editing of the commission's testimony entertained at that time by Senators who were members of the commission and others: Mr. JONES, of Arkansas. In connection with that amendment I should like to ask the chairman of the Industrial Commission, the Senator from South Dakota, one question. I understand among the other sub-committees that the Industrial Commission has an editing committee. Is that true? Mr. KYLE. We have not an editing committee, properly speaking. Mr. JONES, of Arkansas. You have no editing committee? Mr. KYLE. No; that is. not for that purpose. What does the Senator mean by "editing?" Mr. JONES, of Arkansas. For the purpose of editing the testimony taken before the commission and changing it to suit the views of that par- ticular committee. Mr. KYLE. No; we have no committee that has any such power at all. Mr. JONES, of Arkansas. I have been told by a member of the com- mission since this debate has been going on that such is the fact; and the chairman of the committee tells me there is no such thing. Of course, if what he tells us Mr. KYLE. We have our chief stenographer, who, with certain other parties, look over the testimony to see that it is grammatical or free from minor errors. If there is any material change, it is made by the whole com- mission. Mr. JONES, of Arkansas. Who are the other parties? The Senator says the testimony is gone over by a "stenographer and certain other par- ties." I should like to know who the other parties are. The stenographer is not a member of the commission, and yet he is authorized to go over the testimony. Who are the other parties? Mr. KYLE. The other parties are members of the commission. Mr. JONES, of Arkansas. Who are they? Mr. KYLE. I do not know that I can offhand name the men who per- form that duty. Mr. JONES, of Arkansas. Who is it that performs that duty? Mr. KYLE. I do not rememl)er the names. MR. JONES, of Arkansas. Is it a roving commission? Mr. KYLE. No; it is not. GARBLED TESTIMONY. 31 Mr. JONES, of Arkansas. It is a very grave charge to be made, that there is an editing committee in this commission who take up the testimony as given by the different individuals and change it. The statement has been made here once or twice on the floor that material changes have been made in the testimony of witnesses, and that has been denied. I understand that these statements are made. As I stated a while ago, it is charged that there is an editing committee in this commission. I thought that was a most extraordinary proceeding, and I should like to understand it. I have now the positive denial of the Senator from South Dakota, the chairman of the commission, that there is any such editing committee. Then he modifies it by saying that they have no power to act. Mr. KYLE. No power to act without the advice and consent of the whole commission. Mr. JONES, of Arkansas. Then there is an editing committee? Mr. KYLE. That is the whole commission. Mr. JONES, of Arkansas. There is an editing committee; but it has no power to act? Mr. KYLE. It has no power to act. Mr. JONES, of Arkansas. There is an editing committee that has no power to act? Mr. KYLE. But it has the power to edit in the sense of making minor corrections. Who edits our debates in the Senate, I ask the Senator from Arkansas, but our chief stenographer? Mr. JONES, of Arkansas. I am not talking about the debates in the Senate, but I am trying to find out about the reports of the commission. Mr. KYLE. I want to draw the parallel between the two. Mr. JONES, of Arkansas. Go ahead. Mr. KYLE. We pursue the same course in the commission that is pur- sued in this body. Mr. JONES, of Arkansas. What course is that, I should like to know? Mr. KYLE. What is the course pursued here? Mr. JONES, of Arkansas. I do not know. I never reported a day in my life. Mr. KYLE. I think the Senator does understand thoroughly. Mr. JONES, of Arkansas. I do not; but I should like the chairman of the commission to say whether there is an editing committee appointed by him? Mr. KYLE. None, except the commission itself, which only has the power to change any feature of the testimony. Mr. JONES, of Arkansas. What does the stenographer do and what do these other parties do? Mr. KYLE. The stenographer has power to change certain things; that is, to correct the phraseology; and we have printed instructions as to that; to correct bad grammar and things like that, but not change in any material sense the meaning of a sentence of the testimony taken before the com- mission. Mr. HOAR. May I ask the Sena'tor from South Dakota, has anybody the power to change the meaning of a sentence? Mr. KYLE. No; nobody has done it, and nobody has any power to do it. Mr. JONES, of Arkansas. How does the Senator know that the editing committee does not change the meaning of sentences? Does the Senator read over all their recommendations and all the testimony? Mr. KYLE. All the proof is gone over by the commission as a whole, every particle of it. The sub-committee on manufactures, for instance, goes over the proof of all the testimony taken before the sub-committee on man- ufactures, and the sub-committee on agriculture goes over entire and in detail every sentence of the testimony taken by the sub-committee on agri- culture; and after seeing that the typewritten report corresponds to the stenographic notes, if there are any material changes to be made, such as personalities referred to awhile ago, then the whole commission take action. That is all. Mr. JONES, of Arkansas. I thought it was a 9:rave charge that there was an editing committee to go over the statements made by persons who 32 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. should appear before the commission, and because several persons who appeared before the commission have told me that their testimony was out- rageously edited^ — which I was slow to believe; I had doubts about it, was the reason I asked the question. The Senator from South Dakota has told us that there was no such committee, and then that "the stenographer and other parties" would go over and edit it, but without the power to act. I accept the statement made by the Senator from South Dakota as true; but if the statement made by other persons turns out to be true, that their statements have been materially changed and modified by this editing com- mittee, it is a very serious matter, in my opinion. Mr. KYLE. I will set the Senator right upon this matter. Just as I stated a moment ago. the witnesses are called before the whole commission, if in Washington, and their testimony taken. If a sub-committee, for in- stance, should go to Boston or elsewhere to take testimony, the witnesses appear before the sub-committee, give their testimony, and the stenographic notes are brought to the commission's headquarters, dictated to typewriters, and written out. Then the evidence is read over and the chief stenographer is empowered, under the printed rules of the commission, to make minor changes in phraseology, etc., but in no case to change the meaning of any sentence. It is a blessing, let me say, to the people of this country that we have a chief stenographer who edits the reports of what goes on in the Senate of the United States. If everything was published just as it is taken down and not changed or edited by the chief stenographer, we should have a queer Record. Mr. LODGE. Will the Senator allow me to ask him a question? Mr. KYLE. Certainly. Mr. LODGE. The chief stenographer of the commission simply does ordinary proof reading. Mr. KYLE. The chief stenographer of the commission simply does proof reading, that is all. Then the copy goes into the hands of the sub- committee to which the work is assigned. If there is any change in the phiaseology or any cutting out of the testimony that makes any material change with regard to the evidence, the whole matter is brought before the commission as a body. Mr. PENROSE. I should like to interrogate the Senator from Arkansas, if he will permit me? Mr. JONES, of Arkansas. Certainly. Mr. PENROSE. I should like to ask the Senator whether he is willing to specify what is the particular testimony he refers to, and to give the names of the witnesses whose testimony has been altered, changed or garbled? Mr. JONES, of Arkansas. I stated a while ago, but I suppose the Sen- ator was not present Mr. PENROSE. I was not in the Chamber. Mr. JONES, of Arkansas. I said that one man, who stated to me that his testimony has been materially changed, is a man living in this town, by the name of Sehulteis. He told me yesterday that every material statement made by him had been taken out by this commission and that his statement was not printed at all as he gave it. I asked him if he had the testimony as he gave it, and he said that he had. I then asked him to bring it to me, so I could take the statement as printed by the commission and as given by him before the commission and could compare the one with the other for the i)urpose of calling to the attention of the Sennte and of the chairman of the commission that fact, but he has not brought his statement to me. I know nothing more about it than what he has said. The Senator from South Dakota (Mr. Pettigrew) alluded to another case of which I had heard, but wlilch I have not mentioned at all, of some man whose testimony he claimed had been edited — that of Mr. Lockwood, I believe — but outside of that I have heard of another statement that one of the Arbuckles made about his buying sugar lands In Cuba and the reasons why he did it, and that every word of the statement made by him, which was thought by some gentlemen to be very material and important, was all stricken out of the report of the commission. Whether these things are true GARBLED TESTIMONY. 33 or not I do not know. I simply state what I have heard on the outside; and that is the reason I have asked whether the statement made that there was an editing committee, which took the liberty of changing a man's statement in his absence, was true or not true. Mr. PENROSE. Mr. President, I should like to state, as a member of that commission, that I never heard a suggestion of the alteration or sup- pression of testimony before the commission. Neither have I, at the few meetings which I have been able to attend, ever heard a single partisan suggestion infused into the proceedings of the commission. It has been industrious, painstaking, conscientious, and careful, in my judgment; al- though I must say as a member of it, I have not been able to devote that time and attention to it which my interest in the great problems confronting it would lead me to do had I the time and the opportunity. It seems to me that these charges are not sufficiently substantiated. They are groundless, frivolous, and uncalled for. Mr. KYLE. Will the Senator allow me a word in that connection? Mr. PENROSE. Certainly. Mr. KYLE. The original stenographic notes of the testimony taken before the commission are preserved and are upon the files of the commis- sion, so that a comparison can be made by anybody at any time. I will state that I corroborate what the Senator from Pennsylvania says. I have been present at nearly all the hearings before the commission, and I have not known it to be the case that alterations of substance have been made in the testimony. Mr. PENROSE. As to the appointments of these commissioners being based upon partisan considerations, 1 believe that almost every member of that commission has been appointed by reason of his record as a student or as an expert in labor and industrial matters, or by reason of some con- nection or association with questions of that character. I know in my own case my desire to get on the commission, and probably the reason that I was appointed, was because I was a member of the Committee on Education and Labor, and have always in my public career taken an interest in labor organizations and in labor matters, which are such important questions in the great industrial State which I represent. I believe that is also true of the Presidential appointees; that they are men skilled, expert, who have a distinct record in questions of this charac- ter. There has never been a suspicion of a suggestion of partisanship in any hearing or any proceeding before the commission. The commission have at all times been willing, so far as I know, to hear any responsible person who was willing and desirous of appearing ])efore them, and they have heard him at length, carefully and considerately, and I have every reason to suppose that testimony has been accurately taken down, and is preserved in the archives of the commission. *********** Mr. KYLE. Mr. President, just one word. I wish to say in regard to Mr. Lockwood's testimony, which has been adverted to frequently by Sen- ators during the discussion and which was referred to by the Senator from Florida fMr. Mallory) only a few moments ago. that the whole matter was taken up by the commission, nineteen members, and discussed. The com- mission were unanimous that those personal attacks should be expunged from the testimony. By a subsequent examination of the whole transac- tion the Senator from Florida became convinced that it should be stricken out. In reference to the two men who have made the criticisms, Mr. Martin and Mr. Schulteis, I will state that they were very strong and urgent appli- cants for positions upon the commission. Had they succeeded Aery likely the commission would have been properly constituted; but since other par- ties were chosen it is all wrong. Mr. CHANDLER. I beg to say to the Senator from South Dakota that that does not dispose of the exact issue that is now fairly before the Senate, and that is, whether testimony actually given by witnesses has been changed by the commission. We are not discussing questions of grammar, questions of punctuation, petty changes that reporters make for witnesses or speak- 34 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. ers, unless the witnesses or speakers make them themselves when they revise the transcription of the notes. We are discussing the question whether substantial changes have been made in the testimony actually given by witnesses before the commission. Mr. KYLE. If the Senator will allow me, I think I stated while the Senator was out of the Chamber that no witness' testimony had been modi- fied or changed in any material point. Where a witness made a personal attack on individuals, as Mr. Lockwood did, it was thought not wise for the commission to incorporate that in the printed report. Mr. CHANDLER. I have not been out of the chamber. I have heard what the Senator said; and with his permission I will go on with my remarks. Mr. KYLE. I beg the Senator's pardon. I thought probably he had not heard what I said. Mr. CHANDLER. I have heard it twice now. Mr. KYLE. The commission has never stricken from the testimony anything, even of this character, without the unanimous consent practically of all the commissioners. Mr. CHANDLER. I desire to say that the power which the Senator admits that the commission exercises is a very dangerous power. I am speaking now of the substantial changes in the testimony of a witness, whether by altering expressions or by omitting substantial statements made by a witness. I want to say that which I would have said before this time if the Senator had not interrupted me to repeat the statement he has made. There should be no such change made by the commission unless they make a memorandum and incorporate it in their record, showing exactly what they have stricken out of the testimony of the witness and the reason why they have stricken it out. There have been sufficient statements made here to-day on the floor to lead me to say that I think the Senator from South Dakota ought to make a more careful statement to the Senate, not negatively denying that anything has been stricken out except a few personal matters which the commission thought ought to go out; but a statement affirmatively showing what has been stricken out; how many witnesses have had sentences, paragraphs, pages eliminated by order of the commission. I do not think the oral state- ment made by the Senator from South Dakota sufficiently covers the ground. A suspicion has been aroused in connection with these statements. I do not assume that because Mr. Lockwood wanted to be a member of this body, if he ever did, and was not appointed, or Mr. Schulteis Mr. PETTIGREW. Mr. Lockwood never wanted to be. There is no such charge. Mr. GALLINGER. Mr. Schulteis and Mr. Martin. Mr. CHANDLER. I do not assume that because Mr. Lockwood is dis- satisfied with what the commission has been doing therefore he makes a false charge. I do not believe that Mr. Schulteis or Mr. Martin, because they were disappointed in not being made members of the commission, if they were so disappointed, have been making false charges against the commission. I think they are honest, as I think the commission have in- tended to do exactly right. But I do say that after all the state- ments which have been made in this chamber to-day the chairman of the commission ought to prepare and submit to the Senate a memorandum tell- ing us what has been done in the way of eliminating testimony, and let us know how far the commission is undertaking to eliminate testimony actually given before the commission. Mr. KYLE. Will the Senator from New Hampshire allow me? I think I can take it upon myself to do that. We have the original notes of all the testimony taken and all the manuscript presented to the commission, and I think I can give him exactly the information he desires. Mr. CHANDLER. Mr. Schulteis and Mr. Martin may be disappointed men, but I believe they are honest, and the statements that have been made in this Chamber and have gone out to the world to-day will create an un- pleasant impression, which I believe the chairman of the commission can wholly dissipate if to-morrow he will make and submit to the Senate such a GARBLED TESTIMONY. 35 statement as I have indicated. I do not desire that the bill shall be delayed for the purpose of having the explanation. What the Senator may submit to the Senate will not change the legislation, and I hope we will dispose of this paragraph and go on with the bill. But I further hope the Senator from South Dakota will make a memor- andum on this subject that can be submitted to the Senate and that we can send out to the public to wholly dissipate the impression that will be created by this day's debate if he does not deal a little more satisfactorily with the subject than he has by the general statement that nothing is eliminated except by the decision of the commission. On the following day, May 29, 1900, Mr. Kyle presented from the Indus- trial Commission an explanation concerning the changes that had been made in the testimony of Mr. Lockwood. This explanation was concluded as follows: It may be said generally of the method pursued by the commission in the treat- ment of testimony for print that each witness is given the fullest opportunity to have his remarks appear in the exact shape in which he desires them to appear. To explain: The stenographer's notes of testimony are placed in the hands of the chief stenographer. It becomes his function to get the copy ready for the printer. In doing this, he is not permitted to change the purport of the witness' testimony or to give it any other color than that which the witness himself gave to it when on the stand, but he is permitted and instructed to cut out matter that is repeated in ether forms elsewhere in that witness' testimony and to correct manifest errors of grammar. When he is in doubt as to the propriety of striking out a repetition or clearing up an obscure phrase, he submits the point to the commission for its action. His freedom with the copy, however, is carefully circumscribed by the following rules adopted by the commission for his guidance. 1. Grammatical errors should be corrected in all instances. 2. Repetitions which do not serve to emphasize or make clearer matter under examination shall be cut out. 3. Personal opinions of commissioners must be eliminated. 4. The name of the witness, when used in a question addressed to him, must be cut out. 5. Remarks of commissioners immediately preceding questions, which do not make the questions clearer to the witness, must be omitted. 6. Ansv.ers of commissioners to questions asked of witnesses by commissioners must be cut out. 7. Opening remarks of presiding officer, with explanation to witness of mode of examination, shall not go in the record. Complimentary remarks of presiding offi- cer at conclusion of testimony are to be omitted, but the reply of witnesses to same, if bearing un the well-being of their organizations or industries or to the work of the commission, shall be printed. S. Leading features (as known in law) of a question should be avoided as much as possible. 9. Where the meaning of a question or answer is doubtful, it may be left intact or submitted to the commissioner asking the question. 10. When partisan politics appears in question or testimony, the same shall, in accordance with the rule of the commission, be eliminated. 11. The name of a previously examined witness shall not be printed in questions tending to the contradiction of his testimony. 12. Witnesses will not be permitted, without the consent of the commission, to eliminate material parts of their testimony or change the form of questions. That in this treatment of testimony no Injustice may be done to any witness, the testimony is submitted to each witness in type proofs after the chief stenographer has revised it. The witness is permitted to m.ake whatever changes in the type he desires; and the officers of the commission are careful to see that the pages go to press in the exact shape in which the witness himself prepares them. It may be worth the while to add that no witness has ever yet complained, after an inspection of his proof, that either the chief stenographer or the commission has garbled his testimony in the smallest possible way or changed its purport or tenor; and that, with the exception of Mr. Lockwood, none has yet complained to the commis- sion that his testimony as tinally printed has misrepresented him in the least. 36 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Another complaint concerning an alleged change made in the report of his testimony was made by Mr. Lockwood in the following letter, which was inserted in the Congressional Record of January 16, 1901: Zelienople, Pa., January 14. 1901. Dear Sir — You will remember that I wrote you shortly before the adjournment of the Senate last summer calling your attention to the fact that you had presented to the Senate and printed in Record, which appears on page 6736, what purported to be a portion of my testimony before the Industrial Commission, in which, in answer to an inquiry as to what I knew of the corruption fund in New York State, I was made to say, "No; I did not say a corruption fund, but from wliat I know of the campaign I am satisfied that there was a lot of money used." The answer, as you have it re- corded, makes me swear that I did not say what I had just said. My true answer to that inquiry was, "Oh, I did not see the corruption fund, but from what I know of the campaign I am satisfied there was a lot of money used." The answer as re- corded in the Congressional Record substitutes the word "No" for "Oh" and the words "say a" for the words "see the," which entirely changes the meaning. Will you kindly have this correction entered in the Record, that it may conform to the facts and undo, as far as possible, the wrong that has been done me? You will remember that in our correspondence over the matter Professor Jenks ex- plained how he thought the mistake might have been made. Yours most truly, M. L. LOCKWOOD. Senator Kyle, Senate Chamber, Washington, D. C. According to the stenographic report used in making the comparisons contained in this volume, Mr. Lockwood said just what he was reported as saying by the commission's stenographer. The question and answer referred to by him, according to this report, follows: Q. Vice-Chairman PHILLIPS. You are not willing here to testify that he was elected by a coriuption fund, positively? A. No; I don't say a corruption fund, but from what I know of the campaign I am satisfied there was a lot of money used. CHAPTER IV MISLEADING STATEMENTS IN THE COMMISSION'S REVIEW AND DIGEST OF EVIDENCE. The Industrial Commission in making its report to Congress has under- taken to introduce an innovation in the manner of presenting the testimony taken by it. This innovation consists of a "review of evidence" and a "digest of evidence," in which it has been sought to present in condensed form the salient features of the testimony. These compilations form a sort of "royal road to knowledge," a means by which a busy man may learn by a few hours of reading what is contained in hundreds of pages of testimony. As a means of securing a general understanding of the testimony with more or less accuracy this is a fairly satisfactory method, but if it should be relied upon to any extent by Senators and Representatives as a means of securing information on which to base their judgment in voting upon any recommendation of the commission, it would be a woefully disappointing affair, as it would be for any one who really desires to know the facts in the case. The "review" and "digest" naturally have the weakness of all such efforts of men to see things through the eyes of some one else. It has gen- erally been considered a most difficult task to state what testimony as a whole docs show when there are various qualifying statements which often nullify the entire force of the statements to which they refer. If the com- mission does not anticipate that their review and digest of evidence will be taken seriously and used as a means for forming an intelligent judgment of what the testimony shows, it cannot be severely criticised, but if it Is seriously offered as correctly reflecting the essential features of the testi- mony it can not be defended. MISLEADING STATEMENTS. 37 The fact is, instead of liaving made a great discovery in presenting a ""review of evidence" and a "digest of evidence," the Industrial Commission merely fell into a snare which many other men have been avoiding in the past. There are numeious publications which might be "digested" in a hundredth part of the space they occupy, and for popular information it has frequently been done. The elaborate statistical reports of the Commis- sioner of Labor might have been presented so that their meaning could be told in simple and brief statements, but no such effort has ever been made officially, beyond explanations of the statistics themselves — summarizing the statistics by giving totals and other simple facts that can not be disputed. The Commissioner of Labor has not n9glected to digest his statistics because he did not think of it or because he has not been importuned by the inex- perienced to do so It has simply been because he has realized that in order that a man may form a reliable judgment on certain statements, he must see the statements themselves and not be told what some one else thinks they show. His reports have been reviewed many times by those who have cared to do so, and they are subjects for innumerable reviews in the future, but the first official review is yet to appear. In the Industrial Commission's "review of evidence," submitted on the subject of trusts, an attempt has been made to review testimony that covers 1,262 printed pages in 30 pages, and in the "digest of testimony" 214 pages are devoted to a more extensive summary of this testimony. In other chapters it will be seen that the report of testimony on which these sum- maries are based does not accord with the stenographic report. If the report of testimony itself is not a reliable reproduction of the evidence sub- mitted, any review or digest based on it can not be reliable, however closely its statements may conform to the text of the report. But it will be seen by a careful comparison of the statements made in both the review and the digest that they do not accurately reflect the official report of testimony. Statements of an important nature are made in the summaries, and when it is sought to verify them it is shown that they are not warranted by the replies of the witnesses. Either the witness is directly misrepresented or no account is taken of qualifying statements made by him in connection with his first remark. These facts, concerning both the official report of the testimony itself and the review and digest based on it, make the opening sentence of the commission's preliminary report on trusts somewhat amusing. After citing the act of Congress creating the commission, the report says: "As the subject of 'trusts,' or industrial combinations, seemed to be one upon which there was pressing demand for trustworthy information, your commission gave it early attention." Another evidence of the tender solicitude with which Vice-Chairman Phillips' trust, the Pure Oil Trust, is cared for in the report of the commis- sion is given in the Review of Evidence (p. 10).* This trust is referred to in the following language: "A somewhat similar form of organization, however. — the voting trust — is found at times. In this form of trust the holders of at least a majority of stock of a single corporation put their stock into the hands of trustees for the purpose of voting it, retaining for themselves all the privileges of draw- ing dividends and making transfers. Such a voting trust has been formed, it is claimed, in the case of the Pure Oil Company — an organization of the independent oil interests — for the sake of protecting a majority of the stock against purchase by the Standard Oil Company. The Standard had bought large blocks of stock before in another independent company with the prob- able purpose of securing control. It will be observed that the purpose of such a trust is not to unite various corporations under one management, but to secure in perpetuity an agreed-upon policy without danger of inter- ference through sales of individual shareholders. Some profess to find danger in this form of voting trust, while others think it decidedly bene- *A11 references to pages, on which quctations appearing in this chapter are to be found, refer to the Industrial Commission's Report on Trusts, unless otherwise indi- cated. 38 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. ficial. It is, however, true that this form of trust may put the direction of a company into the hands of a comparatively few members, the trustees, who are in this way able to manage the affairs of the company and to secure it a permanent policy (whatever later wishes of stockholders may be) such as could not be secured under the ordinary corporate management with so great certainty. At any rate, as a form of corporate combination for the sake of securing monopolistic control, the voting trust does not seem to be now in vogue." The reviewer adopts the argument of the competitors of the Standard Oil Company that the purpose of their voting trust was "not to unite various corporations under one management, but to secure in perpetuity an agreed- upon policy without danger of interference through sales of individual share- holders." The logical result of such an arrangement, if carried out to its fullest extent, would be that the trustees could pursue a policy for their own selfish interests and bankrupt the company, v»-hile the men who would suffer financial loss by their action could in no way control them. It is also asserted that such a trust "may put the direction of a company into the hands of a comparatively few members." Anyone who has read the form of voting trust of the Pure Oil Trust will discover that not only may the result indicated be realized, but that it was the central feature of the trust and if it was not formed for that purpose it is hard to discover a reason for its existence. In the review (p. 17) in commenting on the Standard's operation of pipe lines, it is asserted that "they" (Standard Oil witnesses) "also conceded that at times the Standard has paid premiums for the sake of forcing a competitor out of the business and that under similar circumstances it would do it again." The testimony of witnesses connected with the Standard Oil Company will be studied in vain in any effort to find a justification for the above statement. The review refers to the testimony of Mr. Archbold and Mr. Rogers as if it formed the basis of the statement. The part of the testi- mony of Mr. Archbold, which comes nearest to containing the assertion that premiums were put on oil "for the sake of forcing a competitor out of the business," etc., follows (p. 576): "Q. In the producing districts? A. The premiums are usually the re- sult of the question of value in the different parts of the district. I will not say that in some cases they have not been lower somewhat, caused by com- petition; where we have had private facilities in certain districts to take care of the oil, and other people have come in and tried to take it away from us, in some cases we may have paid more than we would like to pay. I cannot say; perhaps that is so; but, as a rule, in the special case of the Franklin oil and the case of the Lima oil and Scio oil, that is not it. It centers entirely on the question of value. \'Q. I infer from what you say that at times, in order to dispose of competitors, the premiums have been kept on till the competitors have been bought out and have been dropped afterwards? A. As I said, when our bu.siness has been attacked we have endeavor?d to protect it. "Q. (By Vice-Chairman PHILLIPS.) I am somewhat familiar with the pipe line business in the oil fields. Take our district, where an independent line went in a short distance from Oil City; a premium was put on that oil, and no one claimed that that oil was more valuable than Oil Creek oil or other oil. It was not put on there on account of the value of the oil. A. As I have already said, that may be a case in point; where we have found, after providing these special facilities, which have no value for any other purpose, that our business was attacked by a newcomer we have, of course, endeavored to protect it." It will be seen that the references to forcing a competitor are limited to the questions that were asked Mr. Archbold. It is presumed that this Review of Evidence is a review of the evidence of witnesses who were on the stand and not of the "evidence" contained or implied in the questions asked the witnesses by the vice-chairman of the commission, one of his competitors, or any other questioner. If it can be admitted that the Standard Oil Company is to be judged by the questions of hostile competitors, or any MISLEADING STATEMENTS. 39 one else, there would be no limit to the findings of the commission. There is a vast difference between paying a premium to secure raw material needed by a manufacturer in competition with others and paying it to force the competitor out of business. It is difficult to imagine how the Standard Oil Company could secure crude oil without bidding for it against its com- petitors. Here is another remarkable statement which appears in the review (p. 17): "Owing to this control (which seems to be in the main conceded by the witnesses on behalf of the Standard Oil Company) some of the witnesses assert that the tables and charts of prices of crude and export refined oil, which show also the ratios or margins between them, misrepresent in many cases the real state of the business. If the prices of crude oil are fixed arbi- trarily for the purposes of buying up oil territory, of buying out competing pipe lines, or of raising the cost to independent refiners, or if losses on refined export oil are recouped by raising the price of American refined, such figures can hardly be an indication of the real condition of the busi- ness. On the other hand, the testimony of Mr. Lee in explaining the course of prices of crude oil over a series of years seems to show that he also be- lieves that the amount of the output has, in spite of many arbitrary acts of the Standard, in the long run and on the whole been certainly a very im- portant if not the chief cause in determining its variations in price." The above is an interesting collection of "ifs" and the conclusion of the reviewer based on them. The review might have been made still more interesting if the subjunctive mood had been resorted to still farther. The reviewer might have declared that if the Standard Oil Company fixes the prices at which it buys crude and sells refined oil it might fix for the crude a still smaller price than that which prevails, while it might sell refined oil at $1 a gallon, and if the public should continue to buy refined oil at that price the Standard would probably make 500 times the profit it receives, in which case the profit would be extortionate and the American public would be treated outrageously. Only the imagination of Jules Verne would be capable of properly developing the possibilities of "if." Colonel Sellers made a masterful use of "if," but strangely enough every inhabitant of the earth didn't have sore eyes and didn't buy his eye water. Then again, if some- thing had really turned up Micawber would have had a full larder, but as he was only able to pay his bills in the subjunctive mood he had a hard time with his creditors. The review divulges another business principle in commenting on ways of controlling prices (p. 18): "A manufacturer who controls so large a proportion of the product as do some of these combinations can, beyond question, to a considerable de- gree control the price. Throwing into the market a large amount of goods at one time tends to lower the price. Likewise, one who controls plants enough to supply the entire normal demand of the country can, evidently, by closing some of these plants, readily raise the price." This is another and a new form of asserting the law of supply and demand. Manufacturers of the country should be prompt in adopting this method of increasing the price of their products. "One who controls plants enough to supply the entire normal demand of the country can, evidently, by closing some of these plants, readily raise the price." Of course while it was curtailing its output no one else would supply the demand. According to this declaration of a new principle it is not necessary for a manufacturer to have a monopoly of a product in order to control its price. If he has plants enough to supply the normal demand he can close some of them and raise the price. Still another remarkable statement in the review follows (p. 10, the amount subscribed is $2.50,000, the amount paid in is $2.35,000, the amount owned by your orator individually and as trustee for the McCalmont Oil Company is $15,000, the capital of said company is divided into shares of $5 each, the number of shares held in trust under said agreement. Exhibit 'B,' are 19,785 shares. "Sixth — Notwithstanding the trust agreement aforesaid and that some of said parties are the trustees named therein and executed the same as such trustees and accepted the trust, yet they have refused to comply therewith by delivering their stock in trust, as they had agreed; among said parties are Lewis Emery, Jr.. Michael Murphy, E. H. Jennings. Thomas W. Phillips and others following their example. As soon as stock is paid up one-half thereof is delivered to the trustees and the other half to the sub- scribers, together with a trust certificate for the amount delivered to the trustees, but a large number of said trust certificates have been refused by the subscribers, who have refused to recognize the trust; and while there is in the hands of the trustees 19,785 shares, your orator is informed that less than one-half of said shares are there deposited with the consent of the subscribers and owners, and the trustees have no power to vote the remainder. "Seventh — The annual meeting of said company for 1897 was adjourned from the charter day to February 18, 1897, and again adjourned to Monday, February 22. 1897, at which time there assembled at Taylor's Hotel, in Jersey City, a number of shareholders, including your orator, and at that time certain amendments to the by-laws were proposed, to-wit: An amendment to Section 8, Article 1, whereby the same should be changed so that the term of office of directors should commence immediately after their election, instead of at noon on the first Wednesday after their election. An amend- ment to Section 4, Article 2, so that the salary of president and vice-presi- dent should be fixed by the directors instead of by the stockholders. An amendment to Section 1, Article 3, so that the president should not be required to sign warrants for the payment of money ordered l)y the board of directors. An amendment to Section 2, Article 3, so that the secretary should not be required to countersign all warrants on the treasury for the payment of money which shall have been previously signed by the presi- dent, as authorized by the board. An amendment to Section 1, rules and regulations, so as to include the power to manufacture crude oil and its products, as well as to produce, purchase, transport, and sell the same, and so as to change the power to hold, manage, and sell personal and real prop- erty as authorized in writing from time to time by a majority of the stock- THE PURE OIL TRUST. 63 holders, so that such holding, managing, and selling may be at the will of the board of directors. An amendment to Section 2 of said rules and regu- lations so that branch offices may be established by the board, instead of the stockholders. An amendment to Section 3, which required that amend- ments to the by-laws and rules and regulations should be only by the con- sent of three-fifths of the owners and holders of the shares of the company, given in writing, filed with the secretary and recorded in the minutes of the proceedings of both the shareholders and directors of the company, so that said amendment should be adopted by a three-fifths vote of the shares of the company, provided a copy of such amendment had been filed with the secretary 20 days before the meeting and the secretary should have notified the stockholders of said proposed change. An amendment to Sec- tion 4 of the rules and regulations changing the number of directors from nine to eleven; but your orator says that said amendments were not pro- posed in accordance with Section 3 of the rules and regulations regulating amendments, and especially the change in the number of directors, and that the requisite consent in writing, as required, was not obtained, filed, and recorded, and the action of said meeting in adopting said amendments was illegal, null, and of no effect. "Eighth — That all of said amendments tended to change the purpose and policy of the company from a corporation managed and controlled by its stockholders, to a corporation managed and controlled wholly by its directors, and that the parties defendants sought by this means to seize the property of the company and divert it from its original purpose to their own ends without the restraining power of shareholders' consent, as pro- vided in the whole scheme of the by-laws and rules and regulations of the company, as primarily adopted. "Ninth — That at said annual meeting said trustees attempted to vote and did vote said 19,785 shares, and said amendments were declared adopted, notwithstanding the failure as above set forth to adopt the same according to the law of the corporation, and an election was then held for directors, but of the parties so voted for a number were ineligible under the laws of the State of New Jersey and the by-laws and rules and regtxlations of the company, in that they were not stockholders of said company, to-wit: Peter Theobold, J. C. Anderson, Hugh King, Lewis Emery, Jr., E. H. Jennings, and Victor K. Phillips. Your orator is uninformed as to C. P. Collins, as to whether he is a member of the company or not. Some of said parties sought to qualify themselves by the delivery of $10 to the secretary, but the secretary had no power or authority to receive said money and issue stock therefor, and did not pretend so to do, and the trustees aforesaid cast 19,785 votes for said parties, although not authorized so to do. "Tenth — Said election was in progress at 6 o'clock p. m., and your orator refused to vote, and left the polls, leaving his address with the parties in charge of the meeting and with the secretary, and your orator has since been informed that the defendants above named, together with your orator, were subsequently declared elected, and some time during the night, but without notice to your orator, the alleged board convened and elected J. W. Lee president of the company, fixed his salary at $10,000 per annum, and elected Hugh King as treasurer, and then dispersed. Your orator, as president of said company, had served two years without any compensation. "Eleventh — Your orator notified said parties, defendants, that their alleged election was nugatory and of no effect, was contrary to the law of the corporation, that their organization as a board was irregular and void, and refused to surrender the books, papers, and property of the company into their hands, and the treasurer has likewise so refused, and your orator insisted that the old board and officers were still in office and entitled to administer the affairs of the company; that said old board are J. B. Akin, W. A. Dennison, Charles H. Duncan, James W. Lee, M. Murphy, Daniel E. Byles, Theodore B. Westgate, W. L. Curtis, and David Kirk. "Twelfth — Said new board have four refiners thereon, namely. Lewis Emery, Jr., Hugh King, Peter Theobold, and Theodore Westgate, and said board has sisnified its intention of making certain contracts with refiners of crude oil, including said members of the board, whereby said refiners will 64 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. obtain from the company for their product a price much in excess of the market price, to the loss, detriment, and disadvantage of the stockholders of the company, and your orator is informed and believes that said new board proposes and purposes conducting the business of said company, not in the interest of its stockholders, but in furtherance of a scheme to promote and further the interest of other affiliated companies or associa- tions, in which said parties are interested, viz: The Producers' Oil Com- pany, Limited; The Producers & Refiners' Oil Company, Limited, and The United States Pipe Line Company and certain refiners, to the loss, detriment, and disadvantage of the stockholders in said Pure Oil Company. "Thirteenth — Said new board has selected from their number an execu- tive committee, in which has been vested practically all the power of the board, and your orator is not one thereof because he was known to be hostile to the improper purpose aforesaid, and therefore your orator, though a member of said new board, would be powerless to prevent the consum- mation of said illegal and improper purposes. "Fourteenth — Said new board has already sought to obtain possession of the funds, money, and property of the company, and has ordered the cash balance to be forwarded to Hugh King, at New York City, and unless restrained by order of court will possess itself of the property, money, books, and papers of said company, and will enter upon the consummation of its illegal purposes; and if your orator and the treasurer of the company, acting under the orders of your orator, refuse to deliver over said money, books, and papers, force will likely be resorted to and an unseemly confiict result, and if delivered over, large amounts will be paid out in salaries and on con- tracts, as aforesaid, and pending the contest for possession, and the de- termination of the right to the office, the business of the company and con- tracts now existing will not receive the requisite attention and great loss will accrue to the stockholders. Therefore, your orator prays, "First — That an injunction, preliminary until hearing, thereafter to be made perpetual, be granted inhibiting and enjoining said J. W. Lee, M. Murphy, Theodore B. Westgate. Peter Theobold, J. C. Anderson. Hugh King, Lewis Emery, Jr., C. P. Collins. E. H. Jennings, and Victor K. Phillips from attempting to act as a board of directors of the Pure Oil Company, and J. W. Lee and Hugh King from attempting to act as president and treasurer, respectively, of said company, and as such directors and officers from taking possession of or attempting to take possession of the money, books, papers, property, business, and effects of said company, or in any manner interfering therewith. "Second — That said election, on February 22, 1897, of said J. W. Lee, M. Murphy. Theodore B. Westgate. Peter Theobold, J. C. Anderson. Hugh Kine. Lewis Emery. Jr., C. P. Collins. E. H. Jennings, and Victor K. Phillips as directors, and said J. W. Lee as president and said Hugh King as treas- urer, be declared null and and void. "Third — That a receiver may be appointed with the usual powers of receivers in such cases, to manage, conduct, and preserve the business of said company and its property and effects, and protect its creditors and stockholders. "Fourth — For such other and further relief as to your honors may seem just, necessary, and proper. "WEIL & THORP, "Solicitors for Complainants. "Allegheny County, ss. "David Kirk, being duly sworn according to law, doth denose and say that the facts stated in the foregoing bill of his own knowledge are true, and those stated upon information and belief he believes to be true; and further saith not. "DAVID KIRK. "Sworn to and subscribed before me this 4th day of March. A. D. 1897. "OSCAR H. ROSENBAUM, "Notary Public." JOHN D. ROCKEFELLER AND S. C. T. DODD. 65 CHAPTER VL TESTIMONY OF MR. JOHN D. ROCKEFELLER, AND MR. S. C T. DODD, SOLICITOR, OF THE STANDARD OIL COMPANY OF NEW JERSEY. Mr. John D. Rockefeller, president of the Standard Oil Company, was furnished by the Industrial Commission with a series of questions concern- ing vital phases of the investigation into the subject of trusts and industrial combinations, especially as they related to the oil industry. He replied to these questions in writing and under oath. The questions and replies were placed before the commission on January 10, 1900, and are as follows: 1. Q. What was the first combination in which you were interested of different establishments in the oil industry? A. The first combination of different establishments in the oil industry in which I was interested was the union of William Rockefeller & Company, Rockefeller & Andrews, Rockefeller & Company, S. V. Harkness & H. M. Flagler, about the year 1867. 2. Q. What were the causes leading to its formation? A. The cause leading to its formation was the desire to unite our skill and capital in order to carry on a business of some magnitude and import- ance in place of the small business that each separately had heretofore carried on. As time elapsed and the possibilities of the business became apparent, we found further capital to be necessary, obtained the required persons and capital and organized the Standard Oil Company, with a capital of $1,000,000. Later we found more capital could be utilized and found persons with capital to interest tliemselves with us. and increased our capital to $3,500,000. As the business grew, and markets were obtained at home and abroad, more persons and capital were added to the business, and new corporate agencies were obtained or organized, the object being always the same, to extend our business by furnishing the best and cheapest products. 3. Q. Did the Standard Oil Company or other affiliated interests at any time before 1887 receive from the railroads rebates on freight shipped or other special advantages? A. The Standard Oil Company of Ohio, of which I was president, did receive rebates from railroads prior to 1880, but received no special ad- vantages for which it did not give full compensation. The reason for re- bates was that such was the railroads' method of business. A public rate was made and collected by the railway companies, but so far as my knowl- edge extends was never really retained in full; a portion of it was repaid to the shippers as a rebate. By this method the real rate of freight which any shipper paid was not known by his competitors nor by other railway companies, the amount being in all cases a matter of bargain with the carrying company. Each shipper made the best bargain he could, but whether he was doing better than his competitor was only a matter of con- jecture. Much depended upon whether the shipper had the advantage of com- petition of carriers. The Standard Oil Company of Ohio, being situated at Cleveland, had the advantage of different carrying lines, as well as of water transportation in the summer, and, taking advantage of those facilities, made the best bargains possible for its freights. All other companies did the same, their success depending largely upon whether they had the choice of more than one route. The Standard sought also to offer advantages to the railways for the purpose of lessening rates of freight. It offered freights in large quantity, car load and train loads. It furnished loading facilities and discharging facilities. It exempted railways from liability for fire. For these services it obtained contracts for special allowances on freights. These never ex- 66 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. ceeded, to the best of my present recollections, 10 per cent. But in almost every instance it was discovered subsequently that our competitors had been obtaining as good, and in some instances better, rates of freight than our- selves. 4. Q. If so, in what years were these advantages largest, and from what roads were they received? A. To the best of my recollection the greatest rebates were paid from 1877 to 1879. During that time we had an agreement for a special 10 per cent, commission. I think that agreement was made with the Pennsylvania, the Erie, and the New York Central roads. Large rebates were also paid during the summer of 1878, amounting, I believe, to 64i/2 cents on refined oil, to equalize eastern shipments by rail with shipments by Erie canal. But these rebates were paid to all who shipped by rail. They were not discriminatory rates. I am not now sure whether any other roads than the Pennsylvania collected the full amount and paid these rebates. The Erie and New York Central made the same reductions in rates to meet canal shipments, but my impression is that the Erie at least did not collect the higher rate from shippers and rebate it as did the Pennsylvania. 5. Q. About what percentage of the profits of the Standard Oil Com- pany came from special advantages given by the railroads when these were greatest? A. No percentage of the profits of the Standard Oil Company came from advantages given by railroads at any time. Whatever advantages it received in its constant efforts to reduce rates of freight was deducted from the price of oil. The advantages to the Standard from low freight rates consisted solely in the increased volume of its business arising from the low price of its products. 6. Q. Did the Standard Oil Company or any of its affiliated com- panies ever receive, under any name whatever, any income from any rail- road for oil shipped over those roads by any of its competitors? If so, give particulars. A. I know of no such instance. It seems that some arrangement of that nature was entered into by one of our agents in Ohio, being the same case which has been testified to by George Rice. When notice of this agreement was brought to the officers of the company for which it was made it was promptly repudiated, and the money received, some small amount, I think under $300, was refunded. And this was done not because of any action in court, or judicial opinion, but promptly as soon as reported, and before we had any knowledge of judicial proceedings. 7. Q. Has the Standard Oil Company received any financial favors from any railroad since 1887? A. To my knowledge none whatever. 8. Q. Has the ownership of stock in railroad companies by ofllcers of the Standard Oil Company given the Standard advantages with those railroads over its competitors? If so, give particulars. A. It has not. Stockholders and officers of the Standard have in- vested in stock of railway companies, but in no instance have they done so for the purpose of influencing the policy of the railway companies, nor to the best of my knowledge and belief has any attempt ever been made through such ownership to influence any railway in favor of the Standard. 9. Q. To what advantages, or favors, or methods of management do you ascribe chiefly the success of the Standard Oil Company? A. I ascribe the success of the Standard to its consistent policy to make the volume of its business large through the merits and cheapness of its products. It has spared no expense in finding, securing, and utilizing the best and cheapest methods of manufacture. It has sought for the best superintendents and workmen and paid the best wages. It has not hesitated to sacrifice old machinery and old plants for new and better ones. It has placed its manufactories at the points where they could supply markets at the least expense. It has not only sought markets for its principal pro- ducts, but for all possible by-products, sparing no expense in introducing them to the public. It has not hesitated to invest millions of dollars in methods for cheapening the gathering and distribution of oils, by pipe lines, JOHN D. ROCKEFELLER AND S. C. T. DODD. 67 special cars, tank steamers, and tank wagons. It has erected tank stations at every important railroad station to cheapen the storage and delivery of its products. It has spared no expense in forcing its products into the markets of the world among people civilized and uncivilized. It has had faith in American oil, and has brought together millions of money for the purpose of making it what it is, and holding its markets against the com- petition of Russia and all the many countries which are producers of oil and competitors against American oil. 10. Q. What are in your judgment the chief advantages from in- dustrial combinations? (a) Financially to stockholders. (b) To the public. A. All the advantages which can be derived from a co-operation of persons and aggregation of capital. Much that one man cannot do alone two can do together, and once admit the fact that co-operation, or what is the same thing, combination, is necessary on a small scale, the limit depends solely upon the necessities of business. Two persons in partnership may be a sufficiently large combination for a small business, but if the business grows, or can be made to grow, more persons and more capital must be taken in. The business may grow so large that a partnership ceases to be a proper instrumentality for its purposes, and then a corporation be- comes a necessity. In most countries, as in England, this form of industrial combination is sufficient for a business co-extensive with the parent country, but it is not so in this country. Our Federal form of government making every corporation created by a State foreign to every other State, renders it necessary for persons doing business through corporate agency to or- ganize corporations in some or many of the different States in which their business is located. Instead of doing business through the agency of one corporation they must do business through the agencies of several corpo- rations. If the business is extended to foreign countries — and Americans are not to-day satisfied with home markets alone — it will be found helpful and possibly necessary to organize corporations in such countries, for Europeans are prejudiced against foreign corporations, as are the people of many of our States. These different corporations thus becoming co- operating agencies in the same business, and are held together by common ownership of their stocks. It is too late to argue about advantages of industrial combinations. They are a necessity. And if Americans are to have the privilege of ex- tending their business in all the States of the Union, and into foreign countries as well, they are a necessity on a large scale, and require the agency of more than one corporation. Their chief advantages are: 1. Command of necessary capital. 2. Extension of limits of business. 3. Increase of number of persons interested in the business. 4. Economy in the business. 5. Improvements and economies which are derived from knowledge of many interested persons of wide experience. 6. Power to give the public improved products at less prices and still make a profit for stockholders. 7. Permanent work and good wages for laborers. I speak from my experience in the business with which I have been intimately connected for about 40 years. Our first combination was a part- nership and afterward a corporation in Ohio. That was sufficient for a local refining business. But dependent solely upon local business we should have failed years ago. We were forced to extend our markets and to seek for export trade. This latter made the seaboard cities a necessary place of business, and we soon discovered that manufacturing for export could be more economically carried on at the seaboard, hence refineries at Brooklyn, at Bayonne, at Philadelphia, and necessary corporations in New York, New Jersey, and Pennsylvania. We soon discovered, as the business grew, that the primary method of transporting oil in barrels could not last. The package often cost more than the contents, and the forests of the country were not sufficient to 68. REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. supply the necessary material for an extended length of time. Hence we devoted attention to other methods of transportation, adopted the pipe line system, and found capital for pipe line construction equal to the necessities of the business. To operate pipe lines required franchises from the States in which they were located, and consequently corporations in those States, just as railroads running through different States are forced to operate under separate State charters. To perfect the pipe line system of transportation required in the neighborhood of $50,000,000 of capital. This could not be obtained or maintained without industrial combination. The entire oil busi- ness is dependent upon its pipe line system. Without it every well would shut down and every foreign market would be closed to us. The pipe line system required other improvements, such as tank cars upon railways and finally the tank steamer. Capital had to be furnished for them and corporations created to own and operate them. Every step taken was necessary in the business if it was to be properly developed, and only through such successive steps and by such an industrial combination is America to-day enabled to utilize the bounty which its land pours forth, and to furnish the world with the best and cheapest light ever known, receiving in return therefor from foreign lands nearly $.50,000,000 per year, most of which is distributed in payment of American labor. I have given a picture rather than a detail of the growth of one in- dustrial combination. It is a pioneer, and its work has been of incalculable value. There are other American products besides oil for which the markets of the V. orld can be opened, and legislators will be blind to our best in- dustrial interests if they unduly hinder by legislation the combination of persons and capital requisite for the attainment of so desirable an end. 11. Q. What are the chief advantages or dangers to the public aris- ing from them? A. The dangers are that the power conferred by combination may be abused, that combinations may be formed for speculation in stocks, rather than for conducting business, and that for this purpose prices may be temporarily raised instead of being lowered. These abuses are possible to a greater or less extent in all combinations, large or small, but this fact is no more of an argument against combinations than the fact that steam may explode is an argument against steam. Steam is necessary and can be made comparatively safe. Combination is necessary and its abuses can be minimized, otherwise our legislators must acknowledge their incapacity to deal with the most important instrument of industry. Hitherto most legislative attempts have been an effort not to control, but to destroy, hence their futility. 12. Q. What legislation, if any, would you suggest regarding indus- trial combinations? A. First^ — Federal legislation, under which corporations may be created and regulated, if that be possible. Second— In lieu thereof. State legislation as nearly uniform as possible encouraging combinations of persons and capital for the purpose of carry- ing on industries, but permitting State supervision, not of a character to hamper industries, but sufficient to prevent frauds upon the public. JOHN D. ROCKEFELLER. State of New York, County of New York, ss: I swear that these statements made by me of my own knowledge are true, and that all other statements I believe to be true. JOHN D. ROCKEFELLER. Sworn and subscribed to before me this 30th day of December, 1899. J. MARSHALL BUSSELLE, Notary Public, No. 190. JOHN D. ROCKEFELLER AND S. C. T. DODD. 69 Mr. S. C. T. Dodd, solicitor of the Standard Oil Company, in response to a request of the commission, on September 18, 1899, furnished informa- tion regarding the profits of the Standard Oil Company and other matters. The data concerning the profits of the company was a direct contradiction of the almost universal claim of competitors of that company, who had as- serted that it had made inordinate profits by means of rebates prior to the interstate commerce act. Mr. Dodd's statement showed, -on the contrary, that the greatest profits of the Standard Oil Company had been made since 1887, since which date the old method pursued by the railroad companies, of giving a special rate to all shippers of oil, as well as of other commodities, had been superseded by allowing the published rate only to all, which forced all shippers of oil to pay exactly what the Standard Oil Company was paying. In 1887 a 10 per cent, dividend was declared on stock of the Standard Oil Company. From that year there was an increase in the amount of dividends until 1897, when the dividend reached 33 per cent. In 1898 it was 30 per cent. In reply to the request of the commission for a complete list of divi- dends that had been declared, Mr. Dodd furnished the following statement: Per Cent. Per Cent. 1S82 5.25 1891 12 18S3 6 1892 12.21 1884 6 1893 12 1885 in.50 1894 12 1886 10 1895 17 1S87 10 1S9(; 31 1888 11.50 1897 33 1889 12 1898 30 1890 12 After giving a list of patents by patent numbers, belonging to the vari- ous companies in 1882, the use of which was open to all, Mr. Dodd replied to questions submitted to him by the commission as follows: Q. What by-products, if any, are available to your organization which could not profitably be made by separate plants? A. All products are made by separate plants, but most of them Avere at one time protected by patents, the use of v/hich became available to all plants. Q. Has there been under the organization any specialization of the plants, further than at time of the organization, giving to each the work for which it is best adapted? Give details, if any. A. Some of the corpora- tions whose stock were taken into the original trust were abandoned be- cause of location or ill adaptation for the desired work. Others were or- ganized at more convenient locations and with superior plants. Those manufacturing oil for export are located at tidewater, while those for do- mestic trade are located at central shipping points in the interior. Q. Have any plants or offices of the organization been closed, shut down, suspended, dismantled, or sold out? If so, give list, with disposition made of each. A. No plants or offices of the organization have been closed or sold out. But in the 18 years all plants of companies have been made new and more effective, and plants have been abandoned at one place be- cause of more effective plants erected in a more suitable place. I am unable to give the particulars of the changes for 18 years: suffice it to say that almost nothing now remains of plants of 18 years ago. Q. Are your prices, in fact, the same throughout the United States, allowing for cost of transportation? A. Yes. Q. Are they, in fact, the same in the United States as in foreign countries, allowing for cost of transportation? A. Somewhat lower in the United States. Q. Have your agents ever authority to make, or have they ever, in fact, made lower prices or rebates in special sections of the country? A. No authority. Q. Have they done so for the purpose of meeting competition or otherwise? A. No doubt prices have been cut to meet lower prices made by competitors. 70 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION". Q. What dividends have you declared? Give complete list with dates. A. Dividends were paid quarterly and have aggregated per annum as fol- lows: Per Cent. Per Cent. 1882 5.25 1S91 12 1883 6 1S92 12.21 1884 : 6 1893 12 1885 10.50 1894 12 1886 10 1895 IT 1887 10 1896 31 1888 11-50 1897 33 1889 12 1898 30 1890 12 Q. Give list of stock dividends, with dates. A. May, 1887, 20 per cent. Q. What was the total amount of net profit, or loss, during your last business year? A. Profit, 30 per cent. Q. What distinctions, if any, are made in the distribution of profits between the former owners of closed or dismantled plants and others? A. None. Q. What sums have been added in enlargement or improvement of plant? Specify the use. Give particulars, with dates. A. In 1882 the prop- erty of the various companies was estimated to aggregate $75,000,000. for which amount trust certificates were issued. In 1892 they were estimated to aggregate $121,631,312. This increase was partly from profits, partly from additional capital invested. Possibly 50 per cent, of the addition was profit. No estimate has since been made; but the addition of profits to capital was in about the same proportion until 1896, since which time profits have been divided. The improvements are in the way of greater efficiency in method and in facilities for enlarged output. Q. What has been allowed for annual depreciation? A. An average of 5.77 per cent. Q. What disposition has been made of plants closed or dismantled since the formation of the organization? List, with particulars for each. A. All that was useful of closed or dismantled plants was used in construction of new plants; all else was sold as junk. No data are within my knowledge or control from which particulars can be given. Q. Give any further particulars which show the work of the organiza- zation and its effects. A. About the year 1872 the condition of the refined oil business was disastrous, and failures were of constant occurrence. Lead- ing refiners began to combine for the purpose of making the business suc- cessful. The combination was by means of purchase of stocks and interests of various companies, and, until 1882, the combination was solely by stock ownership in the hands of a limited number of individuals, who controlled the corporations as agencies in a common business. In 1882 these owners, whose names appear in Exhibit A, entered the trust agreement. The com- panies whose stock they owned, in whole or in part, appear in the same agreement. They were not then competing companies. The individuals named as trustees controlled them by virtue of absolute ownership of a ma- jority of their stocks. When the trust was dissolved, in 1892, the same fact existed. The indi- viduals then trustees continued to control the companies by virtue of abso- lute ownership of a majority of their stocks. Consequently the corporations named have been, many of them since 1872, separate agencies carrying on business as a unit for the individuals who are their common stockholders. What they have accomplished in that time may be thus briefiy summarized: 1. Thev have cheapened transportation, both local and to the seaboard, by perfecting and extending the pipe line system; by constructing and sup- plying cars by which oil is shipped in bulk; by building tanks for storage of oil in bulk; by purchasing and perfecting terminal facilities for receiving, handling, and re-shipping oils; by purchasing and buildine steamers and lighters for river and harbor service; by building wharves, docks, and ware- houses, for foreign shinments; ])y purchasing and building ocean steamers for carrying oil in bulk, and by employing in foreign countries the same J. W. LEE, PRESIDENT PURE OIL TRUST. 71 special methods for storing and transporting oils in bulk, by which means alone the markets of Europe are to-day held for American oil against Rus- sian competition. 2. By uniting the capital, skill, and acts, and the various processes and patents of a number of persons, as well as their secret processes, and by building up manufactories on a more extensive and perfect scale, with improved machinery and appliances, and by locating them in the centers of the trade they were intended to reach, the manufacture of oil has been much cheapened and improved. By spending large sums in the investigation of methods of utilizing Ohio and Indiana oils, and by purchase of various patents, they have suc- ceeded in making a superior article of illuminating oil out of what for some years seemed an almost worthless product. 3. By uniting with the business of transporting and refining, businesses necessarily collateral thereto, to-wit, the manufacture of barrels, tin cans, boxes for inclosing cans, paints, glue, sulphuric acid, etc., and by union of capital and skill, obtaining the best machinery, and manufacturing on a large scale, they have cheapened these products. 4. They have obtained and utilized the best scientific skill in investigat- ing and experimenting upon the obtaining of new and useful products from petroleum, and have cheapened illuminating oil and otherwise benefited mankind by the utilization of these by-products. 5. They have used their united capital in opening up the markets of the world for American petroleum, and have held those markets against the fiercest foreign competition. This was rendered possible only by the em- ployment of millions of capital, in the cheapening of transportation at home, across the ocean, and in foreign lands, and by the best and cheapest methods of manufacture. The proofs of these propositions will be found in the statistics of petro- leum, showing its production, prices of crude and refined, consumption at home, and amount exported to foreign markets. While the Standard does not produce, refine and market all the oil, it has been the leader in the busi- ness, and competitors have succeeded by uniting their capital, skill and acts, and following the same methods. It may be asked whether all this could have been accomplished with- out combination. It could if one man could have commanded the necessary capital and employed the proper means and persons. But that was mani- festly impossible. It could have been accomplished by one corporation instead of many, but no charter could be obtained authorizing a corporation at once to produce, manufacture, transport by pipe line, car and steamer, and deal in oils, and also to manufacture packages, acids, etc. The theory of the combination was that a corporation created by and largely doing business in a State should take its charter from that State. Until charters can be granted by the Federal government, the agency of different corpora- tions will be required in any business like that of American petroleum, which seeks all the markets of the world. CHAPTER VIL TESTIMONY OF MR. J. W. LEE, PRESIDENT OF THE PURE OIL TRUST. There are a variety of inconsistencies in the testimony of Mr. J. W. Lee, president of the Pure Oil Trust, who appeared before the Industrial Commis- sion on May 11, 1899. The careful reader of Mr. Lee's testimony will readily see that he had many diflSculties to overcome in his argument in which he •endeavored to show that the Pure Oil Trust was altogether good, while the Standard Oil Company was altogether bad. 72 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. Lee and other competitors of the Standard Oil Company argued that the charge of twenty cents per barrel for local pipage of oil as made by the Standard Oil Company was extortionate. When closely questioned on this matter, he said he thought the cost of piping oil would be between seven and eight cents a barrel, apparently referring to local piping. In reply to a question by Representative Livingston, who asked who paid the expenses of the independent pipe line, Mr. Lee said: "The company itself. It charges 15 cents for local pipage to the refiners. They have 15 cents pipage out of which they pay the expenses, and if there is anything left it is their profit." This reply indicated that the dividend of the independent pipe line was very uncertain, and yet Mr. Lee a short time before had testified as follows: Q. (By Professor JENKS.) Could you give any estimate as to what you think the cost of pipage is now that the pipe is so low? How would you estimate it? A. I think the cost of pipage would be between seven and eight cents a barrel.* It should be remembered that the National Transit Company's lines were built before the "pipe was so low." Mr. Lee was asked whether his estimate of the cost of pipage included interest on the capital invested, which would appear to be a very important part of the cost of local pipage, as capital could hardly be engaged for such a purpose without profit. He replied that his estimate of the cost was simply the cost of pipage. This most important qualifying statement, which was secured only after persistent questioning, was dropped from the report of his testimony before it was given official- publication. This omission was very unfortunate, as it made the testimony of Mr. Lee in that respect wholly misleading. Other witnesses had testified that the cost of piping oil was very much cheaper than seven or eight cents a barrel, such testimony being given to show that the profits of the National Transit Company were exorbitant. Vice-Chairman Phillips, in asking Mr. Thurber a question, declared it could be piped for five cents a barrel. If dividends were doubtful on a charge of 15 cents per barrel by the United States Pipe Line Company, it is difficult to see how the price of 20 cents per barrel charged by the National Transit Company has been exorbitant. Mr. Lee testified as follows: Q. (By Vice-Chairman PHILLIPS.) Is the amount given and the length, of time it was received (referring to alleged rebates paid by the Pennsyl- vania and other railroads which the witness had previously said the Inter- state Commerce Commission had assessed against these roads) shown in the testimony of Mr. Cassatt? A. Yes, sir, it Is in the testimony on pages 242 and 243 of the work on trusts. Q. (By Vice-Chairman PHILLIPS.) Can you give the commission the exact amount in dollars? A. It is estimated here to be from October 17, 1877, to March 31, 1879, $10,551,218. The above testimony would indicate that this amount of discrimination was testified to by Mr. Cassatt. The fact is Mr. Lee was not really referring to the testimony of Mr. Cassatt, but to the deductions from that testimony by Mr. Lewis. Emery. .Jr., which appear on pages 242 and 243 of the report of the testimony taken by the Committee on Manufactures of the House of Representatives, the absurdity of which has been fully shown in the testi- mony of Mr. Archbold. The testimony as given by Mr. Lee is altogether misleading as to the facts. The discrepancies between the testimony as actually given by Mr. Lee and the official report of his testimony as issued by the Industrial Commis- sion are very great. Whether the official censor of the commission or Mr. Lee himself made these changes in his testimony before thp latter swore to the correctness of his statement before a notary public, cannot readily be ■^Both Mr. Phillips and Mr. Kmory sairl the cost of local pi], age was from three to five cents a barrel. Mr. Phillii)s said oil rouUl he piped to the terminal in New Jersey, cari'ving half capacity for five cenis a barrel, and with full capacity for less than four cents. Mr. Emery said oil is piped from the wells to the terminal in New Jersey for ten cents a barrel. J. W. LEE, PRESIDENT PURE OIL TRUST. 73 ascertained by the public, but the character of these changes is significant. A trifling omission occurs in the opening of Mr. Lee's testimony. In reply to a question by Mr. Phillips, who asked what methods the Pennsyl- vania Railroad Company and the Standard Oil Company used to prevent the passage of a bill in the Legislature of Pennsylvania, he said: "The methods that are usually known, I think, in Legislatures, especially in the Pennsylvania Legislature." It is not clear what reason existed for cutting out the term "especially in the Pennsylvania Legislature," but it does not appear in the official report. Not only were these changes made in Mr. Lee's testimony, but they occurred as well in the questions asked him by Vice-Chairman Phillips, the 'leading" portions of which were frequently eliminated by some one. A careful comparison of the testimony as actually given and as officially pub- lished, will show that in a number of cases the leading questions of Mr. Phillips have been stricken from the record, the answers to these leading questions, frequently merely a repetition of the questions, being retained. In other cases the questions do not appear as such, but are incorporated as a part of Mr. Lee's answers. The testimony, as officially published, is misleading in many respects, if the reader expects to find in it a reproduction of what actually took place before the commission. Mr. Phillips asked his colleague in the Pure Oil Trust: "Do they obtain rebates from railroads?" (referring to the Standard Oil Company). Mr. Lee promptly replied: "They do obtain rebates from the railroads." Those who are at all acquainted with the testimony taken before the commission know that no evidence, worthy to be considered by reasoning men, was presented to show that rebates had been paid to the Standard Oil Company since the passage of the interstate commerce law. Very properly when the official report of the evidence was issued the "do" of both Air. Phillips and of his friend Mr. Lee w.is changed into a "did." so that the assertion regarding rebates might refer to any old time. Of couse, there is no intention to charge either Mr. Phillips or Mr. Lee with having introduced the past tense into statements originally referring to the present time, but the change was in keeping with the facts in the case and to that extent should be com- mended. It will be seen that when Mr. Farquhar asked the witness whether the oil producers of this country receive a fair price for their product, he replied: "They certainly do not." In the official report he is made to say: "They certainly have not." There is a very wide difference between "do not" and "have not." There is no question that at times oil producers "have not" received a fair remunerative price for their product, and it was because of that fact that the Standard Oil Company in 1887-88 co-operated with the producers in order to reduce the stock by limiting the production, so that the oil might be placed on a paying basis for the producers. The result of that action was to improve conditions in the oil industry so that it could no longer be said that the producers "do not" receive a fair price for their product. The virtue in this change in the testimony is that it was at least in the direction of the facts. Again when referring to the old yarn about the $10,000,000 rebate. Mr. Lee said: "It went to the Standard Oil Company chiefly, of course." That was positive testimony of a kind that one would hardly expect to be made without abundant proof to sustain it, but before the testimony was placed before the public in the official report, this positive statement became mel- lowed into a mere supposition, as Mr. Lee is there quoted as saying: "It went to the Standard Oil Company chiefly. I suppose." Mr. Lee declared: "I do not think any of the trustees (of the Standard Oil Company) have had any practical experience in the business." When he w^as asked what he thought of Mr. O'Day, he said that he had had expe- rience as a pipe line man and Mr. Archbold had had quite a large experience as a refiner. In the official report there was some spirit of condescension, apparently, on the part of some one. for Mr. Lee is made to say: "I think with the exception of one trustee, none of the trustees have had any expe- rience." A further compliment is paid Mr. Archbold by the additional 74 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. remark which appears in the oflBcial report, but not in the stenographic report, Mr. Lee being quoted in the former as saying: "I think he (Mr. Archbold) is a competent man in that business." This indeed is high praise for the body of men whose genius for business and organization has con- structed the most wide-reaching industrial enterprise the world has ever known. Again, when speaking of what he considered the inordinate profits of the Standard Oil Company, Mr. Lee said: "They have the ability, they have the power, to take from the consumer just what they please where there is no competition, and I do not think anybody would be moderate under such circumstances. I would not want to trust myself, I think, under those circumstances." In the official report this candid acknowledgement of Mr. Lee's distrust of even himself under temptations to take an inordinate profit, does not appear. In discussing methods by which great corporations might be controlled, Mr. Lee, in referring to the suggestion that no company should have over 11,000,000 of capital, said: "You can make it a penal offense for them to have more than that; if you want to drive them out and make them begin over again do away with the trusts altogether. No commercial company should have more than that." This suggestion of the particular heroic treatment that Mr. Lee approves does not appear in the official report. When ques- tioned by Mr. Phillips regarding the sale of lubricating oils by the Standard Oil Company to railroads of the United States. Mr. Lee said that while he could not give any positive information on the subject, he believed the Stand- ard was securing an advantage from the railroads by selling them lubricat- ing oil. He said: "I think the railroads of this country can be lubricated for one-half of the amount which they pay to-day, and a large profit be made out of it; the railroads are being robbed in that way." In the official report of his testimony he is made to say: "I think the railroads of this country can be lubricated for one-half the amount which they pay to-day and a large profit made out of it; but the railroads are simply giving rebates in that way." (P. 268.) Representative Livingston asked the witness what stood in the way of the Standard Oil Company purchasing the remaining companies. The wit- ness replied: "Because they are not willing to sell — that is the only reason." After being edited the testimony reads: "Because they are not willing to sell; that is one reason." (p. 71.) Some comparisons between the testimony as shown by the stenographic report and as officially published follow: STENOGRAPHIC REPORT. OFFICIAL REPORT (p. 264). Q. (By Vice-chairman PHILLIPS.) Q. (By Vice-Chairman PHILLIPS.) Do they obtain rebates from the rail- Did they obtain rebates from the rail- roads? A. They do obtain rebates roads? A. They obtained rebates from the railroads. That is probably from railroads. That is probably quite an old subject, etc. quite an old subject, and it is fully gone into here in the testimony of Mr. Cassatt. * * * STENOGRAPHIC REPORT. OFFICIAL REPORT (p. 268). Q. (By Mr. FARQUHAR.) As a Q. (By Mr. FARQUHAR.) As a business proposition, does it make business proposition, does it make any difference to a man selling oil, any difference to a man selling oil whether he goes to the president or to a railroad whether he goes to the the purchasing agent — practical dif- president of the railroad or to a pur- ference, I mean? A. Yes. sir, T think chasing aeent? A. Yes, I think it it makes a great difference, because makes a difference; because the pur- a purchasing agent is supposed to chasing agent is supposed to buy his buy the oil at the very lowest oil at the very lowest prices. It is price if he does his duty to the stock- different in the case of the president. J. W. LEE, PRESIDENT PURE OIL TRUST. 75 holders of the road; if it is put in the hands of the president it is for one purpose and that is to pay ex- tortionate prices. Q. State any one case in which you know that the president or the purchasing agent has been paying such prices? A. No, sir, I do not know of any. STENOGRAPHIC REPORT. Q. (By Vice-chairman PHILLIPS.) Have you any information in regard to the Standard paying a large bonus or premium for refining works to re- main in idleness, or sums of money to persons to not enter the business, who would probably have done so, without going in with them? A. I know that they leased a number of refineries years back; not within the last five years, but prior to that they leased a number of refineries and simply shut them down and allowed them to remain idle. As to persons receiving money to remain out of business, I have no personal, abso- lute knowledge on that subject; only common rumor. STENOGRAPHIC REPORT. Mr. LEE. You will observe from the figures that I have given, that prior to the time the Standard Oil Company obtained so large a control of the industry, prices of crude oil were very high. The price of crude since the beginning of 1895 has av- eraged $] .05 a barrel. That is very close to the general average price of crude for the last four years. 1 will not say that is within a fraction of a cent, but it is very close to the aver- age. During the ten years prior to that the average price of crude oil wa> below 80 cents, and that was entirely an unprofitable price, con- sidering the entire industry. Men could not produce oil and get cost for it, and maintain their production generally. * * * * STENOGRAPHIC REPORT. Q. (By Representative LIVING- STON.) What is the surplus in bar- rels carried over now? A. The sur- plus in round numl)ers is a little over 11.000.000 barrels in Pennsylvania oil, and about 14.000,000 in Lima oil. A while ago Lima oil had about 22.- 000.000 barrels surplus. Pennsyl- vania has increased her surplus about 2,000,000 barrels in the last year. Q. (By Mr. FARQUHAR.) Is there any proof by which you know that the purchasing agent gets competi- tive prices on oil? A. No. OFFICIAL REPORT (p. 272). Q. (By Vice-chairman PHILLIPS.) Have you any information in regard to the paying of a large bonus or premium for refining works to re- main in idleness, or have you any information in regard to their pay- ing sums of money to persons to stay out of the business? A. I know that within the last five years and prior to that, they leased a number of re- fineries, and simply shut them down and allowed them to remain idle. As to persons receiving money to re- main out of business, I have no per- sonal, absolute knowledge of that subject; only common rumor. OFFICIAL REPORT (p. 279). Mr. LEE. You will observe, from the figures I quote, that prior to the time of the Standard Oil combina- tion, competition largely controlled this industry. The prices of crude were very much higher than they have been since. Beginnin"? with 1895 they averaged about $1.05 a bar- rel. During the ten years prior to that the average of crude oil was be- low 80 cents. That was generally an unprofitable price. Men could not produce oil and get cost for it and maintain the production. * * * OFFICIAL REPORT (p. 280). Q. (By Vice-President PHILLIPS.) What is the surplus in barrels at present? A. The surplus stock of oil is a little over 11,000.000 barrels in Pennsylvania oil and about 14,000.000 barrels in Lima oil. A year ago Lima had more than 22.000.000 barrels surplus. Pennsylvania has increased its surulus about 1,000,000 barrels last year. 76 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. STENOGRAPHIC REPORT. Q. (By Mr. FARQUHAR.) You wish to state unequivocally the pro- ducers of this country do not receive a fair price for their product? A. They certainly do not: I do not think that the counties which have pro- duced oil are as well off as they would have been if they had never produced a barrel of oil, and yet they have already taken out of those counties in the neighborhood of 800,- 000,000 barrels of oil. OFFICIAL REPORT (p. 282). Q. (By Mr. FARQUHAR.) You wish to say that the producers of this country do not receive a fair price for their product? A. They certainly have not. I do not think that the counties which have pro- duced oil are as well off as they would have been if they had never produced a barrel of oil; yet about 800,000,000 barrels of oil have been taken out of those counties. STENOGRAPHIC REPORT. Q. (By Professor JENKS.) You said the price of piping is still 20 cents? A. Yes, sir; local pipage. Q. Could you give any estimate as to what you think the cost of pipage is, now that the price is so low? How would you estimate it? A. I think the cost of pipage would be between seven and eight cents a barrel. Q. That includes interest on the capital invested? A. No, sir; that would simply be the cost of pipage; all of the entire cost. Q. (By Mr. FARQUHAR.) That does not carry fixed charges, does it? Professor .TENKS. No, sir; no fixed charges. OFFICIAL REPORT (p. 284). Q. (By Professor JENKS.) Piping is still 20 cents? A. Yes, local pip- ing. Q. Could you give any estimate as to what the cost of piping is now? A. I think the cost of pipage would be between seven and eight cents a barrel.* STENOGRAPHIC REPORT. Q. (By Mr. A. L. HARRIS.) What was the character of the rebates at the time you speak of in the Penn- sylvania oil district? What I mean to say is this: What is the amount of the rebate and where did that rebate go to sometimes? A. That rebate was in the shape of checks, I suppose, or cash, and it has been estimated to have amounted to $10,- 000,000. It went to the Standard Oil Company chiefly, of course. I do not know how it was divided. OFFICIAL REPORT (p. 287). Q. (By Mr. A. L. HARRIS.) What was the character of the rebates at the time you speak of in the Penn- sylvania oil district? What I mean is this: What was the amount of the rebate, and whom did the rebate go to in that district? A. That re- bate was in the shape of checks, I suppose, or cash, and it has been estimated to have amounted to ten millions of dollars. It went to the Standard Oil Company chiefly. I sup- pose. I do not know how it was divided. *Tho qualifying questions and answois sliown in tho quotation from the stenographic report are omitted from the official report. While several of the so- called independents were questioned regarding the cost of local pipage of oil this was the only Instance in which any of them was asked if his estimate included fixed charges. J. W. LEE, PRESIDENT PURE OIL TRUST. 77 STENOGRAPHIC REPORT. Q. (By Vice-chairman PHILLIPS.) What was the rate the independent company paid to the railroad and did any of that come bacli to the Stand- ard Oil Company? A. The independ- ent shipper would ship his oil and pay the open rate, and they would pay 80 cents of the amount of the freight that he paid over to the Standard Oil Company. They paid not only on the oil that the Stand- ard Oil Company shipped, but the oil that he shipped to anyone. The Standard Oil Company got the rebate on that. I don't say that 80 cents is the amount, but they did that in some instances. I know in Ohio they charged 55 cents to some of the inde- pendent men and after paying that they paid 25 cents to the Standard Oil Company. Q. (By Mr. FARQUHAR.) Was that a matter of proof? A. It was stated in testimony. That was done in the case of the receivership in Marietta, and the court removed the receiver on that ground. OFFICIAL REPORT (p. 287.) Q. (By Mr. A. L. HARRIS.) Was it paid to the railroad and then paid back to the Standard Oil Company? A. The independent shipper would ship his oil and pay the open rate — we will say $1.80; and 80 cents of this freight that he paid was handed over to the Standard Oil Company. They got the rebate not only on the oil they shipped, but on the oil he shipped. No one could stand that. I do not say that 80 cents is the amount, but they did that in some instances. STENOGRAPHIC REPORT. Q. (By Professor JENKS.) Would the same thing hold in reference to the cost of other materials they use in connection with the shipment — tin cans, and barrels, etc.? A. No, sir; others make these just as cheap- ly as they can. The making of titi cans is a very simple process. It is all done by machinery, and they are made very rapidly. I think others can manufacture them just as cheap- ly as they do, and they can manufac- ture barrels just as cheaply as the Standard Oil Company. I judge they cannot manufacture any cheaper than other people, because they do not do it, and in the other branches of their business they manufacture no cheaper than the other people. They are not any better producers than the independent producers, nor as good; and they do not transport oil any cheaper on any pipe line. OFFICIAL REPORT (p. 269). Q. (By Professor JENKS.) Would the same thing hold with reference to the materials they use in ship- ping? With reference to the cost of tin cans and barrels? A. The mak- ing of tin cans is a very simple pro- cess; it is all done by machinery, and they are made very rapidly. I think others can manufacture them just as cheaply as they do. Barrels can be manufactured just as cheaply as the Standard Oil Company can make them. I judge they cannot manufac- ture these things any cheaper than other people, because they do not do the other parts of the business any cheaper than the other people. They are not any better producers than the independent producers, nor as good, and they do not transport the oil any cheaper through a given size of pipe than we do. 78 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. STENOGRAPHIC REPORT. Q. (By Professor JENKS.) In your opinion then, whatever advantage they have comes from some special discrimination through the monop- oly, and not from any advantage of a large capital? A. I think you are entirely correct; they have no ad- vantage so far as the real doing of the business is concerned, unless it is through some discrimination that they get in some way. STENOGRAPHIC REPORT. Q. (By Mr. FARQUHAR.) You said some time ago you thought those who were interested in the in- dependent companies and had been brought up to the business and had long experience in it, were better managers than the agents the Stand- ard Oil Company employs in the re- fining or transporting or selling of oil. Is it, or not, a fact that in the acquirement of these properties the Standard Oil Company has usually taken the expert mixers and refiners and business men of these concerns into the working force of the Stand- ard Oil Company? In other words, are not the controlling spirits of the Standard Oil Company to-day the men who have been in the field from the first with as wide an experience as any of the independent companies could have? A. No, I don't think so. I do not think any of the trustees have had any experience; have had any practical experience in the busi- ness. Q. What is the experience of Mr. O'Day? A. He has had experience as a pipe line man, and Mr. Archbold has quite a large experience as a re- finer. STENOGRAPHIC REPORT. Q. (By Representative LIVING- STON.) Now give the reasons to the commission why you think so. A. The reasons are that any man who is permitted to take whatever he wants to, is never moderate in his taking. They have the ability, they have the power, to take from the consumer just what they please, where there is no competition; and I do not think anybody would bo moderate under such circumstances. 1 would not want to trust myself, I think, under those circumstances. I do not believe anybody should be trusted with unlimited powers any- where. OFFICIAL REPORT (p. 269.) Q. (By Professor JENKS.) In your judgment, then, any advantage they have comes from some special dis- criminations or through monopoly, and not from any legitimate advan- tage they have through large capi- tal? A. I think you are entirely cor- rect; they have not much advantage, so far as the actual doing of the bus- iness is concerned, except through discriminations. OFICIAL REPORT (p. 271.) Q. (By Mr. FARQUHAR.) You mentioned the fact some time ago that you thought those who were in- terested in the independent com- panies, and had been brought up in the business, and had long experi- ence in it, are better managers than the agents that the Standard Oil Company employ in refining, or transporting, or selling. Is it. or is it not a fact that in the acquirement of these plants, the Standard Oil Company has usually taken the ex- pert mixers and refiners of those concerns into the working force of the Standard Oil Company itself. In other words, under the controlling spirits of the Standard Oil Company to-day, have not the men in the field had as wide experience as any in- dependent company can have? A. No, I think not. I think, with the exception of one trustee, none of the trustees have had any experi- ence. Q. What is the experience of Mr. O'Day? A. He has had experience as a pipe line man. Mr. Archbold, I think, has had quite a large ex- perience as a refiner. I think he is a competent man in that business. OFFICIAL REPORT (pp. 272-273.) Q. (By Representative LIVING- STON.) Why? A. The reasons are that anyone who is permitted to take whatever he chooses is never moderate in his taking. They have the ability and power to take from the consumer just what they please, where there is no competition; and I do not think that anybody would be moderate under such circum- stances. I do not believe that any- body should be trusted with un- limited power to fix prices. J. W. LEE, PRESIDENT PURE OIL TRUST. 79 STENOGRAPHIC REPORT. Q. (By Mr. A. L. HARRIS.) Would you reach the remedy for this trouble by what are commonly called the anti-trust laws, or would you do it through the corporation acts of the different States? A. They would have to be real anti- trust laws. You would say that no company should have over $1,000,000 capital. You can make it a penal offence for them to have more than that if you want to drive them out and make them begin over again and do away with the trusts altogether. No commercial company should have more than that. You can have a perfect division of labor with $1,000,- 000 capital, and all political econo- mists say that is all that is desired by the aggregation of capital. But that is not what the trusts desire. The trusts desire to get in a posi- tion to squeeze somebody out of business, to drive somebody out of business, to obtain a monopoly whereby they can levy tolls upon the public generally. That is what the trusts are after. They are all after that. OFFICIAL REPORT (p. 295). Q. (By Mr. A. L. HARRIS.) Would you reach the trouble better by what is commonly called the anti-trust laws, or in the corporation acts of the different States? A. They would have to be real anti-trust laws; you would have to say that no company should have more than $1,000,000 capital. You can have a perfect di- vision of labor with $1,000,000 capi- tal; and all political economists say that is all that is desired by the aggregation of capital. That is not what the trust desires. The trusts desire to get into position to squeeze somebody; drive somebody out of business; whereby they can levy tolls on the public generally. That is what the trusts are for. STENOGRAPHIC REPORT. Q. (By Representative LIVING- STON.) If one State is allowed to issue charters as it pleases, and those charters are to be operative in all of the other States, how are you go- ing to remedy it by State legislation? A. You can, we will say, provide that no trust can do business in the State of Georgia. Q. We have an iron-bound, rock- ribbed law there now? A. And that no trust nor corporation can do busi- ness with a capital over $1,000,000. If a dozen States would pass laws of that kind that would enable in- dependent companies to come in those States and do business on those lines. Q. If a corporation comes into my State to sell goods with $500,000 or $500,000,000 capital, and does not use imfair methods, does not attempt to destroy competition, why not let it have $500,000,000 as well as $1,000,- 000? A. I do not object to the capi- tal, but to the amount of it. Q. I do not see the object of limit- ing it to $1,000,000 because a rascal can be a rascal with $1,000,000 just OFFICIAL REPORT (p. 295). Q. (By Representative LIVING- STON.) If one State in the Union is allowed to issue charters just as she pleases, and do as she pleases, and those charters are operated in all the other States, how are you go- ing to legislate? A. You could say in the State of Georgia that no trust should be possible in that State. Sup- pose a dozen States should pass laws that no trust should be possible or no corporation should do business in those States with a capital of over $1,000,000; that would enable inde- pendent companies to go in and do business in those lines. I do not object to the amount of capital. I only limit it to $1,000,000 because a company with $1,000,000 capital can not engage in destructive competi- tion. It might be mean in a small way, but it could not do much dam- age. A company with $100,000,000 or $500,000,000 capital can drive everybody out of that business; and the question is, will they not do it? There is no way of curbing their power except by restricting their capital, or else making it a penal 80 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. as easy as with $100,000,000. A. I only limited it to $1,000,000 because a company with $1,000,000 capital can- not engage extensively in destruc- tive competition. Q. He can to that extent, on a smaller scale it would be just as mean? A. It might be mean, but as much damage could not be done by a company of $100,000 or $500,000 of capital. A company with $500,000,- 000 of capital can drive out every- body else in the industry, and when they do it they want to secure a monopoly. That is all. I am afraid they will do it and there is no way of curbing their power except to take their capital away from them ; not allow them to have that capital. offence to engage in destructive com- petition. STENOGRAPHIC REPORT. Q. (By Professor JENKS.) I want to see if we can have made clear the causes for three or four of the most important fluctuations. I un- derstood you to say that the South Improvement Company was formed in 1872, and that within the next two years there was a great fall in prices. What influence did the South Improvement Company have in the way of forcing those prices down, if any? A. I think it had the effect of forcing those prices down, because they had a combination v.'ith the railroads to control trans- portion to a very great extent, and the producers became frightened and would sell their oil and get rid of it, and in 1873 was also the panic year. You remember the panic had some effect on prices. The man who owed debts for drilling and had to pay up had to sacrifice his oil, and to get out, threw the oil on the market. Q. Did any new discoveries have anything to do with it at that time? A. At that time also there was a new di'^covery in Butler County, which looked as if tliey had a very prolific and large field, which thev had. OFFICIAL REPORT (p. 283). Q. (By Professor JENKS.) I want to see if you have made clear the causes for three or four of the most important fluctuations. I understood you to say that the South Improve- ment Company was formed in 1872, and that within the next two years there was a great fall in price. What influence did the South Improvement Company have in the way of forcing these prices down, if any? A. I think it had the effect of forcing prices down, because they had combined with the railroads and controlled transportation to a very great extent and the producers became fright- ened. Eighteen hundred and sev- enty-three was the panic year. You will remember the panic had some effect on prices. At that time, also, there was a new discovery, in But- ler County. That promised to be a very prolific field; and it proved to be. Q. Those two factors worked to- gether? A. Yes, sir. STENOGRAPHIC REPORT. Q. (By Vice-chairman PHILLIPS.) Is there or not a movement to unite the various pipe line com- panies and the refineries? A. There have been suggestions of that kind. They will be stronger if united in one organization and the stock all owned by one company. OFFICIAL REPORT (p. 290). Q. (By Vice-Chairman PHILLIPS.) Was there or was there not a move- ment on foot to unite the various pipe line companies and the refiner- ies? A. There have been suggestions of that kind. It has been thought that we should be stronger if we were united into one organization. J. W. LEE, PRESIDENT PURE OIL TRUST. 81 The testimony of Mr. Lee is given in full, this being done for the reason that for many years he has been the attorney of various competi- tors of the Standard Oil Company, and is at the head of the Pure Oil Trust, which he was largely instrumental in forming. He had probably prepared his case against the Standard Oil Company with great care, and Vice-Chairman Phillips, his associate in the oil business, presiding at the head of the Industrial Commission, asked numerous questions. If be- tween them they did not make out their case, they surely could blame no one but themselves or a poor cause. The complete testimony of Mr. Lee follows: *Vice-Chairman PHILLIPS. The commission will please be in order. I will state to the members of the Commission that we will dispose of the regular order this morning because Senator Lee, of Pennsylvania, is present from Pittsburg. Senator Lee has been long and familiarly acquainted with oils and petroleum in all their departments, and I will state to the commission that Senator Lee has said that he would like to present his testimony under three heads, namely, "How, in your opinion, do Trusts affect the consumer? How do they affect the producer? How do they affect the laborer, and what remedy can be applied?" I would request the commissioners to take note of anything that they desire to ask the witness and reserve their questions until after he has finished under each head, so that he may not be interrupted in his general statement, and we will take occasion to ask Senator Lee some preliminary questions before entering upon this. After these questions any commissioner who wants any information about the oil region or petroleum will be at perfect liberty to ask questions. I am pleased, gentlemen of the commission, to present Senator Lee, of Pittsburg. Q. (By Vice-Chairman PHILLIPS.) Will you give your name, place of residence, and business? A. James W. Lee, I reside at Pittsburg, Pa., and at present am engaged in practicing law. I am also connected with the independent pipe line and independent oil companies. There are four companies. I am president of three of them and attorney for the fourth. Q. (By Vice-Chairman PHILLIPS.) Will you please name those com- panies? A. The first company to be organized was the Producers' Oil Company, Ltd., with its general office at Warren, Pa. The second company to be organized was the Producers and Refiners' Oil Company, Ltd., with its general office at Titusville, Pa., and the third was the United States Pipe Line Company, which is exclusively for the transportation of both refined and crude oil by means of pipe lines, with one of the termini at Oil City, and the other intended to be finally at the seaboard. The fourth company is the Pure Oil Company, which has the right to engage in the production, transportation, manufacture and marketing of oil and its products. That company was organized three years ago last November, and was the last to be organized; they are all owned substantially by the same persons and operated together. Q. (By Vice-Chairman PHILLIPS.) *You have stated that you are a prac- ticing attorney. Where were you admitted to the Bar? A. I was admitted to the Bar of Franklin, in Venango County, which is one of the original oil counties in the State. Q. (By Vice-Chairman PHILLIPS.) Did you practice law in Franklin after being admitted there? A. I practiced law in Franklin until five years ago, when I went to Pittsburg. Q. (By Vice-Chairman PHILLIPS.) Who was your partner there in the law business? A. My first partner was S. C. T. Dodd, now of the Stand- ard Oil Company, of New York. I was afterwards in partnership with Mr. George S. Criswell, now judge of the county, and Mr. Hastings. Q. (By Vice-Chairman PHILLIPS.) Have you ever held any public office? A. None, except I was Mayor of the city in 1875 and served two terms of four years each in the State Senate of Pennsylvania, beginning in 1879. ♦Black faced type indicates matter omitted, in the course of editing, from the official report. 82 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-chairman PHILLIPS.) *You have stated that you served two terms in the State Senate of Pennsylvania. Was there or had there been any pending legislation with regard to free pipe lines, or any dis- crimination before you were elected, and had you any part in such legisla- tion while in the Senate? A. If you will permit me, probably it would be interesting to the commission to have a very brief statement as to the beginning and growth of the oil business, especially that branch of it which relates to transportation. Q. (By Vice-Chairman PHILLIPS.) The commission would be pleased to hear you, no doubt. Senator. A. The first oil was discovered, as is gen- erally known, by Colonel E. L. Drake, who drilled directly for it in 1859 Q. (By Vice-Chairman PHILLIPS.) (Interrupting.) On Oil Creek? A. Ou Oil Creek, which is a tributary to the Allegheny river. The first well was probably eighteen miles distant from the river. Then oil was from that time developed along Oil Creek to the south until the production reached a thousand barrels in 1861 and 1862. The means of getting it to market at that period was by loading it into vessels on Oil Creek and building temporary dams and cutting them and thus making an artificial flood and sending the boats out on that flood into the river and thence by river to Pittsburg, where, at that period refineries were located. The first pipe line, I think, was constructed in 1865 or 1866. It ran from Pithole, on the left of Oil Creek, down Oil Creek about five miles to the Allegheny river, for the purpose of transporting the oil to the river, to be there loaded into boats and sent to market. From that time the business of transporting oil by means of pipe lines increased and the busi- ness developed, extending first north to Tidioute, in Warren County, then south into Clarion, and thence into Armstrong and Butler, and finally into Allegheny and Washington. In 1875 they extended north to ivicKean County where the largest development of oil took place; and then further north to Allegany County, N. Y., probably making the length of the belt in 1880 about 300 miles and the width about forty miles, which embraced all the oil that was produced at that period. As the fields extended, it became necessary to employ pipe lines and that caused the building of pipe lines quite extensively in 1871 and 1872, with very small capital at first. The company which is now the National Transit Company, was started as the United Pipe Lines, with a capital at first of about $4,000, and it grew very rapidly until the capital has reached millions and the number of barrels of oil transported in 1877 was probably about 15,000,000. I may not be entirely correct in these figures, but it was a very large amount. Other pipe lines were started, but the United Pipe Lines soon got into the control of people who are now known as the Standard Oil Company or Standard Oil Trust. These small lines were laid in various parts of the oil field to convey the oil to the railroads because there were no lines leading to the seaboard prior to 1883. A pipe line law was passed which limited the laying of pipe lines to certain counties. An effort was made from 1870 onward to obtain a general State law, allowing the laying of pipe lines and giving to the companies organized for that pur- pose, the right of eminent domain. That was opposed by the railroad com- panies and also by the Standard Oil Company when it came into existence. That bill was introduced in successive Legislatures from 1870 and failed each session until 1883, when it was finally passed. I was present in the Legislature in 1879 when that bill failed and again in 1881 when it failed, and in 1883 it was only passed by the oil people who were interested in having it passed holding mass meetings throughout the agricultural coun- ties of Eastern Pennsylvania and securing petitions of the farmers to their own representatives to vote for the bill. Then it passed in each House by a very meagre majority. Q. (By Vice-Chairman PHILLIPS.) Were you present in that Legisla- ture? A. I was present in that Legislature, and attended a number of the mass meetings that ^vere held. I remember at one mass meeting if you *P.Iack fricecl type indicates matter omitted, in the course of editing-, from the official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 83 will permit the statement, dodgers, small hand bills, were passed through the audience, saying that if the bill became a law the orchards would be destroyed, the springs would be polluted and that death would lurk under their door sills — of course, a very effective way of frightening people who were not acquainted with that means of transportation, while it was a great deal safer and a great deal more economical than any other method of transportation. I do not think there has been a single life lost in trans- porting oils by means of pipe lines in twenty years and there were a great many lives lost in transporting it by the railroad prior to that time. Q. (By Mr. NORTH.) Were these the real objections to the passage of the bill? A. No, the real objections were that it would give the people who desired to enter into business, an opportunity of doing so. The real objection was to maintain in the Standard Oil Company the exclusive right to operate those lines and, by combinations with the railroads, to secure unfair advantages over all competitors; and if any proof on that subject is desired, I would like to submit it right now. I have here the statement under oath. Q. (By Vice-Chairman PHILLIPS.) *You can submit it now, or in the other part of your testimony, as you see proper? A. I guess it would be perfectly logical to submit it right now. Mr. A. J. Cassatt, who was the vice-president of the Pennsylvania Railroad Company, in his testimony given before the master in a case which was instituted in Pittsburg, in the Supreme Court of Pennsylvania, gave his testimony in regard to that sub- ject. He said: (Reading.) "Q. Did you understand at that time that these railroad companies and the United Pipe Lines had united with the Standard Oil Company in order to force the Empire Transportation Company out of the refining business?" (The Empire Transportation Company was a com- pany owning a large number of tank cars, the president of which was Mr. Joseph D. Potts, probably as fully acquainted with the subject of trans- portation as any man who ever lived in the United States — I think I am not saying too much — a man of very great ability and with very wide knowledge on that subject.) (Reading.) "A. I believe they did; I believe that was the object of their onslaught upon us." Q. (By Senator DANIEL.) Who was "us?" A. That is the testimony of Mr. Cassatt. Q. (By Senator DANIEL.) I say. who was "us?" A. That is the Penn- sylvania Railroad Company. The Standard had combined with three trunk lines to force the Pennsylvania Railroad Company to exercise its option to buy the cars of the Empire Transportation Company and to cease the refin- ing of oil, so as to give the Standard Oil Trust a monopoly of the business. That is on page 177 of a book which was published by the Government; it was the investigation before the Committee on Manufactures. I think, in 18S8. Q. (By Mr. NORTH.) Of the Pennsylvania Legislature? A. Of Con- gress. (Reading.) "Q. Was it after the Standard had threatened to with- draw its patronage from your road? A. Well, they had not threatened to withdrav,' their patronage from our road at the time, but they had protested very strongly against the Empire Line being interested in that New York refinery I spoke of before, and had complained that the Empire Line was giving facilities to that refinery on account of their interest in it that they did not give to them, and had been endeavoring for several months to get us to insist upon the Empire Line going out of the refining business." That is the testimony of Mr. Cassatt on page 178. Mr. Joseph D. Potts testified before the same committee of Congress as recorded on page 261 of this same book. He was the president of the Empire Transportation Company. (Reading.) "Q. I will call your attention to this subject; do you not know and did you not also at that time, through railroad officials and other sources, that the Standard Oil Company complained of the impropriety of a trans- porting line, upon which they were dependent for their supply of oil, being also engaged at the same time in competition with them in refining? A. *Black faced type indicates matter omitted, in the course of editing, from the official report. 84 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Yes, sir, that was the point that was made." And at that time the trans- portation company's cars were purchased by the Pennsylvania Railroad Company, and their refining plant by the Standard Oil Company, and they went out of the business. *That is in answer to your question, IVlr. North, whether that was their sole reason for opposing the bill; that was not their reason at all. That bill was passed in 1883. Q. (By Vice-Chairman PHILLIPS.) What methods did the Pennsylvania Railroad Company and the Standard Oil Company, or either of them, use, if any, to prevent the passage of the pipe line bill in 1883? A. The methods that are usually known, I think, in Legislatures, *especially in the Pennsyl- vania Legislature. Q. (By Mr. FARQUHAR.) How much control of oil production did the Standard Oil Company have in 1883, compared with all others? A. I think about five per cent. Q. (By Mr. FARQUHAR.) Five per cent of all? A. Yes, sir. You are speaking of production now. They had none directly, I think there were other companies that were supposed to be, as they term it. affiliated with thgm, such as the Forest Oil Company and probably the Anchor Oil Com- pany and one or two others. Q. (By Mr. FARQUHAR.) Then would you say that the foundation of the strength of the Standard Oil Company, after the passage of the Act of 1883, lay in their means to make combinations with other companies to secure the whole control? A. The great power which they obtained, lay in their discriminations which they obtained from the railroads over all other persons. That is found in the testimony of Mr. Cassatt before the same committee on page 191. Q. (By Vice-Chairman PHILLIPS.) I would like the Senator to proceed in regard to this opposition; how they did before the passage of this free pipe line law. What methods did they take to prevent others from getting through to the seaboard, if any? A. It was impossible to lay a line to the seaboard without having from the Legislature the right of eminent domain; it would be useless to attempt it. because anyone owning a piece of land could absolutely prohibit a pipe line passing over it, and within the region the pipe line law was only extended to certain counties. As the oil business grew, it went beyond the counties to which the law applied, making it diffi- cult to lay lines even within what were known as the oil producing counties. Q. (By Vice-Chairman PHILLIPS.) Were there other attempts to lay lines to the seaboard and how did they attempt to circumvent them? *Did they, or did they not, lease land in advance, or purchase it, over which they could not obtain the right of way? Have you any knowledge of this class of facts? A. I understand that when any attempt was made to lay a line to the seaboard, tracts of land in front of the pipe line would be purchased, and it was impossible to cross such pieces of land. Thus they could and did prevent the laying of pipe lines, so that it became absolutely necessary. in order to lay a line to the seaboard, that a corporation organized for that purpo.se should have the right of eminent domain. Q. (By Representative OTJEN.) You said they controlled five per cent of the production in 1883. What percentage of the transportation did they control at that time? A. I think they controlled ninety per cent, of it. Q. (By Representative OT.JEN.) Even at that time? A. Yes. sir. Q. (By Vice-Chairman PHILLIPS.) *Now ycu can go on on the other questions; have you anything further to say on the pipe lines? A. No, sir. If anyone has any question to ask me in reference to transportation or the laying of pipe lines, I would be glad to answer it now. A number of smaller lines were laid through the oil country and these were rapidly absorbed by the National Transit Company or the United Pipe Lines, which was a Standard or-^anization, so that in 1883 they practically had command of all the transportation of crude oil. Q. (By '^Tr. C. .1. HARRIS.) Has it been their policy to secure control of any new lines that have been laid since then? A. Yes, sir. Q. At whatever cost? A. No matter what the cost. *BIack faced type indicates matter omitted, in the cour.«e of editing, from tlie official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 85 Q. (By Vice-Chairman PHILLIPS.) Do they obtain rebates from the railroads? A. They do obtain rebates from the railroads. That is prob- ably quite an old subject and it is fully gone into in the testimony of Mr. Cassatt. which is easily accessible to the commission. They got their power by means of rebates; they got a rebate, not only on the oil they shipped themselves, but on the oil everybody else shipped; a very excessive rebate; the rebate was so much that nobody else could stay in the business. Q. (By Vice-Chairman PHILLIPS.) How much did that rebate amount to in any given period of time? A. On page 191* Mr. Cassatt said at that time it was eighty cents a barrel in their favor. Q. (By Vice-Chairman PHILLIPS.) In round sums, do you, or do you not, know how much they obtained in the course of a year or some such length of time, from all the railroads? Have you any evidence on that subject? A. I should think it would run into the millions; probably as high as eight to ten millions a year. Q. (By Vice-chairman PHILLIPS.) In rebates? A. I think so. Q. (By Vice-Chairman PHILLIPS.) Has there been any testimony taken heretofore on that subject to your knowledge? A. There has; very fully. It was very fully gone into in the testimony that was taken before the Committee on Manufactures in 1888. Q. (By Vice-Chairman PHILLIPS.) Is the precise sum stated in the testimony? A. The precise sum is stated on page 191. (Reading.) "Q. I mean the tariff rate? A. $1.90. Q. What was the actual rate? A. If shipped to the Standard Oil Company at that time, it would be eighty cents a barrel," (resuming) which was just one-half, and it was even higher than that; I think it was higher than $1.16 a barrel. tVice-Chairman PHILLIPS. Has any gentleman of the commission any more questions to ask In regard to the pipe line system? Q. (By Representative OTJEN.) What percentage of transportation do they control now? A. They control probably about eighty-eight to ninety per cent of it. Q. About the same as they did in 1883? A. Yes. sir; there have been times when they tcontrolled it all; practically controlled it all. tVice-Chairman PHILLIPS. Now, if there is no objection, I will state that Senator Lee will now take up the questions in the order that he has presented them here, that he would like to make his statement and at its conclusion, as I remarked before, under the head of any one question, any member of the commission will be at perfect liberty to ask questions; and we prefer that they take the opportunity to ask him at the conclusion of his statement. Q. (By Mr. FARQUHAR.) Will you permit one general question before you start that? Vice-chairman PHILLIPS. Certainly. Q. (By Mr. FARQUHAR.) Was the establishment of these pipe lines a positive advantage to the oil industry in Pennsylvania as a whole? A. I think so. Q. (By Vice-Chairman PHILLIPS.) How, in your opinion, do trusts affect the consumer? A. I think a very general impression is sought to be created by the trusts themselves, that the organization of trusts, and the introduction of what they call the economies of manufacture, reduce the price of the manufactured article to the consumer. I think that is, in fact, wholly erroneous; that instea'8 of decreasing the price to the consumer they increase the price until it becomes absolutely extortionate. One would suppose that that would be the case, from the mere fact that these trusts are organized for the purpose of securing a complete monopoly of the business in which they are engaged. They permit no one else, if they can help it. to engage in the same business.. They pay enormous prices for other estab- lishments in the same line for the express purpose of closing them up and thus obtaining a complete monopoly of the business. When they have ac- *The witness referred to the report of the Committee on Manufactures of 18S8. tBlack faced type indicates matter omitted, in the course of editing, from the ofncial report. 86 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. complished that, or approximately accomplished it, they have absolute con- tiol of the fixing of prices to the consumer and I do not believe that any body of men anywhere, and especially when organized for the purpose of profit, can be trusted with the inordinate power of absolutely fixing prices to the consumer. One would suppose that in doing so they would fix extor- tionate prices in order that their profits might be high. I believe it could be shown, in fact, that this is the effect of the creation of trusts, and es- pecially of the first trust, and to this day, the greatest, the Standard Oil Trust. Now that they do charge extortionate prices would be a very easy matter for this commission to prove, by simply getting the prices at which they sell refined oil at all points where they are without competition, and in securing, for comparison with those prices, the prices at which they sell refined oil at all points where there is a competitive market. I think it is always well to deal in the concrete, rather than in the abstract, and I will give an example which the commission can readily verify. In New York and Brooklyn and Jersey City, in March, 1896, they were selling oil to the local merchants and to what are known as the wagon men, the re- tailers, at nine and nine and a half cents a gallon. The Pure Oil Company having lieen organized on the 9th day of March, put a wagon on the streets in New York and sold the first day ten gallons of oil at nine *and a half cents a gallon. As soon as the Standard knew that the Pure Oil Company was doing business in the City of New York and vicinity, they commenced a rapid reduction of their price, until, in July, 1896, they had reduced the price to five and a half cents a gallon for the best quality of water white oil, sold a*^ letail; ^old in small quantities out of their wagons in the City of Nev.' York at retail. When the price was nine and a half cents a gallon the price of crude petroleum was $1.30 a barrel, which was a trifle over three cenvs a gallon. Crude oil is always measured in barrels of forty-two gallons each; three cents a gallon would be $1.26. When they put the price at five and a half cents a gallon, crude oil was $1.15 a barrel. In other word;5, they reduced the price of refined oil $1.68 a barrel when crude had only declined fifteen cents. Now nine and a half cents a gallon was an inordinate price for refined oil in New York, and five and a half cents was below cost. They could not make the oil, transport it to New York and sell it for that price and get cost for it. The same is true of the City of Philadelphia, where there has been competition for two years. Q. (By Mr. NORTH.) How long had they competition in New York? A. We put additional wagons on in a small way and I do not hesitate to say that we have lost money every month in New York since we started, three years a^o last March. Q. The prices remaining the same? A. With some slight changes — practically the same. They are a little better now. I think crude oil is within two cents of the price it was in July, 1896; it was then $1.15. it is now $1.13; yet the prices of refined are a little higher now than they were in 1896. But I do not hesitate to say that by the competition which we intro- duced in the City of New York during the last three years. Greater New York has been saved at least $3,000,000. Q. What have you to say about Philadelphia now? A. The same is true of Philadelphia. The Pure Oil Company, one of our companies, has been doing business in Philadelphia since the 19th day of June, 1896, and prior to that time there was another company, which our company succeeded, that had been doing business there for years, and the price of oil in Philadelphia is even lower than it is in New York. Q. (By Mr. C. J. HARRIS.) This saving to consumers would probably not have been made unless it had been for competition, would it? A. Oh, no, sir, I think the trust would have maintained during this entire period the price of nine and a half cents *or more. Q. (By Mr. FARQUHAR.) Are these prices carried by both competing parties at a loss now? A. Certainly, at a loss; *they have to be if they are carried at all. Their purpose is to drive out competition, and unless the ♦Black faced type lndicatP.s matter omitted, In the course of editing-, from the official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 87 company has considerable capital it could not exist; no individual can com- pete with them. They have absolutely destroyed all enterprise in the oil business. Q. Would it not have been a better business method to have adopted the price of the opposing company? That would have involved no loss to the company, which would simply have been a competitor against them, instead of going below their figures. A. If we were to sell oil at all we had to sell it at their price and that was done. We did not care to do business at a loss and would have liked to have avoided it if possible. Q. (By Mr. C. J. HARRIS.) They made the reductions? A. They made the reductions; they made the cuts, and they did it to make it destructive. Q. (By Mr. FARQUHAR.) The cut, you said, was from nine and a half to five and a half cents? A. Yes, sir, from March to July. Q. Were you in competition at that time with the nine-and-a-half-cent rate? A. Yes, sir, when we commenced, March 9th. Q. At the nine-and-a-half-cent rate? A. Yes, sir. Q. The other company then made the first reduction? A. Yes, sir. Q. Was the first reduction they made, the five-and-a-half-cent rate, or was it a less figure than nine and a half? A. The first reduction was, I think, to eight cents, and seven and a half, and six, but quickly down to five and a half. Q. (By Mr. NORTH.) Can you state a figure at which the oil could have been sold at that time with a reasonable profit? A. Seven cents would have given a very handsome profit both to them and to us. Q. (By Mr. KENNEDY.) How about the price of the same quality of oil in other cities where the Standard has not the competition of which you are speaking? A. In New York, for instance, the prices are very low, and as they s;et entirely away from competition, they get what prices they please. Q. Can you name a case in any city? A. No, I cannot give you the figures in other cities; not from memory. I know the figures here because it was my business to know them. Q. (By Vice-Chairman PHILLIPS.) These figures will be obtained and presented to the commission, no doubt, in satisfactory shape. A. But it is true that wherever there is no competition their prices are high. Q. (By Vice-chairman PHILLIPS.) We are still on the question of how, in your opinion, do trusts affect the consumer? A. Well, give the trust the absolute power to fix prices and they will always fix them high, because that is the only way they can get their inordinate profits on their watered stock, and the consumer, of course, must suffer. No government should allow any power to be lodged anywhere to absolutely fix prices for the con- sumer of a given product, if it can be prevented. *Q. (By Senator DANIEL.) Can you tell how the United States govern- ment can prevent it? A. I have made one head of that kind at the conclu- sion; I prefer to wait until then. (h). (By Mr. NORTH.) Are there many competitive points in the United States? A. Yes, sir, there are probably a hundred competitive points in the United States, where the independent people have stations or distribut- ing points for oil, but usually, I think, at a very great disadvantage in freight rates. Q. Is the number of these competitive points increasing or decreasing? A. I think they are increasing, as the independent interests are increasing. If they should diminish, we would correspondingly diminish. Q. (By Mr. FARQUHAR.) In proportion to their capital, are the inde- pendent companies making as much money as the Standard? A. Oh, I think not, sir, if we are to judge by their declared dividends. I think the Standard recently declared for the last three months a dividend of three per cent, and a special dividend of nine per cent, which would make twelve per cent in three months, on a capital of -*10'^,000,000, if the commercial statements can be relied upon. *Black faced type indicates matter omitted, in the course of editing, from the official report. 88 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. Through how many states did this pipe line have to go before it reached the seaboard? A. Pennsylvania and New Jersey. Probably it would be interesting for the commission to know that the independent in- terest first undertook the transportation of refined oil by means of pipe lines. The Standard people said it was impossible to transport refined oil long distances by means of pipe lines. The independents laid a pipe line via Titusville, Warren. Bradford, and Wilkesbarre, Pa., to Hampton Junction, N. J., for the purpose of reaching New York harbor to transport refined oil. That line has been in operation four years, and has transported millions of barrels of refined oil without the condemnation of a single barrel of oil, and it was the only means that enabled the independent refiners to live*. Without that they would have been driven out of business by the railroad companies. tThey had to get away from the railroad companies in order to live at all4 Q. Did these pine lines find any trouble in getting their right of way? A. Oh, yes. sir, they did. Even in Pennsylvania they were hindered and delayed and stopped in a great many ways in reaching Wilkesbarre. Men went in advance of them and took options on the right to lay a line at very high rates for the purpose of establishing a rate for this line that was coming. They would offer a man to take the option for the right of way at very much more than the value of his entire farm. Q. Isn't that the usual way, either with a railroad or with a pipe line, that the second customer is the one that is very apt to pay an inordinate rate? A. The first person that went there was not intending to lay the line at all, but was simply going in advance to fix the prices for the one that did intend to lay the line. Q. (By Vice-chairman PHILLIPS.) Will you state the efforts made by the United States Pipe Line, to ship both refined and crude? Will you state to the commission what adverse circumstances you met in the State of New Jersey in trying to get to New York? A. The line was first pro- jected by way of Hancock on the Delaware river, and through New York to the Hudson river, and when we reached a place near Hancock on the Delaware river, above New York, we found the Erie railroad there with cannon and with other appliances necessary to prevent the laying of the line, and we found we would be delayed there a long term of years, probably, in securing the right to lay that line through to New York, because the free pipe line law of New York had been so amended as to make it very difficult to lay another pipe line. We did not see how it could be accomp- lished then. We saw they could prevent the laying of additional lines there, so we gave up the project of getting to New York by means of Han- cock and, crossing New York to the Hudson river, started from Athens south to Wilkesbarre. § ( *Mr. Lee did not explain to the commission that the oil of the so-called "inde- pendents" is tested by an expert before it is allowed to go into the pipe lines, dO that the condemnations take place before the oil reaches the seaboard. Mr. Lee must have been well aware of the fact that a large number of rejections of oil refined by the "independents" occur annually at the receiving end of their pipe line. His boast that no oil was rejected at the seaboard was made possible only because such rejections were anticipated at the points of manufacture. vHlack faced type indicates matter omitted, in the course of editing, from the official report. tin arguing that the "independents" "had to get away from the railroad com- panies in order to live at all," Mr. Lee merely acknowledged the fact that the Pure Oil Trust has copied the pipe line system of the Standard Oil Company, in order to secure the most economical method of transportation. The system of piping oil was developed by the Standard Oil Company as a necessary adjunct to their business and as a means for supplying oil to consumers at the lowest possible cost. The Pure Oil Trust found that in order to succeed they should follow in the steps of the Standard Oil Company in every particular. §This testimony has been contradicted in an affidavit filed by the president of the I'nited States Pipe Line Company In the courts of Luzerne county, setting forth that the line as projected to Hancock was merely experimental and was not intended as a permanent location. J. W. LEE, PRESIDENT PURE OIL TRUST. 89- Q. (By Vice-chairman PHILLIPS.) That is Athens, Pennsylvania? A. Athens is in Pennsylvania, about four miles from the New York line. We intended to lay the line thence directly through New Jersey to the Bay of New York, where the Columbia Oil Company, with which we are associated, has loading facilities. We reached the Delaware river and crossed it. and met the first objection in New Jersey from the Belvidere railroad, owned by the Pennsylvania, and although we owned an acre of land at the crossing, they enjoined us from crossing that by means of a bill in equity filed before the vice-chancellor, but that was reversed in the Court of Errors and Ap- peals, the highest court in New Jersey. We crossed under that road, but we were delayed a year after getting to that point, and then we met our next difficulty at the Delaware, Lackawanna & Western railroad, where we owned a line, and that is still in litigation. They undertook to tear that line out, and we maintained our position by force. They had a battle there and some men were hurt. We retained the line under the railroad, and it is still there; that is still in litigation. We crossed under the Essex Canal at a culvert and reached Hampton Junction, which is sixteen miles from the Delaware river in the State of New Jersey, and 51 miles from the harbor of New York. There are two lines from Bradford, Pa., to Hampton Junction, one through which crude oil is transported, and the other through which refined oil is transported. We transport three different grades through the same line; push one out with a purer grade, and when the pure oil comes, cut it off by means of a valve into the tank, and transport that second grade of oil for a while, until we have transported the amount desired. Then we put in the third grade of oil, and push that through until we have transported the amount we desire of that grade, and then do the same thing with the first — just keep alternating them. Q. (By Vice-Chairman PHILLIPS.) How can you transport these grades of oil without mixing them to any extent? A. Well, in pumping oils 100 miles it doesn't mix for 50 feet, but of course the better grade of oil simply comes in with the poorer and makes it that much better. Q. (By Mr. FARQUHAR.) Does the Standard Oil Company use the same system in transporting? A. No, sir. Q. (By Vice-Chairman PHILLIPS.) Is your company the first company that ever pumped refined oil for any distance by means of a pipe line? A. By means of a pipe line, yes, sir; I think the Standard is pumping some dis- tillate in Ohio to New York for treatment. Q. (By Mr. FARQUHAR.) Is there in Pennsylvania, or in any oil dis- trict, a feeling against the transporting of crude oil, and in favor of giving these localities the benefits of refining the oil? A. No, I think not; there is a pretty liberal spirit on that subject. They are willing that the oil shall be refined wherever it can be refined cheapest. Q. Then you state that there is an advantage in going to the seaboard for your refining? A. No. I think that oil can be refined cheaper in the interior, and transported as refined by means of pipe lines, getting labor at low cost. Q. Giving employment to the locality where the oil is produced? A. Yes. sir; I think so. I think so for several reasons; land is cheaper, help is cheaper, fuel is cheaper, and water is abundant and of good quality. Q. (By Senator DANIEL.) Living is cheaper? A. And living is cheaper. Q. And it tends to diversify labor? A. Yes, sir. Q. (By Mr. FARQUHAR.) Is there a better market at the seaboard for what you call the by-product or residuum of petroleum, than there is at your local refineries in Pennsylvania? A. That I would not be competent to answer fully. I think that the market for by-products is all over the country, and probably one part of the country is as valuable as a market as another; it depends upon population entirely, I think. Q. (By Vice-Chairman PHILLIPS.) Does, or does not. the Standard Oil Company have a monopoly of the lubricating oils, especially as to the rail- roads of the United States? A. I want to state something that I do not state to be absolutely true. I do not know it to be true, but it is a matter of belief with me. I believe the Standard is getting just as great discrimina- tions from the railroads as ever, but I think they get them in an entirely 90 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. different way, in a way that I do not see how it can be reached. Jt^^ P}[- chas ng o7oils for the railroads has, by a great many roads, been taken out of the lands of their purchasing agents and put in the hands of the president or some managing director, and I think they get their rebates from the railroads by means of the prices at which they oil these roads. Q. (By Vice-chairman PHILLIPS.) The lubricating oils? A. Yes. sir. Q. (By Vice-chairman PHILLIPS.) Does that require a large amount; is it a very large item of expense in regard to railroads? A. I think the railroads of this country can be lubricated for one-half of the amount which they pay to-day and a large profit made out of it; the railroads are being robbed in that way. Q. (By Mr. FARQUHAR.) As a business proposition, does it make any difference to a man selling oil, whether he goes to the president or the pur- chasing agent — practical difference, I mean? A. Yes, sir; I think it makes a great difference, because a purchasing agent is supposed to buy the oil at the very lowest price if he does his duty to the stockholders of the road; if it is put into the hands of the president, it is for one purpose, and that is to pay extortionate prices. Q. State any case in which you know that the president or the purchas- ing agent has been paying such prices? A. No, sir; I do not know of any. Q. (By Professor JENKS.) The statement has been very frequently made, that another of the advantages was from the large capital of the Standard Oil Company by which it could and did refine a good deal cheaper than other companies, because they make better use of the by-products. Can you tell us in reference to that, whether you, for example, have as good facil- ities for refining as the Standard? A. I presume that in refining a large quan- tity of oil in a given refinery, there would be a slight difference in favor of a large refinery, but I think that would be so slight as to make no real differ- ence. I think the independent people make just as good oil and better than the Standard Oil Company. Q. And they get also substantially the same by-products? A. They get also ^substantially the same by-products besides; have the facilities for mak- ing them. Q. Does it require anything like the amount of capital that the Standard has to get an establishment big enough to make good use of these by- products? A. No, sir. Q. How much would you say would be necessary? A. I suppose that a capital of $500,000 would make a complete refinery, so as to get every by- product out at the very cheapest possible cost. Q. Would the same thing hold in reference to the cost of other materials they use in connection with the shipment — tin cans, and barrels, etc.? A. No, sir; others make these just as cheaply as they can. The making of tin cans is a very simple process. It is all done by machinery, and they are made very rapidly. I think others can manufacture them just as cheaply as they do, and they can manufacture barrels just as cheaply as the Standard Oil Company. I judge they cannot manufacture any cheaper than other people, because they do not do it; and in the other branches of their business they manufacture no cheaper than the other people. They are not any better producers than the independent producers, nor as good; and they do not transport oil any cheaper on any pipe line. Q. Then you think that. *owing to the fact that they have a monopoly, they do not take such great care in reference to their refineries as the others do? A. I think that the very best talent in the oil world is in the business of producing oil individually, and they are giving their own personal atten- tion to that specific thing, while all their production must be under the supervision of paid agents, who are not as able in the business as the men who have been in it for 30 years or more. Q. In your opinion then, whatever advantage they have comes from some special discrimination through the monopoly and not from any advan- tages of a large capital? A. 1 think you are entirely correct; they have no advantage so far as the real doing of the business is concerned, unless it is through some discrimination *that they get in some way. ♦Black faced type indicates matter omitted, in the course of editing, from the ofRcial report. J. W. LEE, PRESIDENT PURE OIL TRUST. 91 Q. (By Mr. C. J. HARRIS.) You have said that the price of oil was nine and a half cents per gallon in March, 1896. Would not that give them, at wholesale rates, a profit of 50 or 60 per cent.? A. It would give them a profit of 100 per cent, because the oil would be Q. (Interrupting.) I do not mean on the crude; I mean if it was refined? A. It would give them 100 per cent. They could buy the oil so as to make that profit — pretty close to 100 per cent. Q. That is a pretty big profit for a wholesale business, isn't it? A. I think so. Q. (By Representative OTJEN.) I understood you to say that there were about 100 competing points. In what part of the country are they? A. I can give you a good many of them: New York, Philadelphia, Pittsburg, Chicago, Milwaukee, Rock Island, Evansville, Memphis, St. Louis, Des Moines, Kan- sas City Q. Any on the Pacific Coast? A. They have such a great advantage over us by the rules the railroads have adopted, that it is almost impossible for independent companies to sell large quantities of oil on the Pacific Coast. The Interstate Commerce Commission has assessed against a number of rail- roads in favor of the independent refineries the sum of $86,000 that they have found the railroads should pay to the independent refiners, by reason of discriminations and suits are pending for that sum now in the United States Circuit Court at Pittsburg. Q. (By Mr. C. J. HARRIS.) Does not the Standard Oil Company con- trol the country trade almost exclusively? A. Very largely they control the country trade which railroads reach. The competitive points are where you can get away from the railroads and get water transportation. Q. (By Mr. KENNEDY.) Has the Standard Oil Company been making attempts to secure control of these independent companies? A. In 1894 and in the beginning of 1895 they had conferences with some of the independent refiners, in which conferences they proposed to buy all the independent lines and all the independent refineries. The independent pipe lines and a number of the refiners declined to sell, but they did at that time purchase three refineries along the line of our pipe line, and which were under contract to take oil from us, and although they were in good condition and one of them was practically new, they tore those refineries down and destroyed them. Q. Did they offer much more than the properties were worth? A. Yes. sir; they offered more than the properties were worth. Q. (By Vice-chairman PHILLIPS.) What other methods did they take to get control of the independent pipe lines? A. They reduced the prices so that oil was sold at the seaboard for a long time below the cost of crude in the oil region, and the refineries had to suffer a large loss. Q. (By Vice-Chairman PHILLIPS.) Did they, or did they not, purchase stock in any of these independent pipe line companies? If so, how much and in what companies? A. The first company we organized was the Pro- ducers' Oil Company, Limited, with a capital of $600,000 — a small capital, and there were a thousand and ninety-five subscribers to the stock of that company. They were scattered over about 300 miles in length of territory, widely separated from each other, and the officers of the Standard Oil Company started to get control of that company and employed agents. They had a bank cashier working for them in nearly every town throughout the whole region where their stock was owned and they had agents in the field. They commenced purchasing that stock at par, and paid as high as 220, until they secured a majority of the stock of that company — $1,000 over one-half. Then they instituted a suit to get into that company, and they were beaten in that suit, which was brought in the name of John J. Carter. He was alleged to be the purchaser and owner of that stock of the National Transit Company, and they transferred it to him on the 16th of January, 1896, and he brought suit to get into the company, to become a member of that company without being elected to membership. 92 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Q. (By Vice-chairman PHILLIPS.) It being a limited partnership? A. It being a limited partnership and the law provided that no one who pur- chased stock could become a member without being elected. He alleged that he was one of the original subscribers to the stock, and was entitled to vote that additional stock in the meetings and have it transferred to him. That was denied by the company, and he lost, both below and in the Supreme Court. That was one of the means by which they sought to get control. He told me, swore to it in fact, that he purchased the stock for the purpose of getting control of the company and changing its policy from one opposed to the Standard Oil Company to one in harmony with it. *Q. (By Vice-chairman PHILLIPS.) Did they buy stock in any one of these independent companies? A. They bought stock in the United States Pipe Line, and in order to prevent them from getting the control of that company a majority of that stock was put in trust in the name of three trustees who were not allowed to sell it, but to vote it at all meetings. Q. (By Vice-Chairman PHILLIPS.) About how much stock did they pur- chase in the United States Company? A. Somewhere in the neighborhood of $350,000 to $400,000 out of $1,200,000 paid up capital. They instituted a suit against that company to get control. We refused to allow them to come into that company, and they instituted suit to get into that company. They won it in the court below and it was taken to the Supreme Court and on a technicality the appeal to the Supreme Court was quashed. Q. (By Vice-Chairman PHILLIPS.) Had they a director in that com- pany? A. They have one director in that company now. Q. (By Vice-Chairman PHILLIPS.) How did they obtain that director? A. They obtained that director b.v the purchase of the stock and through the decree of the court that he should be entitled to vote it at the election. *They were entitled to vote it. Q. (By Mr. KENNEDY.) Senator Lee, have the independent companies found it necessary, in order to pi'otect themselves against the encroachment of the Standard, to enter into any form of combination? A. Well, not so far, except the combination that comes from combination of interest. They are practically one and the same people. They would be much better and stionger, undoubtedly, if they were welded into one organization. Q. Then practically they are not independent *of each other, but inde- pendent of the Standard Oil Company? A. They are independent of each other and they are independent of the Standard Oil Company. Q. You say they are controlled by the same people? A. By way of illus- tration : The refineries are all owned by different people, individual or companies; each man owns his own refinery, and each company owns its own refinery, and they take oil from the pipe line, and pay us 15 cents pipage, while the Standard pipage is 20 cents. We have always maintained the uniform rate of 15 cents for local pipage, but they operate their own refiner- ies, sell their oil where they please, compete with each other, and compete with the Standard, so they are entirely independent. Q. (By Mr. A. L. HARRIS.) How many different companies have been absorbed by the Standard Oil Company? A. Oh, in round numbers I would say over a hundred in the last 20 years. Q. Is there a list of these companies with the amount of the capital in each? A. Yes. sir; there is a list given here, up to a certain date; the list of refineries that were obtained and dismantled. Of course a complete list can be made of it. Q. *(By Vice-chairman PHILLIPS.) In what book is that? A. That is in the testimony of Senator Emery before the Committee on Manufactures in 1888. It is indexed and the list can be found in that l)ook. Q. (By Representative LIVINGSTON.) What stands in the way of their absorbing the remaining companies? Is it from the fact that they produce oil enough to meet the demand or are they trying to work them to lower figures? Why do they not absorb the other independent companies? A. Because they are not willing to sell — that is the only reason. *Black faced type indicates matter omitted, in the course of editing, from the official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 93 Q. (By Mr. FARQUHAR.) Do you mean by that, that there is sufficient profit in the independent lines now, so they can ask their own prices and not sell? A. No, sir; we refused to sell at 112, which is 12 per cent, above cost, when we oxpected to go into the hands of the sheriff, and be sold out. We maintained those companies largely as a matter of sentiment and as a pro- tection to the independent producing interests. Q. You stated a minute ago, in speaking of the purchase and dismantling of refineries, that they paid inordinately high prices for them. This com- mission would naturally understand that when independent companies will not be absorbed by, will not sell to the Standard Oil Company, they do not so act on account of sentiment or philanthropy towards the consumer, but because there is a large profit, present or prospective, to keep them out of the Standard Oil Company? A. Well, no; men naturally desire to remain in the business which they have selected and with which they are acquaint- ed, and, while they are satisfied with moderate profits, they do not like to be driven out of their business. There is an American pride in being able to m.aintain and live in a business that a man feels he is entirely competent to carry on and has adequate capital to carry on if he has a fair chance. Q. Is it not a fact that the independent companies of this country are making money, and make a sufficient percentage on their capital? Is that not one of the reasons why they do not sell? A. That is true just at present, but this proposition to purchase them was made after they had been doing a continually losing business for 20 months, and in that 20 months they lost $200,000 in actual money, and then they declined to sell. Q. You said that some time ago you thought those who were interested in the independent companies and had been brought up in the business and had long experience in it, were better managers than the agents the Stand- ard Oil Company employs in the refining, or transporting, or selling of oil. Is it, or not, a fact that in the acquirement of these properties the Standard Oil Company has usually taken the expert mixers and refiners and business men of these concerns into the working force of the Standard Oil Company? In other words, are not the controlling spirits of the Standard Oil Company to-day the men who have been in the field from the first with as wide an experience as any of the independent companies could have? A. No, I do not think so. I do not *hink any of the trustees have had any experience; have had any practical experience in the business. Q. What is the experience of Mr. O'Day? A. He has had experience as a pipe line man, and Mr. Archbold has quite a large experience as a refiner. Q. When they absorbed the old Galena Oil Company did they not take the foreman and eight or ten of the experts and the best operatives of that company and put them in the Standard Oil Company? A. What Galena Company do you refer to? Q. The Ohio Company; the Head Light Oil Company. A. That is located in Fianklin, and I think the same men are in that company that have always been in it. Q. .(By Mr. A. L. HARRIS.) I wish you would turn to page 438 of that report.* How many of the companies in that listf are in existence at the present lime? A. I cannot speak of Cleveland nor of New York. Oh, yes, sir, of New York, Borne, Scrymser & Company have been absorbed by the Standard, and, I think, Lombard. Ayres & Company. They are marked there as affiliated with the Standard then. At Pittsburg, Bear Creek Re- fining Company is a Standard works, as I understand, now. lola Oil Works is a very small works, and the Globe Refining Company. I think, is Standard. At Oil City the Keystone Refining Company was wrecked and torn dov/n by the Standard Oil Company. The Standard Oil Company, I think, became the purchaser of that at sheriff's sale. It is torn down and wrecked. I know that. The ground is bare now, with the exception of a few tanks. Q. I wish you would state as you go along what has become of the different companies that have gone out of existence, and how they went out *Report of Committee on Manufactures, House of Representatives, ISSS. tList of "outside refineries." 94 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. of existence; whether acquired by the Standard Oil Company or not. A. The Reno Mutual Oil Company was purchased by the Standard in May, 1895, and wrecked — torn down — nothing left standing but the chimney as a monu- ment of disaster. I am not sure but what the chimney is down now. At Franklin those are small refineries; they are not running, I think; I think most of them are shut down. I do not know anything about those at Buffalo, Toledo, Findlay, Lima, Bradner, Smith's Ferry, Boston, nor Baltimore. Bradford — those are not in existence now. I do not know what became of them. Q. I wish you would state as you go along, if they are not in existence, whether you know what became of them. A. No, I do not know what be- came of those at Bradford. At Parkersburg one of the refineries that was in existence at that time has been absorbed by the Standard. At Marietta, I am not informed as to those refineries, and at Titusville, Rice, Robinson & Witherup have sold out, but it is being run by an independent company now. John Schwartz was a refiner whose property was destroyed by flood. He then went into the National Oil Company or into the Union Refining Company, and in 1895 that was bought and absorbed by the Standard and torn down. The International Oil Works (J. P. Thomas) was also absorbed and purchased by the Standard in 1895. It was practically a new works, in fine condition, and was torn down. The National Oil Company was united with the Union, as I have said, and the Union was purchased by the Stand- ard Oil Company and torn down. The same was true of the Western Refin- ing Company; the Western went into the Union. They united those re^n- erios, leaving but two out of that number now in existence at Titusv 1" ^ and one that has been erected since by the Manhattan Oil Company, known as the Oil Creek Oil Works. Clarendon — those are small works at Claren- don, and I am not familiar with them. I think one of them is still operated by the independents, and I think the others are not operated at all. 1 am not informed as to the refineries at San Francisco. At Philadelphia, Boss- hart & Wilson are not in business. As to the others, I am not informed. Florence, Colorado — The Florence Oil Company — I am not familiar with that. This list was made, 1 see, in 1888. Q. (By Vice-Chairman PHILLIPS.) Have you any information in re- gard to the Standard paying a large bonus or premium for refining works to remain in idleness, or sums of money to persons to not enter the business, who would probably have done so, without going in with them? A. I know that they leased a number of refineries years back; *not within the last five years, but prior to that they leased a number of refineries and simply shut them down and allowed them to remain idle. As to persons receiving money to remain out of business, I have no personal absolute knowledge on that subject, only common rumor. Q. (By Vice-chairman PHILLIPS.) But you know as a fact that they have leased works that have been shut down for a period of years? A. Yes, sir, I know that fact. Q. (By Vice-Chairman PHILLIPS.) And paid large sums of money in some instances? A. Yes, sir. paid large rents. Q. (By Vice-chairman PHILLIPS.) Did they or not? A. Yes. sir. I think that has been done. Q. (By Representative LIVINGSTON.) What, in your opinion, would be the price of oil to consumers, provided in any way the Standard Oil Com- pany should be abandoned or dismantled? A. I believe that the price to the consumer generally, the average price to the consumer, all over the United States, and all over the world, would be very much less than it is to-day with the same price for crude oil. Q. Now give the reasons to the commission, why you think so. A. The reasons are that any one who is permitted to take whatever he wants to. is never moderate in his taking. They have the ability, they have the power, to take from the consumer just what they please, where there is no competition and I do not think anybody would be moderate under such *Black fncefl type inclicates matter rjmitted, in tlu' rcnu.'-e of fditing, from the official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 95 circumstances. *l would not want to trust myself, I think, under those cir- xumstances. I do not believe anybody should be trusted with unlimited powers anywhere. Q. You say then that competition would so rule or control that the independent companies would be forced to sell oil for a less price than the Standard now obtains? A. Yes, sir, I have not a bit of doubt about 1l. Q. That being true, what interest has the independent company in forcing the disintegration of this company? A. Just this interest: they stand always in mortal dread of being entirely wiped out. They do not know whether they can live six months or a year. They always have to fight for their lives, and they do not make fair profits even now. Taking five years together, they have not made what would be called fair manu- facturing profits. Q. (By Mr. NORTH.) What do you call a fair manufacturing profit? A. They would be entirely satisfied to do this business at ten cents a barrel on crude oil that runs through their refineries. I think the Standard Oil Company makes $1.50 to $2 on every barrel that goes through its refineries. Q. About what per cent? A. That would be ten cents a barrel on the amount that they refine — the number of barrels. Q. "WTiat per cent of profit? Q. (By Mr. FARQUHAR.) Per cent on the investment? A. That would probably be about — that — let me see — $1 a barrel — that would be about ten per cent. Q. (By Mr. NORTH.) Which you call a very good manufacturing profit? A. I should think so. I have heard independent refiners say they would be entirely satisfied to enter into a contract for any number of years to make ten cents a barrel on every barrel of crude oil that they refine, and with oil at $1 a barrel that would be a profit of about ten per cent. Q. Have you any knowledge of the price at which the Standard Oil Company sells its product abroad? A. The Pure Oil Company, which was organized in 1895, for the purpose of aiding the independent refiners, was organized in an open meeting, held at Butler, on January 24, 1895, for the purpose then stated, of organizing a company that would take the oil from the refiners at cost. They were willing to refine oil at cost, if they could live that way; just to enable them to live. They were willing to say they would continue in the business, to give oil to a new company at cost, without making a cent; and this company was organized for the purpose of taking that oil at cost and marketing it abroad. Q. (By Vice-Chairman PHILLIPS.) Now will you kindly state, if you can, what means the Standard Oil Company is taking to destroy the market abroad under those circumstances? Mr. NORTH. He is coming to that. The WITNESS. They had made the market abroad so bad, that oil was sold in New York for a number of months below the cost of the crude at the refinery, without anything for refining it, and without anything for transporting it from the refineries to New York. The refiners had lost large sums of money. Then they said they could not continue unless they were aided by the producers and they formed the Pure Oil Company for the purpose of taking their oil at cost, in order to enable them to stay in the business, and not to be driven out by the Standard Oil Trust. That was in an open meeting held at the Opera House at Butler, and the stock of that company was subscribed there to the amount of $65,000 in a few minutes. It went on until it now has a capital of $377,000 with an author- ized capital of $1,000,000 and that company has been buying oil from the independent refiners and marketing it abroad. They have a station erected at Hamburg, Germany; their own tankage and their own tank cars. They have one erected at Rotterdam, Holland; their own tankage, barrel houses, pumping outfits, etc. They are erecting one at Mannheim on the Rhine, in Germany, and they have rented a plant at Amsterdam, Holland. ♦Black faced type indicates matter omitted, in the course of editing, from the official report. -96 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Q. What methods, if any, did the Standard Oil Company take to pre- vent the sale of oil abroad? A. I was going to finish this, and then I will do that, Mr. Phillips. Those plants were established, one of them two years ago last October, the other a year ago last August; the third one a year ago the first of April, and the other is in process of erection. The oil is trans- ported to those plants by means of tank steamers in bulk, and pumped out into the tanks, and distributed just as the Standard distributes oil through- out Germany. I want to say here, and I say it with a blush for this country, that everybody can do business in Germany on an equal footing, and no- body has any advantage over any others. It ought to be true in the United States. It is a sad thing that it is not. Q. (By Senator DANIEL.) Please explain that a little. A. They do not permit any discrimination; they will not allow it. Q. By whom? A. The government will close up an establishment, or forbid them to do business, if they enter into any discrimination. *Their railroads do not discriminate. Q. You mean to say they prevent trusts and combines? A. I think they do, or at least I think one individual has no advantage over another indi- vidual. Q. (By Mr. NORTH.) Not for his own purposes to sell at a loss? A. Not for his own purposes, they will not permit them ; they will not permit that. They will not permit anybody to do business at a loss in Germany. Q. For the sake of destroying a competitor? A. Yes, sir, they will not allow that. Q. You have not quite answered the question I originally asked you'.' A. What was that? Q. I want to know how the foreign prices of the Standard Oil Company compare with their domestic prices? A. Prior to that time the independent refineries sold nearly all the oil they marketed in Germany, to a man by the name of Poth. He always said that he could not do business in Germany at a loss, which we found to be true, and of course they gave him the right to say what he could buy oil for, and he got rich out of the purchase of oil from the refiners during a period of a few years. Q. (By Vice-chairman PHILLIPS.) The independent refiners? A. Yes, sir, and finally he sold out to the Standard Oil Company, and he was over- whelmed with grief after he had done so, and found that the refiners had stood by him. *He had been told that they had all deserted him and sold out, and he went home and died within three days. He is dead and his busi- ness is carried on now by the Standard Oil Company. Q. (By Vice-Chairman PHILLIPS.) Did they take any means to buy tankage? A. They would often tie up all the tankage at any given port, and they sold oil abroad at low prices for a period Q. (By Mr. NORTH.) At lower prices than they were selling for in this country at the same time? A. Oh, yes, sir, very low prices. Q. (By Professor JENKS.) How about the quality of oil that is ex- ported, compared with that which is used here? A. The oil that the inde- pendents export, while it is equal to second grade oil. is nearly as good a burning oil as the very highest quality. The refiners tell me they would as soon burn what is known as export oil as water-white. It don't make quite as brilliant a light, *but it is entirely safe, and it is a good quality of oil. *lt looks white in the lamp. Q. (By Mr. NORTH.) Are you able to carry on competition in foreign counti'ies with the Standard Oil Company without those disadvantages that you encounter at home? A. A great deal better in foreign countries than in America. Competition is preserved in Germany to a very much greater extent than it is in the ITnited States; it is in England, too. Q. (By Vice Chairman PHILLIPS.) Is the Pure Oil Company making a profit? A. The Pure Oil Company is making a profit — doing a profitable business. Q. (By Mr. NORTH.) Selling at market rates abroad? A. Selling at market rates abroad and doing a profitable business. *Black faced type indicates matter omitted, In the course of editing, from the official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 97 *Q. (By Mr. RATCHFORD.) Senator Lee has referred frequently dur- ing his evidence to independent companies; are we to understand, from this term, Senator, that these companies are not connected with the Standard Oil Company? A. Yes, sir. Q. You have stated, I believe, that a hundred or more of these com- panies were absorbed by the Standard Oil Company? A. Yes, sir. Q. Has there been any such thing as a transfer of the property or plants from one of these independent concerns to another, at any time? A. Oh, very frequently these interests will be sold. Q. They have bought and sold to each other? A. They change owner- ship to some extent. Q. The reason that others have not sold to the Standard Oil Company was because they were unwilling to sell? A. Yes, sir. Q. Now if these independent companies have bought and sold and changed ownership, have they not been absorbed by each other in the same sense in which the Standard Oil Company has absorbed some of them? A. No, sir, in changing ownership they do not absorb their works; they simply buy the one concern, and conduct the business just as it has been conducted before. Q. When an independent company buys another company, its plant and property, does it continue to operate it? A. Yes, sir. Q. The only difference then, between them and the Standard is that in one case the plant is bought for the purpose of continuing the business, and in the other for the purposes of destruction, laying it in waste. Is that it? A. Very frequently it is bought for the purpose of destruction. Q. I should think the term "destroyed or laid in waste" would be a better term than "absorbed." A. I say "absorbed and dismantled," which means destroyed. Q. Has the product of the Standard Oil Company improved in quality during the past twenty years? A. I think it has deteriorated in quality and would like to give the reason for that. Prior to twenty years ago we did not use what is known as Lima oil, or oil that has sulphur in it. Within the last twenty years they have used a very large proportion of Lima oil and therefore I think their manufactured oil generally is not as good as it used to be. *G. Because they mix Lima oil with it? A. Yes, sir. Q. For what reason? A. Lima oil is said to contain both arsenic and sulphur. One clouds the chimney and the other makes a bad odor. Q. How about their by-products? A. No doubt they make their by- products very lucrative to themselves. Q. Have any of their prices been materially reduced during the past twenty or twenty-five years? A. I read a statement made by a gentleman who I thought was not at all familiar with the oil business — Mr. Thurber, of New York — that the prices had been correspondingly reduced with the cost of material employed in production. In other words, there has not been a relative reduction in the price of refined as compared with the cost of the crude, and they have had nothing to do with making the cost in the pro- duction of the crude. All the improvements in drilling the oil wells and in producing the crude, have been made by the people who were actually engaged in that business, and many of them workingmen. O. Are you prepared to state whether or not the cost of say half a '^ozeiv other articles of common use has or has not been reduced propor- tionately with that of the product of the Standard Oil Company? A. Oh, yes, 'iir, I think that nearly all of the leading staple articles have been redu^'ed within the last twenty years in larger degree than the price of refined oil. Q. (By Senator DANIEL.) Has not the price of the crude article been reduced more in proportion than the price of the refined? A. Undoubtedly; I am going to speak of that hereafter. ♦Black faced type Indicates matter omitted, In the course of editing, from the official report. 98 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Professor JENKS.) The Senator has had his attention called to these figures. There have been some figures put up here*, and this upper line represents the cost of refined, and this lower line the cost of crude oil, so that the distance between the two shows the cost of refining plus the profits. Now these figures are very frequently cited by those who favor the Standard Oil Company to show that they have very rapidly reduced this cost. These are the dates, here. The Standard Oil Company started in 1872, and went into the trust in 1882. It seems to have been not very much changed since 1882. Can you explain to us whether these average annual figures show definitely or not, the way in which the Standard Oil Company fixed its prices? A. That difference there between your lines indicates the cost of refining plus the profit. Professor JENKS. That is the price of the crude and refined made on the basis of this base line, so that is the difference between the two. A. That does not signify anything. They can make the price just what they please. Mr. FARQUHAR. Does not that diagram show tha., since the Standard Oil Company came into the business they have run both refined and crude almost parallel? Q. (By Professor JENKS.) There has been a slight reduction here all the time, but of course the Standard Oil Company men will say that when you get the price of crude down to less than a cent a lallon, there is not any possibility of reducing it many cents lower than that. I would like the Senator to explain that. A. I am told by refiners tLat in twenty years the cost of refining has been reduced from two and a half cents a gallon to less than half a cent a gallon, so of course those lines, if parallel, woula leave a very much larger margin of profit. Q. Will you also state in reference to the way in Vvhich they fix their price, whether the cost of the crude and the cost of the refining is a definite basis for the fixing of their profit or whether it is agreed upon arbitrarily. A. I do not think the Standard Oil Company fixes its prices on the basis of the cost of refining or the cost of the crude oil, either. They are trying to avoid that. In other words, sometimes when crude is very low refined is very high, and when refined is very low crude is very high. They do not want the public to understand how they fix their prices. They are entirely arbitrary. They have had very low prices for refined )il when crude was very high and very high prices for refined oil when cruds was very low. Q. (By Vice-Chairman PHILLIPS.) Does not that come about through their selling in one period and supplying the market for a number of months ahead? A. Probably through selling ahead and then putting the price of crude up so that their competitors would have to pay higher prices for the crude while they would be manufacturing c -ude that they had already purchased. Q. (By Mr. KENNEDY.) You have stated that un ler the conditions of competition in Germany and Great Britain you could nake a profit there? A. Yes, sir. Q. The Standard Oil Company could not drive you out there so that you could not make a profit? A. Yes, sir. Q. And in this country their competition or metho( s have generally been ruinous to you, so that you could not make a profit. Has the profit which you have been enabled to make in Germany and C reat Britain in years passed, been the means of enabling your companies to live, notwithstanding the destructive methods of the Standard Oil Company in this country? A. Yes, sir. Q. How long have you been operating in these ci untries? A. We have been operating in Germany for three years next Octob sr. Now, for instance, this year the price for export oil, which is a secopii grade oil, has been almost as high as water-white oil, although the cost ot drilling oil wells and obtaining the oil is very much greater within the last three or four months, *Referrlng to a chart which was exhibited on the wall, and which is reproduced elsewhere. J. W. LEE, PRESIDENT PURE OIL TRUST. 99 than it was last year, on account of the advance in all materials and the prosperous condition of the country. But they hav ; kept water-white oil very low in this country during the last year. Q. We have been told often that the Standard Oil Company has in some instances almost given away oil to drive out competii Ion? A. Yes, sir. Q. Is it true that they could not give away oi' if they wanted to in Germany or Great Britain? A. No, sir, I do not think they would be allowed to do thtit there. Q. You think not? A. No, sir, I don't think so. Q. The government would come in? A. And int irfere, yes, sir. Q. And say: "You cannot sell this oil at ten cei ts, or a cent a gallon less than other people." A. I don't think they would b ^ permitted to do that. Q. (By Representative OTJEN.) With the unt erstanding that they were doing it to crush somebody else out? A. Yes, i ir, I don't think they could. Q. The government would be the judge of their methods then? A. I think they would not permit it. Q. (Br. Mr. FARQUHAR.) Is there any act of Parliament which would prevent their giving away oil or selling it at any price? A. The government is somewhat despotic over there; they don't allow it. Q. How do they manage then, with the American meats coming into competition both in England and Scotland and cutting the English price probably thirty-three per cent? A. I suppose those are sold at a profit *even after they have cut the price. They do not prevent your selling goods but they do not allow one company to have an advantage over another, and they will not permit business to be done at a loss there. Q. (By Mr. KENNEDY.) I would like an explanation of how they pre- vent a man from doing business at a loss. A. *They will not permit you to do business. They close up your establishment. Q. (By Mr. NORTH.) You mean to say they guarantee that every man who goes into business will make money? A. No, he can quit when he pleases. Q. (By Senator DANIEL.) Are you speaking from an examination of the German laws on the subject? A. Speaking from a knowledge of the business done there by them for the last ten years. Q. Give us some item of your own knowledge. A. In regard to doing business with Mr. Poth. He said to us that he was not permitted to do business at a loss. Their books are open to inspection under some law. Q. Where was that? A. In Germany. Q. What place? A. He was doing business at Hamburg, and Mann- heim, and a number of other places in Germany. He said he could not do business at a loss, therefore he must do business at a profit. Since we have gone in there, our agents say to us : "They will not permit us to do business at a loss, they will not allow us to sell goods at a loss and do a losing busi- ness; we can close up and quit." Q. (By Professor JENKS.) You said the prices here were considerably higher in your judgment than they would be if there had been anything like free competition? A. Yes, sir. Q. And yet it was very difficult for these independent refiners to get along, to make a good living, to make good, fair profits. Can you tell us a little more accurately what the methods of the Standard Oil Company are that would make these two things consistent? A. In any market reached by the independent oil they put the price down so low that there is no particular profit in marketing the oil, and at points where the independent refiners do not reach they put the price up so as to recoup their losses at the competitive point. They have very great information as to every shipment. For instance, before a shipment of oil made by the independent refiner reaches its destination, they will land at the same place a cargo of oil to be sold at a very much reduced price, and they will reduce their prices two or three days before that oil arrives, so as to prevent the man who bought it once from buying it again. If a merchant buys it once he has ♦Black faced type Indicates matter omitted, In the course of editing, from the official report. 100 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. to lose on that lot of oil because he has paid a higher price than he can sell it for. They will sell it lower than he can and get out, and they will send some one to him and say: "You can't get any but Standard oil," and that is their method of doing business. Q. (By Senator DANIEL.) Have they done that in Germany? A. No, sir, they are not allowed to do that in Germany. Q. (By Professor JENKS.) You will perhaps add a word in reference to the way they are getting along in France? A. I don't know much about the French business except that the Standard Oil Company is *associated with the French refineries and are doing largely the business in France. Q. (By Representative LIVINGSTON.) Can the oil that the refiners send abroad and sell in Germany and other places be sold in the States here? A. In some of the States, yes, sir. It can be sold in Pennsylvania. It is a marketable oil in Pennsylvania. =^Q. Then it is not up to the standard that they require in the States here? A. No, not regarded so, although probably it is as good oil as is burned in the United States, but it is excluded by reason of the statutes that have been passed. Q. What is the gravity of the export oil? A. It is called seventy-three Abel Test. I am not familiar practically with the specific gravity. Q. What does the law of New York or any other State require when the oil drops to 110°? A. Well, it is 110° oil. It is called 110° oil. 150° is the highest grade of water-white, and it is about forty-eight gravity. 150° oil. forty-eight gravity, is considered the best class of oil. Q. (By Professor JENKS.) What proportion of the refined product is exported, and what proportion is consumed here? A. About forty per cent of all the crude manufactured is exported. That is beside the lubricat- ing oils. There would be some lubricating oils in addition. Q. In this industry it has been necessary for a great many years, in order to keep the prices up, to export large quantities of oil. Has this large export business enabled the Standard Oil Company to keep prices higher than it otherwise would? Has there been any special effort made to limit production here, in order to keep prices up? A. Yes, sir, there was at one time a movement to limit the amount of crude produced. That was in 1887. They limited it to the amount of about 17,500 barrels a day. That is fully entered into in this book.f Q. (By Representative LIVINGSTON.) I have been furnished with a statement based on statistics of last year which shows that about fifty per cent of all oil is exported or consumed abroad. A. Well, I said forty per cent of the amount manufactured from the crude is exported in the shape of refined. In addition to that forty per cent add whatever lubricating oil would be sent abroad, so that it would probably make it fifty per cent. Q. Does the oil from the independent refineries that is not of such a standard as to be consumed in the States come in competition with the oil sent abroad and sold by the Standard Oil Company? A. Oh, yes, sir, the Standard has had a very large business in Germany. Germany is the largest oil market in the world. I think the population is about the same as France, and it uses probably twenty times as much oil as does France. I think I am not far wrong in that. Q. Then do the sales of the oil from the independent refiners reduce the prices of the Standard Oil Company's product there? A. No. sir, they sell at very fair prices abroad and have been for the last two years. The profits are not excessive and they are reasonable all around. Q. You mean the Standard alone? A. The Standard prices and the independent prices. Q. Rut if you were to withdraw or were forced out of the market? A. We think that prices then would be very much increased. Q. (By Mr. FARQUHAR.) Is there any difference in the grade of oil the Standard Oil Company and the independent oil companies sell in Ger- many? A. We think we sell a very much better oil than they do for the *BIack faced type indicates matter omitted, in the course of editing, from the ofHcial report. ;The witness referred to the Derrick's Handbook of Petroleum. J. W. LEE, PRESIDENT PURE OIL TRUST. 101 reason that we do not manufacture any but Pennsylvania oil, while they do manufacture and export some Lima oil that we believe is mixed with the other. But that I do not speak positively about, for I do not know. Q. (By Mr. KENNEDY.) Do you meet with much competition in Ger- many from the Russian oil fields? A. The Russian oil has not been largely used in Germany, because it does not climb the wick as well as the Penn- sylvania oil, or American oil. The Germans have their own lamps and they do not change them readily. It has not been largely used, although the Standard has been pushing the introduction of Russian oil. It is said it has bought a large amount of Russian oil and is trying to push that into the markets as against the American oil. Q. (By Professor JENKS.) The Standard Oil Company has often claimed that it has had decided advantages by virtue of the patents it has succeeded in getting with the large number of establishments that have come in with it. In your judgment, does it have any advantage along that line? A. No, sir, I think their process of manufacture is very similar to that employed by the independent refiners. Q. (By Mr. FARQUHAR.) Do you mean the process of making the oil? Professor JENKS. Anything that is appertaining to their product; it may be either process or machinery. Mr. FARQUHAR. Suppose you add "formula" then to the "patents" in your question. The WITNESS: I do not believe they have much advantage in that regard, if any. Q. Do they have any advantage, in your judgment, in the matter of getting fuel cheaper *by virtue of the large amount taken by them, and pos- sibly in connection with the railways? A. Yes, sir. I think that all large purchasers have an undue advantage in securing fuel, and I think that it has, yes, sir. I will speak of that hereafter, to show that it has depressed labor. In oiher words, when they want an amount of coal they practically fix the price and they say: "We will take this coal if you will furnish it at a certain price; if you don't furnish it at that price, we will not take it." As they use so large an amount the coal companies must furnish it, and in order to get even they cut their own men. That is the way the miners have been cut down to meet the demands of these large companies to get coal and other raw material at too low a price. The companies must fur- nish it and in order to furnish it they must cut their men. After recess from 1 until 2 p. m., Vice-Chairman Phillips called the com- mission to order. Vice-Chairman PHILLIPS. The commission will please be in order. Now, I will state again the three propositions that Senator Lee is giving us information upon; he has passed from the first one, "How in your opinion do the trusts affect the consumer;" the next one is, "How do they affect the producer." We will be pleased to hear Senator Lee upon this, and after he is through making his general statement upon it, before we proceed to any other, we will be pleased to have any member of the com- mission ask any question he may desire. Representative LIVINGSTON. Please read the first one. Vice-Chairman PHILLIPS. "How in your opinion do the trusts affect the consumer." That we passed over this morning; you were not in when we entered upon that. Colonel. The next proposition is, "How do they affect the producer." That is before us now; and after the Senator makes his statement on this proposition, then it will be open for questions, and we would like to ask the gentlemen to make pencil notes of anything they would like to ask when he gets through, and you will get a more concise, connected statement by not interrupting while he is making his statement on this proposition. The question is: "How do trusts affect the producer." The WITNESS. The reason I desire to state why, in my opinion, trusts affect the consumer by making him pay a higher price for the manu- factured article, is because, in doing so, it is their aim and object to get a complete monopoly of the business. When they have once got a complete *BIack faced type Indicates matter omitted, in the course of editing, from the official report. 102 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. monopoly of the marketing and manufacture of a certain article they have the producer of the raw material as absolutely in their power as they have the consumer. They can fix for him whatever price they please and compel him to take it, and the only thing they do consider is whether he will remain in the business and produce that raw material for them at a given price, and they simply allow the producer of the raw material to get about cost out of it, or a very little margin, if any, of profit. The price of crude oil prior to the time the Standard Oil Company virtually obtained a monopoly of the business was very much higher than it has been at any time since. The price was as high (I have before me a work that gives the prices) in 1869 as $7 a barrel; in 1870, $4.90; in 1871, $4.75; in 1872, $4.10— no, higher than that, $4.55; in 1873 (now their power began to be felt, not as the Standard Oil Company, but as members of the South Improvement Com- pany) the price declined until the highest price in 1873 was $2.75, and the lowest was $1.05. In 1874, the highest price was $2.07 ^/^ and the lowest was 82% cents a barrel. In 1875 the highest price was $1.82i/^, and the lowest price was 97^/^ cents. In 1876 the highest price was $4.23%, and the lowest was $1.98%. In 1877 the highest price was $3.69%, and the lowest $1.96i4. In 1878 the highest price was $1.63%, and the lowest price 95%- In 1879 the highest price was $1.28%, and the lowest was 70% cents. In 1880 the highest price was $1.24% and the lowest 86%. In 1881 the highest price was $1.01^4 and the lowest price was 80% cents per barrel. In 1882 the highest price was $1.37, and the lowest 61% cents. In 1883 the highest price was $1.24%, and the lowest 97% cents. In 1884 the highest price was $1.15%. and the lowest was 75 cents. In 1885 the highest price was $1.12%, and the lowest was 75% cents. In 1886 the highest price was 91%, and the lowest 66 cents. In 1887 the highest price was )0 cents, and the lowest was 65% cents. In 1888 the highest price was $1, and the lowest price 82% cents. In 1889 the highest price was $1.12 1/^ and the lowest 86 cents. In 1890 the highest price was $1.07%, and the lowest 72%. In 1891 the highest price was 81% cents, and the lowest 61% cents. In 1892 the highest price was 63% cents, and the lowest 53 cents. In 1893 the highest price was 80 cents, and the lowest 54% cents. In 1894 the highest price 95%, and the lowest 80%. In 1895 the highest price was $2.60, and the lowest $1.00%. In 1896 the highest price was $1.50, the lowest was $1.05. In 1897 the highest price was 96 cents, and the lowest was 65 cents. There the quotations for the open market ceased, because in January, 1895, the Standard Oil Company quit paying the market price for oil. as it was de- veloped upon the Oil Exchange, and simply hung out on their window the price they would pay for what are known as credit balances, or amounts standing to the credit of each individual producer upon their books; that they would pay that price and no other. Q. (By Mr. NORTH.) What effect did that have on the market? A. That enabled them to fix absolutely whatever price they saw fit. All oil speculation, and the general trade in oil. had no effect on the prices. They controlled the price absolutely by determining what they would pay. Q. (By Vice-chairman PHILLIPS.) Did that shut up the doors of the exchange in oil? A. Well, it almost entirely killed speculation in oil, and drove the brokers in oil to doing business in other lines. You will observe, from the figures that I have given, that prior to the time the Standard Oil Company obtained so large a control of the industry, prices of crude oil were very high. The price of crude since the l)eginnin2; of 1895 has aver- aged $L05 a barrel. *That is very close to the general average price of crude for the last four years. I will not say that is within a fraction of a cent, but it is very close to the average. During the ten years prior to that the average i)rice of crude oil was below 80 cents, and that was entirely an tinpiofitable price. *considering the entire industry. Men could not produce oil and ret cost for it, and maintain their production generally. While some men could, yet the general industry could not do that at the price that pre- vailed for ten years prior to 1895. So I say that the effect of the trust upon the producer of the raw material has been to compel him to take an un- remunerative price for his product. You might ask why he did not sell his product elsewhere. For the reason that, you understand, when the oil is *BIack faced type Indicates matter omitted, in the course of editing, from the official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 103 produced at the well, the pipe line runs to the well, the oil is taken into the pipe line, and as they had the absolute control of thd entire refinery busi- ness, or almost so, they were able to fix the price at \.hich they would take that oil. There were no outside purchasers of that oU. If they purchased it they would have no place to put it. Q. (By Representative LIVINGSTON.) The pipes ^aid to the wells were connected also with the refineries of the Standard Oil Company? A. Yes, sir. Q. And you had no other connections? A. They Jiad no other connec- tions. There were some few independent I'efiners, but they bought all their crude from the Standard Oil Company and paid them twenty cents local pipage rate, *and they were the only individual purchasers who purchased it at the well and ran it into the line. Q. Prior to 1895, for ten years, you say the oil averaged about eighty cents? A. Less than eighty cents. Q. And since then $1.05? A. And since then $1.05. Q. What had over production, or under consumption, to do with those prices during that period? A. Nothing. *Q. No over production? A. No, sir; there was a time when there was an over production. In 1881 the Bradford field was opened with a very large production. It averaged in the year 1881 very close to 81,000 barrels a day in McKean County, Pa., known as the Bradford field. That created quite a heavy stock of oil until in August, 1884, there wfere 39,000,000 barrels of oil in stock. Q. That must have depressed the price? A. No, sir, the price of oil was higher in 1884, as you will see by the tables, than it was subsequently when the stock was reduced one-half. Take the yeai 1884, and average it with the year 1887. Q. The year 1880 it was $1.24, and in 1884 it was $1.12, was it not? A. *Well, $1.24 in 1880 was the highest, and 86% cents was the lowest; an average between these two would put it fully at $1 in 1880. In 1884 the highest price was $1.15%, and the lowest 75 cents; there was as high average in 1884 as there was in 1880. The production was noc as great in 1887 as it was in 1884. Q. But yet the price was lower? A. The average price in 1887 was 66 cents a barrel. I think the stock then was 31,000.000 barrels, and it had been 39,000.000 in 1884, and the production was, I thinK, about the same in 1887, as it was in 1884. I can tell in a minute by looKlng at it. Q. (By Professor JENKS.) Was there not an efforc made to restrict the production about that time when the Producers' Protective Association was formed? A. There was an effort made to accomplish a lessening of the production by the producers in conjunction with the Standard Oil Company in 1887, the producers purchasing from the Standard Oil Company 6,000,000 barrels of oil at a fixed price of 62 cents, which was then the current price, and shutting in their production to the amount of 17,500 barrels a day. The men all signed the contract. Q. (By Vice-chairman PHILLIPS.) Reducing it that much? A. Yes, sir, that was done. Q. (By Representative LIVINGSTON.) I would like tt bring your at- tention to the production of 1870 — $4.90 a barrel. In 1890 you got $1.07, highest, and 72 cents, lowest. What had entered into the cost of production and transportation, or what was it that enabled the producers of that oil to live at $1.07 in 1890, when in 1870 they got $4.90, almost $4 difference on a barrel? Was the cost of producing it so lessened that they could live, or what was it? A. In 1870 producers of oil made very large money. *Q. Had a monopoly of the business? A. They had entirely a competitive market. People would come into the field and seek the producer and buy oil directly from him and pay him. Some days it would go up half a dollar a barrel when there was competition. In fact, many of the people were getting it for the purpose of sending it to independent refiners, and they would ride up Oil Creek and meet a producer and say: "How much oil have you?" "Well. I have a thousand barrels." "We will give you $4 ♦Black faced type indicates matter omitted, In tlie course of editing, from the official report. 104 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. for all of them." They would make the contract right under a tree or some- where, and there was a general open competition for the oil that made that price. Q. Has there been a very great lessening in the cost of production since then? A. Yes, sir, they are drilling wells now at a very much less cost than they drilled them in 1870. y. 'Ihe pipe system reduces the cost of transportation? A. No, sir, the cost of transporiation has not lessened. Q. I mean from the line out. A. Thf line runs to the well. The price of local transportation has never been changed since the Standard Oil Company introduced their lines. At the fme they laid their lines, pipe was worth about thirty-five *to forty cents a foot. Last year it was worth about six cents a foot. They charged twenty c-nts then, and they charge twenty cents now. They charge the same price There has never been any de- crease in the cost to the producer, or to any one who desires to have oil transported by local pipe lines. Q. What is the surplus in barrels curried over now? A. The surplus in round numbers, is a little over 11,000,000 barrels in Pennsylvania oil, and about 14,000,000 in Lima oil. A while ago Lima oil had about 22,000,000 barrels surplus. Pennsylvania has incr ;ased her surplus about 2,000,000 barrels in the last year. Q. Then the market is not glutted with oil? A. No, sir; the stock of oil now is not more than should be carried for safety. It is not so great. *Q. (By Vice-chairman PHILLIPS.) Have you finished all that you de- sire to say on the "Effect on the Producer?" A. I want to say one thing in regard to the producers. I have been intimately acquainted with them since I was a boy. I have lived among them, they have been my clients, I have been familiar with their business, and I have never known a more energetic, able and determined lot of men than the producers of petroleum; and yet, as a body, they have not grown rich, but are poor. There are some instances of producers becoming wealthy, and many of them do. They were engaged in speculative business in which there are always chances of certain per- sons becoming rich. I believe that the great body of producers have put money into the industry rather than taken it out. Q. (By Representative LIVINGSTON.) What was the total product of the wells in 1870 and the total product in 1890? A. The production of Pennsylvania oil in 1890 was about 35,000,000 barrels. The production, I think, in 1870, was not over 5,000,000; that is from recollection. .1 may be a little away from the exact fact, but not far. I was putting the production at 90.000 barrels a day in 1890. I think it was 90,000 barrels a day in 1890. In 1891 it ran up to an average of over 100,000 barrels a day by the discovery of the McDonald field — a very prolific field. Q. I want to get a basis for an opinion as to what produced this rapid decline from 1870 to 1890. A. It was entirely arbitrary. *Q. Was there not a difference of 30,000.000 barrels in the production? A. But there was so much wider market for it. Q. Has the consumption increased in proportion to the increase in the production? A. I think the consumption has kept pace with the production. Q. Is there any way of showing that? A. The export tables will show that that is true as to export oil, and I think it is certainly true as to home consumption. Q. (By Mr. FARQUHAR.) How do you account for the abnormal prices in 1876 and 1877? A. There was an open competitive market and the Stand- ard Oil Company was not really a factor in it yet, and those prices were the effect of speculation in the open exchanges. *The certificates were sold on the open market, 1,000 barrels each, and they were taken up by people who thought the oil was cheap and invested in it and held it. Q. You mean to say those prices were entirely speculative prices, and not the product prices? A. They were the real prices when people bought the oil for those prices for manufacturing as well. *Black faced type Indicates matter omilied, hi the course of editing, from the official report. J. W. LEE, PRESIDENT PURE OIL TRUST. 105 Q. (By Vice-chairman PHILLIPS.) Did not the discovery of fourth sand oil under the third sand deposit, have something to do with lowering the prices very materially in 1873, and about that time? Was this, or was it not, somewhat of a reaction from that large output of oil from that new dis- covery? A. I think the discovery of Butler County, a new and a very prolific field of oil, had something to do with lowering the prices in 1873, 1874 and 1875, and this was a reaction from that. Oil, in my recollection, went as low as forty-six cents in 1873 or 1874. Q. (By Vice-chairman PHILLIPS.) I have known it to be sold at forty cents. A. Yes, sir. Q. (By Representative LIVINGSTON.) You stated a minute ago in your opening remarks, that the refiners fixed the price of the raw material? A. Yes, sir. Q. Isn't that true of all manufactures? Take glass, or cotton, or hemp, or anything you please, and the manufacturer of the raw material, in its last analysis, controls the price of the raw product just as these refiners control the price of the oil in its crude state? A. But if there are a great many persons interested in the manufacture, there is competition between them and that fixes the price. Q. Provided there is no combination there? A. Yes, sir, but where there is a combination, then it is fixed arbitrarily by one person, and there is no competition. There is nothing to raise the price; the combination simply fixes the price and the producers must take it. Q. If these producers could refine their own oil, what would be the result? A. Then they would have to meet the Standard Oil Company in the refining market. Q. Would the Standard Oil Company have to go out of existence if the producers should refine their own oil? A. If they should refine it all, cer- tainly, but the Standard Oil Company also produces oil. Q. (By Mr. NORTH.) To a considerable extent? A. Yes, sir, I would say they produce about twenty-three or twenty-five per cent of the entire production. Q. (By Representative LIVINGSTON.) How many Independent wells or producers are there? A. I think there are over 60,000 wells in existence — 50,000 or GO, 000 — and over one-half the production is owned by men who own less than ten barrels a day apiece, so you can see the extent of the inde- pendent production. Q. Is there no way for those independent producers to refine their own oil? A. They are attempting to do that in the company that I represent; attempting to transport it. and through the independent refineries to refine it. The stock of the Producers' Oil Company, Limited, the Producers and Refiners' Oil Company, Limited, the Pure Oil Company and the United States Pipe Line is owned chiefiy by independent producers. *Vice-Chairman PHILLIPS. I will say to Colonel Livingston that that ground was pretty well covered in the morning, early in the day, with regard to the independent efforts. Representative LIVINGSTON. Excuse me, I did not know that you did anything on the part of the independent miners to refine their own oil. Vice-Chairman PHILLIPS. Yes, sir, they are doing that now; they are attempting to do it. Q. (By Mr. KENNEDY.) It seems to me this independent question is becoming a little mixed. When you say "independent producers of oil," do you include these individual companies? A. I include all companies that are not under the control of the Standard Oil Company. Q. Then you say the Standard Oil Company produces only about twenty- five per cent of the oil that is produced? A. Twenty-three to twenty-five per cent. Q. That is, these independent producers produce fifty per cent of the oil? A. Probably seventy-five. *Black faced type indicates matter omitted, in tiie course of editing, from ihe ofRcial report. 106 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Mr. FARQUHAR.) In what form were your first exports to Europe? Was it refined petroleum or crude? A. They exported both re- fined and crude to Europe. Q. In what year was oil exported first? A. I think they exported oil to Europe as early as 1870. Probably prior to that. Q. What effect does this export trade in oil have on the home market? A. It gives a market for just the quality of oil that they use abroad and to that extent widens the market. Q. (By Mr. NORTH.) Do you get a drawback on tin plate used in the independent refineries? A. We do not use any. We have never transported any oil in cans. Q. Is oil transported in cans by the Standard Oil Company? A. To some extent, but I think they are largely supplying their eastern trade now from Russia and making their tin cans *abroad. Q. The drawback has at one time been a large source of revenue to them? A. It has enabled them to manufacture all the cans here and get a- drawback on the tin they use in the manufacture. Q. (By Mr. FARQUHAR.) Suppose you were in a measure restricted to prices that you would not call living prices, would you not have the export market in Europe, that as you claim has equality in prices, even if the whole American product was put into that market against the Standard Oil Com- pany? A. You could not live if you had to sell sixty per cent of your product at a loss, and get some profit on the other forty per cent. You might do it until you had wasted your capital but that would not take a great while. Q. So that both the producer and refiner must be just as dependent upon the home market as on the European? A. I think the foreign markets do help the independent interests to maintain their foothold, and the Stand- ard Oil Company seems to have gi-eater facilities in crowding out the inde- pendents in America than it has abroad. Q. Does this foreign market tend to maintain .the domestic price? A. I think it does. Q. Does not this foreign consumption, which seems to be enlarging all the time, minimize the idea of a monopoly by the Standard Oil Company which only produces twenty-five per cent of the whole product of America? A. While they only produce twenty-five per cent of the oil, they virtually control absolutely another fifty per cent, because they fix the price of that additional fifty per cent, and therefore I do not think that the foreign mar- ket does minimize the danger from the Standard getting a monopoly. Q. You wish to state unequivocally that the producers of this country do not receive a fair price for their product? A. They certainly do not; I do not think that the counties which have produced oil are as well ott as they would have been if they had never produced a barrel of oil, and yet they have already taken out of these counties in the neighborhood of 800,000,000 barrels of oil. Q. (By Mr. KENNEDY.) At an average cost of what? A. I think they have determined that the average cost has been about $1 and for ten years they got very much less than that. Q. (By Vice-Chairman PHILLIPS.) Perhaps you might explain to the commission why the production could keep up under those circumstances — *about the difference in the flow of the wells and the richness of some of the fields — why some could live and others could not? A. The reason they could at all keep up the production was because it is a speculative business; one man may go in and drill a well, and he may get a thousand-barrel well and get rich. The result of that incentive was that a great deal of money came in and they kept drilling for these wells and made a large loss as they did not find them. There was more money put into the business in 10 years than was taken out of it, *but there was always that incentive that some one would strike these wells. There was the prospect of large returns; it was like a lottery in that regard. If honestly conducted, some one drew a prize, while the others did not. That enabled them to keep on and then these large ♦Black faced type indicates matter omitted, In the course of oditing, from tlie offlcial report. J. W. LEE, PRESIDENT PURE OIL TRUST. 107 fields were struck, and in such as the McDonald field some people made money even though the price was very low. They had wells that produced as high as 15.000 barrels a day, and of course a man who had a well of that kind would make a large amount of money. Q. (By Professor JENKS.) I want to see if we can have made clear the causes for three or four of the most important fluctuations. I understood you to say that the South Improvement Company was formed in 1872, and that within the next two years there was a great fall in prices. What influ- ence did the South Improvement Company have in the way of forcing these prices down, if any? A. I think it had the effect of forcing the prices down because they had a combination with the railroads to control transportation to a very great extent, and the producers became frightened and would sell their oil and get rid of it, and in 1873 was also the panic year. You remem- ber the panic had some effect on prices. *The man who owed debts for drill- ing and had to pay up had to sacrifice his oil and, to get out, threw the oil on the market. Q. *Did any new discoveries have anything to do with it at that time? A. At that time also there was a new discovery in Butler county, which looked as if they had a very prolific and large field, which they had. Q. Those two factors worked together? A. Yes, sir. Q. Then, in 1876 and 1877 there was a decided increase in the price; you said you thought that was partly due to speculation? A. Partly due to spec- ulation, and partly to the fact that the Butler oil field had been largely drilled out. *and they could not find such prolific wells, and the Bradford had not yet been opened. Q. Then in the year 1883 there was quite a decided rise. Do you remem- ber about that? A. There was quite a decided rise, yet it was limited. I think the highest price was $1.24%. Q. It was not so high as it had been before? A. Oh, no, sir; it was not so high. Q. (By Mr. FARQUHAR.) $1.2434 in 1883? A. Yes, sir, $1,243^; what time was that in the year? Q. (By Professor JENKS.) I don't know; it was the average for the year that you gave. O. (By Mr. FARQUHAR.) A fluctuation of 27 cents. A. That was largely due to the giving out of a field known as the Cherry Grove field. It had come in in July. 1882, and the wells were very large, but they did not last a great while, and in the fall of 1882 they commenced to decline and the price went up on account of that decline. Q. (By Vice-chairman PHILLIPS.) Did or did not the Bradford decline about the same time? A. *Very materially; a great many people thought the Bradford was going to quit. *and sold their property in Bradford and went into the Cherry Grove field. 1 think that was owing to the decline of the Cherry Grove field and also probably to the decline in the Bradford field. Q. (By Vice-chairman PHILLIPS.) In the years 1888, 1889 and 1890 there was quite a decided rise again. I understand that that came very .largely from the limitation of the production by the Standard and the inde- pendents coming together? A. My recollection is that the stock of oil was reduced from 31.000.000 of barrels in August, 1887, to about nine or ten mil- lions in 1889. That, of course, would account for that rise, although it ought to have s'one very much higher. Q. (By Vice-Chairman PHILLIPS.) Now, there was another decided increase in 1895. Q. *(By Mr. FARQUHAR.) Take that low price of 1892. A. Yes. sir; in 1892 there was quite a low price. The McDonald field came in and the production of that field was as high as 81,000 barrels a day at one time in 1891, and that caused quite a reduction in price. That was a natural reduc- tion. O. (By Professor JENKS.) Then in 1894 the prices were 953^ cents highest, and 80% cents lowest, and in 1895 it went up to $2.60. That was a tremendous rise. A. That was entirely arbitrary. The Standard advanced *Black faced type indicates matter omitted, in the course of editing, from the ofHcial report. 108 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. the price 25 cents a day for a period of about seven days, running the market from $1.12 to $2.60. Q. Was that helpful — that arbitrary rise? A. It helped the producers who had oil on hand to sell. *l don't think that was the object. Q. But still in the succeeding year it only went down to $1.50. A. It went lower than that. Q. $1.50 was the highest and $1.05 the lowest. A. That is right. Q. (By Mr. NORTH.) Are we to infer from your testimony that the Standard Oil Company arbitrarily fixed the price of the crude oil at a figure which it knew to be below the cost of production at a profit? A. Certainly, that is undoubtedly true, for in 1887 they maintained the price of 65 cents for months when everybody knows that it could not be produced for that. That is away below the cost of production. *l say that unhesitatingly. Q. (By Vice-chairman PHILLIPS.) That is as a whole? A. Yes, sir; as a whole it could not be produced for that. Q. (By Mr. NORTH.) Will you state to the commission your judgment as to the cost of the production at the present time? A. It will be an opin- ion, of course. I think that it could be produced now, and the amount of production probably maintained, anywhere from $1 to $1.20 per barrel, but without much profit. Q. The cost varying according to local conditions? A. Yes, sir. Q. (By Representative OTJEN.) And the flow of the well? A. Yes, sir; over one-half of the wells now being operated produce less than half a barrel of oil a day. Q. *(By Mr. NORTH.) Is that possible? A. Yes, sir; over 25,000 we'.ls being operated to-day produce less than half a barrel of oil a day. Q. *(By Mr. FARQUHAR.) That does not include all abandoned wells? A. No, sir; that just includes the wells they are working every day. Q. (By Mr. NORTH.) Are not all these wells producing at a loss? A. No, sir; in some fields where they couple them up in shallow territory, one man will pump .30 or 40 wells, and there is some little profit at the present price of oil, but very little. In some cases they operate them at a loss. Some men keep accurate statements of the different productions and I have looked at these, and men have shown me that they were operating certain wells at a loss. I asked why they continued to do so, and they said in the hope that the prices would advance, so that the wells might become profitable. Q. (By Professor JENKS.) The prices that you gave are prices at the wells and not at the refinery? A. At the wells, of course. Q. You said the price of piping is still 20 cents? A. Yes, sir; local pipage. Q. Could you give any estimate as to what you think the cost of pipage is. now that the pipe is so low? How would you estimate it? A. I think the cost of pipage would be between seven and eight cents a barrel. *Q. That includes interest on the capital invested? A. No, sir; that would simply be the cost of pipage; all of the entire cost. Q. (By Mr. FARQUHAR.) That does not carry fixed charges, does it? Professor JENKS. No, sir; no fixed charges. Mr. FARQUHAR. That is what I want to get at. Q. (By Vice-Chairman PHILLIPS.) Senator Lee has referred several times to what was called the "shut-in" movement, or limiting production, in the oil country, and it may be of interest to this commission if he would state what led up to that "shut-in" movement and what action, if any. was taken in regard to the labor employed throughout the oil fields at that time. A. I will do that briefly. The price all producers and the Standard Oil Com- pany realized on oil was below the cost of production during the year 18S7. The average price of that year was about 66 cents a barrel. The Standard Oil Company said they wanted to treat the producers fairly, but they said they had an excessive stock of oil on hand, that it was deteriorating in value and becoming worthless, and that in order to have a better price the produc- tion must be decreased, so that they could use up that stock of oil and take it off the market and save loss upon it by wastage. A number of the leading *Black faced type indicates matter omitted, in the coiir.'-e of editing, from the ofRcial report. J. W. LEE, PRESIDENT PURE OIL TRUST. 109 producers met a number of the Standard people at Niagara Falls and after discussing the subject the producers agreed to limit their production in order to have that excessive stock of oil manufactured, which at that time was 31,000,000 barrels. I met with them and I drew the contract by which the producers purchased from the Standard Oil Company 6,000,000 barrels of oil to compensate them and the labor which they employed, for limiting this production; because it would cut off their revenue and the revenue of the men who were engaged in that industry. Mr. Phillips, who was in that movement, insisted that they should set aside 2,000,000 barrels of oil to compensate the laboring men engaged in the industry, who would be thrown out of employment by cutting off the drilling of the wells. Q. (By Vice-Chairman PHILLIPS.) Was it, or not, the executive board of the Producers' Protective Association that took that action? A. Yes, sir; the executive board of the Producers' Protective Association took that action, and the reason for doing it is well expressed in the preamble to this contract, it is on page 09 of that same book (the report of the Committee on Manu- factures of 1888), (reading): "Whereas, There has accumulated in the past years an excessive stock of crude petroleum, which is deteriorating in quality, and a portion of which each year becomes sediment, valueless for any purpose, and the carrying of which excessive stock requires the expenditure of vast sums annually; and whereas, in consequence of the existence of said stock, the price of crude petroleum has for the past year been largely below the cost at which the same was produced; now, in order, as far as possible, to preserve the said stock from further waste, and to conserve the public interest and our own, this agreement witnesseth:" And the producers agreed to reduce their production 17,500 barrels a day and to purchase 6,000.000 barrels of oil from the Standard Oil Company at 62 cents. They were to give the profit of 2,000,000 barrels of that to the well drillers and pumpers who would be thrown out of employment, and to keep the profit on 4.000,000 barrels of oil so sold separately, and the laboring men actually realized about $.50,000 more profit out of their 2,000.000 than the producers did out of their 4,000,000. Q. (By Vice-Chairman PHILLIPS.) How was that money distributed? A. It was distributed through their organization, the Well Drillers' Union. They were allowed $1 a day for the time they were out of employment by reason of this movement. Q. (By Professor JENKS.) The Standard Oil Company was itself in this movement? A. The Standard Oil Company put up a million barrels and the independent producers put up a million to be distributed among the laborers. *Q. (By Vice-chairman PHILLIPS.) They joined equally in that move- ment? A. They did. Q. (By Vice-Chairman PHILLIPS.) Have you anything further to say in regard to production? A. No. I have not. I believe if there had been 50 concerns engaged in the manufacture of petroleum just as wide markets would have been obtained for the article, and while the consumer might not have paid any more for his oil. the producers would have realized a much better price and have had a handsome profit, which I think they have not realized. Q. (By Representative LIVINGSTON.) Where is the balance of that money now? A. I think the Standard Oil Company can explain that. I think they have realized in the neighborhood of $500,000,000 in profits, or more. Q. (By Professor JENKS.) Will you explain to us briefly the nature of the pipe line certificate? What use the producers can make of them in securing ready market? A. The oil is gauged by gangers who run it into the line for the oil company. The producer is given a ticket showing the amount of oil that is run into the line that day, and that is telegraphed to the pipe line office. They keep books showing the amount of oil due each producer, and any day a man can walk into the pipe line office and sell what- *Black faced type indicates matter omitted, In the course of editing, from the official rP to Judfjo Tlaisjht were elimiriatfd from the official report as an unwarranted attack on a di-stinsuished and honorable jurist. M. L. LOCKWOOD. 141 *Q. (By Professor JENKS.) Can you furnish us the exact citation? A. I will attend to that if you will make a memorandum of it. Q. (By Vice-chairman PHILLIPS.) You will furnish the data of both of these cases? A. I will furnish the data of everything, from end to end. No, gentlemen, Ihe remedy is not in the courts. You can't reach these fellows in the court. They will circumvent you. They *broke up Matthews and they will break up any man who honestly attempts to bring them to justice. The thought is fast becoming fixed in the minds of the common people that these great railway combines, extending as they do from the Atlantic to the Pacific and from Canada to the Gulf, *in conjunction with all of the power of the trusts, are gradually packing *the Supreme Courtv with men that will do their bidding, or rather with men who are in sympathy with the present monopolistic condition of things. Now, then, in 1878, the producers of petroleum in Pennsylvania had all of that old Anglo-Saxon confidence in the justice of the court and in the power and omnipotence of the law-. If we could get a law enacted by Congress prohibiting railway discriminations, then there would be no more railway discriminations and no more trouble. We paid a retired railway attorney a thousand dollars to draft us an anti-discrimination railway bill. The conditions were that it should be such a bill that, when enacted into a law, the railway companies could not drive a train of cars through it. I shall never forget the report which that committee made when they came back after bringing that bill down here to Washington. They found Reagan, of Texas, chairman of the Committee on Commerce, and they took that bill to him. He read it through, and after he had got through reading it. he said: ";\Iy Lord, that is just what we need down in Texas," and he went behind that bill and stayed there for eight long years in passing it. *We spent eight long years in circulating petitions, getting men to petition Congress to pass this bill. We all thought that the CuUom amendments in the Senate very much weakened it, but finally it was passed after many years and we had an interstate commerce law. But do you know that these great railway and trust combinations don't seem to care any more for that law than though it was not upon the statute books. If they can control the appointment of attorneys-general and Supreme Court judges, they don't care what the law is. They have become *bigger than the law; bigger than the government itself. They dare lo threaten the Interstate Commerce Commission and ignore its orders, for this great government seems powerless to perform the duties provided for it by the law that created it. *For the evidence to prove the^e statements I desire to refer the commission to the proceedings before the Interstate Commerce Commission in the Titusville and Oil City independent cases, pages 256 and 267. See also complaint of the Interstate Commerce Commission to the United States Circuit Court in the Cox case. Also see contention of railroad companies in Rice case, page 2 of their brief. Four or five years ago, or maybe six years ago, the Atchison, Topeka & Santa Fe Railroad Company went into the hands of a receiver, but about the first thing that receiver found out was that the officers of that road had paid out in a short time prior — some two or three years — over seven millions of dollars in rebates to trusts and monopolies and favorite shippers. While this was a state's prison offence, there did not seem to be any disposition on the part of the attorney general of the United States to bring these great criminals to judgment. These great railway combines and monopolis- tic organizations seemed to overshadow the government, and direct and control the action of its officials. Q. (By Senator MALLORY.) In reference to the action on the part of the attorney general, wasn't that before the passage by Congress of the law which subjected the shipper who received the rebate to liability under its provisions and which punished all parties concerned in the rebate busi- ness? A. Now really, this was the time that the Santa Fe road failed. *Q, That was eight or nine years ago, was it not? ♦Black faced type indicates matter omitted, in the course of editing, from the official report. tin ly.e official report "our higher courts" appears in place of "the Supreme Court." 142 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Mr. KENNEDY. In 1893. Q. Well, that was before the passage of the amendment of the interstate commerce law which exempted one of the parties from criminality in such proceedings. A. Now, then, behind the power of railway discrimination, the Standard Oil Company, the Sugar Trust, the Steel combination, the Big Four Beef combination and the rest of these organizations, feel so secure in their power to throttle competition and plunder the producers and con- sumers of America, that the stocks of some of these companies, from fifty to ninety per cent water, are selling to-day at from two to four hundred cents on the dollar. Now then, Mr. Chairman, the greatest battle on the record of time, has been fought by Mr. George Rice, of Marietta, Ohio, for the right to do business in this free country — for the right to do the business of his choice. Now then, what is the record in that Rice case? In the latter part of the seventies, the railway managers, to cripple Rice in the interests of the Standard Oil Company people, doubled the rate on oil out of Marietta, where Rice's refineries were. The raise was only on oil — nothing else. No other freight was raised, and only out of Marietta. Ten miles below, on the Ohio river, at Parkersburg, the Standard Oil Company had a refinery and the rate was not raised on oil from there. The railroads raised the rate on Rice"s oil out of Marietta, and no raise was made anywhere else. For the evidence to prove this statement. *see the report of the Com- mittee of the Ohio Legislature on railroad freights, pages 5, 41, 42, 124, 141, 162, 166 and 170. What further? The railroads over which Rice had been shipping oil to the southern markets raised the rate on oil from twenty-nine to 212 per cent on Rice's shipments, over and above what the Standard Oil Company had to pay; and finally they refused to give Rice any rates at all. *For evidence to prove this statement see testimony in the Rice case before the Interstate Commerce Commission, Nos. 51 and 60, pages 147, 148, and 149; also see Rice's complaint, page 6. What further? The railroads paid rebates to the Standard Oil people on the oil that Rice shipped. Q. (By Mr. KENNEDY.) How much? A. I will give you the reference so you can tell. *See the report of the Committee of Congress on Tru-ts, 1888, pages 575, 576, 577, 578; also page 583. What further? The railroad companies discriminated against Rice in favor of the Standard Oil Company people to an amount equal to $1f»9 per car carrying 100 barrels. *See exhibit, page 582, report of Fiftieth Congress, on Combinations and Trusts. Now then, Mr. Chairman, and Gentlemen of this Commission, I hope I am not asking too much when I ask the members of this commission to read the forty-three pages giving the history of George Rice's exertions to do business over these American railways. Every fact herein stated is sub- stantiated by sworn evidence before the Interstate Commerce Commission, before the courts, before the State and National investigating committees, and when you have read this record of crime, when you have read and seen how the rights of the American people are destroyed by these railway com- panies, I would suggest, and I think it is proper, that when John D. Rocke- feller appears before you that you ask him if the railway companies had have treated him as they did George Rice, whether he thinks he could have succeeded in business. Q. (By Senator MADT.ORY.) What is the name of that book? (Re- ferring to a book in the hands of the witness.) A. This is three chapters of H. D. Lloyd's great book on Wealth Against the Commonwealth. *Q. (By Vice-chairman PHILLIPS.) You will leave that for the present for the use of the commission? A. Yes, sir. Now then, it does not seem l)ossible that under this government, based upon the doctrine of the equal rights of men, that such outrages can be possible; yet this great govern- ment, through its courts and through its commissions, seems powerless to prevent these wrongs which I have enumerated. *Rlack faced type indicates matter omittod, in thp course of oditinp, from the official report. M. L. LOCKWOOD. 143 Now then, what is the remedy? Take these railroads away from these corporations and make them public property. Let the government own and run them. Make them highways over which the people can go to market upon even terms with everybody. The eleven billions of capital combined in the railways of the Republic, organized as they are under joint traffic and passenger associations, are throttling the law of competition and con- stitute one great railway trust, controlling the highways of the people, dic- tating who shall and who shall not do the business of the country, condemn- ing this man to poverty and that man to riches. Those holding these eleven billions of capital combined with those holding the capital of trusts and monopolies, have constituted themselves the political dictators of this coun- try. They furnish the millions of dollars for corrupt political campaign pur- poses. They assume to own the votes of all the men in their employ, and he who becomes politically obnoxious to them is blacklisted and turned out to starve or hunt a new occupation. Shrewd politicians, backed by this combination of capital and this power, have constituted themselves political bosses. These political bosses are but the creatures and servants of this great corporate power, and these bosses are dictating the nominations of legislators, Congressmen, Senators and judges satisfactory to their masters. In this way they are controlling legislation, and escaping punishment for their crime. It takes a strong man, Mr. Chairman, well anchored in the confidence and affection of his people to triumph politicallj^ — *triumph poiitically, I say — against this combined capital and power. And just in proportion that these great trust combinations are enabled to absorb the wealth produced by the people and impoverish them, will the people become subservient and cowering, because, Mr. Chairman, the fear of hunger for wife and babies makes cowards of us all. Can the Republic survive with these railways in the hands of corpora- tions which are fastening these monopolies upon us? Mr. Chairman and gentlemen, these corporations, in justification of their management of the highways of the people, the railways, set forth that they are moving the freight of this country cheaper than the freight of .any other country upon the globe. True, but out of their own mouths they convict themselves of a great crime. I hold in my hand a receipted freight bill for the shipment of a car load of oil well supplies from Harmony, Pa., to Unity, Pa., a distance of forty-nine miles. The cost wa-? .$-1'l.(;0 for this carload of sixteen tons, or $2.91 a ton for forty-nine miles, or $0.0.593 per ton per mile. *Q. (By Professor JENKS.) Will you put that in evidence? A. Yes, sir, I will give you the distance, too, if you want it. I have freight bills showing that I have paid $0.04.32 per ton per mile in carload lots of freight. Now then, a large percentage of the freight of the American people is moved in less than carload lots, and I have here the receipted freight bills for lots of from one to two tons, and I find upon that class of freight that I have paid $0.13.57 per ton per mile. Q. Have you any evidence to show that over this same road, for the same distance and the same freight, any lower rates have been given to anybody else? A. No, I have not. It is a small matter, you know, and I only ship over it occasionally. A large percentage of the freight of the country is shipped by men who ship a car this month and a car next month and so forth. Now then, these freight bills are for fifth or sixth class, freight which I think oil well supplies are, and I suppose that the public pays the same freight for similar shipments. I suppose they do. Now then, the statistics of this country show that all the freight of the country includ- ing everything is moved at the average rate of 0.85 of a cent per ton mile. Now, then, these facts convict these railway managers of a great wrong, for those freight bills show that the people are being robbed for the benefit of the stockholders of these railways and the statistics show that these stock- holders of these railways are being robbed for the benefit of monopolies, trusts and favorite shippers. *Black faced type indicates matter omitted, in the course of editing, from the official report. 144 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Now here is a problem. If the people are obliged to pay, as shown by these freight bills, upon their shipments of freight, from four and thirty-two one-hundredths cents per ton mile to thirteen and fifty-seven hundredths cents per ton mile, and all of the shipments of the country are moved for eighty- five one-hundredths of a cent per ton mile, then how much less do the mon- opolies, trusts and favorite shippers pay in order to bring this average from thirteen and fifty-seven one-hundredths cents per ton mile down to eighty-five one-hundredths cents per ton mile? The answer to this question will an- swer the oft-repeated questions of why so many of our railways are in the hands of receivers. The proper answer to this question will answer why it is that many managers of these railroads are becoming many times million- aires while the railroads are becoming bankrupt. The record for the last twenty-five years has demonstrated that as long as these railway? are in the hands of these corporations, that they will use them for the benefit of their friends — the inside combination — and they will use them for the purpose of destroying the great principle of equal rights which is the foundation stone of our Republic. Now then, take these railroads away from these corporations. Guar- antee to every man an equal right in the transportation of his product. I know the independent oil producers and refiners of America, and if you will establish equality over these railroads, with a guaranty that that equality will continue, I feel safe in saying that in less than fifteen years the inde- pendent oil producers and refiners of America will drive the Standard Oil Company into a secondary position in the oil trade of the country. Now, these great trusts and combinations do not know the first prin- ciples of economical management. By virtue of the great flow of wealth that has come to them from railway rebates and monopolistic possessions, they have not been obliged to study the principles of economy a moment in their lives. By this monopoly process they have been able to take so much money from the people that they absolutely do not know what to do with it. Re-establish the equality of our people over the railways of the country, and there will be no more coal miners' strikes, soldiers and deputies will not be called upon to shoot down American citizens like dogs in order to drive them back into subserviency of monopolistic control, for then the miner can ship his car load of coal just as cheap as the biggest coal combine in the land. Men do not strike and go out and starve, only as a last resource. Establish the equality of our people over the railways of the country and when the coal miners become dissatisfied for any reason, instead of striking for their ii.-;hts, they can get together, or can keep together, and form a little com- pany of their own, and lease either McComb's or McLaughlin's farm and open up a coal mine of their own and ship their coal, the products of their owii labor, and market it upon equal terms with the biggest coal combine in tne land. Now, then, how can these great over.-capitalized and extravagantly managed coal combinations stand such competition as that? They could not stand it at all. It would be mighty hard on these big coal combines, but it would Re justice and it would be a wise National policy. Now. then, with absolute equality over the railways of the country, so tha*: every butcher could ship a car of cattle just as cheap as the Big Four Beef Combine, the Big Four Beef Com])ine could not hold a monopoly of the meat business of America for 24 hours; they could not do it. Under government control, the letter of an oil producer, a coal miner or a butcher, goes to its destination wqth the same speed, at the same cost, and with the same precision as the letter of an .Vrmour or a Rockefeller. Send their oil. their coal and their meat to market upon these same terms of equality, and it wont be long before these great monopolistic combines will be getting rid of their $25,000 a year lawyers, and their $25,000 a year man- agers, upon the plea that their business will not stand such high-priced men; and these managers will soon be engaged in building up a business of their own, and these lawyers will soon be engaged in a better business than advising their principals just how far they can go without getting behind the Lais. M. L. LOCKWOOD. 145 Now, then, how can these railways be taken away from these corpora- tions? It is easy. The public welfare demands it. Under the eminent domain of the State, the power exists to condemn these railway properties for the public welfare, just as under the eminent domain of the State private lands were condemned upon which to build those railways for the public welfare. Pay these corporations for them just what they are truly worth, and in this transaction we must be careful that we do no injustice either to the people or to the stockholders of these railways. But some one says, how could the government pay the immense interest upon the enormous public debt which this purchase would create? Why, Mr. Chairman, the people, who in this land are the government, are paying it to-day. These railway companies are taxing the people in exorbitant freight rates for the payment of the interest on all of their corporate debt, many div- idends upon watered stock, and hundreds of millions annually for the benefit of these trusts, monopolies and favorite shippers. Under government own- ership the people are only changing the managers of their highways for these railways are the peoples' highways, and one of the greatest judges that this land has ever produced, in my judgment, has said "that a public highway cannot be private property." Now, then, an important reason for government ownership is that the bonded debt necessary to acquire those roads could be placed at from l^/^ to 3 per cent, less interest annually than is now being paid for interest upon the bonded debts of these roads, and this great reduction of interest would be an important factor in cheapening the cost for the transportation of the products of the people. But a great and more overshadowing reason for government ownership is that then we will be able to shake off the grip of these monopolies from the throats of the people. But some very good men fear the power of patronage which the govern- ment ownership would give the party in power. I do not fear it. That can be controlled by civil service laws. But even if the National ownership of railways should be a source of strength to the party in power, they would be responsible to the people for a just, honest and fair administration and management of the great public property in the interest of the people. While under corporate management all of the power and influence of these great railway combines, together with all of the influence and power of the men whom they control, are thrown into the balance in favor of this or that party, whichever will secretly agree to serve them the best. They hold the balance of power in many of the States, and they can elect the candidates of that party whose bosses will guarantee the greatest subserviency to their will. The party that obtains control by virtue of this influence is not held respon- sible to the people for the maladministration of these public highways, as they would be under government ownership. It is because these eleven bil- lions of railway capital, together with all of the men which it controls and who are in politics clear up to their armpits, and all of this influence and power is used for corrupt and selfish purposes; it is because these eleven billions of capital, together with all the capital of the trusts, are corrupting our public affairs and debauching our public men. that the people must take these railways away from the corporations. The record of the last 25 years has demonstrated that the government must own and control these railways, or else the railways will control and run the government. Now, then, in the oil regions of Pennsylvania there has lived a set of men who have never bowed the knee to Baal, but have battled on continu- ously for their rights as American citizens to use the railways of the coun- try. It has been a long battle. Some of the men who buckled on the armor in 1872 have been claimed by the hand of death; some of them have gone down under the blandishments and money of the Standard Oil Company and they have been bankrupted and reduced to servitude and have been obliged to go to work for this great monopoly in order to obtain bread for their families. Some of them, with a deep sense of the great wrong that has blighted all their hopes and darkened their future lives, with a deep sense of the great wrong that has driven them from the highways of the country and chained them to the rock helpless while this great monopoly 10 146 REVIEW OP TESTIMONY— INDUSTRIAL COMMISSION. has robbed them — some with a deep sense of this wrong have been driven to the grave of a suicide or the insane asylum; but there are enough left to keep the faith and battle on for commercial liberty and equality. These men have never faltered, but have battled on as best they could with the means at their command. They first built the 28 pipe lines which I have referred to. They then found that it was railway discrimination. They then went to the courts, and when the courts failed them they came down here to Washington to Congress for an interstate commerce law; when the inter- state commerce law failed them they attempted to hew for tuemselves a way by building a pipe line to the ocean where commerce is free, thinking, hoping, praying, that somewhere beyond our borders we might find a land and a government where the equal rights of all men are maintained upon the highways, and they have found it, Mr. Chairman, in the great Empire of Germany, where the government owns and controls the railways. The poor- est man in Germany can ship a barrel of oil from one end of Germany to the other just a cheap as the Standard Oil Company can. In Germany the inde- pendent oil producers and refiners of America are not only enabled to com- pete successfully with the Standard Oil Company, but in addition they are enabled to earn satisfactory and flattering profits upon their entire capital. Give us National ownership of these American railways, which will insure and perpetuate equal rights, and we will soon give the people of America their oil at competitive rates, and the people of America will not then be obliged to pay 40 per cent, dividends on Standard trust stock, at least 50 per cent, water, because there will be plenty of capital ready to serve them at 6 per cent, profit on the actual amount of capital invested. I take no stock in the idea that inordinately great capital can produce cheaply. Where monopoly begins, there improvement ends. It is competi- tion that drives men to economic improvements and inventions. It is monopoly that demands great profits. While competition is putting the refined oil into tank steamers for the competitive markets of Germany at two cents a gallon, monopoly, backed by railroad favoritism, is forcing the people of Texas and Arkansas to pay 25 cents a barrel upon the oil that they burn in their lamps.* Vice-Chairman PHILLIPS. A gallon, you mean? The WITNESS. I mean a gallon, excuse me. The paid attorneys of the Standard Oil Company, by a liberal use of the public press and a system of comparison, have imposed upon the American people the thought that the Standard Oil Company has furnished them their oil cheaply. If the people have been served cheaply by this monopoly, what means the five hundred millions of profits which this great monopoly has garnered. It is not the purpose of trusts to serve the people cheaply. It is the purpose of the trusts to create monopoly, and then force the producers and consumers of America to pay dividends on billions of watered capital. Before the Sugar Trust had fully fastened its fangs upon us, I bought good granulated sugar at $3.90 a hundred. To-day this Sugar Trust is forcing the American people to pay them $5.50 and $6 a hundred for the same grade of sugar, a difference, I am told, of more than $200,000,000 an- nually to the American people. Think of it, Mr. Chairman! Two hundred ♦Mr. Lockwood should have known that his Ftatement that refined oil Is put into tank steamers for the competitive markets of Germany at two cents a gallon was incorrect, and had he heard the testimony that was constantly repeated by officials ijf S'lnthern railroads before the commission, he would have known that at certain Isolated points freipht rates are very high because of natural disadvantages which hamper the railrot.ds in the conduct of their business and which make it necessary for them to charge a comparatively high rate, whereas, when the small amount of freight handled by the road and the long stretches of unproductive country through which they pass are taken into consideration, the rate compares favorably with the rate actually much lower on Northern roads. This had been shown to be the case from the fact that on many Southern roads, with high freight rates, the earning capacity is greatly inferior to that of roads in other sections where cheaper rates are secured. He failed to refer to the difference in quality between the export oil ,"nd the oil he referred to as being sold elsewhere at a higher price. T^ater he admitted that the two-cent rate he referrcil to was a cut rate his company had adopted to open a market abroad, and which thty promptly abandoned as soon as their purpose was accomplished, after which they put up the price. M. L. LOCKWOOD. 147 million dollars of the wealth produced by the American people by this pro- cess taken from the pockets of the people who have earned it, and trans- ferred into the coffers of the Sugar Trust, and then Mr. Havemeyer says, "What are you going to do about it?" I will detain you but a little longer. Now, then, how can this be pre- vented? By assuming control of these railways of America, and guarantee- ing to every man. to every American citizen, equal rates upon the transporta- tion of his product, and then, in addition, by enacting a law forcing these great trusts and monopolistic combines, when they fix the price upon their goods, then that price, freight considered, must be the price in every town- ship and hamlet of the land. When prices are changed at any point they must be changed everywhere. Make a violation of this law a State's prison offence for the mdnagers of these corporations. These corporations are the creatures of the State. The State has created them *and has put into them all of this power for commercial and creative energy, and the State has the right to control them in such a way that they may not be detrimental to the public welfare. This law will prevent these great trusts and combinations from putting up the price in one section of the country where there is no competition, and forcing the people of that section to pay the costs of destroy- ing competition in another section of the country. This law will prevent these corporations from forcing the people to pay for a war of annihilation against new competition. This law will protect and encourage competition upon every hand, and cure the evils which are now upon us. Say to all of our people: "Mine, manufacture, produce, and the products of your labor shall find a market upon terms equal to all, and you shall be protected in a fair competitive combat." Do this, and these great over-capitalized and un- wieldy trust combinations will wither and go down before the energetic, intel- ligent, active, competitive capacity of the American people. I thank you, gentlemen, for your very kind attention. Q. (By Mr. KENNEDY.) I gather from the testimony that you have just made, that you believe freight discriminations and favoritism to be the mother of the great trusts of this country? A. I do, largely, yes, sir; I think it is really the foundation. *Representative LIVINGSTON. Is that intended for a political question? Mr. KENNEDY. No, sir; that has been the tenor of his argument all the way through; that they could not exist in this country were it not for freight discriminations. The Witness. The brains of the country must have protection from some source. The brains of the country are not in the heads of a few men; they must have protection from some source. The protection which has created the Standard Oil Company, the Big Four Beef Combine, and trusts and monopolies of that class, is the protection of railway discriminations and freights. The commission took a recess from 1 to 2 o'clock p. m., after which Mr. Lockwood's examination was continued. Q. (By Professor JENKS.) I understood you to say. Mr. Lockwood, that there were quite a nmuber of different pipe lines in those earlier days in the oil producing industry in Pennsylvania, that were either forced to suspend their operations or were bought up by the Standard Oil Company, and united. How many of these different pipe lines were there — I think you men- tioned A. I have a record of, I think. 28. Q. Can you tell us the methods by which the Standard secured control of this pipe line industry? A. Well, in those early days theirf policy was to go to the wells, and pay for this oil more than anybody else could pay. For the last 15 years they have adopted a policy of paying what they call a premium on the oil that is accessible to these competing pipe lines. When a new pipe line starts into a particular district, immediately that oil becomes very valuable and the Standard Oil Company will put a premium on that oil of say 20 to 30 cents a barrel. When they have succeeded in finally driving out, buying up or breaking up this competing pipe line, then that oil is not *P.lrick faced type indicates matter omitted, in the course of editing, from the official report. tReferring- to the Standard Oil Company. 148 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. any more valuable than any other oil, and they take the premium off. Let me give you an illustration. In 1887, the Craig, Elkins and Kimball outfit built the Western & Atlantic Pipe Lines. They made their first shipment of oil on October 11, 1887. At that time the Standard Oil Company was paying for crude oil at the wells 69 cents a barrel. The Western & Atlantic Pipe Line did not fairly get started in business until the spring of 1888. By that time the exchange market for crude oil under the growing competition was 88 cents a barrel, and the white sand oils of Butler, Armstrong, Alle- gheny and Washington counties, into which this Atlantic & Western Pipe Line ran, were so valuable just at that time that the Standard Oil Company was paying a premium of 20 to 25 cents a barrel. *ln Washington county, nearly the center of the Craig pipe line movements, they paid 25 cents, and in the outlying counties beyond they paid a premium of 20 cents, which made the oil at the wells worth— 88 and 20 would be $1.08, 88 and 25 would be $1.13, respectively in the different districts. Now, then, refined oil was selling in August of that year for seven and five-eighths cents a gallon, including the barrels, in New York City and export points. In November, 1889, a year afterward, the Standard Oil Com- pany was paying us for oil at the wells $1.30 a barrel *under the competition, and' refined oil was selling in New York City at seven and a half cents a gallon. Competition was putting the price of crude oil up to the producer and competition was putting the price of refined oil down to the consumer. I have a very vivid remembrance of this time because I was kind of into it. I was opening up some territory on the Little Connoquenessing creek. That is in the western part of Butler county. Pa., in what was known as the "hundred-foot rock." I had leased the Cable farm, the Charlie Young farm, the Ed Young, Eyeholtz and Hayes farms. I was getting some magnifi- cent wells. One on the Eyeholtz farm started off at 125 barrels an hour. I had one well on the Chariie Young farm that averaged 1,000 barrels a day for a long time. I think I drilled about 40 wells on this property. Competi- tion was giving me for this oil all that it was worth as compared with what the consumer was paying for it, and I was getting rich. I was getting from $1.10 to $1.30 a barrel for this oil.t About this time, it became evident that there was a hundred-foot oil belt extending from the western part of Butler county in a southwesterly direction down into the eastern part of Beaver county. Pa., *and 1 got on to that idea, and I worked night and day, never stopping for anything, until I became interested in about three miles of that oil belt. I got on the southwest and I started in on the Fogle, the Kaneff, the Shrumm, the Trautman. the Allen, the Passavant. the Coker, the Fankee, the McCurdy, the Eyeholtz, the Getman, the Eichenhower, and the Mover farms. I was interested in two and a half miles of this oil belt. I had it all. *Some others worked in, so I didn't have it solid. 1 thought I would make a million out of it. *We were getting a good price for oil and of course I felt qood over it. I had some grand wells on it. I had a well on the Trautman farm that started off 1.200 barrels a day, *and a number of the wells that would fill a 250-barrel tank a day. I think I controlled 60, 70 or 80 wells on that oil property. .About that time, the Standard Oil Company gave the Elkins and Kimball crowd their price and bought their pipe lines and refineries, and the very next day the premium of 20 and 25 cents came off. This oil wa<^ not worth any more after that pipe line was gone than any other oil, and the price of the *Black faced type indicates matter omitted, in the course of <'ditinK. from the ofTicial report. lit will be seen by the above testimon.v that tlip well i)roducinR 12.") barrelH an hour or 3.000 barrels a day and the oth, no account is taken of the product of the other .^S wells which he drilled. As the cost of drilling- these two wells could not have exceeded $2,500 each, it will be seen that Mr. Lock- wood made 100 per cent, nn that investment every two days. M. L. LOCKWOOD. 149 oil came down, *down, down, down, down to $1.06 and down to $1; down to 95 cents; down to 90 cents; down to 85 cents; down to 80 cents; down to 75 cents and to 70, and 65 and 60 and 55, clear down to 53 cents a barrel. I didn't sell a barrel of oil in one of those years above 60 cents a barrel. The average, I think, was along about 50 cents, along about 53 — I should say as low as 53. t The next year after that — *there was no competition now, you know — I sold all of my oil below 70 cents a barrel, below the cost of production, *away down below the cost of production, and for two long years I had to sell this oil for less than the cost of production, and practically the Standard Oil Company confiscated all of that magnificent property, and instead of hav- ing a million of dollars, which I ought to have had if 1 had had my share of the profits that were made on that oil, *according to what the consumers paid for it, I absolutely had to mortgage my property to get money to pay the costs of this operation, the tubing, casing, engine, boilers and tools, and work of the men. All the value of that immense property that should have made any man a millionaire was transferred into the coffers of the Standard Oil Company. Q. (By Mr. KENNEDY.) What was the price a barrel when you say it started to go down? A. $1.30. Q. And what was the price of refined oil? A. The price of refined oil when I started was seven and five-eighths cents a barrel in New York. Q. A barrel? A. A gallon. Q. The cost of refined did not go down at all compared with the cost of crude? A. No. Q. It did not? A. That is, you can see there. I give the dates of the two times when this competition in this line was in existence. The price of crude oil went up and the price of refined oil went down. I think there was a reduction of a fraction of a cent during the time of these low, extremely low, prices. The history of that case is the history of the manipulations of the Standard Oil Company over and over again. When the oil producers are lucky enough to find and open up a great field, the Standard puts the price down r:i\(] practically confiscates the profits. Of course the Standard Oil Company's newspapers there during this time had great cock-and-bull stor- ies ?.boi:t the increase of production, increase of stock, as an excuse for this oil to go down. But the facts are that during these years which I have described when the price of crude oil was pulled down from $1.30 to 53 cents a barrel, the entire increase of stocks of oil would not have supplied the consumptive demand of the world for two and one-half months. All of this talk about production and stocks was a mere subterfuge to take from the *Black faced type indicates matter omitted, in the course of editing, from tlie ofHcial report. tEven after the price of oil dropped to o3 cents a barrel Mr. Lockwood, accord- ing to his own testimony, wa.s in receipt of an enormous income. He testified that on the first property he developed, two of his 40 wells gave him 4,000 barrels a day and on the second property one of his "60, 70 or SO wells" produced 1,000 barrels a day. The cost of production for these flowing w'ells could not have been as high as 25 cents a barrel, and yet if that had been his expense, in addition to the royalty of one-eighth of the product to the landowner, he would still have realized a profit of $1,225 a day from three of liis wells. Even at this hard-time price Mr. Lockwood must have received 100 per cent, on his total investment from these three wells alone in a little over six days, or about 16 2-3 per cent, profit per day, estimating the cost of drilling the tliree wells at $2,500 each, and it could not have exceeded that amount. At this same rate of interest Mr. Lockwood was '-eceiving a net profit on his three wells of about 6,000 per cent, per annum. Accorditig to his statement he had at least 97 other wells on these two pieces of property, but his testimony as to their production was too vague to permit the making of an estimate of the net income he derived from them. Supposing Mr. Lockwood had 120 wells, which was the high- est number he named, and the cost of drilling them had been $2,500 each, his total investment would have been $300,000, which three of his wells would have paid back in 245 days. However disastrous the low price of 53 cents a barrel may have been to small producers, Mr. Lockwood's testimony indicates that his flowing wells were still enormously profitable at the lowest price at which oil was sold. As the low- price was the result of the enormous output of these and other flowing, wells, Mr. Lockwood occupied an odd position when he posed as a martyr to a condition he himself had helped to bring about. 150 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. producers the wealth they had created, and transfer it into the coffers of the Standard Oil Company. Q. (By Professor JENKS.) That practically covers the explanation as to the way in which these pipe lines were absorbed by the Standard Oil Com- pany and the effect upon the producers? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) About 28 in number here? A. I have a record here of this number, and the names of them all. Q. (By Vice-Chairman PHILLIPS.) It is not perhaps worth while to name them here, if you can give us the reference to the book. (Referring to book held by the witness.) A. Well, now, it is in a biographical book in which there is a speech that I delivered on the Free Pipe Bill question 20 j^ears ago. Q. (By Professor JENKS.) In your testimony this morning you gave us a great many instances of cheap railroad rates that were secured by the Standard Oil Company a good many years ago, and showed how, in your judgm.ent, by virtue of these special rates, the Standard Oil Company had been built up. You have cited us also the authorities by which these state- ments could be verified. Have you any information or any proof that the Standard Oil Company is at the present time getting any special privileges from any of the railroads? A. The evidence in the Titusville and Oil City independent cases gives the proof. Q. How long ago were these cases brought? A. Well, they were brought in Q. (By Mr. KENNEDY.) 1893, you said this morning. A. Well, I don't know; fome place along in there that they were brought, because they were lon5 af'er the Interstate Commerce law was enacted. The evidence all goes to prove that the lailway companies are manipulated *by different subterfuges some way by which the Standard Oil Company gets an advantage, and the great fear of the independent producers and refiners is that after they have gone on and extended their trade and spent money to build up stations and acquired property with which to do business in any section of the country by bome scheme the railway companies will put u)) the rate on them and shut thorn out of that district just as they have shut them out of the New England States in the case which I cited this morning. It is the fear of railway dis- crimination that paralyzes the men. Q. (By Professor JENKS.) We have had some evidence offered tend- ing to show that the Standard Oil Company is at the present time receiving special favors. Have you yourself anything in the nature of definite proof to show that fact? A. No. sir; no, sir; I am an oil producer, you know, and I don't get in touch with these railroad people so much as the refiner does. I have no doubt that they are getting a great advantage to-day, and probably at the end of four or five years we will find out just what that advantage is. The time in which they were getting $1.50 and sometimes more rebates, they v.ere persistently denying that they had any advantages, and they have persistently denied, time and time again, that they had any advantage, but ultimately the truth would come out in some way, and we could see then why it was that they were triumphing over the independent interests. Q. Have you any information at the present time in reference to the rates of freight on oil over the Canadian road? A. I have no information on that subject. t Q. You gave us some instances this morning in reference to the very high rates of freight that you yourself have paid over some of the roads that run from Pittsburg to Union City. A. To Unity Station. Q. Those rates of freight were very high, as you just showed, very much higher than the average rates throughout the country. Have you any proof that th(M-o is any discrimination in rates between different persons or differ- ent companies over these railroads? A. This road that extends to Unity, on the Allegheny Valley Railroad, is a coal road; it was built into that district to take out the coal for. I think, the Buffalo & Cleveland Coal & Gas Com- *T'.l.T(k faced typo inflicatfs matter omitted, in the course of editing, from the official report. rit will be noticed in the above testimony that wher^ clopely questioned about the statements lie liad testified to as facts, he had no proff of any kind to show that they were facts, excusing himself by sayii:?; that he did not gel in touch with the railroad people as much as did the refiners. M. L. LOCKWOOD. 151 pauy. I was told while I was operating in that district, that the rate of freight on coal to anybody outside of that company was so high that it was impossible for them to compete at all in the markets of Buffalo. Q. Were the rates of freight on coal different to the members of the company from what they were to outsiders, or were the rates themselves the same to all parties, the members of the company getting their profits simply from the higher rates of freight that put money into their pockets as railroad owners? A. I really do not know the inside workings of that coal road; all I know is that the men who owned coal farms there could not ship their coal; that they were powerless to do any business in competition with the coal combine.* Q. Of course it may have been true, even though the owners of the road were paying the same rates of freight, because what they were paying out in one form they were getting back in another. Have you any information to show that this railroad has been acting contrary to law in making dis- criminations? A. I imagine that on the class of freight that I ship every- body pays the same rate. Q. Pays the same? A. Yes, sir; I imagine that. Q. Was there very much freight shipped over this road besides coal? A. There has been quite a development of oil and gas in that region and there has been quite a large amount of oil well supplies, pipe, etc., shipped over that road. Q. Is the railroad running from Pittsburg to Unity a small line of road? A. It is a part of the system of the Allegheny Valley Railroad, which is a branch of the Pennsylvania system. Q. (By Mr. KENNEDY.) Did you not say the independent companies had their own pipe line to the seaboard. A. The independent oil producers, after the purchase by the Standard Oil Company of the Elkins, Kimball and Craig pipe line system, when oil got down so low that it meant bankruptcy and ruin to all of us, went to work to try to hew for ourselves a way out by building this pipe line through to the seaboard. The first movement, I think, was in building the pipe line of what was known as the Producers & Refiners' Oil Company. Limited. t That was built into the McDonald field with the expec- tation of piping oil to the railroads and shipping it with cars to the independ- ent refinerymen at Oil City and Titusville. As soon as that was completed and the business was begun, there was a system of discrimination set up against them in some way — I do not remember just how it was — but it resulted in the producers having to lay a line from the McDonald field, where this first little line was started, through to Oil City and Titusville to the refineries. $ Then after they had done that the discrimination began against the refined oil again. As long as these refinerymen were taking the inferior oils of the Standard Oil Company that had been in the tanks until the finer parts had evaporated, they did not discriminate so much against them, I understand, but after they were able to get good oil from the wells they commenced to block the shipments of refined oil and then we undertook to lay a seaboard line from Titusville to New York or Jersey City. Q. You have a line then? A. The line has been built down into New Jersey, and the railroads have blocked us. The managers bought a piece of land in fee simple that went under a wagon road, and I believe in the lower courts we got a verdict in favor of our right to lay that line under there, and after we had laid our line I think 60 miles further, they carried the case up to the Supreme Court of New Jersey, and that court reversed the decision and forced us to stop, I understand. I don't know, but I think we are still putting oil through there, but it is subject to the final decision of the court there. The verdict by which we had the right was reversed. Q. And do you ship from that point? A. It comes down over the Jersey Central Railroad. *Ap:ain it will be seen that after offering' hearsay evidence the witness excused himself when he was asked for some definite Inform.ation on the subject on which he testified. tThe witness probably referred to the Producers' Oil Company. tThe Producers & Refiners' Pipe Line. 152 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-chairman PHILLIPS.) From that point? A. From that point, from the end of the pipe line, I think 80 or 90 miles (it must be as far as that to the tanks at the seaboard). This is the line that the Producers & Refiners' Company built as a double line.* They transport the refined oil from the refineries at Oil City, Bradford and Titusville, through to the end of this pipe line as they do crude oil, and then it goes on board the cars to the seaboard and the refined oil is there put into steam tank vessels and sent to Germany, where the independent producers and refiners have built three large stations which were, I think capable of holding 70,000 barrels of oil, and the crude oil is refined at the seaboard. In Germany there is no rail- way discrimination. Q. (By Mr. KENNEDY.) What I wanted to get at, Mr. Lockwood, is whether the railroads now can give the Standard Oil Company any advan- tage over you in getting oil to the seaboard, and I judge by what you say that, with the possible exception of the Jersey Central, no road can do it.t A. No road has anything to do with our oil from the time it starts from the wells until it gets to the Jersey Central. Q. They cannot give the Standard Oil Company any advantage over you? A. Not on that export oil. On that export oil, we are on even terms with the Standard Oil Company, except, I think, about seven cents on every barrel. t Q. (By Vice-chairman PHILLIPS.) It does not exceed 15? A. It does not exceed 15, anyway. Q. (By Vice-Chairman PHILLIPS.) A great deal has been said about the Standard Oil Company's methods of doing business. Were they ever able to, or did they ever ship refined oil any distance through pipe lines? A. They always claimed it could not be done; that it would injure the quality of the oil. Q. (By Vice-Chairman PHILLIPS.) What has been proved by this pipe line running through to New Jersey? A. It has been proved that it can be done and successfully done. Not only can you pump 110° fire test, which is export oil, but you can pump through this line right behind it, 150° fire test, and they are able to separate that oil at the end of the pipe line without making a change of more than a barrel. Within 20 and 30 feet the column of oil can be kept separate. Q. (By Vice-Chairman PHILLIPS.) Do you consider that a great im- provement over the Standard Oil Company's methods of handling oil? A. Certainly; very much. Q. (By Mr. KENNEDY.) Then the independents have some advantage over the Standard Oil Company in getting their product to the seaboard? A. In this connection; yes, sir. Q. (By Vice-Chairman PHILLIPS.) But does not the Standard refine a very large percentage of theirs at the seaboard after having it pumped through in the crude state? A. Yes, sir; I understand their export oil Is nearly all refined at the seaboard. *The witness probably meant the "United States Pipe Lines. tMr. Archbold in his testimony gave the exact rates that were charged the T'nited States Pipe Line Company by the Central Railroad of New Jersey on tlie crude and refined oil transported over that line from their terminal point at Hamp- ton Junction, N. J., to Bayonne, N. J., a distance of 52i^ miles, the witness stating that he considered it a lower freight rate than the Standard Oil Company ever had fur an equal distance at any time in the history of its business. Mr. Archbold fur- nished the following statement of the rates: (Distance, 52V2 miles; mileage ^ cents each way, equals 78 cents per car; empty car returned free. Weight per gallon crude oil, 6 2-3 pounds; refined oil, QV2 pounds.) Rate per Actual barrel of 50 weight per Rate per gallons. barrel of 50 Rate per Rate per car, less gallons. 100 pounds, car of 120 barrels. Crude 0.0692 S.'S mileage. Refined 0769 325 0.0208 $8.20 $7.42 .02366 9.22 8.44 JThere was a freight charge of about seven cents and a terminal charge about equal that amount, which was paid to the Columbia Oil Company. His reference shows that he omitted one of these charges. M. L. LOCKWOOD. 153 Q. (By Professor JENKS.) I understood you to say this morning that the independent refiners were supplying the refined oil in Germany at two cents a gallon? A. In the contest for that trade the producers sent ship- ments of oil to Germany at from two to two and an eighth and two and a half cents a gallon. One cargo of oil, I believe, was sent to Germany at one and nine-tenths cents a gallon. Q. That was for the purpose of starting the German trade? A. Well, it was, yes, sir; to get into the trade, to become a part of the trade. Q. They were selling the oil in Germany cheaper than they were selling it here? A. I think so, a great deal cheaper than it was sold to the American people generally. Q. I understood you to say that it was the independent oil producers who were chiefly instrumental in starting the idea of the interstate com- merce law? A. Yes, sir. Q. And also that since the interstate commerce law had been in force the Standard Oil Company in particular, and the railroads who were placed under restrictions upon their powers, had succeeded, in your judgment, largely in defeating the purpose of the law? A. Yes, sir. Q. And in that connection you used an expression like this: That the members of the Interstate Commerce Commission had been threatened? A. Yes, sir. Q. In what way have they been threatened? A. Well, that their power would be tested. I gave a reference there to the case. Q. You do not mean then that the members of the Interstate Commerce Commission have been personally threatened? A. Oh, no; they simply questioned their authority, and threatened to test their powers. Q. From the connection in which you used the expression, I was not certain, but thought you meant to say that the members of the commission had been personally threatened? A. Oh, no, sir. Q. You mean simply that the Standard Oil Company and the railroads had asserted that they thought they could defeat the law? A. Well, that the commission did not have the power to perform the duties provided for it under the law that created it. Q. And they proposed to test that question in the courts? A. In the courts, yes, sir. There was one case taken into the court by the commission. 11 years ago, you remember, the Cox case, and it has not yet been settled. Q. You made the statement also that the press had been subsidized by the Standard Oil Company. *We have had some little testimony before of that nature which tended to show specific cases of that kind. Have you yourself any positive information of the specific cases in which the Standard Oil Company has subsidized the newspaper press. A. Well, they bought the Oil City Derrick, and since the time they got it, brought Pat Boyle to run it, and he runs it in their interest. I don't know just what their arrangements are, but the paper is in the interest of the Standard Oil Company and it attacks the independent producers and their movements.! Q. (By Vice-Chairman PHILLIPS.) Has there ever been any action brought against that paper and its editors for libel? A. Why, yes. sir; I think Senator Lee sued them for libel; they published some very damaging statements and he brought suit against them. I think Senator Emery brought suit against them for what they said about him. Q. (By Vice-Chairman PHILLIPS.) Were these suits carried to a con- clusion; either or both of them? A. I am not clear about how these cases ended. My memory is that they were settled in some way. I don't know just how. Q. (By Professor JENKS.) Have you any other specific cases in mind besides this of the Oil City Derrick? A. Well, the Titusville papers — the ''Black faced type Indicates matter omitted, in the course of editing, from the official report. jMr. Boyle in his testimony given September 6, 1899, showed that he was pro- prietor of the Oil City Derrick and that since he had been connected with it the Standard Oil Company had never owned a share of its stock and he did not believe it had ever owned any interest In it. When Mr. Boyle was before the commission another attempt was made to dis- credit him as a witness in much the same manner as when Mr. Lockwood testified. 154 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Titusville Herald seemed to be under their thumbs, and now the Pittsburg papers have reached a point in which they take all of the oil information that they publish from the Standard Oil people. The Standard Oil people are publishing what they want in the reports; and in the daily papers *on the question of oil, they depend on the Standard Oil Company to furnish them what they want printed, as near as I understand it. Q. Your statement then means substantially this: That there are sev- eral papers in the section of the country in which you live, that make favor- able reports regularly in reference to the Standard Oil Company, and make unfavorable reports in reference to those that are opposed to it? A. More particularly the Oil City Derrick. Q. More particularly the Oil City Derrick? A. Yes, sir. Q. But you have no direct personal knowledge that the paper is owned by the Standard Oil Company. You make your assertions largely upon the nature of the material that is published by that paper? A. Yes, sir, and the knowledge that I have had through the public press of the transactions. Q. (By Vice-chairman PHILLIPS.) Has the Oil City Derrick been favorable or unfavorable to the independent movements generally? A. Oh, it is bitterly opposed to independent movements and attacks the credit and reputation of the men who are putting their energies to the case at all. Q. (By Vice-Chairman PHILLIPS.) You do not remember, then, the termination of the suit in Warren in regard to the libel case? A. I am not clear that it was pushed to a final hearing. *Q. (By Mr. KENNEDY.) Mr. Lockwood, you stated this morning that a certain gentleman in a certain State had been elevated to the Supreme bench by means of a corruption fund furnished by this corporation. That is a pretty serious and a very grave charge to make under oath, and I think the commission would like to have you at least specifically state some facts that will corroborate your testimony to that effect? A. The action of that judge in connection with that case was of such a character that it appalled every- body that knew about it. Q. (By Professor JENKS.) This was the Matthews case? A. Yes, sir; and the fact that he received the nomination for the Court of Appeals, and of course in those times this corruption fund was a large part of the cam- paign in which the corporations were interested and that was the basis upon which I made the statement. Q. You do not know anything further about it then? A. Not further than just what I have stated. Mr. FARQUHAR. I hope that Mr. Lockwood's statements regarding Judge Haight will be taken out of the minutes of this commission — every word that he has said against Judge Haight. I do not think it is proper that this commission should adopt them. It amounts, in my mind, to an assassi- nation of character that is not permissible before a body of this kind. I know more of the Matthews case than Mr. Lockwood does, and I am a friend of Mr. Matthews, and this is the first time I have ever heard called into question the honesty of Albert Haight, as a jurist or a man. No jurist who was ever in the State of New York stands as high as Albert Haight in the National Bar Association and the State Bar Association, of New York. 1 defy any man to say one word against his character from the first day he came as judge of the county court of Erie county until the present time, when he is on the bench of the Court of Appeals. I have known him as a young man, known him through his whole judicial career. He has been my nearest neighbor almost for life. I have known him in the church and in public assemblies. I have met him almost every day of his life for 20 or 25 years, and the highest honors have been given Mr. Haight. In New York he ran very far ahead of any political ticket that was put up. I have been pt conventions that nominated him, and I have never known of a single man belonging to a corporation that had anything to do with nominating Albert Haight for one office. I do not want this as a matter of record. I simply make the request, and submit it to Mr. Lockwood now to have the whole of that scored out of his testimony, and I believe that if Mr. C. B. Matthews were here he ♦Black faced type inrticatos matter omittpcl, in the coiir.se of editing, from the official report. M. L. LOCKWOOD. 155 ♦would make the same request. I do not believe any man, under a solemn oath, as is Mr. Lockwood here before this body, should be permitted to impugn the character of a great judge of the Court of Appeals without a protest, and it should not go on the records of this commission in any shape whatever, and at the proper time I shall make a request to have it scored from the minutes. Mr. KENNEDY. I take it that what Mr. Lockwood says about Judge Haight has no weight at all. He simply gives it as a matter of his belief; he does not know anything about it. Mr. FARQUHAR. He speaks of corruption funds and everything of that kind. Mr. RATCHFORD. I beg to rise to a point of order, Mr. Chairman. We are not here trying the character of any man. Mr. FARQUHAR. That is what I think. Mr. RATCHFORD. I do not know anything in relation to this matter, but this has nothing to do Mr. FORQUHAR. I hope that this commission will not take cognizance of it and I hope it will be taken out of the minutes entirely. It is not testi- mony. Mr. RATCHFORD. I do not know the man; I do not care anything about it. Mr. KENNEDY. Mr. Chairman, the gentleman made the statement this morning that this thing had been done, and he made it under oath. I thought it was very proper to ask whether he could give any facts that would sub- stantiate his statement. I thought that was the proper question to ask, and he says he cannot. Mr. RATCHFORD. The gentleman has answered the question. The WITNESS. Only the evidence of the case which is on record. Vice-Chairman PHILLIPS. I would state, according to the f:rm of the oath that is taken here, that a man has a right to give — (I will just read it) — (Reading.) "And all other facts stated on information and belief, you be- lieve to be true." Now, the chair would rule this: That Mr. Lockwood's testimony was entirely competent in regard to the trial of that case and the decision of the court in regard to it, and he would not have the right to state positively — and he says now he did not — that he was elected by a corruption fund, but he inferred that. I would suggest that it might be well, as Major Farquhar's statement has gone in, that it is only a matter of opinion and belief in regard to his being elected, and as Major Farquhar makes this request, that the part relating to his election might be eliminated from the testimony. Mr. KENNEDY. I think, Mr. Chairman, if the reporter's notes were to be appealed to it would be found that Mr. Lockwood made that statement in regard to that judge without any qualification whatever. Mr. FARQUHAR. Of course it was a pure libel. The WITNESS. Now I would like to ask Mr. Farquhar Mr. FARQUHAR. I hope this will not be discussed any further. Mr. RATCHFORD. We have questions on more important things than that. Vice-Chairman PHILLIPS. The chair has tried to make a clear state- ment in regard to what the chair would believe to be competent; and as he has stated that this has simply been rumor or his opinion, I think it would be well for Mr. Lockwood, if he does not yet make the positive statement, to now withdraw that statement, because he has no personal knowledge and a man has a right to do that in his testimony. The WITNESS. The issue, as I understand it, from the information that I have, was made against Judge Haight in that campaign for the Court of Appeals; and Judge Haight ran behind the ticket on that issue. Am I not correct? Vice-Chairman PHILLIPS. Well, you do not state this as your own knowledge and belief. If you stated that he was elected in that way it is not of your own knowledge; you think that or believe that from circumstances. A. Yes, sir; I believe it. *Black faced type indicates matter omitted, in the course of editing, from tiie official report. 156 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Vice-Chairman PHILLIPS. You are not willing here to testify that he was elected by a corruption fund positively? A. No, I don't say a corruption fund, but from what I know of the campaign I am satisfied there was a lot of money used. Mr. A. L. HARRIS. Of course I do not want to discuss this proposition, but it goes a little bit further than the question as regards this particular judge. We live under a republican form of government; we nominate and elect our representatives not only to make the law, but to execute the law, and this kind of thing insinuates that the whole machinery can be corrupted. Any time that a proposition can be proved it is all right, but if an insinuation is to be made about candidates without the possibility of proving it, it has the effect of course of weakening the faith of the common man in this repub- lican form of government; and I think all of that line should go out of the testimony. Representative BELL. I want to raise a point of order. I want to know whether it is the business of this commission to sit here for the purpose of criticising a witness, and telling him what he shall state and what he shall not; whether a man is here for the purpose of protecting his friends or whether we call witnesses here for the purpose of telling the facts, let the facts hit where they will. Mr. FARQUHAR. Facts are all right. Representative BELL. Yes, and I notice in one direction that some people get very sensitive. Now, I will venture that here is a man that knows what he is talking about; here is a man that has investigated subjects that probably not two or three men on this commission know anything about. He is a pioneer in thought; there is no trouble to tell that, and I want to say to you that you can go to the best authority to-day in the land and you will find these things put on record. I will cite to you a Republican Governor of the State of Iowa, Mr. Larrabee, who has v/ritten a valuable work on rail- roads, and I know my friend has read it. I can tell from his testimony that he has. Mr. Larrabee, as a Republican Governor, fixed the railroad problem in the State of Iowa, and but for such a Governor it would not have been fixed to-day. Mr. Larrabee, in that book, that is in almost every library in the world, says that the judges were not only put into office, but he tells you how they did it. He points out to you that there are two judges on the Supreme bench to-day that were put there by the railroad interests of the United States for the purpose of repealing what was known as the Granger law, and the moment that those two judges got on the bench of this govern- ment they went so far out of their way that when they got to a bar associa- tion or some place where they had to respond to a toast, that they got so far from the subject that they got entirely outside of the record and ran off ad- vocating that you be easier with railroads, and that you do this and that and the other. He tells you clearly that they went to a district judge of that district, or a circuit judge, and they did not say: "We will buy you out," but they said: "Wouldn't you like to practice law again." There was a judge that was impartial as between the people and the great railroad that Mr. Larrabee was fighting. Oh, he said, he did not know; there were some things about the judicial business that he liked. They said: "We would like to find a man — we want to find a man to keep us out of litigation; we would like to employ such a man and therefore we would like to employ you for 10 years; we will give you $15,000 a year if you will step out and represent this railroad company." It was perfectly legitimate with the judge; he was not purchased; he didn't see the point, but the moment he went out of office there dropped into his place a man whose every sympathy and every fibre was with the railroad company. He not only does that, but he gives the facts. He cites the speeches to the very toasts that were made by some men that are occupying the bench of the United States to-day; and he shows you where they get the railroad statistics of eleven billions of dollars invested, and how they had said how tenderly we should care for them, when it had no application to the subject that they were treating. ♦Black faced type Indicates matter omitted, in the course of editing, from the offlclal report. M. L. LOCKWOOD. 157 *Now this question of railroads is the biggest question in civilization to- day. The question of honesty in the offices is just as great, and this gentle- man told the truth, that is verified by history, when he said the most diffi- cult place on earth for the common people to get a hearing is in the highest offices of the land. Now, then, mind. I do not say they are dishonest. I say that men are picked up who are in sympathy with the railroad problems, or w;th bank problems, or with problems of that kind, and they are put in office with the idea that they will remain in sympathy during their terms of office. Now I want to say that Congress provided a short time ago a committee to investigate a problem. What was it? The problem of the excessive cost of carrying the mails in the United States. One of the leading Republican members of that committee told me himself that it had proved futile. He said that the Second Assistant Postmaster-General, in the Postoffice Depart- ment of this government, seemed to be in the hands of the railroad. I saw it read, and it is a part of the Congressional records of this government that the Second Assistant Postmaster-General of this government, eight years ago, was taken from a place of superintendent of one of the greatest railroads in Ohio; that the Second Assistant four years subsequently was a traffic manager in the State of New Jersey, and these men make the contracts with the railroads. I ask you to go to either end of the Capitol and see who is at the head of the Postoffice Committee of the Senate and who of the House. Then investigate their connection with railroads. I want to say to you that it is very pertinent for this gentleman to give his opinion of men, whether they are in the judiciary, in Congress, in the Senate, or anywhere else, if they abuse the rights of American citizens. Men are not sacred because of the place they occupy in this land. That is not the test of humanity. Men are sacred because they are flesh and blood and reasonable creatures, and the man who works on the street and does his duty as a bootblack, in my estimation, is just as good as the man that sits on the bench of the Court of Appeals of the State of New York. And if he does not perform his duty, if he got there in devious ways, it is not our business to throw it aside, neither is it our business to come here and produce a witness, and then say you shall strike out his testimony if it doesn't suit me or if it doesn't suit you. Now, you would get on my toes pretty fine if I were considering these as political questions. This was supposed to be a non-partisan body; I am considering it so; but I notice that when we strike a new ques- tion, or when we strike a question that affects one man politi- cally, v.e are liable to get a little sensitive; but I say that if we are going to make any discrimination with this witness because a man may be known by one member of this commission, or because he may belong to my party or yours, let us call this a partisan commission, and let us go Into this and have men swear to what we want them to swear to, and not to the facts that they propose to produce before this commission. Now, v.e want to find the facts. This man can teach us all. Men think that these statements are wild, that they are ravings. I want to say that there is a man who has gone into these subjects; there is a man who has read the books. There is a book that lies before him. Wealth vs. The Com- monwealth. It is a mass of material; it is a mass of the record of crime; it is a mass of stuff and pretty nearly all of it is in quotation marks. It is taken from your Congressional investigations, your Legislative investigations, or some court proceedings; and it shows, just as this man says, that in Cleve- land, 11 men — or 13 men, I believe it was — formed a company to go into the oil business. No one of them had a pound of oil or an oil well; but it was a combination of railroads and not an oil combination. They put the rates so that they not only shut off competition, but they squeezed the value out of every man's oil claim in the oil regions, knocked it down to 40 or 50 cents on the dollar; and I say this has been done in every coal field in the United States, and as he says, these things have been going on, and it is impossible for a man to — rk his mine, whether it ^e coal or oil, or anything else. Now, *Black faced type indicates matter omitted, In the coiupe of editing-, from the official report. 158 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *he simply means that they have controlled the offices and that he is con- vinced of that. He believes from certain things that have happened, that a certain member of the judiciary was elevated; he has a right to that opinion, and he has a right to express it here. We have no right to reflect on him by criticising and telling him what he shall state before this commission. I am willing to say that we will come in now and we will revise our rule, and we will say that a man shall state so and so, and we will circumscribe it within this oath, and then we will try them all that way. Now, I want to see this man treated as other witnesses. I think he is a man and a student; he is one of those men that has been tried in the fire. That is what is the matter with him. He has had the experience, he has gone through the flames, and he has come out like a man that I have often quoted here, like Mr. , the manager of the great western railroad, who went before the committee down here. When the opposing counsel referred to the people of Kansas as anarchists, he said, "I will tell you what made them anarchists; you charged them twice as much to carry their grain from their homes to the Missouri river, 400 miles, as you charged the elevator company to carry the same grain 1,200 miles." He said, that is what makes them anarchists. That is what made them in that country, and that is what makes this man's conviction, and that is what makes my conviction, for I have seen these things. I am in a country where we are in a developing state. I have seen rail- roads come up here where there was a struggling town, and turn right around and go within a quarter of mile of it, or two miles above and start a to'"-, and never run down there at all. I have seen them fix a rate which wr'ld be less to the further town than to the nearer one that was in the hub of the wheel, as it were, and destroy it. I have seen them shut down an individual's coal mine, covering over 50.000 acres of coal land. Whenever it got to a point even v/here they would make the freight rate so high and we would attempt to ship a little coal, they would furnish us no cars. They would say: "We have no cars and therefore we cannot ship it." I say, this man has gone along that line, and he has answered those questions. I have seen them in Congress under an investigation in a Senate committee. I want to say to you that Mr. Huntington stated openly that in the State of New York every time the Legislature met one of the great rail- roads there made an appropriation of $250,000. Are we not to go into these questions? He stated that his company had paid over a million dollars for legislation and for Congressional aid. Are we not to go into these questions. We showed by the Second Assistant Post- master-General of this government, that they had been taking for the Second Assistant Postmaster-General's position for the eight years, and prior to that time a high officer of the railroad company, who had to make all the contracts of the government for carrying the mail. He showed there that we paid more annually for rent alone of postal cars than every postal car in the land cost; in the United States that we paid more rent per annum than it would cost to build them, and that we paid eight cents a pound in addition to that for carrying the freight, and the average haul was 448 miles in the United States, and the cost of carrying the letters across the continent was about $60 a ton. All these things have been shown to the Congressional Commit- tee. We are not so particular down there. Why should we be here? Now, I am in earnest about this, because I am in sympathy with this man. I know his doctrine; I know what books he has read, and I know where they are from, and I want to say that if what he says treads on my toes, or the toes of my political party, I want to see every man have an oppor- tunity before this commission — and if it gets out of the record — if we are going to apply it to one let us apply it to all. Let us not listen to a man who will tickle our fancy because he flatters our particular theories, and then when he gets on to a theory of somebody that is maybe a little in advance of you, stop him. It is not the great majority power in men that are always right; there has always been a little minority right in every great advance in the world. •Black faced type indicates matter omittrd, in the course of editing, from the official report. M. L. LOCKWOOD. 159 *There were just a few pioneers who blazed the way. Here is one of them; a pioneer in thought; a pioneer in action, and, God bless them, we owe to them all that is sacred to humanity to-day — the civilization we have. Now, I want to see him treated just as other men, and I don't want to see anybody get up here and tell a witness: "You can't state this, or you can't state tiiat, or you can't state the other; let us strike it out." If you do, I want to say that I propose that when we make our report, to say that this is not a non-partisan commission; that men were not permitted to state facts or give opinions, but they had to correspond with the majority of this com- mission. Now, the commission, I know, is a little off when it thinks about telling a man to give this data, or the other, when it is given under oath. If you want to establish rules, all right, but I think that man is right. I believe with old Larrabee and these other men that say that these things are the truth; it is the absolute truth and you cannot deny it. Now, there is no use in being so particular about these things. If these things are not competent, let us bind ourselves by some rule. But let us not get up and invite a witness before us, and then jump up and tell him that he must take this back and that back and that you must swear what we want you to, and not what is your real conviction. Mr. KENNEDY. I desire to make a few remarks just here: This is a very simple matter. Mr. Lockwood stated under oath, without any qualifica- tion, and the notes will show it as I stated before, that the judge in a certain State was elected by corrupt means — by this corruption to which he refers. Now, this commission should know whether Mr. Lockwood is stating that as a matter which he can prove — which he can substantiate — and when he was asked further he says that he cannot do it. He changes the form of his tes- timony and says that it is a matter of belief. Now, that is all right; let it go that way. Judge Bell is a man who has been on the bench. I appeal to him and ask him whether he would not, as a judge, when testimony is not substan- tiated, ask the witness a question which would lead up to substantating these things which he says are facts. Representative BELL. That is perfectly right. The WITNESS. I want to say to this commission Mr. FARQUHAR. Just one minute. There were some remarks that Judge Bell made, that I said I hoped the witness would make the change. I did not demand that the witness should make the change; I know my duty better as a legislator and as a member of this commission. I hope that there will be, and I think that there will be the same view taken that I do about it. Now, that matter of the implied argument, the argument that Judge Bell has made about what I said there, is entirely out of place. No one in this com- mission would ever demand of a witness to strike out his testimony. We could not do that; it is not in the perview of this commission, anyway, nor I would not ask it — I would be the last one, because there are kindly personal relations now, and have been, between the witness and myself. What I said about Judge Haight was in a general manly way, I think, and I want to say there are no closer friends in Buffalo than Charles T. Matthews and myself. We have been in a good many reform movements together; we have been close personal friends, and I am sure if Mr. Matthews were here, he would not hesitate a moment to do Judge Haight justice, and I believe Mr. Lock- wood knows about Mr. Haight right here at this time. The WITNESS. I desire to state, Mr. Chairman, that Judge Haight and I attended the same school together when we were school boys. Mr. FARQUHAR. That is right. The WITNESS. He was a man I always admired and I had the highest regard for him. I have earnestly studied this Matthews case, the evidence that was taken in that case, and the remarks that were made upon that sub- ject were well considered, and I made that statement because I believed I owed that to this commission and to the American people. The evidence I gave is from a study of this question which convinced me that the statement I made was correct. ♦Black faced type indicates matter o : iMed, in the course of editing, from, the official report. 160 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Q. (By Representative BELL.) May I ask you a question? Did you ever read Larrabee on railroads? A. Yes, sir; I did a long time ago. Q. Do you know who Larrabee is? A. I know he was Governor of Iowa. Q. A Republican Governor? A. Yes, sir. Q. And Governor at the time the railroad went through? A. Yes, sir. Mr. RATCHFORD. I rise to a point of order. Vice-chairman PHILLIPS. Please state your point, sir. Mr. RATCHFORD. If Judge Bell will excuse me, Mr. Chairman and gentlemen of the commission, I must renew my point of order. My point of order is: First, that this is not a commission to try Republicans or Demo- crats, or anybody else; second, that if we are going to investigate into the character of any man, if we are going to inquire into his integrity, if we are going to charge crime against any man in authority, we ought to have the witnesses here, we ought to have the man himself here and give him a chance; that is my point of order, and I insist upon the ruling of the chair. Vice-Chairman PHILLIPS. Has any gentleman any further remarks to make on the point of order that the gentleman has raised? Senator MALLORY. I do not understand what the point of order is. The point of order has been stated by Mr. Ratchford here, in his terms, but I do not see where the application of the general rule which is invoked, comes in. To what inquiry or language does he refer? Mr. KENNEDY. This gentleman comes in, and says that this man was elevated to the bench by the means of a corruption fund, and I asked him if that was a matter of belief, or if he could give any facts to substantiate it, and then he changed his form of answer, and then this controversy sprang up. Senator MALLORY. It strikes me that it is impossible for us to under- take to restrain the witness as to any particular statement. If a witness goes out of his way and makes a statement which cannot be substantiated on cross- examination, inquiry directed that way will reveal that fact. I was present this morning, and I came very near interrupting Mr. Lockwood when he made the statement, and asking him if he was testifying to his own knowledge on that particular case, or if it was mere rumor or report, because it was a serious charge to make against a man sitting on the highest bench of the State, but at the same time I preferred to wait until he finished his testimony, and then on cross-examination to ask him where his information came from. I do not think it would do for this commission to adopt a remark of that kind, because we are endeavoring to avoid any partisanship in this investigation, and that therefore a witness should be inquired of but not told what we want him to say. In other words, I think as long as the witness' testimony is not scandalous and is not of such a character as to be unfit to be heard, that he ought to be allowed the largest latitude possible. Then, as in a court of jus- tice, if he makes a statement that he cannot sustain, that may be discolsed on cross-examination by asking him ftr the source of information. Mr. KENNEDY. What you propose to do is just exactly what I did. Mr. RATCHFORD. In defence of the position I have taken in rising to a point of order on this question, I want to say to the Senator that Mr. Ken- nedy on cross-examination has brought out the very thing that he intended to bring out with reference to the explanation that was made by the witness this morning. Evidently on a question of fact. On cross-examination the witness modified that statement, I believe, and properly so. He has done that, and why not pass on? Let that man who is in New York, who does not know that he is being arraigned before this com- mission, rest. We are here, Mr. Chairman, to consider issues, if you please; to consider industrial conditions; to consider social conditions; and not to consider polit- ical questions or political corruption. I ask for a ruling on my point of order. Vice-Chairman PHILLIPS. The chair would state, in regard to the wit- ness' testimony, that it is entirely competent for him to state an act, and after that statement goes before this commission, he can be examined as to it. But he surely can state what he has reason to believe from personal knowl- edge of the judges, from the history of that case, and the testimony given. ♦Black faced type indicates matter omitted, In the course of editing, from tlio official report. M. L. LOCKWOOD. 161 *lf he was promoted thereby, and from his knowledge of the surroundings, he believed there were corrupt practices used in his promotion, he has a right to state it. Mr. FARQUHAR. That is true; but Judge Haight was elected, Mr. Chairman, not promoted. Vice-Chairman PHILLIPS. He has stated that and he has now amended his statement by saying that he did not know of his own personal knowledge that corrupt methods were used, but from the circumstances he believed them to have been used, so there is nothing further to rule as to its compe- tency — regarding its competency or its accuracy, and the chair would so rule. Q. (By Representative BELL.) You say you have read that book?t A. Yes, sir. Q. What would you say as to the merits of it? A. Well, I think it is a full exposition of this railroad question, as it has grown up in this country. Q. Doesn't he develop the fact that the tendency then, as early as 1876, was prevalent in the United States? The WITNESS. That is the tendency of the roads to manipulate political parties? Representative BELL. Yes, sir. The WITNESS. Yes, sir. Q. And fill judicial positions with their sympathizers? A. Yes, sir. Q. Now, sir; you speak of the Standard Oil Company building up their trust through railroad discrimination. Was there any other reason at that time for building the trust, or that would enable them to build the trust, other than railroad discrimination? A. I don't think so in any respect. The men who were refining oil in the oil regions were men of ability and business capacity, as I understand, equal, don't you know, to the business capacity of the Standard Oil Company people, with the exception that the Standard Oil Company people recognized that it was a question of advantageous freight rates, instead of a question of superior goods; that superior goods could not go over these railways unless the railways would let them. Q. Well, they raised the price on crude oil from about 40 to 80 cents a barrel, and then if the independents shipped a barrel of oil at all, they took 40 cents of it, and handed it over to the Southern Improvement Company? A. Yes, sir. Q. Forty to $1.10; that was the contract? A. Yes, sir. Q. And that had the effect of not only destroying competitors, but did it not destroy the value of all independent oil wells to the owners? A. Very much. Q. And the market value of them? A. Very much. Q. And froze them out of business? A. In a great many cases. Q. Now. have you given any study to the coal fields of the United States? A. No, I have not, only in a general way. Q. Well, don't you know that it is a fact that the railroads of the United States refused to allow any private individuals to operate coal fields? A. Yes, sir; I know that to be the case in Allegheny county. Q. That they there have an independent coal company that is a wheel within a wheel, usually gotten up by the railroad stockholders. A. Yes, sir; and that company is the only company that can exclusively ship coal over that special railroad. Q. If they give you the rate here, did you ever have any trouble in the country in getting cars? A. Why in those early days, and clear down during the time of the independent refiners' struggle within the last 10 years, that was one of the principal ways in which the railways discriminated in favor of the Standard Oil Company by refusing to give men who had oil the cars to ship it in. For instance, if a man needed 20 or 30 cars, likely enough, two or three days after he expected them, one or two cars would come, and he would not be able to get his oil into the market at the time he expected. Q. Speaking of private ownership, have you seen in your experience, any- thing in the way of discrimination against towns? Did anything of that kind •Black faced type Indicates matter omitted. In the course of editing, from the official report. tLarrabee's work. 11 162 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. come under your observation? A. Well, not personally, but in the investiga- tion of this question I have found that towns are built by railways and towns are practically destroyed by railways, as far as they are commercially and industrially concerned. Q. Isn't it the tendency of all private ownership to make commercial centers, great centers like Chicago? A. Yes, sir; and New York. Q. Now, what, in your judgment, would be the effect of the government ownership or the government control that would require all railroads to carry freight for one man at the same price they carried it for all others? A. I think it would be especially beneficial; it would give individual enterprise an opportunity to develop itself, men would have the courage to enter into business enterprises that they do not dare to enter under the present system. Q. And as I understand you, the reason they have hesitated about build- ing up enterprises in your part of the country is for fear of these discrimina- tions? A. Yes, sir. Q. In favor of some strong company, or against the men that are starting these new enterprises. A. Yes, sir. Q. Therefore, it keeps back development? A. Yes, sir; the great over- shadowing fear that men have in the oil country in starting into an enter- prise to compete for the oil trade, the refined business, is the fear that the railroad will discriminate against them and shut them out of the market; that is the thing. If there was a guarantee that everybody would be equally treated over the railways, the men of the oil region have the courage, the ability and the resources to go in and do this business. Q. Now, what experience have your people had between the original farmer marketing his product and the elevator companies hauling the same product from the West? A. Well, we don't have any elevator companies in our section. Q. Not in your section; but there are elevator companies in Chicago? A. Yes, sir; yes, sir. Q. How does the freight rate from Chicago to New York correspond with your freight rate from Pennsylvania to New York? A. Well, from the information I have gathered on investigating that subject, that rate from Chicago to New York is sometimes much less than it is from Pittsburg to New York. Q. That is with these big companies? A. Yes, sir. Q. The rate given to the elevator companies or the beef companies? A. Yes, sir. Q. So that they really can market their grain in New York for less than can the individual farmer from Pennsylvania? A. Yes, sir; I believe that. Q. Isn't that the general principle that is now established as between the Beef Combine, the Elevator Combine, and all like combines? A. I think it is. Q. (By Mr. RATCHFORD.) I understood the witness to say this morn- ing that the South Improvement Company made a contract with the railroad company in 1878? A. Yes, sir, 1872. Q. 1878, I thought you said; 1872 is it? A. Yes, sir. Q. To transport their product at certain prices, I presume, wasn't it? A. Yes, sir; that is, certain prices; they raised the prices. Q. Would you care to state those prices. A. I could not state those prices without reference to the testimony in those cases. Q. (By Vice-Chairman PHILLIPS.) You have referred to where that testimony can be found? A. I have referred to that sworn testimony. Q. (By Mr. RATCHFORD.) Can you state who composed this South Improvement Company? Was it composed of what are now known as inde- pendent producers? A. No; the South Improvement Company was composed of 13 men, and 10 of these men afterwards were the prime movers in the Standard Oil Company combine. Q. Well, it appears that the contract which you refer to was not carried out on the part of the railroad company? A. No, that is true; it was not carried out. That contract was so abhorrent to every idea of American right, that the men in the oil region went into revolt; they would not stand it, and it created such an excitement that the Legislature took up the question and repealed the charter of the South Improvement Company. M. L. LOCKWOOD. 163 Q. And the producers brought action against the raih-oad company, did they? A. At that time there was a settlement of this difficulty in which the producers, or a committee of the producers, entered into a contract with the railway companies that henceforth there should be no discrimination for or against anybody — that everybody was to have equal rights. I give a refer- ence to that contract; it is in the record. Q. Is the South Improvement Company still in existence? A. The char- ter of the South Improvement Company was repealed by the Pennsylvania Legislature in 1872, and the company, of course, went out of existence; but as you well know, by a reference to my statement, everything that the railway companies had contracted to do publicly for the South Improvement Com- pany they have since secretly and persistently done for the benefit of the Standard Oil Company. *Q. That being the case, then, would you care to state, in your opinion, as to what the difference is from a consumer's standpoint as to whether the South Improvement Company was favored by railroads, or the Standard Oil Company favored by the railroads? A. Why, the result would be the same. Q. The result would be the same? A. Yes, sir; the South Improvement Company, if they had been allowed to go on, would have created a monopoly and controlled the oil business just exactly as the Standard Oil Company, enjoying the same advantages which the railroad companies had contracted to give to the South Improvement Company, were afterwards enabled to do. Q. Now, referring, Mr. Lockwood, to the case of Mr. Rice in Marietta, against the Standard Oil Company, I understood you to say that the railroad company increased their rates on Mr. Rice's product, charging him an exorb- itant price. A. Yes, sir. Q. And in doing so, they paid a certain percentage of the amount received from Mr. Rice to the Standard Oil Company. Is that right? A. Yes, sir; that is right. Q. Well, then? A. Now, wait; let me answer that a little further. While Mr. Rice's refinery was at Marietta he got his crude oil to put into his refinery from the Macksburg field, something like 70 or SO miles, by the Marietta & Lake Road — the road that runs up toward the lake there. Rice had a little pipe line and a car, and he obtained a rate, I think, of 15 cents a barrel over the railroad for his car, running it back and forth. Rice was extending his business, and the Standard Oil Company got after that railroad, you know, in regard to this man. Dan O'Day. the manager — you know what I said about him — this road with a good many others went into the hands of a receiver — and he went to this receiver, and threatened them that unless they would carry his Standard oil, I think, for 10 cents a barrel, and charge Rice ■3:5 cents a barrel — I am not quite sure as to this particular price, but I can fix that — that they would lay a pipe line to their refinery at Marietta. The evidence shows that the receiver made that arrangement with them, and they paid out of the 35 cents that Rice paid them back, 25 cents to the Standard Oil Company. That is in evidence; it is on record; it can all be seen. Q. Now, Mr. Lockwood, do you believe that that was the result of a demand on the part of the Standard Oil Company from the railroad? A. Yes, sir. Q. Well, carrying that question out a little further. You have stated. I believe, in that connection that the railroad company finally refused to ship Mr. Rice's oil at any price? A. Yes, sir; that was afterwards. Rice extended his pipe line down to the Muskegon river, I think, or some little river that runs in there at Marietta, and got some flat boats after this refusal to give Rice any rate at all in his attempt to get his oil into the Southern market. Q. Do you believe that it was also the result of the influence of the Oil Company? A. I have no doubt of it in the world, not the least. Q. Now, the question I would like to have you answer is this: If the Standard Oil Company found it advantageous to get a certain percentage from the Railroad Company of the money paid to them by Mr. Rice for his shipment, how could it be advantageous for the same oil company to cause the railroad to give Mr. Rice no transportation? A. The profits of this *Black faced type indicates matter omitted, in the course of editing, from the official report. HM REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. monopoly have been enormous. The $500,000,000 which it is said they have accumulated, is an immense amount of wealth, and they have gotten this wealth by working these railroads to destroy all competitors, so that they can force the consumer to pay a large price for their oil. Q. But Mr. Lockwood A. The 25-cent rebate which they got on Rice's oil was only a drop in the bucket upon the price that they could obtain if they could shut Rice out of the market and sell their oil in Rice's place. Q. Your answer is directly, I take it, that that company obtained the best conditions they could at the time — at a certain time — and when they made these conditions, they did the best they could. Is that it? The WITNESS. The Standard people? Mr. RATCHFORD. Yes, sir. The WITNESS. Yes, sir; they are always looking out for the Standard. Q. (By Mr. KENNEDY.) Mr. Lockwood, can you state approximately what per cent of the refined oil of this country is turned out by the independ- ent companies? A. We calculate that they are handling about 4 per cent. Q. Only 4 per cent.? A. Only 4 per cent.; you know this is Hn immense btisiiiGss, Q. (By Vice-chairman PHILLIPS.) That is including the Ohio oil? A. Including the Ohio oil and the Pennsylvania oil and all these different grades of oil. Q. (By Mr. KENNEDY.) Can you state what per cent, of the oil that you refine is sent into the German market? A. I am one of the managers of that enterprise, and I know that the larger percentage of the oil is exported. Q. Well, I gather from your testimony that the business you do in this country is done at a loss, but the companies are enabled to live and make a profit by the advantages they have in the German market? A. Yes, sir; yes. sir; yes, sir. Q. Is that so? A. Yes, sir. The independent producers and refiners went into the New York City market to supply the consumers and the Stand- ard Oil Company immediately brought the price down there, and held it down, so that there is no profit. I guess I am not revealing any of the secrets when 1 say that the independents have lost money continuously in New York and Philadelphia in their attempt to supply those towns with oil. but the profits that they make in their export business, in their trade with Germany, in which they have an equal show all around, is sufficient to make up these losses and still show quite a favorable earning upon the amount of capital invested. Q. (By Vice-chairman PHILLIPS.) I would like to ask Mr. Lockwood one quesLion. How did the Standard Oil Company meet the competition at different points in the country in the distribution of refined oil? Have you any specific knowledge of discrimination against the independent producers at any particular point or points? A. When the independent producers come into a district they bring the price of oil down to try to make them lose money. Another way in which the Standard Oil Company people — I always call it by that name because it is such a hydra-headed concern — does this business, is to intimidate merchants to prevent them from using or selling anybody's else oil except their own. Of course, I have read of a good many instances of that kind, but I have in mind a special incident: In 1888, I think it was, I was in the Pan Handle of Texas. I bought some land down there from a gentleman by the name of White — W. W. White. He was quite a prominent merchant. He had quite a large store, and he fitted out these trains that went over the prairies, you know — three or four wagons, or five or six teams. While I was there he told me his experience in the oil business. He had been buying his oil from the Standard Oil Company people, and finally one day a man came along with some specimens of oil that were very much finer than any he had been able to get, and the price being satis- factory he purchased a carload of oil from this man. It ran along for two or three weeks, and finally this car of oil arrived and the next morning the Standard oil representative from Fort Worth (this was at Wichita Falls) appeared on the scene and challenged Mr. White's right, don't you know, to buy anybody's else oil except theirs and said they would not stand it — they would not have it — and he finally threatened to establish a store and run White out of business if he insisted on selling any other oil except theirs. M. L. LOCKWOOD. 165 White was a conservative, close-fisted fellow, and of course the prospect of having to lose his business was sufficient, so that ultimately it was settled and agreed that Mr. White could sell this car of oil if he would agree not to buy any more of this oil, but to buy his oil from that trust. I guess that is all I have to say on that. Q. (By Vice-chairman PHILLIPS.) Mr. Lockwood, the Standard Oil Company have become quite large producers of oil, have they not? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) They own a very large per cent, of the Ohio oil field? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) What is called the Lima oil, do they not? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) Well, did they purchase that after having a long depression in the Lima oil, after the price had fallen, didn't you say, 10, 15 or 20 cents — somewhere around there? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) When they entered that field, and purchased a large body of it, wasn't it very cheap, and did they fix the price? A. Let me state that: I remember that development very well. When the first oil was struck in Ohio, the independent people were interested in this oil, went out and found a market for it for fuel and manufacturing purposes, and they were unable to get over 40 to 50 cents for this oil at the wells. That is all it would net them after they had paid the expenses of delivering it. Finally, the Standard Oil Company reached out after this good development, and by the manipulation of the railways they interfered with the independ- ents and got control, and pulled that oil down to 15 cents a barrel — 15 cents a barrel — and they held that oil down to 15 cents a barrel in Ohio until they broke the hearts of the producers, and bought nearly the entire country up on that basis. I don't know anything further. Q. (By Vice-chairman PHILLIPS.) Well, they fix the price of oil now absolutely, do they or not, by telegraph? *A. Oh, that is it. Q. (By Vice-Chairman PHILLIPS.) Is it, or not, fixed by the exchange, or is it fixed absolutely by the Standard Oil Company? A. I couldn't just give the date, but it is on record, when Joseph Seep, the purchasing agent, gave notice that thereafter, quite a number of years ago, the price of oil upon the exchange would not be the price that they would pay for oil — that they would fix the oil price for credit balances. That is, on what the producers had and wanted to sell, they would make the market; and from that time since they have fixed this price. Often there has been quite a wide range of difference between what the price of oil would be upon the floor of the exchange and what the Standard Oil Company would fix as the price for credit balances. Q. (By Vice-Chairman PHILLIPS.) Now, Mr. Lockwood, you have spoken about the reduction of the price of oil in Ohio. Have the Standard Oil Company not bought a large amount of producing property in the Penn- sylvania and Virginia fields, and when they made those purchases was not oil at an extremely low price, as a rule. A. I think their policy has been to depress the price of oil and discourage men who had oil property, and who were discouraged with it. until this discouragement would reach a point at which they could go to these men and buy their property. They bought a very large amount of property just before the great rise which occurred after they had bought all the property they could. Q. (By Vice-chairman PHILLIPS.) Was that along about 1896 or 1897? A. Yes, sir; 1896 or 1897,t after they had bought all the property they could, the market went up very high; as high, I think, as $2.60, and had quite a high range of values for quite a long period. Evidently they had in mind the idea of depressing these prices and obtaining this property, but the law of supply and demand will ultimately make itself felt. For instance, the low price at which they had maintained the oil had impoverished producers and stopped their development; and finally, as a result of that long depres- sion, stocks ran down in the storage tanks to between four and five millions ♦Black faced type Indicates matter omitted, in the course of editing-, from the offlcial report. tThls high range of prices occurred April 17, 1895. 166 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. of barrels. Then this movement, in which they fixed a very extreme ficti- tious price, was for the purpose of getting everybody excited and getting all the producers out in the field to develop new territory and increase the sup- ply of oil. Q. (By Vice-chairman PHILLIPS.) But did not that great advance, when the purchase of that territory was made, aid them in paying for it? Did they not advance the price of refined oil? A. Yes. sir; very largely. I cannot give you the figures, but I have them here. I can give the commis- sion the benefit of those figures. Q. (By Vice-chairman PHILLIPS.) Do you think, then, that they as- sessed the world to pay for this property, or not? A. Yes, sir; two or three times over — or forty times over. Q. (By Vice-Chairman PHILLIPS.) When they have bought out pipe lines, as a rule, they have depressed the price of oil, have they not? A. Always; I think I can show that to the commission. Q. (By Vice-Chairman PHILLIPS.) Back to whom, then, would they go to pay for these pipe lines? A. Four or five times over the amount would come from the producers. I gave the commission a statement of how they pulled the price from $1.30 down to 53 cents a barrel. Q. (By Vice-chairman PHILLIPS.) Do you. or do you not. think that w^hen they buy a large amount of property they are enabled to assess the consumers, not only of this country, but of the world, to pay for it? Have they had entire power to do that? A. They practically can control the mar- kets of the world, and they are working them to get all out of them they can. Q. (By Vice-Chairman PHILLIPS.) When they buy out a pipe line at a large price, and depress the price of oil A. The producers have to pay for that pipe line two or three times over; or forty times over. Q. (By Vice-Chairman PHILLIPS.) Have you any brief statement to make. Mr. Lockwood, before we conclude? A. I have nothing further. Vice-Chairman PHILLIPS. I will state that I am authorized by the commission to return the thanks of this commission to you for your very clear, full and frank statement of this matter. The WITNESS. And 1 am very much obliged to the commission. CHAPTER X. TESTIMONY OF FRANK S. MONNETT, ATTORNEY- GENERAL OF THE STATE OF OHIO. Mr. Frank S. Monnett. of Columbus, Ohio, Attorney-General of the State of Ohio, appeared before the Industrial Commission on May 16, 1899. Mr. Monnett's testimony was merely a review of his own official acts as Attorney- General of the State of Ohio, and of the testimony that had been taken in the case of the State of Ohio vs. the Standard Oil Company of Ohio, which had been pending since 1891. A comparison of the testimony of Mr. Monnett as actually given and ag shown in the official report indicates that in a large measure it was practi- cally re-written, without regard to the wording of the original testimony. This was; leally necessary in order to make the story told by Mr. Monnett read with some degree of consecutiveness of thought, the report of his remarks while on the stand showing a very disjointed manner in recounting what he had to say about the Standard Oil Company. Mr. Monnett said that the secret power of the Standard Oil Company would be found in the discriminating favors they get through having an absolute monopoly of the transportation of crude oil and by means of vari- ous devices, "even authorized by statutes that should be repealed." This statement that the Standard Oil Company receives discriminating favors that are "authorized by statutes that should be repealed" was eliminated FRANK S. MONNETT. 167 from the official report of the testimony. Instead of the elimination of so important an assertion, it would have been interesting had Mr. Monnett pointed out the statutes he referred to. It seems strange that the Attorney- General of a great State like Ohio should go on the stand at Washington and before a government commission make such a statement. The follow- ing quotations from the testimony as shown by the stenographic report and as officially published show how Mr. Monnett's statement was modified: STENOGRAPHIC REPORT. * * * In other words, the secret of the power of the Standard Oil Company's trust will be found in the discriminating favors that they get through having an absolute control and monopoly of the transportation of the crude product, and the discrim- inating favors they receive by the various devices, even authorized by statutes that should be repealed where such exist, giving a discrim- inating rate in favor of carload lots, giving them a discrimination for loading and unloading their own product. OFFICIAL REPORT (p. 299). * * * In other words, the secret of the power of the Standard Oil Trust will be found to be the dis- criminations or favors that they se- cure by controlling or monopolizing the transportation of the crude prod- uct and the discriminations they re- ceive by various devices in trans- porting the refined oil, e. g., the discriminating rate in favor of car- load lots and train loads, with allow- ances for loading and unloading their own product. Again Mr. Monnett asserted that there was "some arrangement" be- tween railroads and pipe line companies by which the former raised their rates when paralleled by a pipe line, instead of lowering them. One would have expected such a charge of an "arrangement" between railroads and pipe lines to have been sustained by the offering of proof. The fact is that in the official report of the testimony the charge of "some arrangement" be- tween railroads and pipe line companies has been eliminated. The steno- graphic and official reports of this testimony follow: STENOGRAPHIC REPORT. * * * If you go into the freight department you will find that these classifications were often violently changed, and freight actually in- creased after a competing pipe line company was placed alongside of a railroad that formerly had a given rate. Instead of competition, by pipe lines paralleling a railroad, lowering the rate, it actually, by some arrange- ment between them, raised the price, so that the independent shipper, who heretofore, because of regular rates, over the railroad had a fair chance, now will not have any, because the rates have been raised on him and he will be obliged to pay their own prices if he ships through the pipe lines. * * * OFFICIAL REPORT (p. 299). * * * If you examine the freight charges in cases where a competing pipe line has been constructed along a railroad, that formerly had a fixed rate, you will find that instead of the competititve pipe line which paral- lels the railroad lowering the price, it has absolutely raised it, showing that the independent shipper is dis- criminated against. He cannot com- pete because rates have been raised, and he must pay their price if he ships through the pipe line. In his testimony Mr Monnett asserted that the Standard Oil Company had issued more than the original issue of trust certificates. This statement v/as modified in the official report of testimony so as to make him say in effect that the Standard Oil Company could have issued more than the original amount of trust certificates under the trust agreement. His state- 168 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. ment was flatly denied by Mr. Archbold. It is very likely that Mr. Archbold's contradiction of his testimony caused him to reconsider his reckless state- ment. The testimony as shown by the stenographic report and as it appears in the official report follows: STENOGRAPHIC REPORT. * * * The insinuation has been made that they have issued, as we could show, under their trust agree- ment, much more than the original issue of trust certificates. OFFICIAL REPORT (p. 309). * * * Considering the fact that three-sevenths of the trust certifi- cates have not been reconverted, in connection with Mr. Rockefeller's testimony that he gets his Interest just the same now as he did before, the present value of the aggregate stock of the companies and the trust certificates may be fairly estimated at $486,250,000, provided they have not issued, as they could under the trust agreement, more than the orig- inal amount of trust certificates. In referring to the shipment of oil by pipe lines, Mr. Monnett said the pipe lines affiliated with the Standard Oil Company charged 20 cents a barrel to pipe oil when that service cost less than a fraction of a cent a barrel a mile. Such a statement might readily be calculated to mislead a casual reader or even a student who did not carefully consider such language. Of course the 20 cents a barrel referred to by Mr. Monnett was a charge for the entire district and the fraction of a cent that he said it cost to pipe oil was for each mile it was piped. As a matter of fact 20 cents a barrel fre- quently amounts to a fraction of a cent per mile. This testimony was changed when it appeared in the official report, the testimony as actually given and as officially reported being as follows: STENOGRAPHIC REPORT. Q. (By Professor JENKS.) Is it your idea that a pipe line should be forbidden to discriminate in rates, or that they should be compelled by the government to hold the rates down to what is reasonable? A. In the case of a pipe line, where they are charging 20 cents when it costs less than a fraction of a cent a barrel a mile to ship it, it is an abuse of a governmental function and they ought to have their charter taken from them. It is a fair deduction and it is very easy to deduce that that is done to shut out competition. A com- petitor obliged to pay that rate would be like ten farmers, one of them hav- ing a load to haul is charged $1, and everybody else is served free. Q. Have you any specific sugges- tion as to how that rate could be held down? A. The Cudahys, of Chicago, would run a pipe line at once; they have been five years running a line to New .lersey, because one of the independent men said he would give $100,000 to connect there. So that the government ought, wherever a public carrier is undertaking to throt- OFFICIAL REPORT (pp. 310-311). Q. (By Professor JENKS.) Is it your idea that the pipe line compan- ies should be forbidden to discrim- inate, or that the government should hold the rates down to what is rea- sonable? A. If a pipe line company charges 20 cents when it costs less than one-tenth of a cent a barrel per mile for shipping, it is an abuse of a governmental function, and the com- pany ought to have its charter taken away for excessive charges. Persons obliged to compete under such cir- cumstances are like farmers who should have to pay $3 to $5 a load for hauling their wheat, while some- one else has the public right of haul- ing his for a dollar. Q. Have you any specific sugges- tion as to how that rate could be held down. A. The Cuda- hys, at Chicago, would run a pipe line; they have been for years trying to get a pipe line privi- lege in Indiana and Ohio. One of the independent men of New York said he would give $42,000 for three miles of line to connect up his lines with the seaboard. Wherever a common FRANK S. MONNETT. 169 tie a competitor, to interfere and carrier is undertaking to thwart a have a public policy. What I mean competitor the government ought to when I say public policy would be to interfere. If the owner of a public oblige them to submit their rates to utility is obliged to submit his rates open competition and there would be to open competition there will be no no more oppression in that depart- more oppression in that department ment than in any other. than in any other. The witness said that a decree had been rendered on March 2, 1892, against the Standard Oil Company of Ohio, it having been charged with being a member of the Standard Oil Trust, or being one of the constituent companies of the Standard Oil Trust. Under the orders of the Supreme Court of the State of Ohio, in November, 1897, the witness said he was ordered to bring the Standard Oil Company of Ohio before the court on the charge of contempt, charging it with having violated the decree rendered March 2, 1892, in not withdrawing from the trust in good faith, but simply shifting or modifying its former system of doing business so as to still get the benefit of the trust combination or arrangement. On that order he filed a complaint in contempt, to which complaint the court gave an order for ser- vice upon the defendants, and the defendants thereupon came into court with an answer, attempting to justify their conduct subsequent to the decree Mr. Monnett said: * * * * to which answer we filed a reply with some 29 interroga- tories, addressed to the president of the Standard Oil Company, who was also the chairman of the liquidating trustees; and also the chairman of the former nine trustees of the Standard Oil Trust, Mr. John D. Rockefeller, of New York, formerly of Cleveland. Ohio. Mr. Rockefeller answered those printed questions under oath in part, demurred to part, which under our code they had a right to do, and a part of them he refused to answer on the ground that they were irrelevant. The court overruled the demurrer and the refusal to answer the main interrogatory that was objected to, and then they came into court with a supplemental list of answers. Thereupon we took an additional order, and took Mr. Rockefeller's testimony in the way of depositions under the master appointed, and from that testimony I will give such data as your commission cares to have. In their testimony dis- closed by the interrogatories and by Mr. Rockefeller in person, and the sec- retary, Mr. F. B. Squires, of Cleveland, we were able to find data that war- ranted the State in filing suits against such of the constituent companies of the original trust as did business in Ohio. We filed independent suits against the Buckeye Pipe Line Company, a constituent company, *making substantially four causes of action. The first cause of action against tliem was on the ground that their business was against the public policy of the State as based upon the Constitution. The Attorney-General instituted that proceeding in the nature of a quo warranto, as he had the right to do against any corporation that offends against any of the existing statutes of the State, or against any public policy of the State. Under that power, vested in my office, I began the suit, as I have said, against the Buckeye Pipe Line Company, which is the company that transports the crude product. We also began suit against the Ohio Oil Com- pany, which is a company that is known as the producing company and makes leases or contracts with the owners of the oil in the land, usually farmers. We also brought a suit against the Solar Refining Company, which has functions substantially the same as the Standard Oil Company of Ohio under its present organization, which is only a refining company. We then brought suit against the Standard Oil Company of Ohio anew, and in each of these cases, we charged them with violating the public policy of the State by confederating together in attempting to evade the decree of the Supreme Court in the decision of March 2, 1892, in the Standard Oil cases proper. We had a second cause of action based upon what was known as our Anti-Trust Act. the Stewart- Valentine Act, which was passed a year ago and took effect July 1. 1898. *Black faced type indicates m.Ttter omitted. In the course of editing, from the official report. 170 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. On taking the testimony at Lima, Ohio, against the Buckeye Pipe Line Company, it was disclosed that they had a telegraph system. From a lawyer's standpoint, the company, from the nature of the business they were doing, might have a telegraph system, if it was to carry on their own private busi- ness by means of communication between the different posts. We conceded that. But in the testimony it was disclosed that they were exchanging busi- ness with the Western Union Telegraph Company and that they had a sys- tem of monthly balances — that they were acting as common carriers of tele- graphic messages for Ohio, for whoever applied to them. It was stated that they even produced the election returns and other news in advance of the regular system, and that they were exercising this franchise outside of their corporate authority, so that we made it an additional cause of action against them, charging them with exercising this ultra vires act, and we have taken testimony to establish that, which I can furnish to the commission. Under the Ohio law it would be necessary for them to have a special charter to do that class of business. It was also disclosed and is in evidence, as claimed by the State, that in the relationship existing between the constituent companies to which I will refer later, they had separate telegraphic contracts for the Ohio Oil Company, the Buckeye Pipe Line Company and the Solar Refining Company, differing from those they had with their customers or the public generally. They used the Western Union contract for the ordinary telegraphic service, but they had a separate contract and a separate account for each of these constituent companies, raising the legal presumption, as we claim from the evidence, that they had the system organized about as follows: They have a produc- ing company, the Ohio Oil Company, that makes the original contract with the owners. That oil, known as the crude product, is then turned over to the Buckeye Pipe Line Company which, in conjunction with the other pipe line companies makes a complete system, and is all one system, as we understand it, the Buckeye Pipe Line Company having the Ohio field, and doing business in Indiana also. Subsequent to this suit they also turned over the Indiana field to the Indiana Pipe Line Company, which is also one of the constituent companies, as we understand it. Then from the "crude" or transporting department, with its telegraphic system connected with all of their pipe lines, they transferred the oil to their respective refineries at Whiting, Ind., a suburb of Chicago practically; at Cleveland, Ohio, known as the Standard Oil Company of Ohio proper; and to the Solar Refinery at Lima. They have a refinery at Parkersburg. W. Va. — well, they formerly had, and I will refer to that later. From the Buckeye Pipe Line Company the oil goes to the refiner- ies thpn the refined product, the kerosene and the gasoline, is transported to the consumers, through another constituent company, the Union Tank Line Company, and from the Union Tank Line to the consumers they have a system of tankage stations. I mean by that, distributing points, county seats of three to five thousand upward, to the largest cities. Then through contracts with the railroads, which you can go into more fully than we have *authority to do under the present suit, you will find the relationship exist- ing between the Union Tank Line system and the railroads, *and this bit of evidence will be important for you to develop, I think. They got a rate on a car load or train load on their tank line, shipped to a tank station, with an allowance for loading and unloading their own product, varying, if I under- stand it, between a part car load and barrel lots, where the company load and unload its own cars. I think the testimony in the trust investigation of Ohio, or somewhere, gives the difference of a discrimination between ship- ping by the Union Tank Line, car load lots, and delivering in tank stations, and the rate that is established on particular carload lotr, and short distances is as much as 400 per cent, against the small producer. The State claims that this is one of the means by which they gained a preference as shippers, means which they have of defeating competition. *because they have the advantage in the transportation department, outside of the original advan- tage in the crude transportation. In other words, the secret of the power of the Standard Oil Company's trust will be found to be the discriminating *Rlack faced type Indicates matter omiltrd, in the course (if editing, from the official report. FRANK S. MONNETT. 171 favors that they get through having an absolute control and monopoly of the transportation of the crude product, and the discriminating favors they receive by the various devices, *even authorized by statutes that should be repealed where such exist, giving a discriminating rate in favor of car load lots, giving them a discrimination for loading and unloading their own product." Q. (By Professor JENKS.) You understand this discrimination to be, in spirit, at any rate, in violation of the interstate commerce act? A. The interstate commerce act applies only to interstate commerce. I am speaking of Ohio and Ohio rates, but on examination you will find that they are per- mitted to have a more favorable rate for car load lots and in tanks than they will for barrel lots. The argument that they will adduce to you is that the return of gasoline barrels or a part car load of oil contaminates all other groceries and they cannot ship in that way, but the one thing we know in practice is that they do ship furniture and plows, and of course hardware, that are classified. If you go into the freight department you will find *that these classifications were often violently changed, and freight actually increased after a competing pipe line company was placed alongside of a railroad that formerly nad a given rate. Instead of competition by pipe lines paralleling a railroad, lowering the rate, it actually, by some arrangement between them, raised the price, so that the independent shipper, who here- tofore, because of regular rates over the railroad, had a fair chance, now will not have any, because the rates have been raised on him and he will be obliged to pay their own prices if he ships through the pipe lines. I will now take this matter up and give you the figures accurately, if you care for them, starting with the Standard Oil Company of Ohio, when and how it entered into the trust, and the names of the constituent companies, with the capital stock. I can furnish the commission that, if you wish it. Q. Yes. if you please. Have you also the dates of the organization of the different companies, with the names of the officers — that is, of the lead- ing officers? A. Yes, sir; I can furnish you that, too. The Standard Oil Company of Ohio (I start with them, because I think it is the Ohio talent that got the credit of organizing this wonderful corporation) was organized oric-inally on the 10th day of January, 1870, and was known then as the Standard Oil Company. It had a million dollars stock. It increased that stock on the 12th day of February. 1872, to two millions and a half. On the 13th day of March, A. D. 1875, it increased its capital stock, by State authority — under our State they have authority to do that — to three millions and a half. It was in this condition from 187.5 to January 2, 1882. and it had 35,000 shares of stock at the par value of $100 a share. * * * The witness said all this stock, except seven shares, got into the hands of the trustees of the Standard Oil Trust in 1882. They retained enough stock in the State organization to hold one share and they could elect a president and secre!ary. Thirty-nine constituent companies were merged into 20 companies that were the original constituent companies of the trust. During the year 1892 an inventory and appraisement showed that the appraised value of these 20 constituent companies was $121,631,312.63. their total capitaliza- tion being $102,233,700, an excess of appraised value over their capitalization of $19,397,612.63. Mr. Monnett stated that the Standard Oil Company of Ohio was to appear before the Supreme Court of the State of Ohio in November to show why they did not obey the order of the master and the decree of the court. The court adjourned on the night of November 15 (Thursday) and they were to appear before the court on the following Tuesday. He said: * * * * ^vg £;ot an anonymous communication that if we would sub- poena certain officers they would be compelled to testify that they had burned their commercial books, some 16 boxes, on the following day. The addresses of the people I can give you. I will 9:ive you Mr. McNirney's testi- mony on this =ubiect. *Thev claimed that Mr. Archboiri was very much incensed over it and said that they were anarchists and laboring men that had been purchased by the State, but he withdrew that statement afterwards. *Black faced type indicates matter omitted, in the course of editing, from the official report. 172 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. which of course was arrant nonsense. These gentlemen were laboring men and men connected with the company and perfectly honorable, and gave the details and were corroborated in many important features of their testimony as to the burning of the books, and they have their explanation for it here also. It is for courts to draw conclusions, and witnesses to give the facts. Mr. McNirney, a resident of Cleveland, Ohio, and an employe of the Standard Oil Company, testified under oath as to the burning of the books about No- vember, or the latter part of December, or the early part of January, I would say. Q. (By Professor JENKS.) Perhaps you will be able to find it later. A. Yes, sir. They have what they call car building works on Broadway, and they have their offices on Euclid avenue, in the Standard block. He says he was called on Saturday, the 19th of November, to the general offices, to do work there. We adjourned taking the depositions when Mr. Squires, the sec- retary, refused to produce these commercial books called for under the orders of the court, and under the interrogations of the Attorney-General. (Reading from the testimony of Mr. McNirney) : "A. The first thing we done was to lower a lot of books from the fifth story to the ground floor. Q. Lower them? A. I dicfn't say books. I say boxes. I don't know what was in the boxes. To lower a lot of freight boxes; we call them supply boxes. Q. Whom did you lower them to? What team- sters, if you know any of them? A. There was a teamster there, but we was going to take the books — I say the boxes — out in front, but as I understood, the janitor objected and said we must not take them out in front, we must take them out in the rear of the building. Q. You lowered these boxes with a tackle from the rear window. A. No, on the passenger elevator. Q. What was done with them after that? You lowered them with that? A. With that: yes, sir." *! will cut this down. He told about putting up the block and tackle he brought down from the shops from the rear of the room. They lowered the 16 boxes, giving the weight of them and the size of them, weighing as much as 250 pounds, with a Mr. Gabelein and a Mr. Moran, who testified aftewards as to the contents. They took them first to the car works furnace, and they choked the steam so that they had to remove them to the other furnace. They took most of them that night, and part the next night, and burned them. This is all substantiated. I will furnish you with the ekact testimony. t Q. (By Professor JENKS.) It is your belief that the books that were burned were the ones that you had required Mr. Squires to produce in court? A. It is a fair legal presumption, from the testimony and from the size of the books and the size and number of the boxes, and the circumstance of their refusing to produce them afterward, although Mr. Kline afterward in open court stated that they had not destroyed them, that they had them yet and they would not produce them at the request of the Chief Justice in the other court; that they still refused to produce them, relying upon their constitu- tional privilege to refuse to answer. I will furnish you the exact testimony as to the burning of the books, before your conclusion. The only purpose I have in citing this in this hearing is to show that we are dependent upon mere conclusions as to the profits and how they distributed them, and so on, and the reason being that we do not have the substantive evidence. Mr. Monnett continued to testify concerning the financial affairs of the Standard Oil Company of Ohio. He said that Mr. John D. Rockefeller received perhaps four times as many of the original trust certificates as were issued to any other one man. He said the trust organization was a scheme where- by, after they were in the trust with nine other trustees, Mr. Rockefeller was in control. The whole organization was a one-man power. He said that the liquidating trustees, representing the Standard Oil Trust, held their meeting at 26 Broadway, November 3, 1898, or December 15, 1898, and adopted the following resolution: "Resolved, That there be divided from the income of the stock still remaining in the hands of the •Black faced type indicates matter omitted. In the course of editing, from the official report. vOver three p!if,'e.s of the nfncinl report are taken up with extracts from Mc- Nlrney's testimony. FRANK S. MONNETT. 173 liquidating trustees a sum equal to $3 upon each share of said trust, quar- terly; also a further special sum equal to $4 upon each share of said trust, payable on and after December 15, and that the transfer books be closed from 3 p. m., November 16, to 10 a. m., December 16, 1898." He said that the dividend of $3 a share quarterly gave $12,000,000 per annum. This dividend was only on the trust certificates. He said that on November 30, 1895, they paid $5 upon each share of trust stock, and on March 17, 1896, $3 a share and $10 extra. This last mentioned rate of payment amounted to $13,000,000 in that quarter. On August 1, 1896, they paid out a quarterly dividend of $3 a share and $7 extra, which made that dividend $10,000,000. On the following November 15, they paid $3 regular and $2 extra quarterly dividend. On February 17, 1897, their quarterly dividends were $3 regular and $7 extra; on May 19, 1897, $3 regular and $7 extra; on August 16, 1897, $3 regular and $2 extra; on November 17, 1897, $3 regular and $5 extra. The witness said: "The insinuation has been made that they have issued, as we could show under their trust agreement, much more than the original issue of trust certificates."* Mr. Monnett referred to the testimony of Mr. F. B. Squires and Mr. T. F. Davis, of Marietta, Ohio. He quoted, from memory, statements made by Mr. Davis during the Ohio investigation to the effect that the Standard Oil Com- pany had practically dismantled all the competing oil refineries down to Marietta and Parkersburg. He advised the commission to secure Mr. Davis as a witness before it. Mr. Monnett said the commission would find that the control of trans- portation was the source of the maintenance of discrimination in nearly all commercial trusts. Q. (By Professor JENKS.) Is it your idea that a pipe line should be forbidden to discriminate in rates, or that they should lie compelled by the government to hold the rates down to what is reasonable? A. In the case of a pipe line, where they are charging 20 cents when it costs less than a frac- tion of a cent a barrel a mile to ship it, it is an abuse of a governmental function and they ought to have their charter taken from them, vlt is a fair deduction, and it is very easy to deduce, that that is done to shut out com- petition. A competitor obliged to pay that rate would be like ten farmers, one of them having a load to haul is charged $1 and everybody else is served free. Q. Have you any specific suggestion as to how that rate could be held down? A. The Cudahys, of Chicago, would run a pipe line at once; they have been for five years running a line to New Jersey, because one of the independent men said he would give $100,000 to connect there. So that the government ought, wherever a public carrier is undertaking to throttle a competitor, to interefere, and have a public policy. What I mean, w-hen I say public policy, would be to oblige them to submit their rates to open com- petition and there would be no more oppression in that department than in any other. In summing up the profits made by the Standard Oil Company, Mr. Mon- nett said: "At their non-competitive price of oil, at $4 a barrel at retail, taking their data, their gross receipts for Ohio oil would be about $120,000,000 a year." Mr. Monnett said that the Standard Oil Company of Ohio, after the suit in which he had figured had been begun against them, had organized what was known as the Jennings Publishing and Advertising Agency, and they had found several men who had received marked copies of certain news- papers in Ohio, defending the Standard Oil Company. They had taken various means to secure articles defending themselves published in newspapers. The witness referred to the testimony of W. H. Clark during the Ohio investigation. He said he thought Mr. Clark could give "valuable informa- tion and exact data for the commission." Mr. Clark was later called before the commission and testified regarding matters referred to by Mr. Monnett. ♦This statement was greatly modified in the official report, as shown in the introduction to Mr. Monnett's testimony. tBlaclc faced type indicates matter emitted, in the course of editing, from the official report. 174 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. He said that the testimony in the Ohio investigation had disclosed the fact that the Standard Oil people had been nourishing three-sevenths of their trust certificates, notwithstanding the decree of the court dissolving the Standard Oil Trust. That, he said, it was charged, was an offense sufficient to revoke their charter. If that should be done the crude petroleum that passes through Ohio would be in the hands of a company under the control of the State and that would give competition and an equal chance to all pro- ducers. If that could be done, no further legislation would be necessary. Mr. Monnett said that oil could be retailed at four cents a gallon in the larger centers in Ohio at a profit. In other places outside of Ohio the cost of transportation would be added to this price. He said that it was true of oil as well as other things entering into competition that the through rate is made up by an excessive local rate. Mr. Kennedy asked the witness whether he had any knowledge of at- tempts by the Standard Oil Company to interfere with judicial proceedings against them by resorting to bribery. The witness said that the bribery charge had been made officially in the Supreme Court of Ohio. He did not think it advisable for him to go into the merits of the pending case, it being a matter peculiarly personal to the court. He said that the testimony in the Ohio investigation showed that the Standard Oil Company paid different people to furnish them information, that they paid railroad employes to give information regarding oil of their competitors passing over the line on which they worked, and paid men to tell them the names of their competitors' customers. He said they had hired a rival's clerk to give such information. Mr. Monnett referred to cases in ^which pipe lines were put alongside of railroads and the rate of the railroad company on oil was increased. He said the ordinary result of such a severe competition by pipe lines should be to lower the rates. "You can draw your inference," he said, "that by some arrangement the freight instead of being lowered by competition in these particular cases was raised. I am basing that, of course, on testimony." Q. (By Mr. KENNEDY.) Are you prepared to say on what railroad? A. I think when that came out they spoke of the Erie in the original fight, and the C. & N. down to Macksburg was one of the originals charged, and the Lake Shore was charged with that, I think, originally, in the contest in which Vir- gil B. Kline was fighting the Lake Shore on the discrimination of rates. He did not think the Standard Oil Company could claim the credit for reducing the price of oil. He gave a number of instances to show that prices of oil in different places were not uniform. He said the Standard Oil Com- pany had taken advantage, as they had a right to do, of each patented im- provement for taking sulphur out of oil. They also had made an improve- ment for getting an increased profit out of a by-product, and there had been a great improvement in cheapening the prices of boring for oil. The Stand- ard Oil Company had simplified the method of transporting crudp oil through their pipe line system, which he declared had originally been intro- duced by others. Mr. Monnett said there was only a limited competition in the oil business in Ohio. Scofield, Shurmer & Teagle and a man by the name of Shields at Mansfield were competing with the Standard. He said Scofield, Shurmer & Teagle originally had a contract whereby they were limited in the amount of their production. The Standard Oil Company had no successful competi- tion in pipe line nor tank line services, and they had driven competition out by unfair means- — by means of railroad freight discriminations and selling oil at non-competitive prices. While they were selling at a low price to drive out competition in one place, they could use their other territory to make up any losses incurred. Ho said they have expert prospectors that are always on the ground the moment a new field is discovered, with their sys- tem of transportation to control the sale of the oil of the territory. The witness said that he did not know how much of the crude product of oil in the United States is owned by the Standard Oil Company but he thought it was more than half; their proportion of ownership was greater than that in Ohio. He said: FRANK S. MONNETT. 175 "If they have the transportation in a given field they do not need to own any of it. All they have to say is how much they are going to pay for it. They can fix the producers' price. Then it comes to be with them a propo- sition to allow the producer just living wages, and let him have the worry of getting the oil out of the rock." The witness said he would furnish the commission a pamphlet that had been published in England to show how the Standard Oil Company prevented the Russian oil companies from controlling the English market. Mr. Monnett, when asked what course he would recommend to correct the evils complained of, said that States granting charters to corporations should control them when they operate within the States, but when they do an interstate business he thought the Industrial Commission should suggest legislation to Congress for the control of these corporations by the Federal government. He explained at some length the efforts of the State of Ohio to control the railroads of that State in the matter of transportation, so as to provide that rates between different points in the State should not be greater per mile than the through rates. Q. (By Representative LIVINGSTON.) * * * Is it your opinion that the evolution that is now going on, if unchecked, will lead to a control of the industries of this country, and after that to the control of the government by a few hundred or a few thousand men? A. Well that is the merest con- jecture. I feel as though under a republican form of government we have as socialistic a form of government as man has ever been able to invent; that as long as people have the opportunity to control matters in the line I have suggested through taking away charters and granting of charters, a condi- tion of affairs will never rise whereby monarchical conditions that you have suggested will be substituted for the republican form of government. To resist that sort of thing is what we had the revolution for and what we wanted to get rid of when we formed this government, and I do not think we will get back into it, although we have made some rapid strides in the last two years. I believe it has gone as far back as it will go. Commissions like your honorable body here, can aid us and point out a remedy, and it will be severely applied. The people are ripe for the remedy, but they do not know how to get at it. They have diagnosed the disease, but they do not know what remedy to apply. To use an illustration, the doctors oftentimes make a good many mistakes on the outside of the body in diagnosing the disease, and they do not reach the disease, but I believe that you gentlemen, when you get through your duties here want to say that you have reached the disease and to suggest the proper rem- edies. I know with three years' experience in my office, so far as the State is concerned it has absolute power to regulate that one feature that I have mentioned, viz., the abuse of governmental powers by creatures exer- cising those functions. Q. Would not the result which I suggested be realized if other industries were controlled in the way a few men control the Standard Oil Company and the oil production of the country? A. Yes, sir; that would be the result. The socialists are advocating that this be speedily gone on with and con- tinued to its ultimate conclusion and when a few men get possession of all the public utilities then they would take them away from them. It is their theory that the government ought to own all of these industries; that the only way to demonstrate the possibility of that is to allow a few people, a few brainy men like Mr. Rockefeller and others to demonstrate that they can be run by a few, and then to have the government step in and take the place of Mr. Rockefeller. Q. That is the point I was referring to, Mr. Monnett. A. Well, if we could always have a man like Mr. Rockefeller to run them he might be able to run them better than they would be run under governmental ownership. 176 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. CHAPTER XI. TESTIMONY OF T. F. DAVIS, OF MARIETTA, OHIO. Mr. T. F. Davis, of Marietta, Oliio,* a producer of petroleum, who has been connected with the oil refining business, appeared before the commis- sion on June 9, 1899. While Mr. Davis began his testimony by claiming that he was driven from the oil refining business because of unfair advantages enjoyed by his competitors, the Argand Refining Company and the Standard Oil Company, he later acknowledged, when asked a direct question by Professor Jenks, that if he had had sufficient capital to utilize the by-products of his refinery to the best advantage, as did the Standard Oil Company, his refinery could have been run at a profit instead of being closed down because of failure to make a profit. Vice-Chairman Phillips evidently did not enjoy having such testimony and he proceeded to ask a number of questions with the apparent purpose of attempting to show that the witness could not have marketed his by-products had he produced them in a finished state, but the answers of the witness were not such as to give him much satisfaction. Mr. Davis said he could get materials used in the refining of oil from the Standard Oil Company cheaper than from any one else and that the refiners of oil in competition with the Standard Oil Company generally buy their materials from them. When the witness admitted that the production of crude oil was a profit- able business, Mr. Phillips appeared to be under the impression that he, too, was on the stand, as he remarked: "It depends on what you strike; a thousand barrel well or a ten barrel well." As will be seen, the testimony of Mr. Davis was very generally based on his suspicions; there was a woeful deficiency of proof. Mr. Davis had been a producer of oil for 20 years in the vicinity of Marietta. He had a large interest in a small refining plant at Marietta about six or seven years, but his refinery is not now running. He first became interested in what is known as the Macksburg field, about 25 miles from Marietta. He was a producer and undertook the refining of his oil, hoping to market the product, which he continued to do for about two years, but he was finally compelled to give it up. He was not able to market his product on a margin sufficient to pay for the plant. He and his associates were con- fined to one grade of oil that was especially desirable for a particular mar- ket, v.'hich they could not reach on account of not being able to combine their product with other grades of oil. Their oil was desirable as a lubricating oil; chiefly desirable for use by the railroads. Their competitor, the Argand Refining Company, produced the same grade of oil, and the Baltimore & Ohio Southwestern Railroad became owners of a large block of the stock of the Ar^rand Company, and after that the witness could not sell to the Balti- more & Ohio Southwestern. At that time the Standard Oil Company was not connected with the Argand Company. His customers, who were located along the lines of this road, were supplied with the same oil the railroad company used. That resulted in winding up the trade of the company of the witness. Q. (By Professor .lENKS.) Did you have reason to think they were getting a rebate on freight rates or getting special freight rates, or anything of that kind? A. Well, we had no direct evidence of it, but we suspected very strongly that they were getting them; our evidence was only circum- stantial. We had no means of knowing except that the business was going on and we believed we manufactured as cheaply as they, and our freight rates bein'? equal, we would have been able to control some of that trade, but we were not able to. *Mr. Archbold, In hi.s tPstimony, told of Mr. Davis' efforts, before and after the latter testified before the commission, to soil his refiiury to the Standard Oil Com- pany. T. F. DAVIS. 177 In the Macksburg field the witness and his associates had their own pipe line i'rom the wells to the railroad, and they shipped in tank cars to the works. They had no difficulty as producers. Their trouble was entirely with the refining part of their business. Later some of the same people who had developed the Macksburg field opened up the Corning field, about 40 miles from Macksburg, along the line of railroad running from Marietta. They could not get this oil to their works over the railroad at a satisfactory rate. This oil was run through the Buckeye Pipe Line, which was owned by the Standard Oil Company. They sold this Corning oil to the pipe line com- pany at 17 cents a barrel less than was paid for the high grade of oil of the Macksburg field. The pipe line charged them 35 instead of 20 cents a barrel for the pipage. The result of this was that it was as profitable to sell this oil to the Standard Oil Company and to buy from them a different grade of oil at about the same price. The witness made application for rates on the branch road to Marietta, and it was at least 30 days before he could get them to give a rate at all, and then it cost to transport oil one cent a barrel more than it would by the pipe line. Q. (By Professor JENKS.) So your inference from the delay was that the railroad was more or less controlled by your competitors in the field? A. It seemed to us so; that is our belief. * * * * The witness had never been engaged in any litigation in regard to freight rates with the Standard Oil Company. He said a good deal of oil property had been bought up by "some of the different branches of the Standard Oil Company." These companies were the South Penn, the Ohio Oil, the Carter Oil, the United States Oil Company, and others. Q. (By Vice-Chairman PHILLIPS.) Are all these companies connected with the Standard? A. All are believed to be, yes, sir. Of course, I have no positive information as to that, only it is the common suspicion that they are. Q. (By Vice-Chairman PHILLIPS.) Do you know, as a matter of fact, that ihe Standard Oil Company is connected with large numbers of produc- ing companies, and has organized quite a large number? A. Well, I have no information, that is positive information, but it is the current belief of the oil people about Marietta that they are. Q. (By Professor JENKS.) As regards the purchase of these oil fields by the Standard Oil Company or those companies that are associated with it, T suppose that simply means that they have plenty of capital and pay higher prices than their competitors? A. Yes, sir. Q. Have you any reason for believing that there is anything at all unfair in their methods of dealing in that way? A. No, sir; 1 haven't. I have known properties to be sold to companies that are believed to be connected with them. They have always uniformly paid very fair prices, in fact I might say exorbitant in some cases. Q. It would seem that it is simply a question, then, of their having large sums of capital at their disposal? A. Yes, sir. *Q. And they are willing to pay well for the territory that they want to get control of? A. Yes, sir. The witness described the manner in which the pipe line companies in his section of the country charged for wastage of oil going through their pipe lines. He said that this wastage was estimated by the Standard to be 2y2 per cent. Q. (By Vice-chairman PHILLIPS.) Is it not a fact that the Standard Oil Company have a large amount of what they call sediment or surplus? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) How is that accumulated — from this ^Vz per cent.? A. Of course we have no definite information as to that. It is supposed that that would be a part of it, and that they also charge or assess for insurance for fire losses in a certain district — occasionally a tank of oil is burned up, the lightning strikes it, and so on. Q. (By Vice-chairman PHILLIPS.) They assess that to all the pro- ducers? A. All the producers in that particular division or locality. *Elack faced type Indicates matter omitted, In the course of editing, from the official report. 12 178 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-Chairman PHILLIPS.) How is this assessment collected? A. Why, just reducing your credit balance. If you have 1,000 barrels and it takes 1 per cent, to make up the total amount, you are charged up with that. Q. (By Vice-Chairman PHILLIPS.) Have they any legal authority to assess you for that loss? A. I think it is mutual. I don't know whether it would stand in litigation, but I have never known of any one objecting to it. Q. (By Vice-Chairman PHILLIPS.) Then you never knew of any person bringing a suit against them to recover? A. No, sir; I never knew of any person bringing a suit against them to recover. They object, of course, but I never have known of any one making a claim for it. Q. (By Vice-Chairman PHILLIPS.) The fact is that it is generally quite a small amount to each producer and they do not feel that they will be justi- fied in going to law in regard to it. A. No, sir. Q. (By Vice-Chairman PHILLIPS.) There is no law by which they can assess that loss to you? A. No, I should say not. Q. (By Vice-Chairman PHILLIPS.) But they do it nevertheless, all over your country? A. Yes, sir; I think that is the custom. Q. (By Vice-Chairman PHILLIPS.) That is your understanding? A. Yes, sir; I understand so. The witness ran a refinery of from 800 to 1,000 barrels a week,* or could have done so had he had a market for his oil. If his company had had a gasoline plant to run in connection with this main plant, it would have materially added to their profits. They were never able to estimate that they got any profit out of their by-products. Q. (By Professor JENKS.) What do you do with the by-products that you have? A. Well, we sell a part of them to Scofield, Shurmer & Teagle in Cleveland — the paraffines and benzines. You can always get a market for them there, but never at a profit. We would just about get rid of carrying them in stock; we never were able, or at least we never estimated that we were able, to get any profit out of these by-products. Q. Can you give any idea at all as to how much more profitable your establishment would have been, if it had been large enough so that you could have made the best use of this paraffine, and all the other by-products that you were compelled to dispose of substantially at cost? A. I never made an estimate of that. It would be a mere approximation which I have never gone into. I would have to go into some little calculation and then it would only be an approximation and it might be a little way from the facts after it was figured out. Q. Supposing I put the question to you in another way. If you had dou- bled or trebled the amount of capital that was in your plant, making it so much larger, giving these additional facilities for making proper use of the by-products, do you suppose that selling your illuminating oil and your lubri- cating oil at the same prices that you did before, that the added profit from the side products or the by-products would have enabled you to pay divi- dends on capital and keep your establishment running, whereas with the experience that you did have you were compelled to close it down? A. Well, I would think so. I would think it would have been sufficiently profitable to have continued the business successfully fand made some money. Q. (By Vice-Chairman PHILLIPS.) Is it or not a fact that the Standard Oil Company has practically a monopoly of all these by-products, so that you were stopped? You could not have well found a market for lubricating oil, for Instance, and many of the by-products. A. Well, we would have gone out to the consumers and dealers. Of course we would have occasion to sell the by-products if we could manufacture them and put them into the com- mercial markets. If we were selling the crude material to any other concern that was specially arranged for using these by-products in their crude state, we couldn't make any profit on that, of course. Q. (By Vice-Chairman PHILLIPS.) Suppose you had the facilities for manufacturing a very large amount of lubricating oils, does not the Standard Oil Company so monopolize the trade with the railroads in lubricating oils, that it would be practically impossible for you to market it in competition •"Eipht thousand barrels a week" in ofTicial reprnl. +Black facei] type indicates matter omittci. in tiic course of editing, from tine official report. T. F. DAVIS. 179 with that company? A. The railroads are the large consumers of the low grade lubricating oils, and unless you can get some connection with a rail- road company that consumes these large quantities of the low grades, it is almost impossible to go around to the small dealers and make any profit. It has practically got so that you must get some railroad in with you or sell your by-products to some of their concerns. Q. (By Vice-chairman PHILLIPS.) Is it not conceded by what we call independent or outside refiners that the Standard Oil Company has practi- cally a monopoly of the lubricating business? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Especially along all the lines of the prominent railroads? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Would any corporation independent of the Standard Oil Company be safe in investing say $.500,000 or $1,000,000 in making a lubricating oil. and would they have any certainty of finding a market for it? A. Well, I should think it would be rather a hazardous under- taking. That would be my judgment about it. The witness said there was a great difference in the price of lubricat- ing oils. Various grades of oil would command a price as high as 75 or 80 cents a gallon. He had become satisfied that the Argand Refining Company was selling the same oil as oil of different grades. He had secured the infor- mation on which he based this opinion from men who worked for him and who had formerly worked for the Argand Company, or from men who had previously worked for him and were then working for the Argand Company. Q. (By Professor JENKS.) You intimated just now that your competi- tors sometimes secured information in reference to your way of doing busi- ness, in ways that were ordinarily not considered normal. What were the methods they employed? A. On one occasion we had a boy who did office work. He became shipping clerk, making shipments of oil by river and by rail. That young fellow was approached by an employe of the Standard Oil Company who offered to pay him, give him a consideration, if he would report from day to day the names of the persons we were shipping to, the points shipped to and the invoice of price. Q. What was the result of this offer on their part? A. The young man was very much surprised. He was very loyal to us and gave us all the infor- mation of what had occurred, and we advised him to go further and get further information, but the other people weakened. I guess they suspected we were getting on to their schemes. At least they never accomplished it, so far as we knew, unless it was done without our knowledge. In the after- noon, after we closed up the office, the office man would be the last man there, of course, and he once or twice held conferences right in our office, and they tried to induce him for a consideration of a suit of clothes or so much money or something of the kind, to give them that information. Q. In this special case you think they failed to get the information they wanted? A. Yes, sir; I think so. Q. On account of the fidelity of your assistant there? A. Yes. sir. Q. Do you know of any other cases in which they did get the information along these lines? A. We didn't have any positive information, but we be- lieved that every barrel of oil that was shipped from our plant, either by steamer or by rail, was in some way reported to our competitors. That was only a matter of belief or conjecture, but the circumstances pointed strongly in that direction. Q. What were the circumstances that pointed in that direction? A. When we would make a shipment of oil and send invoices, frequently our traveling men would come in contact with the people we shipped to, who said they had got a quotation at a lower price, and in many cases we would have to meet that price or lose the customer. We would have to make a reduction on the invoice, or make an allowance on the next shipment, or something of that kind. Of course, it created a great deal of dissatisfaction and we had to keep the men on the alert all the time, traveling from one little town to another to see the small dealers. Q. It was then, I infer, practically your universal experience that wherever you had customers they seemed to be followed up regularly? A. Yes, sir. 180 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-Chairman PHILLIPS.) And as a rule, did they sell lower than you were offering to sell? A. They would offer it, and we would ulti- mately lose a customer unless we would reduce the price. Q. (By Vice-Chairman PHILLIPS.) You said your traveling men were followed up by traveling men from the Standard Oil Company and that they offered to sell lower than your price. Was the general effect of this upon the consumer that the price of oil was lowered? A. I think not. Q. (By Vice-chairman PHILLIPS.) Why not? A. Why, the dealer would not change his price. He would continue to sell the oil that he would buy, at the same price. The dealer would get the advantage of the difference in the price. Q. (By Professor JENKS.) Do you think that on the whole, the lowering of the price of oil resulted in the dealers getting better profits than they would have received if it had not been for this action of the Standard Oil Company? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Was that universal or only in local- ities? A. In localities where they were seeking a market; it may have been in other localities. Of course 1 had no information as to that. Q. (By Vice-Chairman PHILLIPS.) You said that you were compelled finally to go out of the business because of this fierceness of competition, I suppose you might call it? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) Have you any reason to believe that the prices, as soon as you went out of business, were increased to the dealers? A. I think they have been restored to more of a uniform condition, where in many localities they would get somewhat increased prices. Q. (By Vice-Chairman PHILLIPS.) So that the general average of price, you think, is probably higher? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) The cutting of prices was ordinarily to special customers in special places? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) And was not a general cutting. A. Oh, no. The witness said his company had special brands of illuminating oil, one of which was the "Champion," and they suspected that their competitors had put this brand on inferior oil. Mr. Davis said that the cost of refining oil is now cheaper than it was a few years ago. Fuel is cheaper and for three or four years has been cheaper than it was 10 years ago. The materials used in the manufacture of oil are also less in value. For that reason the cost of refining oil had decreased in late years. He had no difficulty in getting material that he used in the refining of oil. His company had a contract by the year with the Standard Oil Company and bought sulphuric acid of the latter. The last contract for sulphuric acid the witness had made with the Standard Oil Company carried a cheaper price than they could have secured it from anyone else. It was gen- erally true that refiners of oil could purchase their materials from the Standard Oil Company for less than they could secure them elsewhere. Referring to the Argand Refining Company, the witness said that their experience had led his company to understand that they could not furnish oil to the railroad companies at any price. They knew that the Argand Company was selling oil for 12% cents to other people, but if the company of the witness offered it for less to the railroads it could not make a sale. His company had made prices to the railroads lower than the Argand people were making to their customers, in order to satisfy themselves as to the condition of that trade. They paid no attention to the railroad trade. He said the railroad officials finally acquired, as he believed at least .50 per cent, of the stock of the Argand Refining Company. The oil his company furnished was intended to be substantially of the same grades as those of the Argand Company. Q. (By Mr. FARQUHAR.) Then, you wish the commission to under- stand that in open competition of that kind the preference was given by the railroad, on accoiint of the influence or interests of its officers, to the Areand Company? Is that what you wish to impress on us? A. That is ray belief; yes, sir. Q. But you have no knowledge? A. No knowledge, of course. T. F. DAVIS. 181 Q. None whatever? A. None. Only the circumstances which led us to the belief that that was the condition of things and the principal reason why we were not favored with that part of their business. Q. Now, Senator Davis, can you tell this commission, of your own knowledge, whether the Standard Oil Company offered better terms than you did to the railroads? A. No, sir. Q. Well, that is just where it ends; that is just where the whole ques- tion ends. Q. (By Vice-Chairman PHILLIPS.) Senator, as I understand you, you offered to sell at a much less price than they were selling at, and they refused to purchase your oil, did they not? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) And that is why you thought it was an unfair competition? A. That is it exactly. Q. (By Vice-chairman PHILLIPS.) Believed or knew? A. Well, we believed. Q. (By Vice-Chairman PHILLIPS.) Because they would not purchase your oil of equal quality at a much less price than they were buying from others? A. Well, that influence did not stop at that particular point. The fact was known along the entire mileage of that road and its branches, that they were getting their illuminating and lubricating oil from this particular concern, and we believed they influenced the dealers along that line because they could get it in small quantities, or get it without very much trouble. These people were interested in the railroad, and in the Argand Refining Company, and all these influences, we believed, went in to make up quite a difference in our trade along that line. I may be mistaken about that, but it so appeared to us at the time it was going on. Vice-Chairman Phillips asked a series of questions which appeared to be for the purpose of bringing out testimony to show that the claims that the price of oil as a whole is much cheaper than it was 20 years ago were not well founded because of the revenue derived by refiners from by-pro- ducts. The witness said he thought that the cheap prices of crude oil which prevailed some years ago were the result of over production. Q. (By Vice-chairman PHILLIPS.) Well, Senator, do you believe that the Standard Oil Company has in a great many instances in the last 10, 15 or 20 years made more for moving and refining every barrel than they have paid for the crude oil itself? If you judge by their profits and by their state- ments, and by their dividends, have we or not a right to infer that they make more profit to-day on every barrel of oil that is manufactured than they pay for it? A. 1 should hardly think that they did. But as shown by their state- ment they make very considerable out of the transportation of the oil by the pipe lines. It is very profitable. Q. (By Vice-Chairman PHILLIPS.) I mean, taking all these things together? A. Yes, sir; oftentimes the entire profits that are made on a bar- rel of oil will be made on its transportation instead of the manufacturing. *They handle it from the well to the consumer, who purchases it. The witness said the cost of producing crude oil had increased very much within three or four months from the time he gave his testimony. The cost of casing, tubing and machinery had in some instances increased 90 per cent. Prior to that increase, such material was cheaper than it had ever been before. There had been no increased price of crude oil in keeping with the increased price of this material. Q. (By Professor JENKS.) Do you know whether the Standard Oil Company itself is interested in the production of these supplies or not? A. I have no information other than the general supposition of people who are consuming these products. Quite frequently you will find that their business relations indicate that they are somewhat interested, but I have no knowl- edge of my own as to that; *it is only just common rumor or report. *Black faced type indicates matter omittecl, In the course of editing, from tlie official report. 182 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Mr. FARQUHAR.) Just one minute, right on that. You mean by that, I presume. Senator, that the parties who hold a large Standard Oil Company interest are interested in tube works, and other works that manu- facture supplies? A. Yes, sir. *Q. And that is all? A. Yes, sir. Q. But the Standard Oil Company, as the Standard Oil Company, has nothing to do with it at all? A. No, sir. Q. (By Professor JENKS.) The question I want to ask you is in refer- ence to the Argand Company. You spoke of that company, as I understood you, as your chief competitor at the time you were in the refining business. So far as your competition with the refiners was concerned, your chief com- petitor was the Argand and not the Standard? A. Well, the Standard had a very large concern at Parkersburg that covered a part of the same territory that we were both covering. Q. But so far as you knew, you were hampered as much by the Argand as you were by the Standard? A. Yes, sir. Q. The Argand at that time was not owned by the Standard Oil Company at all? A. No, sir. *Q. It was an entirely independent company, as you thought? A. Yes, sir. Q. What has been the history of the Argand Company since? A. The Argand Refining Company was leased some time within the year, I should say, by one of the branches of the Standard Oil Company — I think the Sun Refining Company, perhaps — on a basis of 6 per cent, on $200,000 for 10 years, or in other words, $1,000 a month for 10 years. They had employed quite a number of people, traveling men and office men, and just recently they left Ohio and went into West Virginia, and have their office there. That was about the time, I think, that Attorney-General Monnett brought the quo warranto proceedings, claiming that they were a part of the Standard Oil Trust, and they immediately moved their office and oflEice men over to Par- kersburg. which is about 12 miles from Marietta, on the West Virginia side of the river. Since then it has been understood that the people owning the stock of the Argand Refining Company have capitalized it and sold out their entire interest to the same people who leased it; so that they in some way discounted the 10-year lease by cash payments, and the Argand Refining Company has practically disbanded its office now at Parkersburg. Q. Is it understood that the purchasers of this stock, or some of them that have control of it, are the managers of the Standard Oil Company? A. That is the supposition now, although if you have access to the testimony taken by Mr. Monnett at Marietta, you will find that Mr. Cram, who was manager of the Argand Refining Company at the time this lease was made, testified as to just what was done in this leasing process. Since that time it is gener- ally believed that the stock has been purchased by the same parties that made the lease. Perhaps you will not find that in his testimony there. Q. (By Vice-Chairman PHILLIPS.) Have you any suggestions to make in regard to legislation in regard to trusts or combinations, to restrict their powers; or do you think it is a question that can be dealt with properly by law? A. Well, I haven't given it the attention, of course, that other gentle- men have; but I realize that it is one of the most diflficult things to control by law. I have no suggestion on that line. If vested rights are acquired by innocent holders of different corporations and are thrown together, I cannot see how you can possibly separate them. There may be some way to do it, but I do not see how it is to be done. Q. (By Vice-Chairman PHILLIPS.) Are you at all familiar with the pipe line business in P.^nnsylvania and Ohio, and in regard to the opposition the Standard has made to the Pennsylvania pipe lines? A. No, sir; I never came in contact with them except in a very moderate way. Q. (By Vice-Chairman PHILLIPS.) You are not. then, familiar with the early history of the Standard in Pennsylvania? A. No, sir. Q. (By Vice-chairman PHILLIPS.) And their methods? A. No. sir. ♦Black faced type inrlicates matter omitted, In the course of editing, frnm the ofRclal report. T. F. DAVIS. 183 Q. (By Vice-Chairman PHILLIPS.) Or their purchases there of pipe lines, their purchase of refineries and so on? A. No, sir; I know nothing about purchasing. Q. (By Mr. KENNEDY.) Has the Senator stated to whom he sells his product now? The WITNESS. The crude oil? Mr. KENNEDY. Yes, sir. A. I sell the oil that is produced in West Virginia to the Eureka Pipe Line, and the oil that is produced in Ohio I sell to the Macksburg division of the Buckeye Pipe Line. Q. They are both Standard Oil Company lines? A. They are the same parties, and the same bookkeeper makes out the check, which is given by one of their agents on New York. Q. (By Vice-chairman PHILLIPS.) They are both owned by the Stand- ard Oil Company? A. Yes, sir; both in the same office. Q. (By Mr. KENNEDY.) They pay you the market price for the crude oil? A. Oh, yes, sir. Q. (By Mr. FARQUHAR.) How is the market price regulated? A. When you have oil to sell you step into the agency, and before he will give you the price he wires to Pittsburg (the books are kept there) and he sees what your credit balance is on the books — that is the number of barrels of oil credited to your account, and the particular grade it is. When he gets that information the price is posted and you may or may not accept it, as you see fit. Q. What influence has the independent producer in this country on the price of the crude oil? A. Well, only in special cases, and I don't recollect any in particular now. I don't think they have any influence over it at all in our part of the country. Q. None at all? A. No, sir. Q. (By Vice-Chairman PHILLIPS.) Is the price of oil fixed for you by the Exchange or by the Standard Oil Company direct? A. By the Standard Oil Company. Q. (By Vice-chairman PHILLIPS.) Both crude and refined? A. It don't pay us to refine; they fix the price for the crude at Marietta. Q. (By Vice-Chairman PHILLIPS.) They make the quotations in New York for the refined from time to time, and they make the quotations in all the oil fields for the crude? A. Yes, sir; wherever they have a purchasing agent. Q. (By Vice-Chairman PHILLIPS.) And it is wired to them what the price should be? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) That day or that week and subject to change at any time by them? A. The holder of credit balances on their ledgers may be producers in Indiana, Ohio. West Virginia or Pennsylvania, and may sell at any of their agencies — it don't make any difference what particular one. I have often been in the office when producers from Indiana would come in and ask for their credit balances and get their checks just the same as the man who produced it within a mile of where it had been trans- acted. *Q. (By Vice-Chairman PHILLIPS.) It is not so affected at all by com- petition? A. No, sir. Q. (By Mr. FARQUHAR.) Is it the New York price or the Pittsburg price that regulates the market? *Vice-Chairman PHILLIPS. The Oil City price. A. It is the Oil City market. O. (By Mr. FARQUHAR.) Of the Standard Oil Company? A. The Standard Oil Company is the one that controls the price of crude. Occasion- ally it is sold at quotations given by brokers where there is a little fluctua- tion. I have known that to be the case a few times within two years. I think. When, on going to sell some of my crude oil, they would say: "If you will allow us to put this on the exchange to-day you may have the benefit to-morrow of the average exchange price, instead of taking a specific and *Black faced type indicates matter omitted, In the course of editing, from the ofRolal report. 184 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. accurate price at the time." Frequently we would get a cent or a cent and a half, or two cents a barrel more by putting it on the Exchange. At other times the exchange was lower than the Standard Oil Company market. Q. Is it your opinion that the independent refiners are making money? A. I don't know positively outside of the concern that I am interested in myself. Q. Take Scofield, Shurmer & Teagle, of Cleveland, for instance. They don't own oil wells at all, do they? A. Well, really, I don't know. Q. They are refiners proper of oil and of by-products? A. Yes, sir; I understand so. Q. It is quite a wealthy firm, isn't it? A. Yes, sir. Q. And has always been an independent firm? A. That has been the supposition. Q. Consequently, if large profits accrue to a firm like that they come out of the producers? A. They certainly do. Q. Because a good many refiners have gone out of business is it proper to say that the Standard Oil Company drove them out of business or bought them out— gave them a good price to get out? A. Why, take, for instance, our own experience there, right in our own place. Q. Couldn't you have sold out in pretty good shape, if you had desired? A. Well. I never was approached in that direction. I would be very glad to if I could get it, but I could have put up a refining plant as good as the one that was practically sold for $200,000 for about $7.5,000. Q. (By Professor JENKS.) That is the Argand. you mean? A. Yes, sir. Q. (By Mr. FARQUHAR.) Well, that is reasonable. Of course, the good will and everything else that goes with an establishment of that kind counts for almost everything, but in your own experience instead of crushing them out, as the expression is used occasionally here, hasn't it been the custom of the Standard Oil Company to buy such plants at a reasonably good figure?* A. They have done that. Q. In a great many instances, haven't they? A. In a great many instances, yes. sir; they did not buy out Mr. Rice's plant. Q. No, I understand that. tA. I have heard in a general way that they would have done so on several occasions and perhaps negotiations are pend- ing now. It is all hearsay. I don't care for you to put that in the record. Q. (By Vice-chairman PHILLIPS.) Is it or not a fact that the Stand- ard Oil Company bought a large number of refining plants and wrecked them? A. Yes, sir. tQ. (By Vice-chairman PHILLIPS.) Paid good prices for them and wrecked them? A. Yes, sir. Q. (By Mr. FARQUHAR.) If they did. Senator, isn't it sometimes a good business proposition to dismantle a plant where you have not trans- portation facilities, and when you can get the same character of oil and product through attaching yourself to another pipe line, and let it go, leav- ing nothing but the bare walls? A. Why, certainly; that is so. Q. As a business proposition any man would do that? A. That is right; yes, sir. Q. (By Mr. KENNEDY.) What is the market price of crude oil to-day? A. The last quotation on that I had was $1.13 at the wells in our fields. Q. A barrel? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) That is white sand oil? A. Yes, sir; white sand oil. Q. (By Mr. KENNEDY.) Can you state to the commission what the cost of production is? A. Well, that varies a good deal; that is one of the uncer- tain quantities. I have spent a great deal of money in sinking wells and got no returns, and I have occasionally been fortunate enough to get a well *In the offlcial report (p. 362) this question appears as follows: "Of course that includes good will and everythlnp; else that c;ops into an establishment of that kind. But from your own experience, do you know wh<'ther it i.^ customary for the Stand- ard, whrn they find a pood, strong refining plant, to crush it out nr huy it up at a pretty good figiire?" It will be seen that this change in the form of the question gives the answer a meaning entirely different from that it originally had. i-Rlack faced type indicates matter omitted, in the course of editing, from the offlcial report. T. F. DAVIS. 185 that was very cheaply produced, and that gave very satisfactory return, so that you can't teil just what that cost is. It is impossible. Q. Well, can you say, in regard to the wells that are productive, what the cost per barrel is. A. Well that varies as to the field. Q. What is it in your field? A. Well, I was going to say, the nearest wells to Marietta are only about 400 feet deep, and they are very productive, while there are several wells of oil at Berea, in the Macksburg field, that vary from 1,000 to 2,300 feet deep, so that you can see there would be quite a little difference in the cost of wells, and in some fields you have to use a great deal more casing than you do in others — three or four strings of casing frequently. In the shallow fields you only use one. Q. (By Vice-chairman PHILLIPS.) The cost of drilling ranges all the way from eight hundred dollars to five or six thousand dollars to the well?* A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) In different locations? A. Yes, sir; in different locations. Q. (By Vice-Chairman PHILLIPS.) And some are more certain than others? A. Yes, sir. Q. (By Mr. KENNEDY.) What is your own total production. Senator? tThe WITNESS. Mine now? Mr. KENNEDY. Yes, sir; the companies tiiat you are connected with. A. Wei!, that varies considerably. It is now about 100 barrels a day. tl have had it as high as 600 barrels a day. Q. You have been in the business a great many years? A. Yes, sir; I have several times thought I was in the business, but when it came to set- tling up. I found I was not; I was behind. Q. Well, is it a profitable business now, even with the Standard Oil Com- pany fixing the price of the crude product, as you say they do? A. Why, yes, sir, it is, as long as you keep sufficient production to pay the expenses of operating. tQ. (By Vice-Chairman PHILLIPS.) It depends on what you strike; a thousand barrel well or a ten barrel well. A. Yes, sir. Q. (By Mr. FARQUHAR.) In a general v/ay, do you think the export of petroleum over the whole world has been of great benefit to this country? A. Yes, sir; I do. Q. You think it has been one of the great factors in holding a fine balance of trade in favor of the United States? A. Yes, sir; it is stated so, yes, sir. Of course there is no question about it in my mind. Q. (By Senator MALLORY.) Senator, some time back you stated that the managers of the railroad — the Marietta railroad, I believe — I don't re- member the name of it — were interested in the Standard Oil Company, and you thought that influenced the dealers along the line of that road? A. They being interested in the Argand Refining Company, the managers of the rail- road company made it appear to the ordinary village merchant that these people were controlling that particular trade. In many cases they controlled the output of coal which supplied the fuel for operating the road, and the miners and operators would purchase their supplies that were furnished by the companies that would do the work. They controlled in that way — collat- erally controlled; not directly by the railroad company, or directly with the merchant. Q. You mean the railroad employes and the employes of the company? A. The coal people, the coal producers — the coal operators. Q. Purchased of dealers? A. In one instance they were supplying the railroad company with their fuel, and operating the mines producing the coal, and of course they were somewhat connected with them. They were not only supplying the coal, but the supplies, that went into producing the coal, to the operators. Q. What I wanted to get at and understand was. what influence was it that controlled these dealers, that you referred to, to your detriment? A. ♦This question In the official report reads: "The cost of drilling is about $.1,000 to $6,000 to the well in different localities?" tBlack faced type indicates matter omitted. In the course of editing, from the official report. 186 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Well, wherever they had control, or were connected with the producing of coal, or other matters that were associated with the manager of the road, they seemed to be able to keep us off. Q. Do you mean to say that they used any direct influence? A. Oh, no; not that we could directly put our hands on; we only inferred it. *Q. You found the fact, did you? A. And the circumstance impressed it upon us, that it was going on. Q. You found it to be a fact that the officers of the company controlled all that in various directions. A. Yes, sir. Q. In the various concerns? A. Yes, sir; and we attribute part of it to that influence. Q. (By Mr. KENNEDY.) A former witness before the commission stated that he believed — stated it as a matter of belief — that a new system of rebates to the railroad companies had grown up, and that it was this: That they furnished lubricating oil to the railroad companies, and the railroad companies paid them for that a great deal more money than it was worth in the market. Do you know anything on that subject? A. No, sir; I do not. I don't know anything about that subject other than I have related. The witness said in his part of the oil field expert oil well drillers get $5 a day, tool dressers from $3 to $3.50 a day, and pumpers from $40 to $75 a month. The contractors, the men who do the drilling and furnish the ma- chinery, get from 60 to 80 cents a foot for drilling. The Standard Oil Com- pany had nothin? to do with fixing these prices except so far as they were interested in drilling wells. Q. (By Mr. RATCHFORD.) I would like to ask the Senator a plain, pointed question on the oil business, which is the burning question just now with this committee. Can you conceive of any business method. Senator, practiced by any of these refining companies, that would not be practiced by others if they had the same power? A. Well. I have given that subject a great deal of careful consideration, and I never have discovered it yet. Q. You have never discovered any? A. No, sir. Q. Is it your opinion that these rival companies, battling against each other, use every means at their command to gain control of the markets? A. I think that is the rule. Q. What effect has this on the consumer in the end? A. Well, it affects different localities differently. The further you get from the oil centers, if you give any one concern, or two concerns, an opportunity of increasing the price, my experience is that they are going to do it, and do do it right straight throu5;h. CHAPTER XII. TESTIMONY OF JOHN D. ARCHBOLD, VICE-PRESIDENT OF THE STANDARD OIL COMPANY OF NEW YORK. Mr. .lohn D. Archbold, of New York City, vice-president of the Standard Oil Company of New York, appeared before the commission on September 8. 1899. He replied to questions asked him by members of the commission and showed the baselessness of such charges against the Standard Oil Company as he considered of sufiicient importance to be noticed, and which had been made by the following witnesses who had preceded him: Mr. .1. W. Lee, president of the Pure Oil Trust; Mr. Theodore B. West- .eate, a director of the Pure Oil Trust; Mr. M. L. Lockwood, of Zelienople, Pa., oil producer; Mr. Frank S. Monnett, Attorney-General of the State of Ohio, and Mr. Theodore F. Davis, of Marietta, Ohio, oil producer. ♦niack faced type Indicates matter omitted, in the course of editing, from the official report. JOHN D. ARCHBOLD. 187 It will be seen that when Mr. Archbold read the voting trust agreement of the Pure Oil Company, Mr. Phillips made an explanation, "very briefly" of the reasons that had caused him to associate himself with this trust, the remarkable character of which at another time caused astonishment on the part of members of the commission. This explanation was stricken from the official report. "Under the existing order we have to combine," said Mr. Phillips. "It is the only way. We are forced into that way of doing business; at least that is my view of it." He continued to say that he was willing to be brought under any restrict- ive legislation that is good for the whole people in the government of com- binations and trusts. In stating that combination was the order of the day and that he was forced to combine, Mr. Phillips only said in another way what practically all the representatives of large industrial combinations had said. Mr. Archbold submitted to the commission a map showing in colored lines, the lines of railroads in the United States the officials of which denied that there had been any discrimination in freight rates in favor of the Standard Oil Company since the passage of the interstate commerce law. This map illustrated how extensively the railroads denying this charge cover the entire area of the United States, but although the commission published a number of illustrations, it omitted to put this map in its report. It will be seen that when Mr. Archbold undertook to show that Mr. Phil- lips and others had approached the Standard Oil Company with a proposition to combine in such a way that they might not be competitors in the usual sense of the word, some members of the commission became very sensitive that "a character" should be assailed. The competitors of the Standard Oil Company had previously been allowed to make assertions for which they did not, and could not produce a particle of proof, and which had seriously reflected on the character and business methods of the Standard Oil people, and no one had suggested that such testimony was at all improper. One member of the commission went so far as to declare that the name of Mr. Phillips should not be used by a witness "in order to cast any reflection on Mr. Phillips." It was a remarkable exemption that a competitor of the Standard Oil Company could sit at the head of a commission and take the leading part in the investigation of his rival, while he himself could not be referred to in rebuttal. The discussion which took place among members of the commission when Mr. Archbold gave his testimony appears in the follow- ing pages, though it was stricken from the official report. Mr. Phillips claimed that if he should be named in the testimony he should have a right, not to cross-examine the witness, but to "make a state- ment," so that it might be reported in the newspapers, together with the remarks of the witness. Week after week the commission had taken the testimony of men who assailed the character of Standard Oil officials by charging that they had been guilty of the most contemptible acts and dis- reputable business methods, but it had never been suggested that anyone had a ricrht to defend them at the time, in order that the explanation and contradiction of such statements might go to the public together with the charges. When Mr. Phillips was reminded that it was customary to swear wit- nesses, and that a member of the commission would object to the chairman or any other member giving testimony without being called as a witness and being sworn, Mr. Phillips suggested that "the chair probably erred in the last statement that he made." It will be seen that when Mr. A. L. Harris suggested that the witness give the amount of taxable property of the oil counties in Pennsylvania at that time, together with a similar statement relating to the period prior to the oil development, in order to answer the charge of Mr. Lee that "these counties are not as well off as they would have been had they never produced a barrel of oil," Mr. Phillips promptly suggested that that would not be a fair comparison, as an "advance has occurred all along in other sections of the country during the same period." This valuable suggestion by Mr. Phillips was stricken from the official report. 188 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The complete stenographic report of Mr. Archbold's testimony taken before the Industrial Commission September 8, 1899, follows: Mr. PHILLIPS. I will state to the commission that Mr. John D. Arch- bold, a gentleman whom I have known for many years, connected with the Standard Oil Company, is present to give us testimony and information in regard to the Standard Oil Company. I am pleased to present Mr. Archbold to the commission. Professor Jenks will take the lead in asking questions of him. Q. (By Professor JENKS.) Will you kindly give your name and address to the stenographer? A. John D. Archbold, New York City. Q. What is your relation to the Standard Oil Company at the present time? A. I am vice-president of the Standard Oil Company of New York at the present time. Q. How long have you been connected with the Standard Oil Company? A. Since 1875. Q. Have you, in anticipation of the examination, prepared any special statement for the use of the commission? A. I have. Q. I shall be glad, Mr. Archbold, if you will give that first, and we will supplement that with questions afterwards. A. Well, the general statement that I have made known to you already. Professor, in answer to the specific inquiries, proves to be not quite ready, and that will be furnished you within a few days. Q. You mean answers to the general schedule? A. Answers to the gen- eral schedule, yes, sir. Q. (By Mr. SMYTH.) I think it would be well if we would ask Mr. Arch- bold just at this stage to give us some detailed account of the organization of the Standard Oil Company, and its different departments. We do not want the names of the individuals, but your transportation department, for instance, how it is managed? A. That will all be furnished — all a part of the statement which is in course of preparation. Professor JENKS. If you will give a general statement in your own way and begin with the points that you care to bring out, we would thank you. Mr. PHILLIPS. The chair would state that there was a resolution passed some time ago that any written matter that was to be presented to the commission would be furnished two or three days in advance, that \\e might get more information on which to base inquiries on certain points, because it would not interrupt the reading afterwards, and all the questions could be better brought out by the commission. There were a few members who were not present when that resolution providing that the written state- ments of the witnesses should be furnished to the commission two or three days in advance, was passed. We have not adhered to that resolution strictly, so that the chair would not consider it out of order for any member of the commission, or Professor Jenks, to ask Mr. Archbold to pause during the reading of the written statement, to give information on any given point. Professor JENKS. Perhaps I should say, Mr. Chairman, that Mr. Arch- bold has kindly shown this statement to me beforehand in the order in which it is to be presented, and he will, of course, give us an opportunity from time to time, as he presents it, to ask whatever questions we see fit. The WITNESS. It will be a matter of preference to me, and I think it will make what I have to say more intelligible to you all if I might first be allowed to answer the criticisms of the witnesses who have appeared, and so let my answers lead up to such other general statement on the subject which I may make. Mr. PHILLIPS. Certainly. The WITNESS. Shall I proceed? Mr. PHILLIPS. Yes, sir. The WITNESS. I answer first the testimony of Mr. J. W. Lee, of Pitts- burg. It is ratheif remarkable, gentlemen, that the first witness to appear before you as a special critic of our business, on the ground of its being a trust, should at the outset, have acknowledged himself to bo not only a mem- ber of, but the real head of a trust. This Mr. TiOe specifically does acknowl- edge, and I may say for your information, that Mr. Lee and his associates have gone a step further than any other company I know of in that they JOHN D. ARCHBOLD. 189 have bound themselves together not only by the ordinary trust ties, but in a voting trust made up of a majority of the stock of their principal companies, with a view to perpetuating their faction in power indefinitely, and practi- cally disfranchising the minority. I make this statement, gentlemen, not as a criticism, but as rather a striking evidence of the irresistible tendency towards combination. I have here a copy of the voting trust of the United States Pipe Line Company, the original trustee under which was a Mr. Wood, who has since died. He has been succeeded under this voting trust by three trustees, namely, Thomas W. Phillips, L. Emery, Jr., and Hugh King. Agreement made April 26, 1893, is as follows: "Whereas, each of the undersigned is a subscriber to the capital stock of the United States Pipe Line Company, and is now a stockholder thereof, and each is interested pecuniarily in the oil business either as refiner, producer of crude, exporter, owner of terminal facilities at or near tidewater, or deal- ers in petroleum and its products for domestic consumption; "And, whereas, we have each of us entered into the organization of the said United States Pipe Line Company for the purposes expressed in its charter, and with the further intent and purpose to secure and furnish to each of us an independent outlet for our products, both crude and refined, not controlled or influenced by others hostile to our respective business interests, and to secure cheaper and better transportation facilities and available mar- kets for our respective products; "And, whereas, to that end. the owners of several oil refineries located in the interior and at the seaboard, in which said refineries some of the undersigned are owners in whole or in part, have by agreements based upon lawful and sufficient considerations entered into contracts to furnish to the said United States Pipe Line Company the product of said refineries for transportation, and said company has also contracts for crude oil for trans- portation from the wells, and for furnishing terminal and export facilities at tidewater, as by said contracts and agreements will fully appear; "Now, therefore, in consideration of the premises and of good, lawful, and sufficient pecuniary and other considerations mutually and severally received, and in order to secure the successful completion of the oil-pipe lines projected and now being laid by the said United States Pipe Line Com- pany, with storage tanks, terminal, transportation, and export facilities, and to each of us in his business, the benefits of the several contracts, agree- ments, plans of operation, secured or being negotiated, made or in contem- plation, and to keep the control of the stock of the United States Pipe Line Comnany in hands friendly to the interests of the undersigned as aforesaid, we the undersigned do bind ourselves, each for himself, severally and not jointly, and each to the others jointly, to the following stipulations, cove- nants, and agreements, each in the sum of one hundred ($100) dollars for each share of stock now he'd by each subscriber, the amount of which is by him now placed opposite his signature hereto, to-wit: "1. We and each of us agree, in manner aforesaid, that all of our inter- ests as subscribers to the capital stock of the United States Pipe Line Com- pany, and our rights under our respective contracts of subscription, and all of our stock as soon as paid up. the certificates therefor and the receipts for the installments paid, be vested in and issued to A. D. Wood, trustee, who shall hold the same for each of us proportionately in trust for the term of five years from the first day of April. 1893, at which date, unless this agree- ment should be extended for a further term, said trustee shall assign and transfer to each of us the stock and certificates so held, unless sooner ter- minated by a vote of three-quarters of the stock so held in trust. "2. We further agree and bind ourselves that each of us, not more than 30 days prior to each regular annual meeting of stockholders, or before any lawfully called special meeting thereof, will make and mail or deliver to said trustee a power of attorney or proxy to vote for each of us at any such meeting or any adjournments thereof, and in case said trustee shall not receive said power of attorney or proxy in time for use at the same, each hereby constitutes the said A. D. Wood attorney in fact to make and sign said proxy or power of attorney in our names for each of us, empowering him, the said trustee, to vote at said meeting or meetings for each. 190 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "3. It is further agreed that upon request in writing of any of the under- signed to said trustee, that he as the equitable owner of said stock or inter- est in capital, desires to pledge the same for a loan of money to the said equitable owner, the said trustee shall, within 48 hours after receiving notice of the name and location of the lender of said money, acquaint a majority of the board of directors of said request and of the name and address of said proposed lender, and shall within thirty (30) days thereafter either lend or furnish to the said applicant an equal amount of money, upon the same time, at the same rate of interest, upon the security of said stock or interest in capital, or else shall in proper legal form assign or pledge the said stock or part thereof, to the lender designated by the said equitable owner of said stock. "4. It is further agreed that no sales of stock so held in trust shall be made by the equitable owner thereof during the continuance of this trust. "5. In the event of the death, resignation or disability of the trustee herein named, his successor shall be appointed by the vote of three-quarters in interest of the signers hereof. The said successor, when appointed, shall have all the powers and shall perform the duties of the trustee herein desig- nated, failing to do which he, or the trustee hereby appointed, may be removed by a three-quarter vote of the stock in interest hereof. "In the event of suit being brought to enforce this agreement, or for the stipulated damages for breach thereof, the same shall be in the name of the said trustee and for the benefit of all not delinquent, as hereinbefore pro- vided. "The said trustee, who shall be a stockholder in the United States Pi:)e Line Company, shall not be held liable, personally, except for gross ne ;li- gence or for the violation of this agreement in its letter or spirit. He shall, before entering upon his duties, accept this appointment in writing, and at the same time enter into a bond or obligation of five thousand ($5,000) dollars that he will faithfully discharge his duties in accordance with the terms and spirit of this contract. "It is further understood and agreed that in voting said stock the parties hereto and said trustee shall vote for persons as directors, interested in the business of refining, producing and exporting oil, as herein stated and as near as may for members of each in proportion to the interest of each class of capital. "In witness whereof the said parties have hereunto set their hands and seals the day and year first above written. "I named as trustee in the foregoing instrument, do hereby accept the duties of the trust, and bind myself to perform the same in accordance with law and the letter and spirit of said agreement, in the sum of five thousand ($.5,000) dollars, to be paid upon breach hereof. (L. S.) "April 1893." T present also, as being perhaps more easily understood, a printed copy of the voting trust agreement of the Pure Oil Company* tQ. (By Vice-Chairman PHILLIPS.) Will you just allow a remark there? My name is mentioned in this, and I will just explain to the commission that I am connected with this combination, and I have sold out my interest in two combinations. Professor JENKS. How is that? Vice-Chairman PHILLIPS. I am connected now with a combination (as my name has appeared) formed under the laws of the State of New Jersey. Mr. SMYTH. Do you wish this to go down as evidence, as testimony, Mr. Phillips? Vice-Chairman PHILLIPS. Well, I would like to make that statement to the commission and I have no objection to its being taken down very briefly, very briefly. Under the existing order we have to combine. It is the only way. We are forced into that mode of doing business; at least that is my view of ♦This voting trust agreement, together wilh a modified form as furnished tn the cnmmission by J. 'W. Lee, will be found iii Ch.TPtor IIT. tRlack faced type indicates matter omitted. In the course of editing, from the oflflcial report. JOHN D. ARCHBOLD. 191 it. But I am perfectly willing to come under any restrictive legislation that is good for the whole people, in governing these combinations or trusts. That is public and understood. I was in the State of New Jersey last week in connection with the combination there, and am the trustee as stated. A. (Mr. ARCHBOLD continuing.) Mr. Lee charges that we fought the passage of the free pipe line bill in the Pennsylvania Legislature, and that we caused dodgers, or small hand bills, to be circulated, saying that if the free pipe bill became a law the orchards would be destroyed, springs pol- luted, death lurk at their door-sills, and so forth and so forth. I want to deny that in toto. In those early days to which he referred we were in favor of the passage of the free pipe law in the State of Pennsylvania. We desired it. We were entering the pipe line business and fully understood its great importance to the future of the petroleum trade, and it is not likely that we would have prejudiced our own cause by any such action as Mr. Lee claims. Q. (By Representative LIVINGSTON.) You deny the issuing of the cir- cular? A. I deny the issuing of the circular in toto. I never knew of the circular until it was referred to in his testimony. Q. Do you know if such circulars were issued? A. I do not. I never heard of that before. Q. You do not know who issued them? A. I do not know that they were issued. Mr. Lee refers, in the way of criticism, to our course regarding our relations with the Pennsylvania road, in connection with the Empire Trans- portation Company's refinery. I may say, in a word of explanation, that, at the time specified, people prominent in oflficial relations with the Pennsyl- vania Railroad engaged in the petroleum business on their own account. We, deeming that outside of the regular province of a railroad company of which we were large patrons, discontinued our shipments over the Pennsyl- vania road, transferring them to the other great lines. This loss of traffic fi.nally brought the Pennsylvania officials proper to a negotiation regarding this special refinery business to which I have referred, and these negotia- tions resulted in our purchase of those refineries, and in our again becoming patrons in the way of transportation of the Pennsylvania Railroad. That is the exact history of the case, simply told. Q. (By Mr. SMYTH.) Are you walling to state what those negotiations were? A. Well, I would be glad to if I had them in mind, but it is a trans- action of nearly 20 years ago, and I cannot give any really exact outline of it. Q. AVere there considerable advantages offered to the Standard Oil Com- pany over other shippers? A. There was no advantage offered to the Stand- ard Oil Company. The advantage was in favor of their own people, as we felt it to be, and that was the main reason for our discontinuing our ship- ments on that road. Q. After these negotiations did the Standard Oil Company secure better rates than other refiners? A. I go into that very fully in answer to the specific charge in that respect. Q. (By Mr. FARQUHAR.) Were the Pennsylvania Railroad holders of oil participants with you in transportation at the s?.me time you made arrangements with the Pennsylvania? A. No, their relations ceased. Q. (By Professor JENKS.) Can you furnish that account more in de- tail? A. Oh, undoubtedly, if you desire it. The Empire and Green Line were corporations doing business over the Pennsylvania Railroad, the stock of which was owned by the officers and managers of the railway. Through these companies the railway became interested both in transportation of oil by pipe lines and in the refining of oil. The Standard Oil Company claimed that the railway discriminated in freights in favor of its own refineries, and refused to ship over that road. This led to negotiations for the sale of the pipe lines and refineries to per- sons interested in the Standard. This sale took place October 1, 1877. The railway first purchased from the Empire and Green Lines all the pipe lines and refineries which they owned, which it was empowered to do by virtue of an existing contract, and then conveyed the pipe lines and refineries to the Standard parties.* *This statement was furnished in accorc!:ince with the request by Professor Jenks and inserted in testimony afterward. 192 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. Lee goes quite into detail in reference to the allegations regarding preferential railroad rates that he claims were given to us during that early period of the oil business. I want to answer all charges made at different times during his testimony at once and as definitely as possible. He treated first the well worn statement regarding the deductions originally made by Mr. Emery, or alleged to have been made by him, from the testimony of Mr. Cassatt, an official of the Pennsylvania Railroad, covering alleged rebates paid to our company for a certain period. I have here and I desire to leave witli you a statement of the analysis of Mr. Cassatt's testimony in that regard, prepared by our counsel at the time, showing the utter falsity of Mr. Emery's statement. Mr. Emery's statement was made on an absolutely false hypothesis throughout. There never was any foundation for it. It was one of those catching statements, lies, you might term them, which take hold and travel fast. It has been denied over and over again, but the people who agitate these questions have adopted it as one of their stoclt features in trade, and have kept on repeating it *until I believe, at this time, nearly 20 years since it was made, even Mr. Emery himself begins to believe it to be true. I have no right to say that, but there is a suspicion that that may be true. I desire to submit this analysis, which I will read, as it is so important to the ques- tion: (Reading.) "The assertion that Mr. Cassatt testified that $10,000,000 was paid to the Standard Oil Company as rebates from October 17, 1877, to March 31, 1879, was first made by Mr, Lewis Emery, and in an examination before the Com- mittee on Manufactures of the Fiftieth Congress, May, 1888, he shows how he deduced these figures from the testimony referred to. I quote from page 241 of the volume containing that testimony: " 'Q. (By Mr. GOWEN.) You were also the authority, were you not, for the statement which is referred to in Mr. Dodd's book that it was proved during that examination that in a period of, I think, 17 months " 'The WITNESS (Mr. EMERY), (interrupting). Seventeen and one-half months. " 'Q. (Continuing) the four railroad companies had paid to the Stand- ard Oil Company $10,000,000 as rebates on the oil carried by them, were you not? A. Yes, sir. " 'Look at that paper (handing paper to witness) and state whether you made an analysis — an examination of the testimony given by Mr. Cassatt, the Standard Oil Company people and other railroad officers in that suit, in order to ascertain what the total amount of money paid over as discrimina- tion during that period of seventeen and one-half months was? A. I did.' Mr. ARCHBOLD (Continuing). "The witness then presented a paper prepared by himself, which, if true, showed a rebate to the Standard Oil Company of 64 1/^ cents per barrel on refined oil, 29 cents on crude oil from one district, 26% cents on crude oil from another district, and 221/^ cents per barrel on crude oil paid to the American Transfer Company. He added these figures, divided them by three, and claimed 55 cents as the average rebate to the Standard. He then took the total consumption of oil from October 18. 1877. to March 31, 1879, to-wit, 18,556,277 barrels, and multiplying by 55 cents produced $10,155,218. which he claimed showed was the amount of dis- criminatory rebates paid to the Standard in 17 months. "Mr. Emery did not pretend to have any personal knowledge of the sub- ject. He pretended to compile his figures from the evidence of Mr. Cassatt. That evidence is published in the same volume which contains Mr. Emery's evidence. To reach this result, Mr, Emery had to make these absurdly false assumptions: "1. That all oil consumed was shipped eastward over four trunk lines, and was all shipped by the Standard Oil Company. "2. That all these trunk lines paid the same rebate as the Pennsylvania Railroad Company. *BIaok faced type Indicates matter omitted, In the course of editing, from the official report. JOHN D. ARCHBOLD. 193 "3. That the shipments of oil of the class on which the rebate was 64i/^ cents was equal to the shipments of oil of the class on which the rebate was 261/^ cents. "Eliminate these gratuitous assumptions from Mr. Emery's statements, and his conclusion is shown to be ridiculous. "These gratuitous assumptions are as nothing, however, compared to the gratuitous falsehoods embraced in the figures given. The claim is that a discriminating rebate, averaging 55 cents was paid to the Standard Oil Company from October, 1877, to March 31, 1879, by four trunk lines. "The evidence of Mr. A. J. Cassatt, which is referred to for the truth of these statements, refers only to one trunk line, the Pennsylvania Railroad, and shows: "1. That the Standard Oil Company shipped no oil over the Pennsylvania Railroad until July, 1875. That the Pennsylvania Railroad was then inter- ested in refining in competition with the Standard, and not only allowed the Standard no preference, but discriminated against it to such an extent that the Standard stopped shipping over the road in March, 1877. "2. That in October, 1877, the Pennsylvania Railroad and the Standard entered into an agreement by which the Standard Oil Company was to have a commission of 10 per cent, on all freight furnished by It in consideration of the Standard agreeing to equalize oil freights on the four trunk lines. "3. That this agreement did not effect a discrimination even to that extent as against other shippers over the Pennsylvania Railroad prior to May 1, 1878, because said shippers had contracts extending to that date, which were excepted in the contract with the Standard. "4. That the Pennsylvania Railroad was willing and offered to carry oil for all shippers on the same terms with the Standard, excepting only the 10 per cent, commission for which it demanded like considerations. "5. That it did continue to carry for all shippers who did all their busi- ness over its line as low as for the Standard, commission included. "6. That shippers not using the Pennsylvania Railroad were able, after May 1, 1878, to get oil east by the Erie Canal lower than by rail, and shipped their oil by that route, in consequence of which the Pennsylvania Railroad shippers were paying greater freight rates than other shippers. "7. In consequence, the Pennsylvania rate was reduced to those who continued to ship by that line 44 1/^ cents on refined, making the net rate $1; said 44V2 cents being paid as rebate. "8. For the same reason, namely, to meet canal rates, in July, 1878, the rate to those who shipped by rail was further reduced 20 cents, the 20 cents being paid as a rebate, and refunded back to May 1, 1878. "9. That these rebates were paid to all shippers who shipped entirely by rail and were for the express purpose of putting them on equality with those wlio shipped by canal. "10. The same is true of the rebate allowed on crude oil during the same period, except 10 per cent, paid to the Standard and 22^/^ cents paid to the American Transfer Company, the latter being the pipe line's share of a through rate. "11. That the rebates which were paid from May 1, 1878, to equalize rail and canal shipments were discontinued December 8 of the same year, when the canal was closed. "12. All payments of rebates entirely ceased March 31, 1879. "The result of the testimony is that while there was an agreement for a 10 per cent, commission between the dates referred to there was, in fact, no discrimination against shippers by the Pennsylvania Railroad, that the rebates were paid to all shippers over that line and that they were paid to put shippers on that line on an equality with shippers by canal." Q. (By Mr. SMYTH.) Do you put that in as a part of your testimony? A. I make that as a part of my testimony, and I hope it will be in the record of the proceedings of this commission, as a final answer to those lusty old lies about the $10,000,000 rebate. Q. (By Representative LIVINGSTON.) Do you say now, in your place as witness, that there have never been any rebates in favor of the Standard Oil Company of any amount at any time? A. I am proceeding with the statement. 13 194 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. I understand that you deny everything that has been said here before about rebates? *Mr. FARQUHAR. Oh, no. The WITNESS. This is specifically the Cassatt matter. Representative LIVINGSTON. I don't want specifically anything. I want to know. Mr. PHILLIPS. I understand that Mr. Archboid will take that up after- wards. The WITNESS. Oh, yes, sir; I will go right into that and be glad to answer any questions about it. Mr. Lee maizes the statement that the railroad companies are now sys- tematically robbed by their own officers through the making of discrimina- tory contracts with the Standard Oil Company for lubricating oils. *Mr. Lee and his coadjutors seem rather to have reached the conclusion that the old lies about special tariffs have been pretty well worked out. and they had to work up something new. I had never heard of this allegation until it was brought out here by Mr. Lee and some other witnesses who have appeared before you. I want to deny it absolutely and entirely as being utterly untrue, and I challenge them to produce a scintilla of evidence in support of their allegation. Q. (By Professor JENKS.) Perhaps, Mr. Archboid, you will note that Mr. Lee says he does not state that to be absolutely true, but it is a matter of belief with him. A. It is the same old method, yes sir; the same old method. He does not know it to be true, and he could not know it to be true, and I challenge him to make any showing of any such thing at any place or at any time. Q. You say that it is not true? A. I say that it is not true. In giving the answer as to whether the Standard Oil Company is now receiving dis- criminatory rates, he does not answer directly, but goes back to the 1889 case, in which the Standard Oil Company was in no way involved, was not in the case referred to by Mr. Lee, and the same is true in a number of other cases also. It was not shown that there was any discrimination in favor of the Standard Oil Company, and as a matter of fact the Standard Oil Company was not given any such discriminatory rates. I make that answer more specifically in reference to the case of the period to which he refers in his testimony at that time. Q. If there had been any such rates, Mr. Archboid, you would have known of them? A. I would have known of them. Q. It would be impossible for any such rates to be in existence without your knowing it? A. It would. I would have known it. Further, the cases referred to in Mr. Lee's testimony as pending in the United States Court to recover discriminations, are really cases to recover freight which the rail- roads charged the refiners on barrels. The Interstate Commerce Commis- sion decided that railroads carrying in both tank cars and barrels should carry barrels free, and the railroads refusing to accept such a decision, are testing the question in the United States Court. It is fair to say that the same charge for carrying barrels was made against the Standard Oil Com- pany, and if the refiners are successful in recovering, the Standard Oil Com- pany will have a claim for a very large amount. Q. Against the railroads? A. Against the railroads. We wall be in pre- cisely the same position as the other shippers, if it is decided in the interest of the refiners. Q. (By Mr. SMYTH.) You would claim a rebate of the freight on the barrels of the refined? A. Yes, sir; we are in the same position as they are on that question. I may say, in my opinion, it is a most unjust decision for any court to make, but it is not for me to decide it. In answer to the query as to whether the Standard Oil Company was paid rebates on shipments of other people, Mr. Lee answers in an untruthful and disingenuous way, and refers finally to the Rice case as the one possible support to his assertion. The Rice case will be fully answered in connection with the testimony of another witness. It is fair to say here, and I will make ♦Black faced type Indicates matter omitted, In the course of editing-, from the ofncial report. JOHN D. ARCHBOLD. 195 this statement covering ttie entire question of freight rates prior to the pas- sage of the interstate commerce law in 1887, that the shipments of oil or any considerable freight over the roads was a question of special contract. While tariffs were nominally issued, every shipper knew that a special contract could be had, and it was uniformly the rule that special contracts were made for the shipment of any considerable freight. Since the passage of the inter- state commerce law, we have strictly obeyed it. I want to say further in this connection that during the period before the passage of the interstate commerce law, every and any rate of freight was uniformly considered in the fixing of prices at which the oil was sold, *so that as a matter of fact the advantage of the rates went to the consumer and not to the shipper of oil. We were not averse to the passage of the interstate commerce law, and indeed were greatly in favor of it, believing as we did that uniform rates would be better for the business, and there could be no stronger proof of the correctness of this belief than the fact that our greatest prosperity in the business has been realized since the passage of the interstate commerce law. Q. (By Representative LIVINGSTON.) Are your books open to verify that statement? A. To the very utmost. I have thought it worth while, in view of the hard downing of this old ghost, to go into some considerable collateral proof to show the falsity of the charges in reference to discrim- inatory rates, and I now beg leave to submit them to you, and I will of course leave them with you. Q. Is there a suit or suits pending, or anything of the kind on the part of the Interstate Commerce Commission against the Standard Oil Company for rebates now, or have there been since the passage of the act? A. There have been various actions instituted regarding some special features of the carrying law, but I do not know that there are any now pending. I think that they have all, so far as related to our interest directly, been adjudicated. I submit here in answer to direct queries, and they are only a very small part of the entire number that I might have had for the asking, letters from prominent railroad officials representing the railroads of this country, north, south, east and west, answering on their own part and over their own signa- .tures, in reference to the charge of discrimination in any way. These letters on this subject are of the most specific character. I thought it best not simply to rest on our own denial on the charge of discriminations, but to leave these with you as collateral evidence of the falsity of these statements which our enemies and competitors in the business are continually making on this question. I will, with your permission, read some few of these let- ters, and I will submit a map colored in lines showing the different sections of the country reached by the railroads represented in these letters all deny- ing any preferential relations with the Standard Oil Company. I will not worry you, unless it is your desire, by reading all these letters. I will sim- ply read two or three of them, if I may, as samples, and leave the rest with you. Q. (By Mr. FARQUHAR.) Give us the titles of the roads from which the letters come first, and then give the samples. A. I will read first the list: (Reading.) Atchison, Topeka & Santa Fe Railway— Paul Morton, Second Vice-President, Chi- cago, 111. Baltimore & Ohio Railroad— Oscar G. Murray, First Vice-President, Baltimore. Md. Boston & Maine Railroad— W. P. Berry, Second Vice-President and General Man- ager, Boston, Mass. Chicago & Alton Railroad— C. A. Chappell, Vice-President and General Manager, Chi- cago, 111. Chicago, Milwaukee & St. Paul Railway— A. J. Earling, Second A'lce-President, Chi- cago, 111. Chicago, Burlington & Quincy Railroad— Thomas Miller, General Freight Agent, Chicago, 111. Cleveland, Cincinnati, Chicago & St. Louis Railway— E. E. Cost, Freight Traffic Manager, Cincinnati, Ohio. Delaware, Lackawana & Western Railroad — W. H. Truesdale, President, New York, N. Y. *Black faced type indicates matter omitted, in the course of editing, from the official report. 196 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Erie Railroad— G. G. Cochran, Fourth Vice-President, New York, N. Y. Great Northern Railway— D. Miller. Second Vice-President, St. Paul, Minn. Lake Shore & Michigan Southern Railway— W. H. Newman, President, Cleveland, Ohio. Louisville & Nashville Railroad— S. R. Knott, First Vice-President, Louisville, Ky. New Y'ork Central & Hudson River Railroad— S. R. Callaway, President, New York, N. Y. Northern Pacific Railway— C. S. Mellen, President, St. Paul, Minn. Pennsylvania Railroad— \V. H. Joyce, Freight Traffic Manager, Philadelphia, Pa. St. Louis & San Francisco Railroad— D. B. Robinson, President, St. Louis, Mo. Southern Pacific Company— J. C. Stubbs, Third Vice-President, San Francisco, Cal. Southern Railway— J. M. Culp, Traffic Manager, Washington, D. C. Union Pacific Railroad— H. G. Burt, President, Omaha, Neb. Wabash Railroad— S. B. Knight, General Freight Agent, St. Louis, Mo. Western New York & Pennsylvania Railway— F. T. Johnson, General Freight Agent, Buffalo, N. Y. The following letter was sent to the railroad companies enumerated in the above list: Standard Oil Company, 26 Broadway, New York. Dear Sir— During May and June of this year the Industrial Commission (a body appointed by Congress) had a hearing in Washington. Before this body appeared a number of oil producers and refiners who testified, generally, that it was their belief that the railroads of the United States were givit.g the Standard Oil Company and its interests many advantages on its shipments of petroleum and its products as compared with those of other oil shippers. We are now and have been, as you know, large shippers of petroleum and its products over your rails, and we would be glad if you would write me a letter stat- ing as fully as you can whether or not, since the passage of the Interstate Commerce law, you have in any way given to the Standard Oil Company or any of its repre- sentatives any lower rates of freight, either by direct tariff, rebate, underbilling, or in any way given to it or its representatives any advantage on the carriage of its shipments over your rails as against any other shipper. In other words, have not the Standard Oil Company and its interests paid the same rate per 100 pounds on its shipments, whether in tank cars, carloads, or less than carloads, as you have charged other shippers between the same points, and has there been since the pas- sage of the Interstate Commerce law, or is there now, any arrangement or device by which the Standard Oil Company have in any way received any advantage in the transportation of its oil, per KX) pounds, as compared with any other shipper over your road between the same points? If you, yourself, have not full knowledge of the matter referred to, we would be glad if you would confer with your traffic department before answering. It may be that we will show this letter and your reply to the Industrial Commission, and would like for your reply to be as full and explicit as possible. Kindly reply at your ear- liest convenience and oblige. Yours truly, HOWARD PAGE, I will read, if you please, letters representing the different sections of the country. Here is a letter from New England, from the Boston & Maine Railroad, and dated at Boston, August 18, 1899: Mr. Howard Page, 26 Broadway, New York, N. Y. : Dear Sir— Replying to your esteemed favor of the 15th inst. You ask me to state whether or not, since the passage of the Interstate Commerce law, the Boston & Maine Railroad have in any way given to the Standard Oil Company or any of its representatives, any lower rate of freight, either by direct tariff, rebate or under- billing, than has been openly quoted to all other shippers of oil, and I am pleased to be able to state that we have not. Yours truly, W. P. BERRY, Second Vice-President and General Traffic Manager. Also a letter of Mr. S. R. Callaway, president of the New York Central & Hudson River Railroad Company, under date of August 17, 1899: Mr. Howard Page, The Standard Oil Company, 26 Broadway, New York: Dear Sir— Referring to your letter of the 15th Inst. You may state explicitly, for this company and also for the Lake Shore & Michigan Southern Railway Company, of which I was president and am now a director, that no discrimination in the mat- ter of rates has been, since the passage of the Interstate law, extended in favor of the Standard Oil Company over either of these lines. So far as my knowledge goes, no application has ever been made by any of the officers of the Standard Oil Com- pany for any discriminating rate. Yours truly, S. R. CALLAWAY. JOHN D. ARCHBOLD. 197 Also a letter from Mr. Joyce, the general traffic manager of the Pennsyl- vania Railroad Company, dated August 28, 1899: Mr. Howard Page, 26 Broadway, New York City: My Dear Mr. Page— In reply to your recent Inquiry, in which you call my atten- tion to statements in the newspapers relating to the inquiry of the Industrial Com- mission, in which statements witnesses say that the railroad companies pay rebates to tlie Standard Oil Company and permit preferences by undergauging tank cars and by paying fictitious prices for oil supplies; I beg to say that if said assertions are meant to apply to this company, in its relation to the Standard Oil Company, they are wholly groundless and without foundation in fact. Yours truly, W. H. JOYCE, Freight Traffic Manager. And from Mr. Newman, president of the Lake Shore & Michigan South- ern Railway Company, dated Cleveland, Ohio, August 17, 1899: Mr. Howard Page, Vice-President Standard Oil Company, New York City: Dear Sir— Replying to your favor under date 15th, relating to rates charged Standard Oil Company on traffic as compared with charges on similar traffic from other shippers. The Lake Shore Company does not now, and has not heretofore, so far as can be ascertained from the records for a period cf years, charged the Standard Oil Company any less rate per lOO pounds on its property, whether oil or products, in tanks or barrels, carloads or less, than charged to the tradie in general on such prop- erty; in other words, the Standard Oil Company has not received any lower rates on the vast traffic handled by that company than any other shippers of the same com- modities, regardless of quantity. I would further state that the Standard Oil Company nor its representatives have at any time asked that we give them any form of concession, but, on the other hand, have insisted that the full authorized tariff rates be charged on its shipments, and that all other shippers of similar commodities be treated likewise. The conditions in that respect do not iiffer from ihe practice during the time I was connected with the Chicago & Northwestern Railway, as the Standard Company insisted then, as it does now, on application of the tariff rates on all ship- ments of petroleum and its products. Very respectfully yours, W. H. NEWMAN, President. The next is from the Chicago & Alton Railroad Company and is as fol- lows : Chicago, 111., August 17, 1S99. Mr. Howard Page, Standard Oil Company, 26 Broadway, New York: Dear Sir— I take pleasure in stating to you, as I have frequently stated to others and am willing to state before the Interstate Commerce Commission, or any other authority, that in my judgment the Standard Oil Company has obeyed the Interstate law better than any other large shipper in the country. So far as the Chicago & Alton is concerned, the Standard Oil Company has not only declined to accept concessions of any name or nature, but has used its influ- ence with the railroads to maintain agreed and tariff rates, and there has been no arrangement, device or any other plan by which the Standard Oil Company received less rates than any other shippers. The rates granted the Standard Oil Company have been the same that all other oil shippers have had, whether in tank cars, car loads or less than car loads. I have frequently stated to the Interstate Commerce Commission, and to others, that if all the large shippers of the country would co-operate in the enforcement of the Interstate law as the Standard Oil Company has done, we would have an ideal condition. Yours very truiy, C. A. CHAPPELL, Vice-President and General Manager. I will now read the letter from the Southern Pacific Railroad Company. I do not want to tire you with these letters, but wish to make out this case: San Francisco, August, 23, 1S99. Mr. Howard Page, Standard Oil Company, 26 Broadway, New York: Dear Sir— I am in receipt of your letter of August 15, in which you refer to the Industrial Commission which recently met in "Washington and before which ap- peared a number of oil producers and refiners, who testified Generally that it was their belief that the railroads of the United States were giving the Standard Oil Company and its interests many advantages on its shipments of petroleum and its products as compared with those of other oil shippers. 198 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. I respond to your invitation to state the facts bearing upon this question in its relation to the Soutliern Pacific Company, not only because I believe the Standard Oil Company is entitled to it, but I believe that it is my duty to my own company and to the railroad interests of the United States that these facts should be pub- lished. Since the passage of the Interstate Commerce law, the Standard Oil Company has not solicited nor received from the Southern Pacific Company any lower rate of freight for the transportation of oil or of the products of petroleum or anything else in which the Standard Oil Company deals than the lawful, published tariff rales, which at the same time were given to every other shipper of like commodities for similar and contemporaneous service, nor has the Standard Oil Company, in its use of the transportatiiin lines of the Southern Pacific Company, employed any device such Hs misrepresentation of the contents of packages or cars, or underbilling in weights, in order to avoid the tariff or to gain advantage over its competitors. I say that the Standard Oil Company has not employed these devices, because it has not been de- tected in any such attempts, and our system of inspection has been such that I do not believe such attempts could have escaped detection; in other words, according to my observation and experience, and I iiave full knowledge of its transactions with the Southern E'acific Company, the Standard Oil Company has obeyed the law in its spirit as well as letter. Yours trulv, J. C. STUBBS. Now a letter of the St. Louis & San Francisco Railroad Company, of which Mr. D. B. Robinson is president, dated St. Louis, Mo., August 25, 1899: Howard Page, Esq., Standard Oil Company, 26 Broadway, New York City: Dear Sir— Absence from home has prevented an earlier reply to yours of the 15th instant. Since the passage of the Interstate Commerce law, there has been no time that the Standard Oil Company, or any of its subordmate companies, have enjoyed any lower basis of rates on the business handled by our lines, than that which has been charged all other oil companies doing business with us. Tills statement is made absolutely, and without qualification of any kind or cliaracter. In all of our dealings with the Standard Oil Company we have found it to be the rule that they have never in any instance asked us for any lower basis of rates than was enjoyed by any other company. Yours very truly, D. B. ROBINSON, President. I will read the letter of Mr. Culp, of the Southern Railway Company, dated Washington, D. C, August 21, 1899: Mr. Howard Page, 26 Broadway, New York: Dear Sir— Replying to your favor of the 15th instant. Since the organization of the Southern Railway Company, I have been in charge, as traffic manager, of its traffic interests, including the establishment and promulgation of all rates used by it in the transportation of passengers and freight over its line of railway, and I am prepared to say. unhesitatingly and without qualification, that the Southern Railway Company has at no time given to tiie Standard Oil Company, or any of its representatives, any lower rates of freight in the carriage of shipments made by that company over our rails, either by direct tariff, refund, or otherwise, than to any other shippers of similar commodities. Our rates, as issued from time to time, are published and filed with the Interstate Commerce Commission, and with the several commissions of States traversed by the Southern Railway, and the Standard Oil Company has, in no instance, been given the benL-Ht of anything less than the rates so published and filed with these commis- sions, and which are the same figures as are charged all other shippers of petroleum and its products. The policy pursued by the Southern Railway Company is to treat all of its patrons alike, and to fully observe its obligations under the law, and this policy api)lieK as well to shipments of petroleum as to other classes of freight, between points on our line. Yours truly, J. M. CULP, Traffic Manager. Q. (By Mr. FARQUHAR.) Read the Santa Fe letter. A. This is a letter from Mr. Paul Morton, second vice-president of the Santa Fe system. It is dated Ausrnst 17, 1899: Standard Oil Company, New York City: Gentlemen — It is with a great deal of pleasure and satisfaction that I write you in regard to the general belief that the railroads of the United States are giving the Standard Oil Company, and its interests, many advantages on its shipments of petroleum and its products, as compared with shipments of other oil producers. JOHN D. ARCHBOLD. 199 For nearly four years I have had charge of the freight business of this company and never in all that time has the Standard Oil Company's representatives asked for or received better rates than other shippers of oil secure. From* my own expe- rience, I know that the Standard Oil Company does not ask for rebates and I know further that the chief aim of the freight representative of your company has been to have the railroads of the West absolutely maintain the tariff. I wish that other large shippers would take the same position in regard to this matter that your com- pany does. If the terrible pressure from gigantic shippers for inside rates could be relieved, the transportation problem in the country woUid be a very easy one to solve. The position of your company in not asking for special rates and in declining to receive rebates and its effort to keep the rates on oil and its products up has been a common topic of discussion among western traffic men ever since the Interstate Commerc3 law became enacted. I take this occasion to thank you, on behalf of the railroad I represent, for the broad gauged position that you have taken in this matter. Yours truly, PAUL, MORTON, Second Vice-President. Do you desire me to read the letter from the Louisville & Nashville Railroad Company? Q. (By Mr. FARQUHAR.) Yes, sir; if you please. A. This letter is from the Louisville & Nashville, signed by S. R. Knott, first vice-president, dated Lousiville, August 19, 1899: Mr. Howard Page, care Standard Oil Company, New York: Dear Sir— Please refer to your favor of the 15th instant. Having been since January, 1S98, in one position or another charged with the direct supervision of the traffic affairs of the Louisville & Nashv'lle Company, and having been for several years prior to that time directly connected with that department of the company's business, I feel I am, in position to speak most authoritatively upon the subject mentioned in your letter. I beg to say that the Lou'sville & Nashville Railroad Company has not in any way given the Standard Oil Company, or any of its representatives or allied inter- ests, any lower rates of freight, either by direct tariff, rebate, refund, un- derbilling or any other subterfuge or device, than it was at the same time extending to any and all other shippers handling the same or similar traffic, and subject to the same rules, regulations and conditions. In other words the Standard Oil Company has been required to pay and has paid to the Louisville & Nashville Railroad Com- pany the same charges for the same transportation rendered as any other shipper, and there is no arrangement between it or any of its agents and the Louisville & Nashville Railroad Company by which any advantage accrues to it over any other shipper handling similar traffic between the same points over this company's rails. Yours truly, S. R. KNOTT. First Vice-President. (Great Northern Railway Company, Office of Second Vice-President.) St. Paul, Minn., August 23, 1899. Dear Sir— Replying to your favor of the 15th instant, I herewith hand you a let- ter from our general traffic manager, Mr. F. B. Clarke, under date of the 21st inst., which 1 think covers your inquiry fully so far as this company is concerned. I have no hesitancy in stating that since my connection with this company, in November last, the Standard Oil Company have paid the full legal tariff on all ship- ments made by it over this line, and there have been no arrangements by which any less rates were secured. I can also make the same statement with regard to the shipments of the Stand- ard Oil Company over the Missouri, Kansas & Texas Railroad during my connec- tloi with that road from May, 1893, to November, 1898. If there is any further information desired kindly advise and I will take pleas- ure in furnishing same. Yours truly, D. MILLER, Second Vice-President. Mr. Howard Page, Standard Oil Company, New York City. 200 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. (Great Northern Railway, Traffice Department.) St. Paul, Minn., August 21, 1899. Dear Sir— Referring to the enclosed inquiry from the Standard Oil Company with respect to the rates charged on shipments forwarded over the Great Northern Rail- way since the passage of the Interstate Commerce law. My connection with this company dates from December, 1896, since which time I knovv- personally that the Standard Oil Company has paid our company full tariff rates on all shipments we have carried for them. I have made inquiry of those con- nected with the general freight department who were in the service prior to my con- nection with the company and who have had opportunities to know what rates were being charged on the shipments of the Standard Oil Company, and have received assurances that the Standard Oil Company has always paid our company the full published tariff rates on their shipments, and that we have yet to receive the first inti- mation that the Standard Oil Company desired less than the published tariff rates charged other shippers of the same class of goods. Yours truly, F. B. CLARKE, General Traffic Manager. Mr. D. Miller, Second Vice-President. (Erie Railroad Company, 21 Cortlandt Street, New York.) August 29, 1899. Dear Sir— In answer to your letter of the 15th instant to President Thomas, I desire to say, in his absence, that the Standard Oil Company has evinced the strong- est disposition to co-operate with the railroad companies to the extent of paying fair and reasonable rates for transportation of all of its products, based upon and in con- formity with the Interstate Commerce act, and based on my own knowledge and information obtained from other officers of this company that said Standard Oil Company has not been afforded lower rates of freight upon such traffic than the tariffs open to and offered for the carriage of like products between the same points to any other shippers of oil over this company's lines. Yours truly, GEORGE G. COCHRAN, Fourth Vice-President. Mr. Howard Page, 26 Broadway, City. (Delaware, Lackawanna & Western Railroad Company, Office of President.) August 22, 1899. Dear Sir— I noted with some interest that during a hearing before the Industrial Commission in Washington during May and June of this year certain parties ap- peared before that body who testified in a general way that they believed that the railroad companies of the United States were giving the Standard Oil Company, or its interests, many advantages on its shipments of petroleum oil and its products over those accorded other shippers of similar commodities. These statements or this testimony, as it may be so considered, is so much at variance with the facts and the truth as I know them to be that I feel compelled to write you and state the facts as I know them to exist, and to say that I am willing you should make use of this letter as you may desire in refuting the false statements referred to. This company has not, since the passage of the Interstate Commerce act, so- called, given the Standard Oil Company or any of its interests or anyone for it any reduced rates or advantages of any character whatever on its shipments of petro- leum oil and its products different or in any way more favorable than was at the same time accorded other shippers of similar commodities. As I am advised by our people, no one for the Standard Oil Company has, since the passage of said act, ever solicited any concession in any way, shape or form from the regular, established rates, rules and regulations governing the transportation of petroleum oil and its products. Furthermore, I take pleasure In certifying that at the time of the passage of the Interstate Commerce act and until 1894 1 was in charge of the Minneapolis & St. Louis Railway, and from 1894 until 1899 was vice-president and general manager of the Chicago, Rock Island & Pacific Railway Company, in charge of its freight traf- fic; that during my connection with the Minneapolis & St. Louis and the Chicago, Rock Island & Pacific Railways, as aforesaid, neither of those companies ever grant- ed to the Standard Oil Company or anyone in Its interests or for it any concessions from the regular established rales on its shipments of petroleum oil and its products, nor did any official of the Standard Oil Company or anyone else in Its interests ever ask special rates or advantages on its shipments, as against those accorded other shippers of the same commodities. JOHN D. ARCHBOLD. 201 Should it be found necessary or desirable to have the foregoing statement of facts put in the shape of an affidavit or deposition, I shall be very much pleased indeed to put my knowledge of this matter in that shape and place it at your dis- posal for such use as you deem best. Yours truly, W. H. TRUESDALE, President. Mr. Howard Page, Standard Oil Company, 26 Broadway, City. (Cleveland, Cincinnati, Chicago & St. Louis Railway Company.) August 28, 1S99. Dear Sir — 1 have your letter of the loth in relation to certain testimony that was given before the Industrial Commission during May and June of this year regarding shipments of petroleum and its products. If I mistake not, this company is the recipient of a fair share of the traffic shipped by your company in all directions, and we can most positively state, and are prepared to support same by an affidavit, that we have not, since the inception of the Interstate law, paid the Standard Oil Company or any of its agents or branches in any manner, shape or form one mill for the purpose of influencing busi- ness via our line; and that the Standard Oil Company have paid full tariff rates on all shipments over the lino of the Cleveland, Cincinnati, Chicago & St. Louis Rail- way, wnetiier in tanks, carloads, or less than carloads. I do not know what further I can say on this subject, only that if the other large shipping interests would pursue the same policy as the Standard Oil Com- pany in relation to the strict maintenance of published rates, it would eliminate the strife and contention among the railroad companies which often produces un- healthy competition and ruinous rates. Very truly yours, E. F. COST. Mr. Howard Page, 26 Broadway, New York. (Chicago, Milwaukee & St. Paul Railway Company, Office of Second Vice- President.) Chicago, August 18, 1899. Dear Sir— In the absence of President Miller, your letter of the 15th instant has been handed to me. In reply I desire to say that since the passage of the Interstate Commerce act the Chicago, Milwauke & St. Paul Railway has carried a satisfactory share of the business of the Standard Oil Company to all competitive points reached by its lines, and I also desire to say that the full, lawfully published tariff rates have at all times been exacted, and that no concessions or deviations from such lawfully published rates have been granted by this company in any manner or device whatsoever; nor has the Standard Oil Company asked for any concessions or suggested any deviations from the lawfully published tariffs. I wish, further, to state that there has been no discrimination practiced by this company in connec- tion with the business of the Standard Oil Company and that of other shippers of petroleum and its products. Yours truly, A. J. EARLING. (Chicago, Burlington & Quincy Railroad Company, General Freight Depart- ment.) Chicago, August 22, 1899. Dear Sir— Answering your letter of the 15lh instant, I have to say that there never has been a request made by anyone representing the Standard Oil Company since the passage of the Interstate Commerce law for a reduction in our tariff rates, directly or indirectly, either by tariff, rebate, underbilling or otherwise, and no con- cessions have been m.ade by this company, of any character whatsoever, on the business transported by us for account of the Standard Oil Company. It has all been done at published tariff rates, which are open to the inspection of everybody. Yours truly, THOMAS MILLER, General Freight Agent. Mr. Howard Page, Standard Oil Company, New York. (The Baltimore & Ohio Railroad Company.) Baltimore, Md., August 22, 1899. Dear Sir— Replying to your favor of August 19, in relation to rates charged to and collected from the Standard Oil Company on their shipments of oil over the road, we invite your attention to next attached communication from our man- ager freight traffic, Mr. Wight. 202 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. With reference to the Cleveland, Cincinnati, Chicago & St. Louis Railroad, as you know, it lias been a number of years since my connection with that company was Levered, and it is therefore suggested you take the matter up direct with them. Yours very truly, OSCAR G. MURRAY, First Vice-President. Mr. Howard Page, Standard Oil Company, New York, N. Y. (The Baltimore & Ohio Railroad, Office of Manager of Freight Traffic.) Baltimore, August 21, 1S99. Dear Sir— With return of attached letter from Mr. Howard Page, of the Stand- ard Oil Company, would advise that since the Interstate Commerce law became effective the Baltimore & Ohio Railroad has not to my knowledge given the Standard Oil Company or any of its representatives any rate less than published tariffs on oil, whether in tank cars or barrels or by any subterfuge whatever, all such tariffs being filed with the commission and the rates named therein being applicable on all shipments, whether made by the Standard Oil Company or its competitors. Yours truly, C. S. WIGHT, Manager Freight Traffic. Oscar G. Murray, First Vice-President. (Western New York & Pennsylvania Railway Company, General Freight Department, Mooney-Brisbane Building.) Buffalo, N. Y., August 29, 1899. Dear Sir— I am in receipt of your letter of 22d instant, relative to testimony given by Oil Creek producers and refiners before the Industrial Commission in Washington. In reply to your letter, would say that on any shipments of petroleum and its products forwarded by the Standard Oil Company, from or via Western New York & Pennsylvania Railway, the Standard Oil Company have not and are not obtain- ing any advantage in any way, shape or manner, as compared with other shippers of petroleum and its products. The shipments of the Standard Oil Company are charged exactly the same rates and the same weights as the shipments of any producer or refiner between the same points, and no lower rates are given the Standard Oil Company, or to any of its representatives, or through any other party, either through tariff, rebate, underbilling- in quantity or in weight, or through any device whatever; and the charges on such shipments against the Standard Oil Com- pany have been upon exactly the same basis between the same points as charged any other refiner or producer since the Interstate Commerce law was put in force. If it is desired, I am willing to appear before any United States Commissioner In Buffalo and make affidavit to the above facts. Yours truly, EuWARD T. JOHNSON, General Freight Agent. Mr. Howard Page, 26 Broadway, New York City. (The Wabash Railroad Company.) St. Louis, August IS. 1S99. Dear Sir— I note that in the course of the investigation before the Industrial Commission, during May and June of this year, evidence was submitted to the effect that the Standard Oil Company had received advantages in the shipment of petroleum and its products as compared with other oil shippers. I do not understand that specific reference was made to any railroads thus favoring the Standard Oil Company, but I would like to testify in defense of the Wabash Railroad Company that we have not contributed in a discriminatory man- ner to the Standard Oil Company, and that we have not, since April 5. 1887- when the Interstate Commerce law became effective— deviated from our published tariffs in the way of rebates or irregular departure from said tariff in a single instance in the handling of shipments of the Standard Oil Company. We have had but one tariff, which applies alike to all oil shipments handled by the Wabash Railroad Company from that period up to the present time. Yours truly, S. B. KNIGHT, G€neral Freight Agent. Mr. Howard Page, Standard Oil Company, 26 Broadway, New York. JOHN D. ARCHBOLD. 203 (Union Pacific Railroad Company, Office of President.) Omaha, Neb., August 25, 1899. My Dear Sir— Returning to Omaha after an absence, I find your letter of the 15th instant. In reply, permit me to say that as far as my personal knowledge is concerned, and from all the Information I am able to obtain from other officers of this com- pany, the Standard Oil Company has at all times since the passage of the Interstate Commerce act evinced the strongest disposition to co-operate heartily with the rail- roads to the extent of paying fair and reasonable rates for transportation of all of its products. I am unaware that the Standard Oil Company has been in any manner afforded lower rates of freight than the tariffs open to and offered for the carriage of like products for any other shippers of oil over this company's lines. Yours truly, HORACE G. BURT, President. Mr. Howard Page, Standard Oil Company, New York City. (Northern Pacific Railway Company, Office of the President, St. Paul, Minn.) New York, August 23, 1899. Dear Sir— In reply to your favor uf August 15, I take pleasure in saying that so far as the Northern Pacific road is concerned it has not in any way allowed you any rebate or concession on your shipments of oil as compared with any other shipper of oil between the same points; and there is no arrangement or understanding, ex- pressed or implied, by which you receive any concession or consideration not open to every other shipper of the same commodities between the same points upon our line. The same is also true, so far as I can recall, with regard to the relation of your company with the New York, New Haven & Hartford Railroad, during the time I was connected with the same as second vice-president, in charge of its traffic. Yours truly, C. S. MELLEN, President. Mr. Howard Page, 26 Broadway, New York City. Q. (By Mr. SMYTH.) You state very plainly that no rebates or advan- tages in rates have been given to the Standard Oil Company. Have they been given any advantages in reference to the quicker movement of freight — immediate dispatch? A. None that I am aware of. Q. You have not asked for any? A. We have not asked for any. I do not know of any such preferential arrangements. Q. (By Professor JENKS.) Does this general statement that you make cover the entire period since the passage of the Interstate Commerce law? A. Yes, sir. Q. That the Standard Oil Company has not in any way had any preferen- tial relations as regards freight, with any of the railroads? A. That is my particular statement. Q. Preferential relations would seem to cover it. In reference to the period immediately preceding that, you said that before that time for some years the freight rates made to large shippers were made on special con- tracts, and that you had them and presumably others had also? A. Yes, sir; and presumably others had them also. Q. Did I understand you to say. however, that so far as the Standard Oil Company was concerned, the prices to consumers were based upon the freight rate in part, so that the consumers received the benefit of any prefer- ences that you had? A. I make that statement very particularly. Q. You make the statement unqualifiedly that the Standard Oil Company did not receive any benefits from their preferential rates? A. On the other hand, I think the old system in vogue among the railroads prior to the passage of the interstate commerce law was altogether inefficacious. Q. And contrary to the financial interests of the Standard Oil Company? A. And contrary to the interests of the Standard Oil Company. And I repeat again that the strongest evidence of that lies in the statement that I have made that our greatest prosperity has come since the passage of the inter- state commerce law. 204 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Representative LIVINGSTON.) In your answer a moment ago, you said, "in any way covered by the interstate commerce law." A. Yes. sir. Q. Are you getting rebates in any way not covered by the interstate commerce law? A. No, sir. There may be local shipments within a State where the tariffs are not issued, and that I am not familiar with at all; but not to my knowledge in any way that would debar any other shipper in the same business, if there was any such another shipper, from having the same thing; no preference at all. Q. There is some testimony here that on the Pennsylvania Railway, between two given points, that a charge on a tank of oil was $1.80 and that the Standard Oil Company got, or the railroad gave back, 80 cents, and put a dollar into their treasury, and with the independent companies, kept the whole $1.80. How about that? A. I do not know of any such case. Q. Would that be a violation of the interstate commerce law? A. Well, if it was within the State it might not be, but I have never heard of any such case as :^'ou say. Q. You say they charged them all the same rates? A. Every shipper could have had the same thing. To my knowledge I never knew of any such case. I do not know the case you refer to. Q. (By Mr. FARQUHAR.) Are there not many railroads that are not under the interstate commerce law, whose lines are within a State and which are not in the interstate commerce business? A. There may be, but I do not recollect. It is possible that it is so.* tRepresentative LIVINGSTON. But if they work in the United States they are under the law. Mr FARQUHAR. But a road doing a State business and chartered under the State law, is not under the interstate commerce law. The WITNESS. I do not know of any arrangement on our part that would be exclusive in connection with any such railroad facilities. Q. (By Professor JENKS.) Do you wish to make further reference to this freieht question? A. I think that is all. Q. (By Mr. KENNEDY.) Mr. Archbold, in one of these letters your correspondent spoke of your policy in refusing rebates. Have any of the railroad companies ever offered the Standard Oil Company rebates in con- sideration of securing their business? A. Well, that would be a very difR- cult question for me to go into. That the Standard Oil Company during the past 10 or 11 years, since the passage of the interstate commerce law. has not secured large amounts of rebate, but that they may have been offered them at times is undoubtedly true. I have no specific cases to state. fWe have knowledge of such cases on the part of our competitors. It is one of our duties to keep looking after them all a little bit, and we are usually the shining n:ark. We know we couldn't take them even if we were desirous, and we are not desirous, even if we dared, tbut we have to keep looking after them pretty sharply, with reference to our competitors. Q. But you state positively that you have not accepted them in general? A. I state positively that we have not accepted them in general, and I think that I make a pretty good case by the railroads' replies. Q. (By Professor JENKS.) Your statement applies also to your ship- ments within a State. A. Yes, sir; and I speak of this from general knowl- edge. I know of no specific cases where we have any arrangement that would debar any other shipper from being on precisely the same basis. Q. (By Mr. FARQUHAR.) Under the old rule of special contracts was it or was it not a fact that the Standard Oil Company, or any other great company, never needed to solicit special contracts from railroads, but that all railroads, bidding among themselves, offered the special contract and even got below their original contracts themselves? A. Unquestionably. Q. That was the character of all the traffic business before the inter- state commerce law? A. Yes, sir. •In the offlcial report thi.s answer appears as follows: "A. There may be, but I do not know. I do not know, on our part, of nny .irran^ement that would he exclu- sive in connection with any such railroad, if there is such." tl^lack faced type indicates matter ( mittrd, in the course of editing, from the oflBcial report. JOHN D. ARCHBOLD. 205 Q. (By Mr. SMYTH.) That was proved by the case of the Pennsylvania Railroad that you spoke of, when you shipped by the Erie Canal? *A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Do we understand you that large shippers never solicited low rates; that they were always solicited on the part of the railroads? A. I answer the question by saying that a business so large as ours was always solicited by the railroads. t Q. (By Professor JENKS.) In one of the letters you read, a statement was made to the effect that the Standard Oil Company, by not asking for rebates and adhering strictly to the established or published freight rates, had aided in keeping the freights up. Is it your opinion that the railroads, generally speaking, feel that the Standard Oil Company is aiding them in keeping their freight rates up so as to make them good paying roads? A. That is true; all the railroads will say so, if they are frank enough to say so, *as some of them are; and any of you who have contracts with any of the railroad officials of this country, if you will talk with them on that sub- ject, will find that to be the case. Q. (By Vice-Chairman PHILLIPS.) How would keeping the rates up affect the general public? Would it be for the interest of the general public? A. It is to the interest of the general public to have a uniformity of rates under the interstate commerce law. as the public consider it, *and I think they are right. Q. You are in favor of the interstate commerce law *and its being en- forced? A. Yes, I am, decidedly. Q. (By Mr. RATCHFORD.) Mr. Archbold has made himself very clear, I believe, in reference to rebates on the shipments of the Standard Oil Com- pany. We have received specific testimony to the effect that the Standard Oil Company received rebates from the shipments of other companies. What do you know oi that? A. Not true, I reply to that, if you will allow me. *IVlr. RATCHFORD. Indeed I will be very glad to have you say so. Q. (By Vice-Chairman PHILLIPS.) You stated that since the passage of the interstate commerce law your profits had been greater than they were prior to that time. Now, was that due to the passage of the interstate com- merce law, or on account of the larger business and less competition? A The principal cause may have been the growth of the business. One of the causes is the better settled condition of the business incident to the passage of the interstate commerce law. I think that my assertion that the con- sumer was given the benefit of the reduced rates of freight was not only true, but the effect was greater than I have stated it, for in the constant anxiety the manufacturer was necessarily under, that perhaps his neighbor might get a lower rate than he was getting, sellers of oil were always very anxious. I think that oftentimes the price was made lower than it needed to be because of the belief or expectation that lower rates of freight were offered or made. I think the business was sacrificed on that account. Q. But you do not wish to leave the impression that your greater pros- perity or greater income or greater profits were due wholly to the passage of the interstate commerce law? A. No, sir; only because the business has been vigorous. Q. And perhaps competition has not been so extensive? A. I think com- petition has been quite as vigorous. I think so. Mr. Lee made a statement as to the course of prices for domestic refined oil in New York, or Greater New York, during the period from March, 1896, to July, 1896, I think it was. He made the assertion that the Pure Oil Company, the company with which he is connected, having made its advent into the market of Greater New York in March of the year 1896, they found the prices which we were charging to the people of that great metropolis to be nine and a half cents a gallon, and because of their advent and their supposed competition, we *Bla.?k faced type indicates matter omitted, in the course of editing, from the official report. tin the offlcial report this answer appears as follows: "A. I answered that ques- tion by saying that a business as large as ours is sought for by railroads. I do not say other shippers do not solicit rates; I have no doubt they secure them." 206 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. dropped the price there, until in July of the same year, it was five and a half cents. He spoke of this as illustrating not only our method of attack as against competitors, but, I believe, claimed some credit from the people of Greater New York to the Pure Oil Company, because of their advent there. I will read from the list prices of the period named as they prevailed at the time and show that to all the trade in Greater New York and its vicinity our selling price, in March, 1896, averaged seven and ninety-eight hundredths cents, as against his statement of nine and a half cents. Q. (By Professor JENKS.) In that immediate territory? A. In that immediate territory. Q. (By Vice-Chairman PHILLIPS.) Was it immediately before or during the time of the advent of the company? A. Their advent there was in March, according to his statement. Q. Will you give us a statement of the month previous to that? A. I only made it for the period covered by him in his testimony. I can give you the other, and I will also quote from that statement as showing the relation between the two, the crude oil prices as they prevailed. At this time, in March, the average price of crude oil in lots per barrel of 42 gallons was $1.33 a barrel. In April our average price for refined oil was seven and thirty-one hundredths cents, the average price of crude oil being $1.22. In May, the average price of refined oil was six and ninety-four hundredths cents, and the average price of crude was $1.19. In June, the price of refined oil was six and seventy-two one-hundredths cents, and the price of the crude was $1.15. In July, the price was six and twenty-three hundredths cents and the price of crude oil was $1.09. This is only an illustration of the carelessness which marks the state- ments which our competitors make in reference to any feature of the busi- ness regarding which they want to make a point. It is unimportant in itself. Q. (By Vice-Chairman PHILLIPS.) Did you sell any oil in March as high as nine cents per gallon? A. I give the average price of the period. Q. It may have been sold at 10 or 11 cents in the beginning and three or four cents at the close. A. The following month would show that. Q. (By Professor JENKS.) You give these average prices for Greater New York. The statement has been made at different times that it was your custom to find the customers of your competitors and make special cut rates to them, which you could very easily do, and that therefore they were obliged to reduce the price to them lower than what you had offered and that you did that with a good many special customers to whom the Pure Oil Company was trying to sell; also that the reduction would be as low as five and a half cents. Can you make any definite statement as to that? A. I cannot make any definite statement, but I reply broadly that it would be utterly impossible for us to have any great variation in prices to the vari- ous customers in any locality. It would be utterly impossible and it would be dishonesty in the treatment of the customers. I want to say that dishon- est men will not succeed in the oil business, or in any other business. We have our hold on the oil trade during 30 years relations with it because we treat the trade honestly and not dishonestly. Q. You would be safe in stating that in May. 1896, no oil was sold to any customer for less than six or six and a half cents? A. Not for less than six and three-quarters. Mr. Lee makes a statement regarding the difficulty of his pipe line, the United States Pipe Line, in crossing railroads and secur- ing the right of way to the seaboard, and he makes a general statement implying that we have instituted and carried out great obstructions to their progress. I want to make a general denial of this statement and to say that we have not at any time had any relation whatever to any obstructions, or made any effort to obstruct their line that would not attach to any competitor in the line of any business engaging against another. In reference to the crossing of the Delaware & Lackawanna Railroad in New Jersey, referred to by Mr. Lee, and with which he attempts, by implication, at any rate to connect us. I want to say that the contention in that respect was entirely at the hands of the railroad, and not at our hands, in any possible respect. They went there surreptitiously and endeavored to force their way on a Sunday over land where they had no right, either by private purchase or by JOHN D. ARCHBOLD. 207 a public franchise, and having. accomplished the crossing of the road in that surreptitious way, they stationed there an armed force to prevent the rail- road company from asserting its right and taking out their line, and they kept that force there for a long period. The railroad company went about it in a peaceful way in the courts, and the result is that after carrying it finally to the Supreme Court of the State the decision is against the line, and they must of course remove their lines. But any statements on Mr. Lee's part, or on the part of any other witness, that we had anything to do with that matter, or with any of the difficulties of their progress to the seaboard with their line, are absolutely false. Q. (By Vice-Chairman PHILLIPS.) Did the company own in fee simple the tract of ground, or right of way reserved to the landowner, through pur- chase by them? Was that the case? A. Mr. Phillips, it was not my case, and I am not conversant with the details regarding it. After having been fought in the newspapers and in the courts for a term of years and seeking the sym- pathy of the public as well as of judges, the Supreme Court of the State finally ruled against them and that, I think, is the best evidence that the railroad company was right on the question. I want to say in reference to our own pipe lines that we never undertake to cross another man's line without first seeing him about it. Q. Still, did they not go through the railroad on their own ground, and was not the final decision that they had not a right to lay the pipe line whej-e a man had reserved a right of way under the ground? A. It was not only decided that they had no right there, but they were ordered to remove. I want also to present a statement showing the rate of freight which Mr. Lee's United States Pipe Line enjoys from the Central Railroad of New Jersey on the crude and refined oil also transported over that line from the terminal point of their pipe line to the seaboard; it being a lower freight, I think, than the Standard Oil Company ever had for an equal distance at any time in the history of their business. (Witness here read a letter from the Central Railroad of New Jersey.) Central Railroad of New Jersey's rate to United States Pipe Line, Hampton Junction, N. J., to Bayonne, N. J. Distance, 52% miles; mileage, % cent each way, equals 78 cents per car; empty car returned free. Weight per gallon, crude oil, 6 2-3 pounds; refined oil, 614 pounds. Rate per barrel of 50 gallons. Actual weight per barrel of 50 gallons. Rate per 100 pounds. Rate per car of 10 barrels. Rate per car, less mileage. Crude 0.0692 .0769 333 325 0.0208 .02366 .$8.20 9.22 $7.42 Refined 8.44 The above shows that this oil is being carried 52% miles in tank cars, averaging 120 barrels or 20 tons to the car, at a gross average revenue to the railroad, on the crude and refined oil, of $7.93 per car, and out of this rev- enue the railroad returns the empty car free. The contract between the railroad and the pipe line is for 100 years from January 1, 1894, and provides for various -rates from different points along the line of the Central Railroad of New Jersey to tidewater. The oil is now (and has been for three years) shipped from Hampton Junction, and the above rates are being paid. The contract further provides the right upon the part of the Pipe Line Company to abrogate the arrangement upon five years' notice at any time during the 100 years. The railroad has no right to cancel, excepting for violation of lease. Q. (By Mr. SMYTH.) The lease is on record? A. Yes. sir; it would seem that if there ever was a preferential contract that is one of them. Q. (By Professor JENKS.) You say this is on record? A. It is not a lease; it is a contract. Q. (By Vice-chairman PHILLIPS.) You do not pretend to say that it would be an illegal contract? A. I am not a lawyer, Mr. Phillips. I am not 208 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. passing on the legality of the question. I now want to call attention to Mr. Lee's testimony in which he claims, at great length and with great particu- larity, that we have at different times done our best to buy them out, offered them large inducements in the way of extraordinary prices for their business, and have done our best to get them out of the business by purchases of that kind. I want to say that any propositions of that kind that have been made have come from Mr. Lee's side to us, and I want to say now that these offers for purchases of that kind have been made by pretty much every person in connection with his company, every prominent person in connection with his company, at various times, including not only Mr. Lee, but Mr. Phillips, Mr. Collins, Mr. Murphy, Mr. Jennings, Mr. King. Mr. Mc- Donnell, and as I said pretty nearly every gentleman prominent in the affairs of that company. I want to say further that we have persistently declined to consider any such combination with them, on the ground, first, as we have stated to them at various times, of its illegality, and, second, and this would have been enough in itself, because of our unwillingness to enter into any business relations with them, because of our lack of faith in them. We had had experience with the gentlemen, different ones of them at different times, and we would have known better, even if there was not the illegality in the way of such a combine that it was impossible for us to have entered into any such relation with them. I make the fullest possible denial of Mr. Lee's statements that we have gone after them in reference to any pur- chase or combination, and 1 make the further statement that they have, up to within this very day, or within the period of the sittings here of this commission, approached us upon this question Q. (By Vice-Chairman PHILLIPS.) Do you mean to include all of them? A. I mean to include the gentlemen that 1 have named, and others that I have not named. Q. Have any persons, either a gentleman or gentlemen, never come direct from your office to solicit the selling of these interests to you? A. No, sir; I say promptly, no, sir; the approaches that have been made have come from the other side of the case, and the answer is as broad as I can make it. Q. You have no knowledge of a person coming from your office and so- liciting a transaction with these people? A. I have knowledge of persons coming to our office — you came there in the interest of different people. You came there in connection with it, if that is what you mean. Q. Was not that to stop the litigation that was going on in New Jersey, and to have a right to live as a company? A I do not know what yoii mean by that. Mr. ROGERS. May I have the privilege of prompting Mr. Archbold? Vice-Chairman PHILLIPS. Certainly, you have the privilege. Mr. SMYTH. I should think so, certainly. Vice-Chairman PHILLIPS. Any information of that kind is entirely ad- missible. A (After conference with Mr. Rogers.) I answer broadly again, after conference with Mr. Rogers, that we have never sent anybody to you for any such purpose. Q. (By Representative LIVINGSTON.) Now, have you got their propo- sitions to you so that we can see them? A. No, they were all oral. You don't catch them making any written propositions. They are too crafty for that. Q. (By Vice-Chairman PHILLIPS.) Do you say, Mr. Archbold, that you were approached by a person, or those persons, at all in an unfair, unjust or wrong way? A. No, I do not say so. I do not say so at all. It may have been entirely fair and just in their view, but their proposition, in our view, was illegal and not to be entertained. Q. Was that not after you had purchased a large amount of stock, a controlling interest, in the Producers' Oil Company, Limited, and also had purchased a large amount of the United States Company's stock, and was it not to make some fair, honorable and just contract that would leave those companies the privilege of living and doing business, years ago, when they were badly crippled by the opposition of the Standard Oil Company, by the lowering of prices in Europe and other places? A. In using your own case. JOHN D. ARCHBOLD. 209 Mr. Phillips, as an illustration, and you can hardly find fault with that, I do not think that at the time you came to Mr. Rogers and myself you raised any question whatever in reference to any possible minority ownership in any of those companies on our part, but your proposition was simply that a division of the business be made, so that you would have a percentage, and we a percentage, and we would co-operate in the marketing of the oil, and in all that appertains to the welfare of the business. Is it not so? Q. Well, was it not to get the privilege to handle the capacity of the lines that then existed, and to cease further opposition, and to do away with the opposition which was very badly crippling these companies? Had you not at that time lowered the price of oil in Germany so as to make it entirely unprofitable? The refiners had lost very large sums of money, and you had bought out a per cent of the refineries that were engaged in these independent lines. A. Nothing of this kind existed. Our business was en- tirely satisfactory, was on a profitable basis in Germany and elsewhere, so far as I am aware, and we had no special desire for a combination with you, as was evidenced by the fact that we were unwilling to entertain it; and I now state that the further reason why we were unwilling to entertain it was not only because of its illegality, but because of our lack of faith in the individuals representing it. There can be no question about that answer. Q. There was a purchasing agency established by these independent companies abroad, and Mr. Poth was managing that business for them there. Did he not sell out to the Standard Oil Company all the tankage procured in Germany, so that these companies could not do business, and did they not re-establish connections and send agents there, and build entirely new tankage, so that oil could be received and distributed in Germany? For several years did you not put the price so there was no profit, and during that period did you not buy out a number of the largest refineries that were connected with these companies? A. My answer is that none of these questions had anything to do with the propositions for combining. You came to us, seeking this combination. That is my statement, and you dare not deny it; it is true, every word of it. *Vice-Chairman PHILLIPS. Well, I will state to the commission that there were persons connected with these companies that went there, but they did not go there to make any illegal propositions to the Standard Oil Company. Mr SMYTH. Is that testimony? I don't think a member of the com- mission has any right to make a statement like that without going on the stand as a witness. I think Mr. Phillips can take the stand as a witness, and, if he desires to do so, and rebut what Mr. Archbold has said, we will be de- lighted to hear from him at any time. Vice-chairman PHILLIPS. Well, I will at a later time. Mr. SMYTH. We want to be perfectly fair about it, and let you make your statement, Mr. Phillips, but I do not think the witness ought to be in- terrupted. Vice-Chairman PHILLIPS. I would not have done it at all had not my own name been brought in in this case. Mr. SMYTH. Yes, sir; I think you ought to be afforded every oppor- tunity. Vice-Chairman PHILLIPS. Now, you can resume, Mr. Archbold. A. I answer to a query regarding gentlemen prominent in the Standard Oil Company. Mr. Lee saw fit to speak of them in a most depreciatory way. It is not amiss for me to ask these gentlemen to think for a moment of J. D. Rockefeller, William Rockefeller, H. M. Flagler. William G. Warden, Charles Pratt. J. A. Bostwick. Benjamin Brewster, Henry H. Rogers. W. H. Tilford. .Tames McGee, and I might mention scores of others prominent in the Standard Oil connection, whose business genius and boundless energy have been given to the building up of the petroleum industry. Will you think of these gentlemen in comparison with the men who have appeared here to defame them? I might justly go further, and speak of the benefi- cent use these gentlemen are making of their substance, but they require no such eulogy at my hands. •Black faced type indicates matter nmitted. in the course of editing, from the official report. 14 210 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION, *Mr. A. L. HARRIS. I think personalities should be avoided in this com- mission as far as possible. It certainly will cause personality again in re- turn. Where will we stop if personalities are brought in. Individual mem- bers of this commission have been named, and it does seem to me that the orderly rules of taking testimony in court should be observed by this com- mission, and that a character should not be assailed personally. The facts may be stated, but I do not think it is proper that individual character should be assailed in the way that is being done. I merely make that as a state- ment. It will necessarily, of course, reflect to some extent upon the com- mission, upon the chairman of the commission, and he feels when these attacks are made that then is the better time to explain. Now, I really be- lieve that we will make better progress, and while this is a heated contest Representative LIVINGSTON. I want to make a suggestion to you. Gov- ernor. Mr. A. L. HARRIS. When I am through I will listen to a suggestion, but what I wanted to say was that we should proceed in an even-tempered way. The WITNESS. I have no other possible desire than that I am only answering what has already been said. Representative LIVINGSTON. I think that this commission had better have an executive session for a little while, and see how we will conduct this examination. We are getting into difficulties here. This is a public commis- sion, and I deprecate them, and I say it ought not to be. Whether these ques- tions are pertinent or not. I want them in the proper way. I think the commission had better determine the line of investigation plainly and dis- tinctly and then call this gentleman back and go on. It is not very com- mendable that the commission should get into a quarrel between ourselves, and I suggest that this be done. Mr. A. L. HARRIS. I think that is a good idea. Mr. SMYTH. Our custom has been to allow the witnesses full freedom in giving their testimony. There have been some very serious charges against the Standard Oil Company by Mr. Clark and others, and they have gone on unchecked and unchallenged, and I think when they come forward to rebut that testimony they ought not to be interrupted or called down. Representative LIVINGSTON. I think the Standard Oil Company ought to have every opportunity and every chance of rebutting any statement which has been made against them on this floor, and I do not care whether it is against the chairman or no, or this whole commission. I think they should have that opportunity. Vice-chairman PHILLIPS. That is perfectly right. Representative LIVINGSTON. But we do not want to quarrel among ourselves about how this investigation shall proceed. Mr. SMYTH. But the other side have had full swing with their wit- nesses. Vice-Chairman PHILLIPS. When an individual is named, that goes out to the press, and creates an impression, and if the person is present it does seem to me that he ought to have the right to explain so that the explanation would come along at the time the person is attacked, especially if he be a member of the commission. Mr. KENNEDY. I want to suggest that we do not limit the witness, and when the testimony is through we individually ought to have the right to cross-examine that witness to the utmost extent. Mr. SMYTH. I think so. Vice-chairman PHILLIPS. If we agree on that, we can go on. But when- ever a member of the commission is mentioned in the testimony, whenever that part is finished by the witness, he shall be at liberty to cross-question, Mr. SMYTH. But not to make a statement, or to give testimony. Mr. A. L. HARRIS. It is due to this commission, if a member of this commission is assailed, that he should have the privilege to make a state- ment, and make it at once if necessary, because it goes out to the press at once when he is assailed, and if he waits a day for the cross-examination to •Black faced type Indicates matter omitted, in the course of editing, from the official report. JOHN D. ARCHBOLD. 211 *defend himself, it has all gone to the public and his answer may not be read in connection with what has been already issued. I want to protect this commission itself. Mr. FARQUHAR. He can have the opportunity the same day. Mr. RATCHFORD. I do not think there is any necessity for the com- mission to go Into executive session. If we follow the rules we have laid down in the past, it seems to me we can take the testimony of this gentleman without embarrassing the commission or any of its members. I have no- ticed for the past few days that personalities have crept into the testimony. I shall at the proper time seek to have them expunged from the testimony of our witnesses. I believe it is unfair, absolutely unfair, that the name of Mr. Phillips should be used, unless where it appears as a stockholder or an officer of this company. It should not be used in order to cast any reflection upon Mr. Phillips. In other words, I believe that the testimony of the wit- nesses should not be made weaker by striking it out where it is necessary, but where it is unnecessary, the name should not be used. The testimony that has been given against the Standard Oil Company by Mr. Lee and others has been given against the company, and I believe the testimony of the company in rebuttal should be against Mr. Lee's company, and not against Mr. Lee. I believe that personalities should not be indulged in, and I hope at the proper time that they will be stricken out of the testimony, so that they will amount to nothing. I hope they will not be indulged in any fur- ther. Vice-Chairman PHILLIPS. Without objection, the witness will proceed and will try to avoid personality in his explanation as much as possible, but the chair insists that if he is named personally he should have a right, as soon as that part of the testimony is given, to make a statement, so that it will go out with the other side, as Governor Harris suggests. Representative LIVINGSTON. Not only the chairman may be assailed, but any member of this commission; is that right? Not to interrupt the testimony while it is being given, but wait in an orderly way until the latter part of it is complete. Mr. SMYTH. I don't object to the cross-examination, but I do object to the chairman or any member of the commission giving testimony without being called as a witness, or without being sworn. We swear our witnesses. This testimony is being given under oath, and I do not think it is proper for a member of the commission to contradict the witnesses or to give testi- mony. I deprecate these personalities as much as anyone, but I can under- stand very readily how one can fall into them. It seems to me that the wit- ness has a right to give his testimony in the way that he wants. Vice-Chairman PHILLIPS. Yes, sir; that is true, and I think the chair probably erred in the last statement that he made, but when the chair alluded to the circumstances that led up to this conversation and how it came about, and in view of the great opposition these people were meeting with at that time both in Europe and America, in the purchase of stock and so on, I had a right to ask Mr. Archbold whether these things were not facts. Mr. SMYTH. I think you had a right to ask the question. It was your testimony I objected to. The situation is this, as I understand it: The Pure Oil Company stated that overtures came from the Standard Oil Company to buy them out and consolidate. The Standard Oil Company denied that and said that the overtures came from the Pure Oil Company. That is simply a matter of testimony. Mr. A. L. HARRIS. Did the Pure Oil Company name any price to the Standard, or was it the Standard? Mr. SMYTH. I don't know that the Standard even named a price when they came to them. Mr. A. L. HARRIS. Without naming a price. Representative LIVINGSTON. Yes, sir; that is in contradiction to the statement that was made on the other side. I would suggest as to these inquiries, that one party is sworn and the other is not. Mr. SMYTH. One is a witness and the other is not a witness. ♦Black faced type indicates matter omitted, In the course of editing, from the official report. 212 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. ^Representative LIVINGSTON. Now, if the chairman or any member of this commission wants to contradict a statement, let him be sworn. Vice-Chairman PHILLIPS. The chair would be perfectly willing to be sworn to the fact that he was approached by persons who said they came on that question, and they deny it. Mr. SMYTH. I move that the witness proceed with his testimony. Vice-Chairman PHILLIPS. It is not necessary for a motion. Mr. Arch- bold, you will please proceed. A. (Mr. ARCHBOLD, resuming.) Mr. Lee said ttie prices of the refined products would be lower all over the world if the Standard Oil Company w^ere abandoned or dismantled. I will not occupy your time by any long argument in refutation of the most absurd position that it we were really out of existence, and had out of existence that which represents to-day two- thirds or three-quarters of the active capital, energy and equipment em- ployed in the manufacture and distribution of oil, the price would go lower, but I would call your attention to what Mr. Lee said in practically the same breath, as showing his utter inconsistency. He gives it as his opinion that if the Standard Oil Company were out of the way prices would be lower, and in the same breath testifies that he wants them out of the way because for five years he, in his own business, has not made a fair manufacturing profit. The utter inconsistency of his testimony is shown by this question and answer. (Reading from Mr. Lee's testimony.) "Q. (By Mr. NORTH.) What do you call a fair manufacturing profit? A. They (the independents) would be entirely satisfied to do this business at 10 cents a barrel on crude oil that runs through the refinery. I think the Standard Oil Company makes from $1.50 to $2 on every barrel that goes through their works." If it is true that the Standard Oil Company makes $1.50 to $2, and they cannot make 10 cents, they are not good people to serve the public. He says the quality of Standard oil has deteriorated because of using Ohio crude, and that the reason is that Lima oil contains arsenic and sulphur. I want to say of the gentlemen connected with the companies represented by Mr. Lee that they have from the very beginning of the great production of oil in Ohio and in Indiana, and because of their small interest in competition in the Pennsylvania region, done their very utmost toi depreciate and dis- credit the standing of the products of Ohio oil in the markets of the world. They came to New York, and before the New York Produce Exchange made a very vigorous effort to have the exchange rule that refined oil produced from Ohio crude should not be a good delivery in the markets of the world. Their course is thoroughly indefensible in respect to the great interests involved in those States, and nothing but the most active effort on our part has saved to those States the markets which are to-day giving them a profit that is inuring to them in the production of the oil in those States. And I want to say that this is in spite of the fact, which they must have known, or could have known if they had any intelligence on the subject whatever, that after the sulphur element in the Ohio oil was conquered — and it was a difficult work to conquer it, but which we applied ourselves to successfully — - the average quality of the refined oil produced from the Ohio crude has been and is equal to that produced from the Pennsylvania crude. That is now admitted by all buyers and in all markets and it is known to consumers, where they know anything about it at all. The talk which the agents of the Pure Oil Company have made, and continue to make, as to the superior quality of their products over even that which we make from the Ohio crude is entire nonsense; it is not true. I want to call attention to Mr. Lee's testimony given somewhat in detail, indicating that we ol)tain higher prices for oil al)road than we do in this country. If that is so — and I do not admit that it is so, but admitting for the sake of the argument that it is so — it is a pretty good argument that the consumers in the United States are being very well treated by the Standard Oil Company. He makes a long talk about foreign governmental control, which is as •Bl.Tok facfd type indicates matter emitted, in the course of editing, from the offlrial rr>port. JOHN D. ARCHBOLD. 213 silly as anybody ever listened to, and I will not take the time to comment on \t. He makes a statement regarding the comparative population and oil consumption in Germany and France, and I refer to his statement only to show you how exceedingly careless he is in respect to statements made before this body on matters in which he seeks to influence your minds and that of the public. (Reading.) "Q. Abroad where the oils of the independent refineries go which are not of such a standard as to be consumed in the States here, does it come in competition with the oil sent abroad and sold by the Standard Oil Company? A. Oh, yes, sir; the Standard has a very large business in Germany. Ger- many is the largest oil market in the world. I think the population is about the same as France, and it uses probably twenty times as much oil as France. I think I am not far wrong in that." The relative population of Germany and France by the last census of 1891 was, German population, 49,421,803; French, 38,343,192. The consump- tion of oil in the year 1898, the last year of record, in barrels of 50 gallons, was, Germany, 3.357,297 barrels, and in France, 1,683,146. Mr. Lee said that it was twenty times as great in one as the other, and their population was about the same. I submit this statement to the commission. He makes the statement that the Standard fixes its own prices at which it buys coal, and is thus enabled to oppress not only labor in its own line of business, but also coal labor, The statement is absolutely absurd and untruthful. The Standard Oil Company buys its coal on competitive offer- ings, and if the price is so low as to compel low prices for labor, it is the result of competition. He claims that prices were fixed by the South Improvement Company when he knows well that the South Improvement Company never did any business. He goes into an elaborate argument to prove that the prices paid for crude oil have been unremunerative to producers. This charge, which is more spQcifically, and I might say hysterically, made by Mr. Lockwood, I will answer when I reach Mr. Lockwood's testimony. In answer to a query, Mr. Lee says that the Standard Oil Company largely supplied Eastern mar- kets with Russian oil and made their tin cans abroad. Our business in the carrying of oil for the markets where the oil must be put into tin cans and packed into wooden boxes for the market, has been a very important feature from the beginning. It is a business in which we have perhaps expended as much or more industry in keeping and maintaining the markets, as in. all other sections of the world combined, because in those sections we have found our great competitor, Russia, most active. In answer to Mr. Lee's statement that we have practically abandoned this business, or that we are buying Russian oil in bulk, and making tin cans abroad in which to put it and send it to market. I present this statement, being a memorandum of our manufacture of tin cans for the five years beginning in 1894 and ending in 1898.* In the five years beginning in the year 1894 we manufactured in the United States, 223,116,660 tin cans, which we packed in boxes holding two tins each, the requirement being in boxes made in this country from our Canadian pine, the lumber being bought here, and the labor being employed here, involving the use of 111,558,330 boxes of wood, holding, as I say, two cans each. And we used in this manufacture 4,590,285 boxes of tin plate. The only business that we do outside of the United States in the manufac- ture of tin cans is where we are compelled to do it by the exigencies of freight: In Mexico City, being a small business; in Vera Cruz. Mexico, a small business; and in Tampico, Mexico, the grand total of which is entirely inconsiderable. We also do a little canning — a very little — in the exporta- tion of bulk oil and the manufacture of tin cans in Italy, at Venice and Savona, where the tariff and the freight question make it necessary that we do all canning there. There is in this great industry employed in steady, remunerative labor, 2,500 good Americans. I present here also a statement *The witness presented a tabulated statement showing the extent of the manu- fucture of tin cans by the Standard Oil Company, wliich is^published on page 533 of the official report. 214 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. to show the exports of refined oil in cans from Batoum, Russia, from 1894 to 1898, inclusive.* I present this statement for the purpose of having you understand something of the menace which attaches to this business at the hands of this great Russian competitor. Our aggregate in all this great business with the East which we have made such a fight to retain for the American petroleum industry, is now 109,000,000 cases for the five years, as against Russia's 53,000,000. But for the year 1898— which perhaps I should read to you as showing the change in the matter — their shipment was 10,728,603 cans against our shipment of 22,479,745. I also present here a statement which you gentlemen can look at at your leisure, and I think you will find great interest in studying it, showing the enormous exportation of this particular packing of oil in tins and cases to the markets of the world. It is a business, as I say, competed for by these foreign countries most vigor ously, requiring the fullest encouragement on the part of everything pertain- ing to the business from America. Q. (By Mr. SMYTH.) Is there any competition from America? A. There is practically no competition from America. I do not know but that these gentlemen do some small amount of business, but it is almost incon- siderable, as shown by the fact that we did not even know that they were doing it. Q. The principal competition, then, comes from Russia? A. The prin- cipal competition comes from Russia, and now also from the far East, as I may explain a little further along. There is getting to be a large production of oil especially in the Dutch East Indies, but I will go into that in another place. I will read the list to show you where the distribution of oil of this character goes: Great Britain, Holland, Belgium, German North Sea, Sweden and Nor- way, Denmark, Russian Baltic, France, Portugal, Gibraltar, Italy, Malta, Greece and the Greek Archipelago, Turkey, Egypt, north coast of Africa, Indian Archipelago and islands of the China Sea, west coast of Africa, Bast India. .Tava, China, Japan, south coast of Africa, east coast of Africa, islands of the Indian Ocean, Arabia, Sandwich Islands and islands in the Pacific, Australia, New Zealand, British North America, Mexico, Central America, Cuba, West Indies, northeast coast of South America, Brazil, southeast coast of South America, west coast of South America. And I may add, gen- tlemen, just by way of a word of explanation, that I think in all of those countries to which we send oil we have our own active American agents, on the alert for the American oil trade and the American industry, and this gentleman comes here and states that we are not doing this business. In answer to a query, or in pursuing an argument rather, that the Stand- ard had so governed the price for crude oil as to have made it an unre- munerative business in the oil country, Mr. Lee made the most astonishing statement that the counties producing oil are not as well off as though they had never produced a barrel of oil. fThat a man witth any knowledge of the oil producing section of Western Pennsylvania and West Virginia should have made such a statement is incredible. That section, prior to the opening of the oil production, was a comparative wilderness, noted, if it was noted at all, principally for its hemlock and buckwheat. The oil production has made it a world-renowned center of marvelous activity. It has taken there a population of tens of thousands. I may say hundreds of thousands of pros- perous, contented, happy people, the like of which probably does not exist in the same territory on God's footstool. The oil production has built towns and cities, it has built railroads and has given steady, remunerative employ- ment to thousands of American workingmen during all this period, and for a ♦These statempnts were submitted lo the commission and are printed on pages 534-.537 of the official report. tn)ark faced type indicates matter omitted, in the course of editing, from the official report. JOHN D. ARCHBOLD. 215 man who comes from that section, with a knowledge of the conditions as they exist there, to stand up here and make such a statement, is, as I say, utterly incredible. Q. (By Representative LIVINGSTON.) In connection with the state- ment you have just made, will you give the commission the amount of cap- ital invested in the Standard Oil Company, and a list of all the stockholders and the profits on that investment? A. The figures in reference to all the specific questions are being made up, as Professor Jenks knows. Q. The list of the stockholders? Professor JENKS. The list of the stockholders, I may say, was not asked for in the general schedule. Representative LIVINGSTON. Well, I am asking for it now. A. I can- not answer as to that. Q. (By Vice-Chairman PHILLIPS.) Would you be willing to meet the commissioner's request and furnish a list of these stockholders of the Stand- ard Oil Trust as it originally existed, and the combination as it now exists? A. I cannot answer that without further conferring in reference to that statement. Q. Will you promise the commission that you will confer with the authorities and, if these things are not inconsistent or impracticable, you will let us have them? A. I will, of course. I will give any information that is not inconsistent or impracticable. Q. (By Mr. A. L. HARRIS.) Would not the best testimony in refuting the statements made by Senator Lee be the amount of taxable property of these counties previous to the discovery of oil and at the present time? A. I think it would be very interesting. *Q. (By Vice-chairman PHILLIPS.) That would hardly be a fair com- parison, allow the chair to explain, in that the advance has occurred all along in other sections of the country during that period, where no oil was de- veloped. A. As simply a slight illustration of the point which I made of the absurd- ity of Mr. Lee's statement, I present for your information a statement show- ing the value of Pennsylvania crude oil as compared with that of other States, the total production in value from the year 1859. which was the beginning of the industry, to the year 1898, inclusive, and figured on a very conservative basis. t It shows, gentlemen, that during this period, and this Is an interesting statement. I am sure, that there has been taken from the oil fields in Pennsylvania, in barrels of 42 gallons, 662,048.642 barrels, and that the average, for all that period, of the prices paid at the wells for the oil, is $1,163 per barrel, or a total value of $769,948,397.37. Q. (By Mr. SMYTH.) That amount has been paid to producers for crude oil? A. That amount has been paid to the producers for crude oil. Now, as has probably been brought out in the course of this testimony, the oil producing business is done largely on a basis of what is called royalty, that is, the operator takes a lease of the land, and pays to the land owner, who is usually a farmer in the section, a certain free royalty interest for the right to occupy and drill the land. Q. That right to occupy does not interfere with the agricultural pursuits of the farmer? A. No. sir; this oil is kept as free as possible from interfer- ence with the farmer. That royalty right, or payment, has varied during the history of the business from one-half of the oil found to the present ruling basis of one-eighth, which basis prevails to-day throughout the larger part of the oil producing country. Of the crude produced, one-eighth goes free to the land owner and for that he does nothing, as I say, but furnish the surface on which to drill. Q. (By Representative LIVINGSTON.) Now, will you go further and give us the average profit that you have made on all those wells? A. Now, what I want to say is that figuring for the whole period that the payment was one-eighth, and not the higher amount that has prevailed during most •Black faced type Indicates matter omitted, in the course of editing-, from the official report. tThis tabulated statement appears on page 539 of the official report. 216 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. of the period, the amount of royalties paid to people in that section on the oil produced would amount, during that period, to the sum of $96,243,549.67. Q. (By Mr. SMYTH.) In royalties? A. Yes, sir. Q. Do you think these counties are worse off than they were before the oil was drilled for? A. Well, if you travel through them you would not think so. Q. (By Mr. CLARKE.) Have you any statement of the population of these cities and towns? A. It would be a mere guess on my part. Mr. Boyle, or even Mr. Lee, ought to be able to answer that very much more intelli- gently than I. I have not lived there for some years although I go there every year and still keep my interests there. They can look it up for you. About 300,000 in the oil towns proper. *IVIr. LEE. Oh, no. Mr. CLARKE. Well, no matter since you don't know. The WITNESS. I can easily look it up for you, if you desire. Mr. Lee, in answer to a question by Professor Jenks, refers to the South Improvement Company as though it were actively doing business, which *he knew was not true. Q. (By Vice-Chairman PHILLIPS.) The South Improvement Company did fix rates, did they not? A. Never to do any business. Q. Not to do business; but they had rates fixed? A. There was a con- tract entered into which was annulled before it became operative. Q. There was another contract and is it not in sworn testimony that that contract was only in existence two weeks afterwards, and did or did not the rates fixed by the South Improvement Company prevail after the Standard Oil Company came into existence? A. I have no knowledge of any relation on the part of the Standard Oil Company succeeding to the South Improve- ment Company, whatever. I was an opponent of the South Improvement Company, as you know. I disapproved of it in theory and practice, and I disapprove of it to-day, and I want to say that from ray own close personal knowledge of the matter, the statements that that which was the South Improvement Company has survived in the Standard Oil Company are not true. If it had been true I would not have been in it *and you know it. Representative LIVINGSTON. I want to suggest now to the witness, once for all, and to all other witnesses, that there are some expressions sim- ilar to one he has just made that a statement is a lusty old lie, or a statement made by Mr. Lee is not true and he knows it. Now, how can we keep per- sonalities out of this? If the witness had said that Mr. Lee was mistaken, or that he was mistaken entirely, that might be a defensible proposition, but for the witness to say that right to the face of this commission, by the Eternal, if you were to make that statement about some men that I know on this floor, you wouldn't get out of this room with any brains in your head. Mr. LEE. I guess my veracity will compare favorably with the gentle- man on the stand. The WITNESS. Well, I will endeavor to be very careful in the future, but what I have said is true. Mr. FARQUHAR. That may be, but the "You know it" would not be allowed in a court of justice. A. That may be; I think it would. Mr. FARQUHAR. The latter part of it would not be allowed, and "He knows it" should be taken out of the record. (A pause.) The WITNESS. Mr. Lee referred to the so-called shut-down movement. It was entered into at the request of the producers, who alleged that they were suffering from low prices incident to a large accumulation of stocks *and excessive production. Our relation to it was entirely the result of the urgency of the producers represented by a *prominent committee *of pro- ducers. They expressed *at the conclusion of the matter the greatest satis- faction with our course in connection with it. T want to present in support of my statement in this respect, *which answers the imputation that this movement was undertaken at our instance and was an oppressive movement on our part, the testimony of Mr. Thomas W. Phillips given before the Con- •Black faced type indicates matter ornitted, in tlic course of editing, from the offlcial report. JOHN D. ARCHBOLD. 217 gressional committee inquiring on this subject in 1888, pages 111 and 112. I will read the concluding part of Mr. Phillips' statement. *Vice-Chairman PHILLIPS. I would be pleased to have you read it if you wish, or such parts of it as you desire. Probably it is too voluminous to read it all; just the parts that refer to the question. The WITNESS. To the question I want to answer? Vice-chairman PHILLIPS. Yes, sir. The WITNESS. Well, then, I will read the concluding part of Mr. Phil- lips' statement. Vice-chairman PHILLIPS. I will state that I never had an opportunity to look that testimony over, as an apology that there is some verbiage in it that I do not think I used before that commission. We see that very often in giving testimony the records are not just as accurate as they should be when there is not an opportunity for revision. The WITNESS (Reading). "By Mr. PHILLIPS. We are certain that there would have been much bankruptcy in that region had this movement not been made. I will state further, in justice to them, that this was not a movement on the part of the Standard Oil people. It Avas a movement con- ceived by the producers themselves. They approached the Standard people in regard to this matter, and after long negotiations, which you have here in testimony, the contract, which you also have, was formulated and signed." Vice-Chairman PHILLIPS. I say the same thing to-day. The WITNESS. That answers Mr. Lee's statement. Mr. Lee says: "I believe if there had been 50 concerns engaged in the manufacture of petro- leum that just as wide markets would have been obtained for the article, and while the consumer might not have paid any more for his oil, the petro- leum producers would have realized a much better price and have had a handsome profit, whereas I think they have not realized." I present here a statement showing in detail a list of the oil refineries in the United States, with their capacities, averaging a life to the end of De- cember. 1898, of 14 years, and numbering 66 in all.t Mr. Lee makes a very elaborate effort to show that trusts and combina- tious affect labor injuriously. The best refutation possible of this statement is the record of our own experience, the fact being that for all the years in which we have been engaged in business we have had scarcely any serious difficulty with the vast body of men employed. On the other hand, we assert most positively that as a whole there never was a more zealous body of employes than have been connected with our interests. We have been prac- tically without strikes, our labor is well paid and contented in every depart- ment, and I submit that our experience in this regard is the best possible proof of the advantages of labor and capital working together on intelligent lines where the rights of each are fairly considered. I am a firm believer in the right, and indeed the duty of labor to organize, as I am in favor of the combination and organization of capital. Of course, it is true that labor organizations often do very unwise and arbitrary things. They fall frequently into the hands of leaders who are demagogic and who lack the qualities of intelligent leadership and are badly influenced also by political demagogues, whose sole stock in trade is often their ability to talk loudly against capital and the employing class; and. above all, they are too much influenced by the bad advice of an element in the public press that is utterly depraved and demagogic, and which teaches them altogether false ideas as to their duties. They are taught that it is no sin for them to cheat capital. They will, however, learn better as time goes on. Capital on its side has made and is making grievous mistakes in the treatment of labor, but the two are moving together on irresistible lines toward organization and a better mutual understanding, and one of these days labor will realize, as the employing class already knows, that the howling of the demagogue is hurtful to ail concerned, and a better era of understanding between the employer and the employe will be brought about. •Black faced type indicates matter omitted, in the cour.se of editing, from the official report. tThis statement is printed on pages 541-542 of the official report. 218 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. Lee's suggested remedies seem almost too frivolous to demand serious consideration. His views on destructive competition, the limitation of capital, etc., seem altogether too absurd to call for special attention. I may say, in conclusion, regarding Mr. Lee, that he has taken very great care to organize his new company, or embryonic trust, in the very State (New Jersey) which he criticises so severely, with a view, undoubtedly, to make his capital quite unlimited if he finds it will float. I turn next to the testimony of Mr. Monnett, the Attorney-General of the State of Ohio. I want to say by way of preface, before answering directly the points presented by Mr. Monnett, that we are interested in Ohio, in whole or in part, in a number of corporations, duly chartered by the State and all carefully observing the obligations imposed upon them by their charters. The annual amount paid in taxes to the State by these corpora- tions is in the neighborhood of $250,000. The aggregate amount paid in wages to about 4,700 employes in the State by these corporations is over $3,250,000 per annum. The further distribution of money within the State for fuel and supplies of all kinds would amount to a vast sum. I submit for your consideration whether we are not a valuable client of the State, and whether we are not entitled to protection rather than perse- cution. That Mr. Monnett's course has been an effort at the most malignant possible persecution, or even worse, I shall endeavor to show in answering his testimony. Mr. Monnett makes the statement that there has been great discrimina- tion in favor of the Union Tank Line or Standard Oil Company. The rates fixed by the railroads in connection with tank car lots, and single barrel or part car lots, have been the same to all and carried with them no discrimina- tion whatever in favor of the Standard Oil Company. In other words, I deny the allegation broadly. Regarding the alleged burning of books, at Cleveland, Ohio, I want to deny the fact of any such burning, positively. At the time of the original inquiry on the subject we offered to produce every employe who could have had any knowledge upon the subject, and each would have denied the state- ment as to the alleged burning of the books. The Attorney-General refused to have them sworn and at the time Mr. Monnett gave his testimony he knew that Mr. F. B. Squire, the secretary of the Standard Oil Company of Ohio, had made an affidavit in the litigation pending in Ohio, that the books were in his possession, and any denial that I have made regarding the matter, or any statement that I have made in reference to the testimony in connection with it is true. It is not true that I have made any retraction, as Mr. Mon- nett states, with reference to any statement that I have made. Mr. Monnett's reiteration of this matter, after all that has been said regarding it. is most reprehensible. I would like to characterize it in stronger terms, but I bow to the wish of the commission. Mr. Monnett endeavors to carry the impression that more Standard Oil Triist certificates were issued than our statements have shown. *This is an utterly untruthful intimation on his part, and the allegation is made without a Fcintilla of proof to sustain it. *He must have known in making it that it was contrary to all the evidence that was offered in the case, and *that it was utterly destitute of the truth. The stock and transfer books of the trust were placed in the hands of Mr. Monnett's associate. Mr. Kincaid, during the Ohio investigation, to examine thoroughly and he expressed himself as per- fectly satisfied. He speaks with feeling in reference to our having dismantled some works at Marietta. I want to call attention to the fact that there are two that survived at Marietta, namely Mr. Rice's and Mr. Davis'. I do not recall that we have dismantled any there. I do not know of any works there that we have dismantled. Q. (By Mr. FARQUHAR.) This commission, in some of its testimony, has had considerable stress laid upon the dismantling of works by your com- pany and the de-localizing and transferring of the business away from coun- try towns and other places, and their concentration in larger places. Would *niack faced t>pe Indicates matter omitted, in the course of editing, from tha official report. JOHN D. ARCHBOLD. 219 you give any business reasons of the Standard Oil Company with reference to any of those changes? A. I will be very glad to and I have it in another place. I thnk you will find it amply treated. *l now refer to Mr. Monnett's testimony in reference to the Cudahy line simply as showing the utter lack of knowledge and the lack of Information of a man occupying an official position and who comes here expecting to influ- ence your minds and the public mind in reference to this important question. He said the Cudahy line ran to New Jersey. It really runs from the Indiana oil fields to Kankakee, III. I state this simply to show the utter lack of knowledge of Mr. Monnett of the subject on which he is talking. Mr. Monnett makes a statement which, even to a person familiar with the oil business is quite unintelligible, to the effect that somehow from the business of selling oil in Ohio we make $120,000,000 a year. As I say, it is exceedingly difficult to know what he could have had in his mind, *unless it was that some time in his experience he had heard this figure, and, it being the largest figure he had ever heard, he named it, but it certainly had no relation to our business. In order to answer that with as much intelligence as possible I have prepared a statement which shows that the total sales in the State of Ohio of all the refined oil and products of oil for 1898 aggregated $979,798.56. Q. That includes by-products? A. Yes, sir; and I will therefore ask you to discount Mr. Monnett's statement at least $119,000,000. Q. (By Mr. CLARKE.) That is the total sales by your company? A. The total sales. I must speak guardedly in answer to what Mr. Monnett saw fit to say regarding the alleged bribery cases in Ohio. With reference to the so-called "bribery" case in Ohio, I desire to say that our affidavits have been filed with the Supreme Court of the State of Ohio, denying specifically all of Mr. Monnett's charges of attempted bribery, and all of his allegations in relation thereto, and asking the court to appoint a commission to investigate the char°:es. The court has not yet acted on the subject. If they do not, we will then see whether there is not some other method by which Mr. Mon- nett can be compelled to answer on this matter. O. (By Mr. FARQUHAR.) What was the supposed amount of bribery? A. There has been some newspaper talk of $400,000. Q. (By Mr. SMYTH.) Paid to whom? A. To Mr. Monnett. *Q. (By Vice-chairman PHILLIPS.) Being offered to Monnett, not paid. A. Yes, sir; I have to say that our answer is before the Supreme Court. In reference to what our final attitude in the matter will be. it would not be proper for me to make any intimation. *Mr. Monnett took that ground and we take the same ground. We court this investigation. Q. (By Mr. RATCHFORD.) Are you prepared to say that such a proposi- tion may have been made without your knowledge, or do you deny that any such proposition was made? A. We have denied it to the very utmost. Our answer is now in court denying it to the very utmost. Q. The answer of your company? A. The answer of our company. We are waiting the recommendation of the court. Mr. Monnett recommends Mr. W. H. Clark, of Newark, Ohio, as a com- petent witness. In recommending this witness to you Mr. Monnett must have known that he was an untruthful, dishonest, discharged employe, and in imposing him upon you as a witness was an insult alike to you, to our inter- ests aiid to the country at large. Mr. Monnett testified in answer to questions by Mr. Harris as follows: "Q. What companies are competing with the Standard Oil Company in Ohio now? A. There is only a limited competition. I think the Scofleld. Shurmer & Teagle people, and a man by the name of Shields at Mansfield has an independent agency and only a limited product. The Shurmer & Teaele people originally had a contract whereby they were allowed to live — to sell and live." Mr. Monnett again refers to the absence of competition in Ohio, and repeats that he does not know of a single independent chartered corporation left in the State of Ohio. He, however, attempts to carry the impression that •Black faced type Indicates matter omitted, in the course of editing, from the oflficial report. 220 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. we are attempting to deceive the public by operating through different names in the State. He quoted the Penn Oil Company. I do not know what he means by that, as we have no such company operating in the State. I now submit statements showing a partial list of our competitors in Ohio, composed of pipe lines, refiners and producers, covering corporations, partnerships, firms and individuals. This list is only partial, but it gives some indication of the utter lack of knowledge, or worse, that actuated Mr. Monnett in his statement. This is a list of the incorporated companies engaged in the Lima district, in the State of Ohio; not in that part of Southeastern Ohio, where the oil of the higher quality is found. Counties of Washington and Monroe, but in the Lima district. There are 159 corporations. *Q. (By Mr. A. L. HARRIS.) That is in production? A. In production and its immediate allied business. Some little in gas, perhaps, but I think substantially entirely in the production of oil. Q. (By Mr. SMYTH.) Are these companies controlled by the Standard? A. Not to the interest of a dollar. They are, of course, all creatures of the State of Ohio, or if not chartered under the State they are all registered under the laws of Ohio and paying taxes to that State. Q. Not owned nor controlled by the Standard Oil Company? A. Neither owned nor controlled by the Standard to the extent of a dollar. And there are individuals. Q. They are agents of the Standard? A. Not agents of the Standard Oil Company in any possible way or sense. Q. (By Vice-Chairman PHILLIPS.) Have you any interest in these com- panies by purchasing in them. A. Not a dollar. Substantially none. None that I know of. As I stated here, these are companies outside of our own bus- iness. Our own business for the State of Ohio is done in the name of the Ohio Oil Company. Q. The point that I wish to make is this: Have you not an eighth, a, quarter, or a third interest in a good many of these companies in Ohio, as you have in Pennsylvania? A. No, I think not; no, sir. Q. In Pennsylvania you have? A. Not that I know of. Q. Are you not largely interested in the output, one-quarter interest in the wells? A. We may be to a small extent. Q. (By Professor JENKS.) Not at all in any of these? A. I think not at all in any of these. If it is, it is such a trifiing exception as not to be an exception to the rule. I stated the number of partnerships was 258, of indi- viduals 1.240, and 159 corporations, and there are of refining concerns, not in the remotest degree related to the Standard Oil Company, eight active, large concerns chartered b.v and doing business in the State of Ohio, which makes a grand total of 1,665 concerns doing business in competition with us in the Lima district, against Mr. Monnett's one concern that he could not name, and one outside man who had a station at Mansfield. Q. (By Vice-chairman PHILLIPS.) What per cent of the Lima field do you control the production of. A. I have that all here. Q. (By Mr. A. L. HARRIS.) When I asked the Attorney-General the question. I had in my mind refining, not producing companies. A. He answered also in regard to producing companies, and he was permitted to do that; he answered regarding them all. Q. I asked him in reference to the refining companies. A. Yes, sir. Q. I thought he intended to make the answer to my question. A. His answer mentioned producing companies and he spoke of the Penn Oil Com- pany as being a producing company which he claimed was really ours. Q. Is that a refining company? A. No, a producing company *which we have in Pennsylvania. Q. (By Mr. RATCHFORD.) Mr. Archbold has stated that the Standard Oil Company has virtually no interest in a number of producing companies he has mentioned. Have they any interest in refining companies? A. None vv'hatever, I believe. •Black faced type indicates matter omitted, in the course of editing, from the nfliclal report. JOHN D. ARCHBOLD. 221 Q. No business interest? A. With the refining companies, none what- ever. Q. (By Mr. A. L. HARRIS.) How many refineries outside of the Stand- ard Oil Company are in operation in Ohio? A. I have just given them here. I do not thinli this covers all, but it covers the larger ones. This was made the first of the year. They are: The Manhattan Oil Company, the Paragon Oil Company, the Craig Oil Company, the Indiana Pipe Line and Refining Company, the Sun Oil Company, the Findlay Pipe Line Company, and the Peerless Refining Company. Q. (By Mr. SMYTH.) Ai'e these only in the Lima district or all through Ohio? A. There are a lot of Cleveland refiners that are not included here. This was made up with reference to the Ohio field about which Governor Harris asked me. I may say that we have not one dollar of interest in the business done by these companies. Q. Directly or indirectly? A. Directly or indirectly, or one iota of con- trol in any way. This business aggregated for the five years, from 1894 to 1898, inclusive, 14,647,949 barrels. Mr. Rogers reminds me that there are some Cleveland refiners also in competition with us that are not included in this list. I think that is all met in another place. By the way, these Cleve- land refineries are included in the general list of refineries which I gave in answer to Mr. Lee's testimony. I have further a supplementary list of com- petitive producing companies made up of corporations, partnerships and individuals operating in Southeastern Ohio, apart from the Lima field, aggre- gating 16 corporations, eight partnerships and 69 individuals, or a total of 93 in that section, which should be added *to Mr. Monnett's lack of knowl- edge. Mr. Monnett shows his vindictiveness as against the American oil indus- try by applauding a scurrilous pamphlet put out by one of the yellow jour- nals of London at the instance of the Russian oil dealers as against the Ameican oil. There was not a word of justification for the statements made, and a committee of Parliament, which has gone into the subject most thor- oughly with reference to possible legislation on the oil question in England, has upheld American oil as against all the outrageous charges made by the Russian industry and given publicity through this scurrilous pamphlet *and disreputable newspaper in London. I need not again dwell on the magnitude of the Russian oil industry and its menace to our American industry. No- where during the past year have they made such a determined effort against the American oil as they have in England and they have retained a journal of the lowest order to make these scurrilous attacks. *Q. (By Vice-chairman PHILLIPS.) .What is the name of that journal? A. The name of that journal is the Star. And this pamphlet is published imdoubtedly at their instance. The Russian people who put it out would not put their names to it. *Q. Is that the pamphlet to which you refer? (Exhibiting a pamphlet.) A. Yes, sir. Q. The name of the publisher is given here, Simpkin, Marshall, Ham- ilton & Kent. A. Yes, sir. 1 submit a further statement of the Russian oil industry, giving statistics and records of production and so forth, in detail, which I am sure you will find of great interest. Q. (By Professor JENKS.) Can you give us the reference to the official statement of the committee of Parliament to which you have referred? A. We can get that for you. Q. (By Mr. PARQUHAR.) Do you state, Mr. Archbold, that those Star articles are in the interest of the Russian oil industry? A. Yes, sir; they apply to Russian oil. and they decry American oil. That is the purpose of the publication. Q. The thing is to cry down American oil over there in the trade? A. Yes, sir. Q. And you claim that it is for the purpose of injuring the Standard Oil Company? A. Oh, yes, sir. They are large distributors over there. •Black faced type indicates matter omitted, in the course of editing, from the ofliclal report. 222 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. What is the test that has been established by the Russian govern- ment? A. 73° Abell. It is a test recommended by Sr. Frederick Abell, a great scientist, who analyzed the oil, and it was adopted by the English gov- ernment. Q. What is the American equivalent of this test? A. About 120°. I might add a further list of the Ohio companies, the articles of incorporation of which have been filed with the Secretary of the State of Ohio, since No- vember 1st, 1898, but not yet published, to include with those exhibits. Mr. Monnett made a statement also that the dismantling of the Standard Oil Company would reduce prices of oil to consumers. I wish to answer this by giving statistics showing the record of cost and prices for a period.* To put out of existence the world-wide facilities employed by the Standard Oil Com- pany and its affiliated interests for the distribution of refined oil, which would require years of effort and a similar amount of capital to replace, would immeasurably increase the cost of oil to consumers. Q. (By Professor JENKSp The price that is given in this table is the average export price? A. Tlie average export price for the year. Q. (By Mr. SMYTH.) The export price fixes the price of the refined, does it not? A. Substantially so. Q. (By Professor JENKS.) Can you furnish to the commission a list of the prices and amounts of water-white oil sold in this country, covering sub- stantially this period in two or three of the leading markets, say Chicago, New York and Cincinnati? A. If you will give me a memorandum of that, I will.t At 1 o'clock the commission took a recess until 2 o'clock. After recess Mr. Archbold was recalled. Professor JENKS. Will you kindly resume your statement, Mr. Arch- bold. The WITNESS. I desire, Mr. Chairman, to say a word of explanation. Senator Lee has called my attention to the fact that in his opinion my testi- mony in reference to his approach to us with regard to their business was with the view of selling their properties. I did not mean to state his approach to us was for that purpose. What I meant to say was that it was with a view to combination. I supposed 1 had so clearly stated it that there would be no misunderstanding, but 1 fear that I did not. And that is the statement that I desire to make. JMr. KENNEDY. That is what I understood. Q. (By Vice-Chairman PHILLIPS.) Was it in regard to combination or were you to not interfere with them in getting their line through to New York — the right to live, rather than the combination? Was it not put rather in that form? A. My understanding of it was as I have stated that it was for combination. tQ. (By Mr. FARQUHAR.) The understanding of the commission was, Mr. Chairman, that there was a combination, and the word "sale" was never mentioned by the witness. Mr. KENNEDY. That is the way I understood it. Mr. SMYTH. I think we all understood it that way. A. 1 speak next of the testimony of Mr. Theodore F. Davis, of Marietta, Ohio. It is somewhat of a difficulty for us to understand why this gentleman should have appeared before you. He certainly has had no experience in the refining of oil, or as an owner of a refinery that would qualify him to appear before you as a witness on this important subject. He has an interest in a little alleged refinery at Marietta which he bought when he was somewhat in politics, and immediately approached us for the sale of the property. We declined to buy it on the ground that it was valueless as a working plant and had no value as a competitor, and I had forgotten that there was such •Mr. Archbold submitted the above paper, which is published in the official re- port (p. 547). These statistics showed that since 1870 the daily production of Penn- sylvania oil has increased 4.')0 per cent., the price of crude oil has declined 75 per cent, and the price of refined about 75V2 per cent. tThis information was furnished by the witness and appears in the official re- port (pp. 547 and 548). tBlack faced type indicates matter omitted, in the course of editing, from the official report. JOHN D. ARCHBOLD. 223 a thing until his appearance here. Immediately after his appearance here before you he evidently thought that he had again made himself prominent enough to succeed in selling it, and he came to me again in New York offer- ing to sell this property and *claiming by way of apology for what he said here, that the papers had misrepresented him. *Q. (By Professor JENKS.) Came to you personally? A. Came to me personally. 1 will submit, if you desire, a letter from him on this subject and my reply thereto, which perhaps covers all that need be said of this case. I think the only possible explanation of the matter in reference to his appear- ance is that he came at Mr. Monnett's suggestion as one of his combination. *Q. (By Mr. CLARKE.) Was the letter written after his interview with you? A. His letter was written after his interview with me, as you will see. The first letter is dated "Marietta, Ohio, July 13th, 1899," and his appear- ance before you was on June 9, 1899: (Reading.) John D. Archbold, Esq., 26 Broadway, New York: Dear Sir— I called on you about two weeks ago with a letter of introduction from (I will leave the name out) and I presented the matter of negotiation for my refinery property at this place. You made memorandum of it and stated that you would present the matter to your people soon after the Fourth of July, and as I have not heard from you, presume you have overlooked it. I have permitted one option to expire and have declined the proposition of another party to negotiate for them, not intimating why I do so, which is my appointment with you in regard to the mat- ter. Please indicate your desire in regard to whether you are inclined or desire to further consider the negotiation. As I stated, I much prefer dealing with your peo- ple than with the others, yet I do not want to let the favorable condition pass by Hoping to hear from you soon. Very truly, • THEO. F. DAVIS. To which I replied, under date of July 18: I am duly in receipt of your favor of July 13. I beg to return you herewith the schedule of refinery property which you left with me. The property is of such a character as to be without value to us, and we do not care, therefore, to buy it. Apprepciating your expression that you prefer to sell the property to us rather than to other buyers, I am Truly yours, JOHN D. ARCHBOLD. I do not suppose it is at all necessary to take up your time with any further statement in regard to this gentleman, but I have rather an inter- esting letter here regarding him from his partner in the refinery business, but I will not read it unless you ask it to be read. Q. (By Vice-Chairman PHILLIPS.) What do you say in regard to read- ing this letter? A. Some features of it are personal and they may be omit- ted. I will read that part which pertains to his business relations if you so desire. It is from a gentleman not in any way connected with us, who vol- untarily gives the letter regarding Mr. Davis and his relation to the refining trade, and authorizes me to use it, if I care to. Q. What would be your purpose in presenting it? To discredit the wit- ness? A. Nothing, except to show the character of the gentleman in the refining trade and his appearance here. Mr. SMYTH. I move that it be read, omitting the personal matter. (The motion was put and carried and the witness continued.) The WITNESS. Well, I will read, omitting that which may seem per- sonal, *and I am only afraid that I may get myself into trouble by reading it. I am in the hands of the profession here. The letter is dated Newark, Ohio, July 17. 1899, and is from George T. MacDonald. (Reading.) *"Theo. F. Davis was never a large producer. I first got acquainted with him in 1884; from that day until 1894 the only producing interest he had was with Laing and me in the Macksburg field, on the Mary Shilling farm, the production of which never exceeded 15 barrels, and Davis had one-third of this. In the latter part of 1894, Davis, Laing, and I think some others, oper- ated in the Corning field under the name of the Davis Oil Company. I have no means of knowing what the production of this concern amounted to, but Laing told me that they had not made any money. Afterwards I heard that ♦Black faced type indicates matter omitted. In the course of editing, from the ofUcial report. 224 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Davis had an interest in some good shallow territory over in West Virginia, but I don't know how it turned out, as the reports are always bigger than the wells. Davis was not interested with Laing and me in the coal lands lease. In 1892 there was a margin in refined oil, so Laing, Davis and I bought the old Lovell refinery, located at the mouth of the Little Muskegon river. We put in $2,000 apiece, making in all $6,000. When the Lovell refinery was built it was for the purpose of taking care of the Cow Run production, and they depended on the Ohio river for an outlet to market their product. We had to take our crude to the refinery in barges, which was too much of a handicap, so we moved our works to Mile Run, a little below Marietta, on the Ohio river, and the B. & O. S. W. put in a side track for us, but by this time our capital was exhausted, and we could not work to advantage. "It also began to dawn on Laing and myself that the day for a small refinery to make money had passed away, so we sold out to Davis. The terms of the sale were that he assumed the firm's debts and assets; the debts were the larger, and we lost our original investment. ****** Davis never ran the refinery to amount to anything after I left it. In fact, Davis is not a business man; he would like to be a politician but don't know how; he had one term in the State Senate and one term as trustee in the Athens Lunatic Asylum, but one term at anything is all that he can stand. "As we moved so much old stuff from the Lovell refinery it would be rather difficult for me now to state just exactly what the present refinery cost, especially as I have not access to the books, but I should think that $5,500 would cover everything, including the ground on which the refinery is built, but this amount would not include the adjoining lot (known as the Rolling Mill lot) which Davis afterwards purchased from New York parties. The location is all right for any manufacturing purpose whatever, both for shipment by river and rail. Now it would be very hard for you to under- stand a man like Davis, as there is no other man like him. ***** |n fact, Davis never made a dollar in his life, and probably never will. He is the slowest man, both mentally and physically, I ever met. While he has no education, he can look very wise, but the more you know him the less you will think of him." Q. (By Vice-Chairman PHILLIPS.) Were you not to omit the per- sonalities? A. I thought I had. I omitted that which was so much worse tiiat I did not see this. Q. (By Mr. A. L. HARRIS.) I want to ask if you think this is the proper way to attack the credibility of a witness? A. Well, the gentleman will come here if it is desired. Q. (By Vice-chairman PHILLIPS.) I think it would be better to have the man on oath that makes this statement. That question was raised with regard to a commissioner this morning, and I think that will be better. A. The letter will be left here and the gentleman will come if you wish him. (Reading.) "Davis newer did any of the business connected with the refinery and knows nothing about any part of it. He knows less about business than an average lawyer. If Davis ever gave any material testimony someone else must have been pulling the string. The nearest he ever came to doing any business was when I was trying to run the refinery in the summer of 1893. A Marietta grocery man stopped him on the street and gave him an order for a barrel of oil, but Davis forgot to turn the order in, and the refinery lost the sale. Davis has no standing in Marietta. *******" There are some other personalities which I will not read. Q. (By Vice-Chairman PHILLIPS.) Such letters as this, reflecting on the character of a witness, are entirely inadmissible and should be stricken out. A. I answer next regarding Mr. T. B. Westgate, of Titusvllle, Penn- sylvania. Mr. Westgate begins by going over substantially the same ground in reference to the advent of the Pure Oil Company in Greater New York. This has already been covered by the testimony of Mr. Lee, and I need not go further into that point. He makes a statement charging that the Stand- ard Oil Company imitated his yellow barrels, and used his brands so that ♦r$lack faced type indicates matter Omitted, in the course of editing, from the ofllclal report. JOHN D. ARCHBOLD. 225 they might get trade which he had built up by the use of those barrels and brands as a special trade mark. I have carefully investigated this question, and I find that instead of our ever having attempted to use Mr. Westgate's brands the real fact is that he used our brands. The yellow brand as dis- tinguishing a certain special quality of oil had been used by us in that ter- ritory for many years before Mr. Westgate appeared there at all. And when he came he adopted our yellow barrel so as to facilitate his chances for getting business. I deny emphatically that we ever used his barrels or brands, and I will state unequivocally that the real fact is he used ours. Q. (By Professor JENKS.) That he used your brands. A. That he used our barrel, our color. *l do not know that he used our brands, but the color on the barrels. I deny his statements in reference to both, and charge in turn that he used our barrels. Q. (By Mr. SMYTH.) How about the charge of using their brands? A. Absolutely untrue. It is absolutely and unqualifiedly untrue. Q. The statement is made here, I believe, that you had used the brand. Sunlight double refined oil, and put your name on the outside of the circle, which of course would not be an exact imitation of his. Did you use the name that he was using for his oil at all? A. No, sir; I deny the whole matter in toto. Q. You had yourself been using barrels of that same color before he began selling in that territory? A. For a long time. I happen to know about It especially because I had to do with the business in that section and with the company that made the yellow barrels, and knew all about it. In re- gard to his statement with reference to Fulton, New York, the facts are that he first enticed away from us the man Crandall, to whom he refers, who began a campaign against our trade by cutting prices. We, in self-defence, finally put on another seller of oil to compete with him to regain lost trade. He goes with more particularity into the case of Charles Frey, of Ho- boken. New Jersey, whom he characterizes as a German with Bismarckian blood who had *withstood wiles and blandishments and threats, and said what he was going to do. This is Westgate's testimony in reference to the case of Charles Frey. I have carefully investigated this case, having talked personally with our Jersey City agent, who was our agent at the period mentioned by Mr. Westgate. He denies emphatically ever having made any such threat to- ward Mr. Frey as Mr. Westgate testifies to, or even having had any under- standing with him as to prices in connection with the marketing of Mr. Westgate's oil or any competitive oil. as Mr. Westgate testifies. As a matter of fact, the man Frey was a customer of ours to a considerable extent in the year 1890, having bought his principal supplies from us. He was a man of violent temper and an avowed anarchist. He has not been in the business now for some years, although Mr. Westgate's testimony would carry the im- pression that he has continued to represent him in the sale of oil at Ho- boken. The last known of him was that he was running a saloon in Brooklyn. Mr. Westgate alleges at great length and with some particularity, the under-billing of tank cars, citing as the special cases of which he had per- sonal knowledge, shipments from Olean, New York, to points eastward. On that subject I beg to present to you letters from the officials of the Western New York & Pennsylvania Railway Company and the Erie Railway Com- pany, the only two lines out of Olean. I will read first, if you please, the letter of Mr. Edward T. Johnson, gen- eral freight agent of the Western New York & Pennsylvania Railway Com- pany, dated Buffalo, New York, August 10, 1899. (Reading) : My attention has been called to the testimony of Mr. Theo. B. Westgate (who I think is a refiner from Titusvllle, Pa.,) before the Industrial Commission of Wash- ington, in which he testified that It was his belief that shipments of the Standard Oil Company from Olean, N. Y., in tank cars v/ere billed at a weight less than the actual contents of the same. *Black faced type indicates matter omitted, in the course of editing, from the ofiiclal report. 15 226 REVIEW OP TESTIMONY— INDUSTRIAL COMMISSION. In answer to Mr. Westgate's testimony I would say that I have investigated the matter, and of my own Icnowledge am positive that there is no arrangement of this kind now, nor has there been at any time heretofore between this company and the Standard Oil Company or any of its representatives. On the contrary, I do Ivnow that on all oil shipments from Olean where the weights have been per 100 pounds we have charged and collected on the full capacity of the tank cars based on— first, six and three-tenths pounds to the gallon, subsequently on six and four-tenths pounds to the gallon, the change at Olean being made at the same time that it was put in force over the entire Western New York & Pennsylvania Railway. Where the weights have been per barrel we have charged and collected freight on basis of maximum number of barrels that the tank could contain. It is possible that in view of the hundreds of cars of oil that are shipj^ed from Olean some clerical errors have been made by which the weight of a car on a freight bill may have been misstated, but if so it has been by clerical error only, and not by any arrangement with the Standard Oil Company or any of its representatives. The above is the situation now, and has been the case for at least 15 years, dur- ing which time we have had full knowledge of all traffic matters pertaining to ship- ments from Olean, and the above statement applies from all other points on this road as well as from Olean, N. Y. If it will be of any service to you I will be glad to put the above in the form of an affidavit, or will appear before any United States commissioner and testify in re- gard to same. Ynurs truly, EDWARD T. JOHNSON, General Freight Agent. I have the Erie road's letter, dated New York, August 29, 1899, addressed to me by George G. Cochran, fourth vice-president: Mr. J. D. Archbold, 26 Broadway, New York: Dear Sir— Referring to Mr. Harriott's letter to ycu of the 2Sth instant in regard to weights on oil. i I was traffic manager of the Erie Line from January, 1892, until March, 1896, and concur fully for this period in what Mr. Harriott says. The weight of six and four- tenths pounds per gallon was maintained from the date of its adoption; previously the average weight was six and three-tenths pounds per gallon. Yours truly, GEORGE G. COCHRAN, Fourth Vice-President. Perhaps I should have first read the letter of Mr. Frank Harriott, gen- eral freight traffic manager of the Erie road. (Reading) : Dear Sir— In regard to the testimony given before the Industrial Commission in Washington, June 8, 1899, by Mr. Theodore B. Westgate, of Tltusville, in which he alleges that on shipments of the Standard Oil Company from Olean, N. Y., tank cars were billed at less than their actual weight and in this way an advantage was given the Standard Oil Company over other shippers. I beg to say that for three years I have been in charge of traffic matters, covering shipments from Olean and other points on the line of the Erie Railroad, and I can state positively that there is not now, nor has there ever been, an arrarigenient between this company and the Standard Oil Company or any of its agents, of a nature testified to by Mr. West- gate. On the contrary, I know that on all shipments from Olean, as well as from all other points on the Erie Railroad, where our tariff rates are "per hundred pounds," we have charged and collected freight on the full weight capacity of the tank car, based on six and four-tenth pounds per gallon, and in a few instances where rates have been "per barrel," we have charged and collected freight on the basis of the maximum number of barrels that the tank car held; and this has been true on all shipments made by the Standard Oil Company as well as by all other shippers. You are authorized to use this letter 'n any way that you think best, and if I can furnish you any further information, I will be glad to do so. Yours truly, FRANK HARRIOTT, General Freight Traffic Manager. I desire to submit also a pamphlet known as the tank gauge handbook, which contains a record of the number of every tank car with its full capacity that is in use in our business, and which is in the hands of every railroad or- ganization over which we make shipments, and I want to say positively that we haven't any understanding, nor have we ever had with any railroad, regarding the under-billing of any car. *l deny the charge to the very ut- most. ♦Black faced type Indicates matter Omitted, in the course of editing, from the official report. JOHN D. ARCHBOLD. 227 Q. (By Professor JENKS.) And you say also that you have paid full charges in accordance with the rates given in this pamphlet? A. We have paid full charges in accordance with the rates given in that pamphlet, *which is at all times in the hands of railroad companies making the ship- ment. We could not deceive them. Q. Are these two railroads from which you have letters the only ones out of Olean? A. They are the only ones out of Olean. The concluding part of Mr. Westgate's statement in reference to railroad discriminations is cov- ered in the statement already made in reference to the same question in Mr. Lee's testimony; namely, that the cases pending in the United States Court are to recover freight which the railroads charged all shippers on barrels. The Interstate Commerce Commission decided that railroads should carry barrels free, and the railroads refusing to accede to such a decision are test- ing the question in the United States Court. I repeat that the final decision will interest us to a larger extent than all other shippers. Q. Mr. Westgate presented a letter from Portland, Oregon, which he put in evidence, in reference to some statements that were made by a ship- ping agent of the Standard Oil Company. Referring to Mr. Westgate's brand the letter reads in this way: "You can rest assured that if another carload of Sunlight oil arrives at your place, it will be sold very cheap. We do not propose to allow another carload to come into that territory unless it comes and is put on the market at one-half its actual cost. You can convey this idea to the young man who imported the carload of Sunlight oil," etc. It is signed George C. Flanders. The question is, whether your agents in competitive territory are authorized and instructed to make state- ments of that kind to competitors. A. *They are not. If any such state- ment was made it was a foolish statement, by a foolish and unwise man, and in our thousands of employes we do have some such. The statement missed my attention if it was in my copy or I would have investigated it. Q. I will give you a specific reference to it. *Refer to your letter which was on the paper of the Standard Oil Company. It is Portland, Oregon, George C. Flanders, shipping agent. A. *l will investigate it for you. I say again that our agent had no such instructions; *he had instructions at all times to compete vigorously for the trade and hold his trade by all fair methods, but any such statement was unauthorized and unwarranted. Q. (By Mr. SMYTH.) A case of zeal going beyond discretion? A. Ex- actly so. yes, sir. (The following letter, with the annexed newspaper clipping, was subse- quently submitted by the witness) : 26 Broadway, New York, October 27, 1899. Dear Sir — Referring to the letter submitted to the Industrial Commission at "U'ashington, witten by George C. Flanders from Portland, Ore., to a merchant at Southbend, Wash., and to which you called my attention. While the Standard Oil Company does compete with other merchants for business, it is done, though, on a basis of a fair margin of profit, and Mr. Flanders did not have any authority to write that oil would be sold on the basis mentioned in his letter. The letter referred to was written some years ago (in March, 1894), and was intended to be written in a jocular manner to deny a claim that he was selling an oil inferior in quality to that sold by others. The Standard Oil Company is at times unjustly accused of doing this, as is evidenced by the enclosed article taken from a Los Angeles paper, and a wrong construction might at times be put on a letter written to refute a claim of this kind. Tours truly, H. M. TILFORD. J. D. Archbold, 26 Broadway, New York. Pomona, October 5. To the Editor of the Times: To my positive knowledge, 90 per cent, of the kerosene sold in Pomona, Pasa- dena, Riverside and Anaheim is a dangerously low-test oil. To sell kerosene for domestic use under a test of 120= in the Eastern States is punished by long terms of imprisonment and from $250 to $500 fine. There are no laws regulating this matter in Southern California. The result is human life Is sacrificed and many homes de- *Black faced type indicates matter omitted, In the course of editing, from the official report. 228 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. stroyed. This oil is shipped into these towns by the Standard Oil Company and sold to the grocers, who in turn sell it to the public as the best Eastern kerosene. By actual tests I find the lowest grade used about the buildings of the Santa Fe Railroad Company is 150° fire, and that sold by the Standard Oil Company to the grocers in those towns as follows: Elain, in cans and cases, 118° to 120° fire; Pratt's Astral, in cans and cases, 98° to 101° fire; Pearl, in cans and cases, 98° to 101° fire; Eastern, in bulk, '.)8° to 104° fire. Tlie meaning of the fire test is at w^hat temperature Falirenheit wuli the oil throw off an explosive gas. An ordinary lamp often attains a temperature of 120°. Therefore, any oil that will throw off this gas under that temperature is termed by oil men "assassination oil." Witli these facts in view, is it any wonder tiiat lamps explode and human life is sacrificed? In the name of human- itv, can not the public be protected from this dangerous imposition? H. S. WAI.KER. The WITNESS. Mr. Lockwood, of Zelienople, says: "The Standard Oil Company has driven into financial obscurity, bankruptcy, or servitude the men who have developed this great oil producing industry of America." *This statement is pretty nearly as absurd as Mr. Lee's statement that the counties that have produced oil are not as well off as though they had never produced a barrel of oil. The fact is oil production has been an exceptionally prosperous business for people who have attended to their business, and not given too much of their time to politics or to the business of ethers. I now present a partial list of what may be termed successful oil opera- tors, which is the best answer to Mr. Lockwood's absurd statement. They have not, as Mr. Lockwood further says, been either driven off the nigh- ways of the country or chained to the rock helpless, but are --ctive, aggres- sive, successful business men who would resent to the utmost any such absurd statement as Mr. Lockwood makes. I hand you a statement, made so much in detail that I will not worry you with its reading, of tlie producers who have been prominent in the business, and successful operators in what is known as the Pennsylvania oil producing section — the section which Mr. Lockv.ood was treating of.t Q. (By Mr. SMYTH.) How many names did you mention? A. I have not figured them up. There are hundreds of them. Of course this is but a very partial list. I have not figured it up — about 800. Q. (By Mr. KENNEDY.) Is Mr. Lockwood's name in that list? A. I suppose it is. Q. (By Mr. FARQUHAR.) Is it alphabetical? A. It is alphabetical, and I see they have omitted Mr. Lockwood, *fearing that he had ruled himself out. I deny emphatically Mr. Lockwood's statement that everything contem- plated to be done for the South Improvement Company has been done for the Standard Oil Company. As a matter of fact the South Improvement Company never did any business, as Mr. Lockwood well knew, and the special features of exclusive freight contracts which were contemplated by the South Improvement Company were not attempted to be perpetuated by the people of the Standard Oil Company. It was at once recognized that that special feature was not defensible, and it was abandoned absolutely. Mr. Lockwood refers to the small pipe lines which sprang into existence in the early history of the oil business. It is true that in the early history of the oil business there were a number of small pipe lines that in many cases were inadequately capitalized for the doing of their business. They w^ere inefficient, and gave the producers such poor service that the remedy which wa^ proposed for consolidation and the improvement of the service w-as very gladly welcomed by the producing class as a whole, and the result was that pipage was reduced first from 40 cents, which was the prevailing price during the life of that number of small lines, to 30 cents, and after consolidation with the United Pipe I>ines it was reduced to 20 cents. *l may say that, as a feature of that consolidation, a continuing cash price was at all times paid or arranged to be paid to the producers for the oil and such a readiness of market was secured as had scarcely attached to any other product that this country, or, indeed, the world at large, has ever known. Q. (By Professor .lENKS.) What date was it that the cost of pipage was reduced 20 cents? A. Shortly after the consolidation of the United Pipe Line system. *Black faced type indicates matter omitted, in the course of editing, from the official report. tThis list was not published in the ofTicial report of (lie testimony. JOHN D. ARCHBOLD. 229 Q. Has the price been lowered since that time? A. The price has re- mained about the same. Q. So there has been no reduction in the price of piping for a good many years? A. No, sir. Q. Twenty years or so? A. No, sir; it was considered a permanent price, and has been considered a fair price throughout. Q. (By Mr. SMYTH.) A universal price, you say? A. A universal price to all comers. Q. The cost of building, controlling and managing pipe lines, I presume, has lessened? A. It has lessened and increased. If you figure from to-day's standpoint it would be higher, of course, with the high prices that are pre- vailing. The long distances involved in the laying of lines to some of the new fields, notably the West Virginia field that Mr. Rogers spoke of. require very expensive operations. Mr. Lockwood makes the statement broadly that discriminations were continued in favor of the Standard Oil Company after the interstate com- merce law was passed. I desire to meet this statement with absolute denial, and I challenge him to produce any such record. After making it, he jumps away from the question as to what, or where or when, and goes back to a case which was begun by Mr. Lockwood and some of his associates, against some of our people in Clarion county, Pennsylvania, nine years before the interstate commerce law was passed. In connection with this case he goes to the length of accusing the Supreme Court of the State of Pennsylvania of violating the constitution in order to prevent a conviction of the Standard Oil people. The statement is so outrageous for a gentleman of his calling that it carries its own answer, and perhaps should have no further comment. Mr. Lockwood goes to great length into the so-called Matthews-Buffalo case. This case, as first instituted, attracted a great deal of attention. It has been made much of in the sensational press and by careless writers, and I am very glad indeed of an opportunity to go on record in answer to this pre- seuiation which Mr. Lockwood has made in this case, and the sensational statements regarding it which he gave to the public through your hands, exposing the sensational charges that have been made in connection with it. 1 will therefore with your permission read this statement of the case: Vice-chairman PHILLIPS. Certainly. The \A'ITNESS. "Mr. Lockwood attempts to make much of the so-called Matthews-Buffalo case. And, indeed, gentlemen, this case has been more often and more thoroughly exploited in the way of misrepresentation, not only by men of Mr. Lockwood's type, but by careless writers of magazine articles, pamphlets and books, than any other case, unless it be that of Rice. It is high time that a simple, succinct statement of the case should be made, and I am glad to make it. "The facts are that in ISSl, Matthews, with two others, were in the employ, in confidential capacities, of the Vacuum Oil Company, of Rochester, N. Y. The executive officers of this company were Messrs. H. B. and C. M. Everest, of Rochester, who, with their friends, represented a large ownership in the stock of the company, and were by contract fully in control of the mana-^ement of the business of the company. Messrs. Everest were not at that time, nor have they ever been interested in the stock of the Standard Oil Company. The Standard Oil Company were owners in the stock of the Vacuum Oil Company, but had no direct relation whatever with the manage- ment of its affairs. While still in the employ of the company, Matthews and his two associates conspired together to leave the employ of the Vacuum Oil Company and establish a like business at Buffalo. To this end they had entered into a partnership arrangement, had prepared themselves by using the Vacuum Company's patents for castings of the material to be used in construction, had thoroughly familiarized themselves with all methods of manufacture, and with the patrons of the Vacuum Company, and in every way prepared themselves to take advantage of the various business pro- cesses — many of them covered by patents owned by the Vacuum Company. There is plenty of indisputable evidence that they did not expect their ven- ture at Buffalo to really succeed on its merits, but they believed that by so imitating the brands and processes of the Vacuum Company they would 230 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. induce the latter to buy them out at a high price. As I say, there is plenty of evidence, even including that of one of the parties who was to join with Matthews — a man named Miller — that they expected to be bought up by the "Vacuum Oil Company, or the Standard Oil Company. Efforts were also made by the Matthews party to entice away other important employes of the Vacuum Company. After the business was gotten under headway at Buffalo and the infringements became evident, various suits were brought by the Vacuum Company against Matthews and his associates. During this period Miller, one of the Matthews party, solicited re-employment with the Vacuum Company and finally, after considerable discussion, was re-employed. Later, having some disagreement with the Vacuum Company with reference to the question of his employment, he again coquetted with Matthews and the Buf- falo party, and as a result of his statement before the grand jury as to what his intercourse had been with Messrs. Everest, and of other statements made before the grand jury, the nature of which was never disclosed, an indictment was found by the grand jury charging Messrs. Everest and all the directors of the Vacuum Company, namely Messrs. H. H. Rogers, A. M. McGregor and my- self with conspiring against the business of the Buffalo Company. The evidence produced in the case clearly indicated a carefully concocted effort on the part of Matthews and his associates as against the Vacuum Company, and the balance of the testimony was tremendously in favor of the Vacuum Company. At the conclusion of the evidence for the prosecution, the judge held, and he could not have held otherwise, that not a scintilla of evidence had been produced against the so-called Standard people — namely, Messrs. Rogers, McGregor and Archbold, and directed the jury to acquit them, which they did. "As I have stated, the balance of the evidence in the case was so much against Matthews that it seems an act of gross injustice that the judge should have allowed the case against Messrs. Everest to go to the jury. The result of the trial was that the jury, plainly influenced by the cunning plea of the District Attorney in behalf of the individual, Matthews, as against the so- called rich corporation, rendered a verdict against Messrs. Everest. Six of the jurors made affidavit, copies of which I attach hereto, that they only agreed to a verdict on the basis of the minor charge presented in the indict- ment, that of the enticing away from the Buffalo works of the man Miller by the Messrs. Everest. The judge imposed a fine, the largest permitted by the statute. As a matter of simple justice the verdict should have been set aside entirely. All talk about the blowing up of the Buffalo works, which has been so much exploited by the yellow journals and by careless writers, is the purest fiction. There never was anything of the kind. "With reference to Mr. Lockwood's statement that Matthews had ver- dicts against the Standard Oil Company people for civil damages for $270,000, I may say that the statement is as false as every other feature which he presents. An action was brought by Matthews for $20,000 and a sympathy verdict for that amount was rendered by the jury. Judge Barker promptly set the verdict aside as being excessive, and on the ground that the jury were guided in their action by 'prejudice, passion or sympathy.' "Matthews brought further action for $2,50,000. which he never brought to trial. Any careful student of the case, who will go thoroughly into the literature of the matter which can be easily presented, will, after the lapse of all these years, reach no other conclusion than that Matthews and his associates, lay and professional, were engasred in an effort of extortion." I give here a record of the action of six of the jurors, in reference to the case of Messrs. Everest. They are statements to the court. Some of them are affidavits. We have all that testimony if you want it; the whole record of the case in extenso. It is very voluminous. The statement referred to above follows: State of New York, County of Erie— ss. Nicholas Demcrly, of the town of Boston: .Tohn J. Kinney, Bernard Schlebus, R. B. Musan, George W. Havens, John Uehblucher, being- severally duiy sworn, each for himself r3eposes and says: That he was one of the jury that served on the trial of H. B. Everest and C. M. Everest for conspiracy in the Erie County Oyer and Terminer Court, In May, 1887: that the said jury rendered a general verdict of guilty against both of said defendants. And deponent further says that as he verily belives. JOHN D. ARCHBOLD. 231 it was not the intention of said jury, in rendering said general verdict, to pronounce the defendants guilty of an attempt or conspiracy to blow up or burn the worics of the Buffalo Lubricating Oil Company Limited, but the conviction was, in the mind of deponent, based upon the enticement of the witness, Miller, from the employ of said oil company, and he believes that the other members of the jury convicted the prisoners on the same ground. And deponent further says that he believes the ends of justice will be met in this case by the imposition of a fine upon the defendants, and he therefore begs to recommend to the court that the sentence of said defend- ants be that they pay a fine only, and that they be not sentenced to imprisonment. (John J. Kinney was sworn as to recommendations only. John Uehblu- cher only signed the paper in presence of John F. Knapp.) Q. Have you the fullest official records of the court which are at the service of the commission, if they desire them? A. Yes, sir; they are at the service of the commission if they desire it. Q. (By Mr. FARQUHAR.) After the finding in the court in respect to their conspiracy to destroy the works, there being several actions after that for damage, I understood you to state that Matthews did not recover at all? A. After Judge Barker set it aside there never was any further case brought to trial. There was an action pending for $250,000, which was never brought to trial. Q. Did Matthews make any settlement of any kind with those against ■whom the judgment was awarded? He received no settlement at all? A. I do not know what his relations were with his lawyers. It seems as far as I have any recollection of the matter, that after this decision, settlement was made with his lawyer, partner, and himself of what there was left. I do not know that this is a very exceptional thing, but it was true in that case. Mr. Lockwood makes the ridiculous statement that the "combines" had threatened the Interstate Commerce Commission, etc. He evidently, in mak- ing this statement, desired to be understood that they had threatened it bodily, but this I believe he afterwards disavowed. I come now to Mr. Lockwood's long statement regarding the case of George Rice, of Marietta. Mr. Lockwood goes at length into the Rice case, *almost as a special counsel, and attempts to enlist the sympathy of the commission regarding Rice. I now desire, first, to present to the commission a full statement of the original Rice case, made by Mr. D. O'Day before the committee of the House of Representatives in 1888, pages 273 to 276. inclu- sive of their report of testimony. This statement covers the exact facts regarding the much talked of Rice case. I would like to read Mr. O'Day's testimony, if I may, and make it a part of the record. The examination of Mr. O'Day before that committee was at great length, but I will try and limit myself to those parts which obtain as directly as possible to the Rice case. (Reading.) "Q. Do you remember the Cleveland & Maiietta Railroad Companv? A. I do. "Q. You remember Mr. Pease was receiver? A. I met him once; yes, sir. "Q. Did you not have a conference with him upon the subject of making a rate over his railroad for crude oil? A. Yes, sir; btit not for refined oil. "Q. When was that? A. I think it was in 1882 or 1883. "Q. Where did you desire that oil to be transported; from what point to what point? A. The arrangement that you speak of was not made with Mr. Pease. An arrangement was made with the managers of the Wheeling & Lake Erie Railroad, I think, who at that time controlled the Marietta Railroad, which was continued after Mr. Pease, the receiver, was appointed. The arrangement consisted in making a through traffic with the railroad company of which the Macksburg line was a part. We made a connection from Marietta to a point south, the total arrangement of charge being divided between the railroad and the pipe line. "Q. What rate did you get over that railroad for the transportation of oil? A. To where? ♦Black faced type indicates matter omitted, in the course of editing, from the official report. 232 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Q. For the distance it passed over the railroad. A. A good deal of oil was transported from Marietta to Cleveland. The bulk of it was transferred south to Marietta and Parkersburg. "Q. At what rate? A. I think the through pipage rate and rail rate was 35 cents, as I recollect it. "Q. What part of that did the railroad company get? A. I have forgot- ten what the divisions were. My recollection is it was 20 and 15 cents. "Q. Was it not 10 cents? A. I cannot say, sir; I cannot be positive. "Q. I will read the following to you to aid your recollection. It is an extract of a letter to Mr. Rapello, general counsel of the receiver, and signed by P. Pease. He states that 'Mr. O'Day, manager of the Standard Oil Com- pany, met the general freight agent of the Wheeling & Lake Erie Railroad and our Mr. Terry at Toledo about February 12, and made an agreement (verbal) to carry their oil at 10 cents per barrel. But Mr. O'Day compelled Mr. Terry to make a 35-cent rate on all other oil going to Marietta, and that we should make the rebate of 25 cents per barrel on all oil shipped by other parties, and that the rebate should be paid over to them (the Standard Oil Company), thus giving us 10 cents per barrel for all oil shipped to Marietta, and the rebate of 25 cents a barrel going to the Standard Oil Company, mak- ing that company, say $25 per day clear money on Mr. George Rice's oil a'one.' "Q. State whether that is a true statement? A. It is not a true state- ment. "Q. In what respect? A. In the respect, first, of the divisions. It may be tiue regarding that. But I am not sure of that; I do not recall it well enough to know. It is not a true statement that we compelled the road in any sense to do anything of the kind. "Q. Were you not under your agreement to have your oil transported from Marietta over the railroad at 10 cents a barrel? A. We had an arrange- ment by which the through rate from the wells, which included the pipage charge, was to be a certain figure, and was to be divided between the rail- roads and ourselves. "Q. What share did the railroad get? A. My recollection, which is rather hearsay, was 20 cents pipage rate and the railroad 15 cents. "Q. And not 10 cents? A. I do not want to be positive of that. "Q. (By the CHAIR.) Does that rate which you give include your local pipage, too? A. Yes. sir. "O. (By Mr. GOWEN.) Where did this oil strike the railroad? A. At a place known as Macksburg. "Q. Went from there to Marietta, Ohio? A. Yes, sir. "Q. Now, I ask you if the rate which the railroad received out of the joint rate was not only 10 cents a barrel? A. My recollection is, as I said before. 15 cents, I won't be positive of that. "Q. Would you assert your recollection against a judicial determination of this question by the court? A. I certainly should not. ■■Q. Now, did you not make it as a part of that arrangement that this railroad company, or its receiver or manager, should charge a certain Mr. Georere Rice, who was a competitor with you, a higher rate on his oil? A. No. sir. "Q. You did not? A. We did not. "Q. Were you not to receive, and did you not receive, from this railroad, or its business, a payment to your company on account of the oil they trans- ported for Mr. George Rice? A. Yes, sir; the railroad company agreeed that the rates should cover all oil transported. "Q. What rate? A. The fixed rate as between the railroad and the pipe line. "Q. That is to say that when the through rate of 35 cents was charged on the oil which passed throueh your pipe line and their railroad together, and out of which you received 20 or 25 cents, as your recollection may be, they were to charg-e the same rate to Mr. George Rice, whose oil passed only over their railroad, and not through your pine line? A. There was nothing special about George Rice, it covered the oil. JOHN D. ARCHBOLD. 233 "Q. But did that other oil which was in competition with you pass through your pipe line? A. No, sir. "Q. bid not they, therefore, on that oil which only passed over their railroad and not through your pipe line, pay to you the same allowance or rebate that they did on your oil which did pass? A. They did, liiit we returned it through the advice of our counsel, Mr. Dodd. "Q. How long did you keep it? A. A very short time. "Q. It was a hot time for Mr. Rice? A. I don't think it was; he was a hot man. "Q. The result of that arrangement, if it had been carried out — assum- ing your recollection to be correct — you would have paid 15 cents to the railroad for your oil. and Mr. Rice would have paid 35 cents, would he not? A. No. sir; he had the privilege of doing what we did, which he afterwards did do. "Q. He was not using your pipe line? A. No, sir; we tried to get him to make an arrangement with us to use our pipe line, but he would not do it; he wanted a better rebate than anybody else. "Q. He had his own means of bringing this oil to the railroad; he did not require your pipe for that service? A. He required the pipe to get his oil to Marietta, and subsequently laid a pipe to Marietta. "Q. Was not this the fact, as Judge Baxter has found, in this case, that Mr. Rice, who at that time only used the railroad, paid 35 cents for the trans- portation of a barrel of oil? Was not that true? A. I took it to be true. "Q. Now, out of that sum, how much did you get from the railroad out of what they had received from Mr. Rice? A. We did not get any; that is, we did not retain any. The railroad company agreed to account to us for the oil that went over its lines, and they did make an accounting, to my recollection, of about $200 or $250, or something like that, on oil other than that which passed through our line. Our counsel. Mr. Dodd, advised me that we could not do that business, and we refunded the money. "Q. Was that refunded before the investigation of the case took place in court? A. I do not know; I do not remember. "Mr. BUCHANNAN. Before this examination proceeds any further, I wish to say that the use of the terms 'in court' and 'Judge Baxter' indicates to me that there has been litigation upon this subject between Mr. Rice and some company. I would like to know before the examination goes any fur- ther, whether there has beeen such litigation between Mr. Rice and any com- pany represented by or that would be bound by the statements of the wit- ness now upon the stand; and, second, whether, if such litigation has been had, it is concluded and the matter disposed of in the courts or is in any Vv-ay still pending. I ask this question solely for information, because I do not know anything about the matter. "Mr. GO WEN. No. sir; the proceedings are entirely completed. It was not a suit between Mr. Rice and anybody. It was a proceeding against the receiver of this road to dismiss him from his receivership. That has been terminated. It has been dismissed, the case is ended and reported in the Federal Reporter. "Mr. SMITH. Who rendered that decision? "Mr. GO WEN. Judge Baxter; he removed him. "Mr. SMITH. Was he judge of the United States Court? "Mr. GOWEN. He was judge of the Circuit Court for the Southern dis- trict of Ohio. "Mr. SMITH. A United States Court? "Mr. GOWEN. Yes. sir. "The CHAIRMAN. I understand, in answer to Mr. Buchanan, the infor- mation is furnished that there were a proceeding pending to remove a receiver. That proceeding resulted in the finding by the court removing him and that litigation is closed. "IVTr. GOWEN. That branch of the litigation is closed. "Mr. BUCHANAN. That answers my inquiry. But there has been an- other remat-k made that leads me to ask if there is any other branch of the case remaining unclosed? 234 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Mr. GOWEN. Only this: The jurisdiction that the United States Court was enabled to take over this case arose from the fact that a receiver had been appointed in a proceeding in that court to foreclose the mortgage, and therefore as the receiver was an officer of that court, the court took jurisdiction on this question. Whether the proceeding to foreclose the mort- gage is ended or not, I do not know. "Mr. BUCHANAN. That answers my question. "Mr. GOWEN. There is no other suit pending about it that I know of. "Q. (By Mr. GOWEN.) Where did this oil that was transported over this railroad to Marietta originate? A. In the country in and about Macks- "burg. "Q. Ohio? A. Yes, sir. "Q. There is a small oil field near the Macksburg field in Southeastern Ohio? A. Yes, sir. "Q. How far is that field from the Ohio river? A. Perhaps 15 or 20 miles; somewhere along there. "Q. The largest town near to it on the Ohio is Marietta? A. Yes, sir; south. "Q. (By Mr. SMITH.) You stated that the charges on oil were lost in trying to get the business, if my memory serves me right? A. Very largely. "Q. How were they lost? A. In competition in buying the oil — bidding for the oil. "Q. Bidding for the oil? A. Yes, sir. "Q. Did you have to purchase of somebody? A. We had to purchase oil." That covers the record of the case as given under the sworn testimony of Mr. O'Day, who had to do with it on behalf of our interest at the time, and I desire to state further that I have made a careful personal inquiry of Mr. O'Day regarding the case, and he informs me that the amount involved in the Rice contract, some $2-50, was immediately, under Mr. Dodd's instruc- tions, refunded, and that such refunding was made before any proceedings were instituted as against the receiver. We were in no sense a party to the proceeding against the receiver, wore not present in court when the matter was heard and had nothing what- ever to do with it. I desire to state further, from my own personal knowledge, that Rice's efforts for many years have been directed, not toward making a success of his refining business, but to the pursuit of such a vexatious course toward us as would lead us to buy him out of the business at an exorbitant price. In other words, his course for many years has been a direct effort toward extortion. In a personal interview which I had with him, on his request, as far back as 1S86, he demanded of me that we pay him $2.50.000 in cash and $50,000 per year for five years, or a total of $500,000 for his Marietta refinery which was worth at that time possibly $25,000 or $30,000. He based his demand on a statement that he had already inaugurated a number of suits before the Interstate Commerce Commission, that he could influence the action of the commission, and had other suits in contemplation which he would at once press, unless we submitted to his demands. He claimed that if we did make the deal with him, he could influence the discontinuance of fbe suits already pending, and that he would refrain from bringing others to annoy us. He further stated that he had the ability to cost us a very large amount of money by making what are termed "cut quotations" in the mar- kets for refined oil, thereby unsettling the trade and compelling us to make concessions to our customers in the localities affected. I drew him out as much as possible on this subject in the hope of getting him to expose his plans as thoroughly as possible, and then asked for time in order to make investigations of his statements. He evidently realized after some delay in the matter that we had not been specially influenced by his statements, and the matter was allowed to drop. Later, however, he made further efforts in the same line. Rice has had no active relation with the business, nor made any effort to have any for many years. I cannot say positively, but I believe he has been supported as an agitator by our enemies and those seeking in this indi- rect and underhanded way to annoy us. JOHN D. ARCHBOLD. 235 I desire to say a word regarding the effort at pathetic reference to Mr. Lockwood in the Rice case, in Lloyd's book. I desire to characterize this statement in Mr. Lloyd's book, as well indeed as all the other statements with reference to our business, as cunning fiction, made up entirely on one- sided testimony, and dressed for sale. Whether Mr. Lloyd expected to share, as a result of his advocacy of Rice, in what Mr. Rice might be able to get from us, I am unable to say, but he certainly lays himself open to that suspicion. I desire to say further with reference to this book of Mr. Lloyd's, that if you are disposed to waste your time reading it, you will find it with refer- ence to its statements regarding the business of the Standard Oil Company, one of the most untruthful, distorted compilations that was ever inflicted on a suffering public. Q. (By Mr. FARQUHAR.) What is the title of the book? A. Wealth vs. Commonwealth. Mr. Lockwood makes an absurd statement intended to convey the impres- sion that at the same time refined oil is sold in Germany at two cents a gallon, the people of Texas and Arkansas are forced to pay 25 cents. There is, of course, not a word of truth in any such statement, nor does he pretend to furnish, nor can he offer, any evidence in support of it. It is the sort of statement that a silly demagogue would make, in an effort to create senti- ment on this question. Mr. Lockwood makes the startling admission that he himself at one time aspired to be a monopolist and a plutocrat. We cannot escape a shudder at the thought of such a thing. *If he had succeeded, who, indeed, would have saved the country? And would he now have been engaged in an effort to marry his daughters to the effete noblemen of the old world. He makes an absurd statement regarding the railroad companies rais- ing the price of crude oil from 40 cents to 80 cents and paying the addi- tional 40 cents to the South Improvement Company. *He must have known that this was an utterly false statement, there being not a shadow of basis to support it. He convicts himself with reference to this matter by testifying that the South Improvement Company was not carried out. As a matter of fact, I repeat that they never did any business. Mr. Lockwood testifies as follows: "Q. (By Mr. KENNEDY.) Mr. Lockwood, can you state approximately what per cent of the refined oil of this country is turned out by the inde- pendent companies. A. We calculate that they are handling about 4 per cent. "Q. Only 4 per cent.? A. Only 4 per cent. You know this is an immense husiness. "Q. (By Vice-chairman PHILLIPS.) This is taking the Ohio oil? A. Taking the Ohio oil and Pennsylvania oil, and all these different grades of oil." I will now present a statement showing the aggregate business done by the Standard Oil Company and by others in the United States for the five years from 1894 to 1898 inclusive, in which it appears that the aggregate percentage of all business in petroleum and its products done by the Stand- ard Oil Company was 82 3-10 per cent, for this period of five years, as against their competitors' 17 7-10. t *Mr. Lockwood's testimony being that it was 4. Q. (By Mr. SMYTH.) That includes all by-products? A. It includes petroleum and all its products. Mr. Lockwood testified that by manipulation of the price of Ohio crude oil, in conjunction with the railways, we succeed- ed in getting the price down to an abnormally low figure and then bought substantially the whole Ohio producing field. I now present a statement covering the years 1890 to 1898, inclusive, showing our relation to the business of producing oil. not only in Ohio, but in Pennsylvania, thinking that it would set at rest the question which has •Black faced type indicates matter Omitted, in the course of editing, from the official report. tA tabulated statement showing the percentage of the petroleum business done yearly by the Standard Oil Company from 1894 to 189S, inclusive, is published In the official report of the commission, page 560. 236 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. been raised in reference to that relationship, and which has been raised again to-day by some gentlemen. I will, if desired, read the statement year by year, or will give you the aggregate, as you prefer. *Q. (By Professor JENKS.) Perhaps it would be better if you just read the percentages. A. Well, in 1890, that produced by us in the fields of Ohio and Pennsylvania was 24.44 per cent.; 1891, 26.79; 1892, 24.36; 1893, 28.46; 1894, 28.21; 1895, 30.28; 1896, 29.45; 1897, 29.82, and in 1898, 35.58. Or for this total period of 1890 to 1898, inclusive, the Standard Oil Company's percentage on the whole thing, by districts, was 28.70.t Q. What are the figures for the two separate fields for the last two years? A. For the year 1897, of Pennsylvania oil, there was produced a total of 35,170,367, of which we produced 27.83 per cent., and there was pro- duced of Lima oil in 1897, 22,793,033, of which we produced 32.89 per cent. In 1898, the Pennsylvania production was 31,645,151, of which we produced 35.55 per cent., and the Lima production was 20,266,328, of which we pro- duced 35.63 per cent. This is in answer to Mr. Lockwood's statement that we had substantially the whole of the Ohio producing field. Mr. Lockwood's statement that when the Standard Oil Company buys a pipe line producers have to pay for it two to forty times over, is so absurd and ridiculous as not to call for any answer. In conclusion, gentlemen, it is really difficult to answer seriously a man who indulges in such extravagance of statement as has characterized Mr. Lockwood's testimony. Indeed, it is difficult to believe that he takes himself seriously. We can forgive much from a man in whose veins runs the boiled down pugnacity of 147 revolutionary sires, but when he ruthlessly attacks judges and courts and claims that the entire railroad and corporate interests of the country find their chief avocation in the "corrupting of public affairs, and the debauching of public men." I think you will agree with me that we must conclude that the "fool-killer" has been very remiss in his duty in the vicinity of Zelienople, Pa. In the possibility that the statement which I have made regarding my intercourse with Mr. Rice and his overtures to me in connection with his business, may not be complete, I desire also to file for the information of the commission a transcript of the testimony of Mr. Rice given on cross- examination in the suit of the State of Ohio vs. the Buckeye Pipe Line Com- pany, taken on the 20th of February, 1899. This is in relation to Rice's con- nection with the contempt proceeding against the Standard Oil Company of Ohio. "Q. Mr. Rice, you know that a proceeding for contempt was instituted by Ihe Attorney-General of Ohio against the Standard Oil Company of Ohio? A. Yes, sir. "Q. Did you employ counsel in that case? A. I did. "Q. Who? A. W. L. Flagg. "Q. What other counsel did you employ? A. Mr. Kincaid. "Q. He is now acting as special counsel for the Attorney-General? A. Yes, sir. "Q. How long prior to the commencement of these proceedings in con- tempt as-ainst the Standard Oil Company did you employ Mr. Flagg? A. Two or three weeks — less than a month. "Q. Did you employ him to assist the Attorney-General in instituting and conducting the proceedings in contempt? A. I should say that would be most natural. "Q. Did he come here to Columbus for a consultation with the Attorney- General? A. Yes, sir. "Q. Did you come with him? A. I guess I came on before. "Q. You had your consultation with the Attorney-General before he came? A. Yes, sir. "Q. You three had consulted together? A. Yes, sir. *P.lack faced type indicatos matter cimittpd, in the course of editing, from the ofTioial report. tThe above statement in tabulated ff' m appears on page 561 of the official report of the commission. JOHN D. ARCHBOLD. 237 "Q. When did you employ Mr. Kincaid? A. That was about the same time, not just exactly. *'Q. Was he brought into this conference by you? A. Yes. sir. "Q. At that time he was not employed by the State? A. I do not think he was. "Q. He was your private counsel? A. Yes, sir. "On cross-examination in relation to Mr. Rice's offering to sell his property to Mr. Archbold: "A. He (Archbold) wanted to know what I would take to go out of business and I told him $250,000 and $50,000 per year for five years; but several years before that he wanted to buy my plant and I offered to sell it for $25,000 and $5,000 for five years, and before that time I offered to sell it for $20,000. I have a perfect right to ask what I please for my plant. ********* "Q. Did you authorize or request Mr. Orvis to have an interview with him (Archbold)? A. No, sir; not at first. "Q. Did you at any time? A. I may have done so. "Q. Now coming to the second interview, did you have another inter- view in June, 1890, with Mr. Archbold at his office in the Standard Oil build- ing, at 26 Broadway, in New York? A. I do not recollect. "Q. Did you then make a similar offer to him? A. I did not have a second interview with Mr. Archbold. "Q. Did you at that time authorize Mr. Orvis to make an offer to sell your property for $500,000? A. Yes, I guess I did. "Q. You were to get $250,000 cash and $50,000 for five years? A. I guess so. "Q. What were you to give to Mr. Archbold for that consideration? A. I was to sell out my plant and get out of the business. "Q. Were you to refrain from bringing any further litigation? A. That was to settle up the whole trouble; I was to do nothing further, have no litigation or anything of that kind." *That finishes my answer to the testimony, iVIr. Chairman. Q. (By Professor JENKS.) Have you any general statements to make in reference to the organization of the company and its methods? A. I have a general statement which I would like to make. Vice-Chairman PHILLIPS. Well, just proceed, Mr. Archbold, and make your statement. A. I am glad to say this is a much pleasanter task to me than attempting to answer the allegations of these various witnesses. I did not come here, although I am naturally under some feeling in respect to these charges that have been made so often and as we think so unfairly reiterated against us, to assail anybody harshly and if I have been led into any expression that seemed harsh at any time during the course of my answers, I am sorry for it. I have answered as I have only out of the fullness of what I believe to be a correct statement and the desire to make my answer as positive as possible; certainly not with any disrespect to this commission. It is a much pleasanter task for me to undertake to say a word more particularly in de- fense of the organization with which I have, for almost my entire business life, been intimately related, and in which relation I have the greatest pos- sible pride. Shall I proceed? Vice-chairman PHILLIPS. Certainly. The WITNESS. .Trusts, or speaking correctly, large corporations, are the necessary, indeed the irresistible result of our rapidly growing com- merce. In adopting them we are but following the example of that greatest of all commercial nations, England, under whose commercial charters, capi- talization and scope are practically unlimited. Any legislative restrictions imposed here would operate alone to the benefit of foreign commercial com- petitors. The claim that such restrictions would help the weak and incom- petent of our own country as against the strong and aggressive is too puerile to call for serious answer. I speak to-day especially in defense of the aggre- gation of capital and experience in the petroleum business on the ground of *Black faced type in(3icate.s matter omitted, in the course of editins, from the official report. 238 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. its absolute necessity for the successful development and promotion of that business. I am here to defend the Standard Oil Company organizations also on economic and ethical grounds. Not to indulge in undue length, I will lay down a number of leading propositions in support of my position, which may serve as texts for more extended discussion if you should so desire. The early years of the petroleum industry were marked by a chaotic and crude condition in all branches of the trade, namely, the production, manufacture, transportation and marketing, and the average quality of the refined products was inferior and unsatisfactory. The advent of the Stand- ard Oil Company aggregation changed this entirely. It brought to the busi- ness ample capital, and combined into effective working shape the best pos- sible talent in all branches of the business. It improved quality and greatly reduced costs. It supplanted old and inferior methods and refineries with the newest and most progressive methods and most perfectly equipped and favorably located refineries. It has ever been on the alert to engage the best obtainable practical and technical talent for the development and im- provement of the business in all its branches. It inaugurated new systems of transportation which not only gave to the producer the most efficient pos- sible service at greatly reduced cost, but a daily continuing cash market for his product, on a basis of the best price obtainable in the world's markets. Further, it reached out and occupied the markets of the world for American petroleum. Individual effort could not have accomplished any such her- culean task in many times the same period, and, indeed, the efforts of the Standard Oil Company were none too quickly made. If there had been as prompt and energetic action on the part of the Russian oil industry as was taken by the Standard Oil Company the Russians would have dominated many of the world's markets which have been made to inure so largely to the benefit of the American oil industry. Later in the history of the trade, Russia and other oil producing countries have followed in the footsteps of the Standard Oil Company in the general markets of the world, and I hand you now a statement, partial in character, of the oil companies of Russia, the Dutch East Indies, Galicia, Japan and other countries, which will give you some faint idea of the menace which even now threatens the American oil industry.* When you reflect, gentlemen, that there has been brought into this country during the past 30 years from the exportation of petroleum and its products nearly $1,500,000,000 you will appreciate the importance of this subject. It is true beyond a question that the result to the public of the opera- tions of the Standard Oil Company has been highly beneficial, and not hurt- ful, as its enemies claim. As has been already stated, it has given the public goods of vastly improved quality at gTeatly reduced prices. It has. by its effective system of distribution, supplied this most necessary article for domestic consumption promptly and cheaply to the most remote sections of our country, and. indeed, to the world. Beyond all this, however, it has given to the community at large an opportunity for investment in the busi- ness itself, which it could never have had under the old system. Thus, there are to-day partners in the Standard Oil Company as shareholders to the number of fully 3,500, where less than one-twentieth of that number would have been interested as partners under the old system. It has been most beneficial in its effect on labor. There could be no stronger evidence that the labor involved in its vast operations has been well paid and contented than lies in the statement that for more than a quarter of a century, since the Standard Oil Company began its operations. it has scarcely had a serious strike of any kind among any branch of its employes, one or two temporary strikes among some special classes of work- men in sympathy with other labor organizations who were striking, con- stituting the sole disturbances. Indeed, it is not too much to say that to the loyalty, zeal and intelli- gence of its vast army of about 35,000 employes, the company is largely in- debted for its strength and efficiency. ♦This list, covering one and a half printed pages, is given on pages 56.3 and 564 of the ofTicial report of the commission. JOHN D. ARCHBOLD. 239' I unhesitatingly express the opinion that when the history of our time is written it will appear that the marvelous commercial and industrial evolu- tion which we are experiencing in this great country during the year 1899 marks one of the most important steps of progress in our country's history. It will prove to be of immense value to all classes of our population. The investor, the consumer and the laborer will all be benefited by it — the in- vestor, by the better security which arises through amplitude of capital for the business contemplated and the combination of talent in the various de- partments of administration in business; the consumer, through improved, processes, resulting in better products at lower prices and more efficient distribution; the laborer by steadier employment at better wages, and a better opportunity for improvement in condition, if special talent is shown. The outcry, gentlemen, against corporations does not come from the great, busy, industrial classes, but from impractical sentimentalists, yellow journals and political demagogues, from the latter, perhaps, more than any other. It is a veritable attack upon thrift and prosperity. To listen to their voice to the extent of imposing restrictive legislation would mean a frightful step backward in the commercial development of our country. If you should ask me what legislation can be proposed to improve the present condition, I answer that the next great and, to my mind, inevitable step of progress in the direction of our commercial development lies in the direction of National or Federal corporations. If such corporations should be made possible under such fair restrictions and provisions as should right- fully attach to them, any branch of business could be freely entered upon by all comers and the talk of monopoly would be forever done away with. Our present system of State corporations, almost as varied in their provisions as the number of States, is vexatious alike to the business com- munity and to the authorities of the various States. Such Federal action need not take away from the States their right to taxation or police regula- tion, but would make it possible for business organizations to know the gen- eral terms on which they could conduct their business in the country at large. Lack of uniformity in the laws of the various States, as affecting busi- ness corporations, is one of the most vexatious features attending the busi- ness life of any great corporation to-day, and I suggest for your most care- ful consideration the thought of a Federal corporation law. Q. Have you any further statement to make in reference to the organiza- tion of the Standard Oil Company itself? A. That, I suppose, would all be covered in the statement that Mr. Dodd is to make. All the data regarding the organization I think will be in that. I want to hand you, in connection with this paper, this most interesting statement, which I think is the first general compilation of the information that has ever been made in this country and is almost a surprise to us who are familiar with the oil busi- ness, as showing the tremendous growth of the foreign petroleum business. I will only refer by name to the countries in which petroleum is now suc- cessfully mined and prepared for the market, the capitalization, so far as we are able to obtain it, and the names of the companies which, as I think, substantially and fully bear out these statements.* Q. (By Mr. SMYTH.) Can you give us anything like the proportion? A. I have a statement which I think shows the proportion of the business done. It will be a little surprise to you, gentlemen, to see the enormous capitalization of the business attaching to the Russian oil development. I may say, in a word of explanation, that the business there is in tremendously or going to be in tremendously strong hands, as you will see, when I men- tion the name of the Rothschilds, which will be a sufficient guarantee as to the strength of the company, and they are growing now enormously in the extension of their business in the various markets of the world. The Nobel Brothers are there competing for the business, and recently, perhaps within the past year more than in the aggregate time before, English capital and English corporate organizations have engaged in the petroleum trade in Russia to an enormous extent, the largest concern, perhaps, being the Shell Company. I hand you this list showing firms in Russia and this showing: ♦This list appears on page 563 of the official report of the commission. 240 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. list of corporations in Galicia; a further statement from Roumania, one from Borneo and sundry places in the Dutch East Indies, in British India, in Alsace, Germany, and in Japan. *Both corporations and individual firms are producing and refining petroleum. It will probably be an item of in- formation to many of you that the production of petroleum is assuming great proportions in Japan. They are now very rapidly progressing, or com- ing to the front in improved methods of production, and will ultimately be- come formidable competitors to our American industry. The system of petroleum refining in Japan is by corporations and individual firms going out into the fields and producing and refining. In Sumatra the business has already attained large proportions, and in Java and the Island of Madeira. Q. (By Mr. SMYTH.) Is there any American capital represented in any of these firms? A. There is no American capital that I know of. They have sent out and taken from our oil producing country here many artisans, but I do not know of any American capital being invested. Q. (By Mr. A. L. HARRIS.) Then the Standard Oil Company is not represented in any of these corporations? A. Not in any way. Q. Not even with the Nobel Brothers? A. No, sir; not a dollar of in- terest or relationship or understanding in any way. Q. (By Mr. SMYTH.) I suppose one of the causes of attack on Ameri- can oil in London is that English capital is interested in the Russian re- fineries? A. Undoubtedly. As I said before, I think that attack was un- doubtedly made by the people interested in the Russian distribution in Eng- land. It may be of interest to read a short letter from our foreign ex- porters giving an epitome of the various productions in these various coun- tries. It is as follows: New York, September 1, 1899. J. D. Archbold, Esq.: Dear Sir— I beg to hand you herewith the statements you desired, in duplicate, and wish to say that the Russian production is on the Peninsula of Apsheron, on the west coast of the Caspian sea, and the Grosni district, northwest from, the same. We estimate the Russian production at present to be about 160,000 barrels per day and Grosni about 10,000 barrels daily. The Galician production is about 2,000,000 bar- rels crude and Roumania 500,000 to 600,000 barrels per annum, and the Alsace pro- duction about 175,000 barrels crude annually. The Dutch East Indies, about 3,400,000 barrels; Burmah about 2,000,000 cases refined per annum, and Japan will probably amount to about 2,000 barrels crude oil per day. Of course we give you these figures as near as we can get to them, and where we give yo;i the output of refined, we have no reliable figures as to what it may represent in crude. Yours truly, C. F. ACKERMANN. I have here a further statement which covers the information which you asked as to the percentages of these various countries. It is for the year 1897. Unfortunately we have not the full data at hand with which to give you the 1898 figures. This statement shows the business of all the countries of the world producing refined oil.f Some little percentage of it, as you will observe, is not of native production in the country, but it is shown in this way because the country named compels, by its tariff laws, the bringing into the country of the crude petroleum for refining there; but the larger items are the production of the various countries, as you will observe. The total production of the world of refined petroleum, illumi- nating oil, for the year 1897, was 39,338,991 barrels of 50 gallons each, and was divided as follows. I will give you the percentages, if you please. Q. (By Professor JENKS.) Yes. A. United States, 64.23; Russia, 23.28; France, 3.25; Austria-Hungary, 2.66; Sumatra, 2.32, and the remainder, Scot- land, Canada, Java, Roumania, India, Spain, Mexico, Cuba. Brazil, Germany, Peru, Italy, Japan and Porto Rico arc all fractions of less than one per cent., making the grand aggregate of 100 per cent.; the great factors, as you will see, for the year, being the United States and Russia, and a rapidly in- creasing factor, of course, in Austria-Hungary and Sumatra. The population of the world is 1,349,140,091. The production of illumi- nating oil is therefore equal to one and five-tenths gallons per capita. *Black faced type indicates matter omitted, in the course of editing, from the official report. tThis statement appears on page 5G7 of the official report of the commission. JOHN D. ARCHBOLD. 241 Q. (By Mr. CLARKE.) Do you suppose there has been a considerable advance since these statistics were given? A. The business of Russia is Increasing very rapidly, *and with our present basis of price here it will increase. Here is a further statement of the world's production of crude oil which may be of interest.! Perhaps I had better not take the time to read it. Total production in the United States, 1859 to 1897, inclusive (38 years), 837,494,059 barrels, on the basis of 5.6 cubic feet to one barrel of oil. This amount of crude oil would fill a pipe line 6.9 feet in diameter extending •entirely around the earth. It would cover a surface of 10,000 square miles to a depth of 0.2 inches, or fill a reservoir having an area of one square mile and a depth of 167 feet. Q. Is there anything further that you have to add to your general statement? A. I have nothing further. Q. (By Professor JENKS.) Perhaps we had better ask you some ques- tions somewhat more in detail in reference to some of the points you ^ave l)rought out. A. Very good, sir. Q. (By Mr. FARQUHAR.) Have you furnished the commission to-day with the total exports from the first, all over the world, from the United States? A. I don't think I have submitted such a statement. It may be that among these statistical reports there is such a statement, but 1 hardly think so. I have for periods given the exports. Q. And you can furnish the exports year by year? A. From the day we began. Total value of petroleum products exported from United States for the years 1861 to 1871, inclusive, amounted to $ 199,030,333 Value of exports from 1872 to 1898, inclusive, (i.e., since the organization of the Standard Oil Company) 1,246,846,381 Value of exports by Standard Oil Company 1,126,401,021 Standard Oil Company, 90.34 per cent, of total. $ Q. (By Professor JENKS.) With reference to the effect of the Stand- ard Oil Company upon prices you have made the general assertion that, through the infiuence of the Standard Oil Company, in your judgment, prices of refined oil have been greatly lessened to consumers here. Is it generally true that the prices at the present time are considerably lower at com- petitive points than at those where you have no competition? A. Well. I cannot speak with any precision regarding that matter, but I have no doubt ♦Black faced type Indicates matter omitted, in tlie course of editing, from the ofRcial report. vTlils statement showed the percentages of the production of crude oil by various countries for 1S97 (the total production being 126.136.528 barrels of 42 gallons each) as follows: United States, 47.96; Russia, 45.26; Austria-Hungary, 1.66: Sumatra. 1.41; Scotland (1896), 1.04: Canada, .64; Java, .58; Roumania. .45; India (1896), .34; Japan, .23; Germany, .13; France, .06; Peru, .05; Argentine, .02; Italy, .01; other countries work a formula within themselves, whereas, when you acquire a formula you can put it in 50 or 60 refineries? A. That statement is entirely correct. That is one of the great secrets of success in our business, particularly be- cause of our combination alike of capital and skill. Q. (By Vice-Chairman PHILLIPS.) Have you any supplementary state- ment to make? A. No, sir; *l think you have granted me every courtesy. Vice-Chairman PHILLIPS. Mr. Archbold, I am authorized by the com- mission to extend their thanks to you for your very full statement in regard to the Standard Oil Company. I am obliged to you for appearing before us. The WITNESS. I thank you very cordially, Mr. Chairman, for your kindness and your patience with me. Vice-Chairman PHILLIPS. If the commission will give attention one minute the chair has a statement to make. The chair will state that when Mr. Rogers is through he (the chairman) desires to be put on the stand to make some corrections or statements in regard to Mr. Archbold's testimony which was given this forenoon. I desire to be put upon the stand because, as it now appears, I do not think it is just to the commission. I care but little for my own personality, but I care a great deal for the reputation of this commission, and at the conclusion of this hearing I shall take the stand myself. On motion the commission adjourned until the following morning at 10 o'clock. CHAPTER XIII. TESTIMONY OF HENRY H. ROGERS, VICE-PRESIDENT OF THE STANDARD OIL COMPANY OF NEW JERSEY. Mr. Henry H. Rogers, of New York City, one of the vice-presidents of the Standard Oil Company of New Jersey and president of the National Transit Company, appeared before the commission September 9, 1899, having been present when Mr. Archbold gave his testimony on the previous day. He was on the stand only a short time replying to such questions as were asked him. Many of these questions were mere repetitions of questions that were asked Mr. Archbold and they received substantially the same replies. He had heard Mr. Archbold's testimony, and he said he agreed substantially with all the former had said. ♦Black faced type indicates matter omitted, in the course of editing, from the ofRcial report. ■256 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. In reply to questions by Professor Jenks, Mr. Rogers said, speaking from memory, he thought the charges on the pipe line were lowered to 20 cents about 20 years ago. He said: "You will understand that the pipe line charges of 20 cents a barrel are what are termed 'gathering charges.' That is to say, the oil is taken from the wells of the producer and delivered at the stations of the pipe line to their tanks. Wherever the oil is found we run a line to it. We are fre- quently called upon to run a line 15 or 20 miles. We have never made an extra charge for that, and while in some instances we pump oil but a very short distance to the tanks in other instances we pump it 15 and 20 and 25 miles, so that we consider it an average rather than an arbitrary charge." Q. (By Mr. FARQUHAR.) You mean not an average, but an equalizing charge? A. An equalizing charge, if you please to term it so. Q. (By Mr. SMYTH.) It puts all the producers on the same footing as to that charge? A. It gives the producer who is a patron of our line, an advantage always, in feeling that no matter where he finds oil in the vicinity of the pipe line system, it may be 15 or 20 miles away, if he is a patron of our line and he has a producing well on a paying basis, we will spend the money to run the line to him and take care of his oil. Q. (By Professor JENKS.) Is there any competition in the pipe line business? A. Yes, sir. Q. What is the competition? A. The competition in the Butler county field is with the Producers & Refiners' Pipe Lines. The competition in the Ohio field is with the Manhattan Oil Company, and in the Indiana field v\'ith the Cudahy Pipe Line Company. Q. (by Vice-Chairman PHILLIPS.) Any competition in the Scio field, in Ohio? A. Yes. sir, there is a trifling competition. The competition in the Scio field is about 6,000 barrels a day of the average run. The run of the outside lines last month was between 400 and 500 barrels a day. Q. (By Professor JENKS.) These competing pipe lines that you speak of are run on the same territory, so that they can equally as well take the product that you otherwise would take? A. Well, if they had the capacity to handle it, yes, sir, *but many of them have not. Q. I mean as regards the location? A. Well, so far as the location goes, yes, sir. Q. Are the prices of this independent pipe line in Pennsylvania the same as yours? A. I don't know; I can't answer that question. Q. You do not know in reference to their charges? A. I don't know; I have hearsay evidence, that is all. Q. (By Vice-Chairman PHILLIPS.) Mr. Rogers, have you any premium on oil in any competing field except the Scio field now? A. Yes. sir. Q. (By Vice-Chairman PHILLIPS.) What other field have you a pre- mium on? A. Tiona and the Franklin field. Q. (By Vice-Chairman PHILLIPS.) The Franklin field is a lubricating oil field, is it not? A. The oil is superior to the ordinary petroleum. Q. (By Vice-chairman PHILLIPS.) And the oil in the Tiona field is also superior? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) That is generally understood? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Now the Scio field is a newer field. Do you understand that to be puperior? A. Yes. sir. it is Q. (By Vice-Chairman PHILLIPS.) Now, Mr. Archbold testified yester- day that you had placed premiums on oil in fields where there was no dif- ference, no special difference, in the quality of the oil. as, for instance, in Butler. Allegheny and Washington counties, when there was competition there. Do you understand that to be substantially correct, Mr. Rogers? A. I understood Mr. Archbold's statement to be absolutely correct. Q. (By Vice-Chairman PHILLIPS.) Now, Mr. Archbold testified that they put this premium on and did not eive a rebate. Now I would like you to explain to this commission the difference between paying a rebate of 10 ♦Rlark ffired type indicates matter omitted, in the course of editing, from the official report. HENRY H. ROGERS. 257 or 15 or 20 cents per barrel on oil or granting a reduction in the transporta- tion prices from time to time to the same parties. Would it not in effect be the same? A. First, I would lil^e to say that as I understand Mr. Arch- bold, he did not testify that we had been the first to put premiums on the oil, but that it had been brought about by competition. I do not think the money that goes into the producer's pocket as an advanced price for his oil can be classed as a rebate, because the producer loses interest in the oil as soon as it gets into the pipe line. The pipe line charges are paid by the man who transports the oil for refining or export. Q. (By Vice-chairman PHILLIPS.) Now, do they not, all that ship in those fields, get an advantage over other producers in other fields, the same as if it was a rebate. Is it not another name for the same thing? A. No, sir. Q. (By Vice-Chairman PHILLIPS.) Or nearly so? A. Not nearly so, as I have explained. Remember that the producer loses interest in the oil the very instant that he delivers it to the pipe line. If he gets a premium on the oil the producer is benefited by it. He has surrendered it to the man who owns the oil after it goes into the pipe line for refining or for sale in foreign markets, for export. The producer has no interest in the oil after he parts with it at his well. Q. (By Vice-Chairman PHILLIPS.) Could he not get a larger price for it if there was a rebate on that oil in selling it? A. I cannot answer such a hypothetical question. Q. (By Mr. SMYTH.) Do we understand that there are two instances or two fields where you say there is a premium that is due to the superior quality of the oil? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) At the present time? A. Yes, sir. *Vice-Chairman PHILLIPS. At the present time that we are speaking about there are premiums in other fields where there is no difference. Q (By Mr. SMYTH.) 1 understand that there is no premium allowed now except in two cases where the oil is of a superior quality? A. There are three points to-day *where the oil is of a superior quality. Q. And at these three points there is a premium allowed? A. There is a premium, yes, sir, and there is a difference in the price of oil in Ohio. That is to say, there are two fields in Ohio, one called the North Lima and the other the South Lima field. The oil of the North Lima field is more valuable than the oil of the South Lima field and there is a difference in price of five cents. Q. And that difference goes to the producer? A. Yes, sir. Mr. Rogers was not sufficiently familiar with the Canadian branch of the Standard Oil Company's business to give testimony in regard to it and in reference to rates to Canadian points 10 years ago. Mr. Rogers was questioned regarding the way certificate holders in the old Standard Oil Trust received stock in the constituent companies, re- garding the credit balances of the National Transit Company and the amount of crude oil in the pipe lines of the National Transit Compauy.t *Black faced type indicates matter omitted, in the course of editing, from tlie official report. tin resFonse to a request by Professor Jenks, Mr. Rogers, some weeks after giving liis testimony, furnished a statement of the credit balances in the National Transit Company, as follows: [In barrels of crude oil of 42 gallons each.] Time. Barrels. Time. Barrels. June 30, 1889 3,217,T49.1G December 31, 1894 1,644.2.».1.3 December 31, 1889 3,160,156.81 June -30, 1895 783,592.96 June 30, 1890 3,794,873.84 December .31, 1895 1,809,325.78 December 31, 1890 2,758,654.30 June 30. 1896 3,275.07.5.49 June 30, 1891 5,403,170.38 December 31, 1896 4,215.060.28 December 31, 1891 3,201,351.34 June 30, 1897 5,413,417.10 June 30, 1892 5,987,.319.53 December 31, 1897 4.523.0.54.39 December 31, 1892 5,532,079.21 June 30, 1898 4,4.50,703.02 June 30, 1893 4,340,713.15 December 31, 1898 3.822.997.28 December 31, 1893 2,705,563.20 June 30. 1899 4,910.451.22 June 30, 1894 2,453,417.82 September 30, 1899 5,349,392.54 Estimate supplied later: The estimate- d amour;t of what is known as Pennsyl- vania crude oil in pipes of five inches in diameter and over, of the National Transit Company and connecting pipe lines, as of 7 o'clock a. m., October 1, 1899, in barrels of 42 gallons each, is 535,528 barrels. 17 258 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Mr. SMYTH.) There was a matter mentioned yesterday that "several of the commissioners did not clearly understand. That was in ref- erence to a pipe line (this was in Mr. Archbold's testimony) in which the Standard Oil Company owned a half-interest. I think it was in Pennsyl- vania? A. The Producers' Oil Company, was it not? Q. The Standard Oil Company I understood owned a half-interest and sold it to Colonel Carter, who was a minority stockholder? A. Yes, sir. Q. With this company's interest he had the control of the company, that is, he owned a majority of the stock, but under some decision of the courts of Pennsylvania he is not allowed to control or manage that com- pany. We want to ask you who owns the minority shares? A. I only know from hearsay, Mr. Smyth. The report is that Mr. Phillips and his friends. Q. The Pure Oil Company? A. Well, not the Pure Oil Company. The Pure Oil Company is a company, you understand, that contemplates the ownership of the Producers' Oil Company, the Producers & Refiners' Pipe Line Company, the United States Pipe Line Company and numerous re- fineries in the oil regions, and one or more at the seaboard. In practice it would prove to be a trust if they carry it out. What we understand they want is practically a repetition of the Standard Oil Trust — a very wise thing^ to do, I conclude. Q. These individuals who own a minority of the stock, according to the testimony yesterday, really control the management of the company? A. It seems so, yes, sir. Q. (By Mr. SMYTH.) You state that the Standard Oil Company has no interest whatever in Colonel Carter's interest? A. None whatever. *Q. (By Vice-chairman PHILLIPS.) At the present time? A. Yes, sir. Q. (By Mr. RATCHFORD.) Was it conceded in the opinion of the court that Carter did own a majority of the stock? A. I so understood it. Q. You could not positively give testimony as to that? A. Only from hearsay. Q. (By Vice-Chairman PHILLIPS.) Was not Mr. Carter furnished the money to buy that stock by a trust company in New York? A. That I do not know; I think not. Q. (By Vice-Chairman PHILLIPS.) And he was introduced to that company by a member of the Standard Oil Company? A. What was the name of the company? *Q. (By Vice-Chairman PHILLIPS.) Or they introduced them to him? A. I do not know the name of the company. Q. (By Vice-Chairman PHILLIPS.) I do not know the name, the facts can be ascertained very well. A. He may have been introduced to the com- pany, I could not answer that question for the moment. I suppose that if Mr. Carter or Mr. Phillips came to me I would feel perfectly free to intro- duce them. Q. (By Vice-Chairman PHILLIPS.) One question before we leave this matter. Did you not understand Mr. Archbold yesterday to state that the Standard Oil Company or Trust or the United Pipe Lines at one time con- trolled a majority of this stock that was sought to be voted by Colonel Carter? A. He testified, I think, that they did not. The Standard Oil Com- panj^ never owned any of the stock of the parties in interest. Q. (By Vice-Chairman PHILLIPS.) But the independent companies, owned or controlled by the Standard Oil Company, did? A. It seems to be a question of memory between Senator Lee and Mr. Archbold and myself as to whether Colonel Carter owned a majority of the stock or we owned a majority of the stock before his purchase. I cannot answer. Q. (By Vice-Chairman PHILLIPS.) Can these facts be ascertained from the proceedings brought and the hearings held in New York? A. There were no proceedings brought there. Q. (By Vice-Chairman PHILLIPS.) I am not really certain whether it was brought there or not, but from the Senator I understood that there were some proceedings and some testimony taken in New York. A. Well, I never heard of it. ♦Black faced type Indicates matter omlttod, In the course of editing, from the official report. HENRY H. ROGERS. 259 *Q. (By Vice-chairman PHILLIPS.) Weil, then I am mistaken about that point. A. I would like to say that Colonel Carter did commence an action in Pennsylvania and the court decided that he was the bona fide owner of the stock and that he ought to be allowed to vote it, but under the rules he could not do it. Q. (By Vice-Chairman PHILLIPS.) And that was carried to the Su- preme Court and affirmed there? A. I cannot answer as to that. I know nothing of it. Q. (By Mr. RATCHFORD.) I was going to follow my previous ques- tion with a second one, but other matters were interjected. If this is an organization, I would like to have the name of it mentioned. Is it an or- ganization under the laws in the State of Pennsylvania? A. May I ask which company? Q. The company to which you referred; I think you referred to it as "Mr. Phillips' friends"? A. The Pure Oil Company is an organization under the laws of the State of New Jersey. *Q. Would the witness object to a suggestion? A. No, sir, not at all. Q. That in the taking of testimony, I venture to make the suggestion, Mr, Chairman, that where your purpose will be served by referring to the company would it not be better to do so, than to refer to individual mem- bers of the company? A. I think I answered the question. I intended to answer the question when the company was referred to. Q. When the company was referred to, who did you refer to in the be- ginning? A. I referred to the company, I did not mean any offense at all. Q. (By Mr. SMYTH.) I understood the witness to say that the minority of the stock in that pipe line was owned by Mr. Phillips and his friends, and that he did not know who they were? A. I think I was rather pressed along there. Mr. KENNEDY. I think he was asked who owned the minority stock? Mr. SMYTH. I was asking who the minority stockholders that con- trolled the company were. A. I so understood it, Mr. Smyth. The witness said he favored Mr. Archbold's suggestion of conducting a large interstate business, such as is carried on by the Standard Oil Com- pany, under a National incorporation. He thought that the English laws that had been referred to when Mr. Archbold was on the stand on the pre- vious day, were most admirable in their operation and most encouraging to capital and protective to labor and everybody in interest. If there was such an incorporation law in the United States he would be willing to or- ganize under it instead of under State laws. He favored the publication of reports and a supervision by the Federal authorities of the stock issued. He thought that such National incorporation could not be secured without amending the constitution, which he was in favor of doing. Such an in- corporation would lessen litigation in respect to corporations and would especially benefit new and young industries. ■ Speaking of over-capitalization, the witness said: "Well, of course there may be a large amount of watered stock of that kind and undoubtedly many of the properties that are put in these organiza- tions can be reproduced for less money than has been put into them, but at the same time you must not forget that in the organization of a great busi- ness there has been a great deal of time and money spent that could not be accounted for. Take, if you please, the case of a newspaper in New York City; it has a large circulation there, their plant could probably be repro- duced for $100,000, yet the paper would sell readily for half a million dol- lars. A certain amount of allowance for good will of that character must necessarily go with any business. It is practically the same in the case of a lawyer. A man of standing in the law and of years of experience, very naturally receives larger fees than a younger man who has just taken his diploma. *l think that when you come to consider many of these economic questions you will find that the over-capitalization has not been so large a feature in bringing out these properties as perhaps the desire on the part of those who are interested in certain properties to get them into a tangible ♦Black faced type indicates matter omitted, in the course of editing, from the ofRclal report. 260 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *form to market, enabling their estates, if you please, to be settled easily and readily. * * * * "If a corporation is over-capitalized and is unable to pay dividends on its capitalization the stock will depreciate in value. All investors certainly look first to the security, and then for the amount of return they get for their money. They will take a little gamble on an over-capitalized com- pany if they feel it can earn dividends and pay them. They will be very glad to invest their money in stock that sells for 75 and pays 6 to 8 per cent, in dividends. They will take some chances and invest it when they may not be willing to put it away in their banks." Q. (By Mr. SMYTH.) It was stated by Mr. Boyle, in his testimony the day before yesterday, that to his knowledge, in Pittsburg, numerous articles were published from time to time attacking the Standard Oil Company. He said they were published gratuitously as communications, but the replies of the Standard Oil Company, when they were made, had to be paid for always, even if published in the local columns or in the news columns. Can you give us any information about that? A. I do not think we have under- taken to answer these anonymous communications very much. I know of a case (I do not think I would like to be personal about it) where I at one time undertook to get in a little communication in reply to an article, and I received a bill of $12, and I paid it. Q. The Standard Oil Company receives no favors from the press in general in the way of defending them or publishing their communications? A. I think the papers publish a great many things that are prejudicial to the Standard Oil Company, perhaps through ignorance about it. But we are so busy that we haven't time to think much about it. But I think the news- papers mean to be generally pretty fair and undoubtedly would open their columns to us freely if we cared to talk. But talk is so awful cheap in these days that we have preferred to keep on sawing wood, and so we haven't had our side of the case fairly presented, perhaps. The witness, in reply to a question by Mr. Phillips, said he thought the capital stock of the National Transit Company was $25,000,000. It operates under a charter granted by the State of Pennsylvania a great many years ago, which was considered a special charter. He did not recall the name of the company to which it was granted, but in due time it came into the possession of the National Transit Company. After the constitutional con- vention of the State of Pennsylvania, held about 20 years ago, no special charters were granted, so that they had an advantage through that par- ticular charter. It was practically the same charter that was given to the Pennsylvania Company, which is owned by the Pennsylvania railroad. The charter is liberal in its form. He did not know what was paid for this charter. He said the charge on their main trunk line for carrying oil to the sea- board at New York was 45 cents. The cost of a pipe line to-day would be 100 per cent, more for some of the materials than it would have been a year or two ago. He thought that the charge of 20 cents per barrel for piping the oil in the field was very reasonable. When a well in a certain locality gives out, the pipe line there is of no use, though there is a certain amount of salvage in it as it could be taken up and used elsewhere. He thought it had been pretty clearly established now that the pipe line charge makes no dif- ference to the producer, but is a matter that concerns the purchaser of the oil. Twenty cents a barrel for piping oil was infinitely cheaper than rail- road, wagon, or other classes of transportation. They sometimes carry oil as high as 25 or 30 miles for 20 cents a barrel. He said: "* * * Allow me to explain a little and say that our affiliated inter- ests, so to speak, of the pipe lines, gather oil in Ohio, Indiana, West Vir- ginia, Pennsylvania, and New York. All the competing lines gather oil in some small local field, as, for instance, the Producers & Refiners' line. It occurs to me that I have heard that their charge is 15 cents a barrel to the refiners, but they only go a short distance. I don't know, and I do not think *Rlack faced type indicates matter omitttd, in the course of editing, from the official report. VICE-CHAIRMAN THOMAS W. PHILLIPS. 261 I should speak of this. But I will say that we are willing to run a line 15 or 20 miles, and we do it for the patrons of our lines at times. I don't know whether they can do that or not. I don't think they do, because I think they are in a confined district." Q. (By Mr. SMYTH.) I suppose you investigate a well very thoroughly before you run a pipe 25 or 30 miles? A. Oh, naturally we look into the business in a conservative way. Q. But at the same time there is a certain amount of risk as to the con- tinuance of the well? A. Oh, yes, sir. Q. And all that risk you assume? A. Yes, sir. Q. Is the only salvage you have, Mr. Rogers, the pipes, when you aban- don a line? A. Yes, sir. Upon concluding his testimony, Mr. Rogers said Mr. Archbold's state- ment before the commission on the previous day was a practical expression of his own views. He was familiar with what Mr. Archbold was going to say before he said it and he was quite willing to rest his case on his state- ment. CHAPTER XIV. TESTIMONY OF VICE-CHAIRMAN THOMAS W, PHILLIPS, OF THE PURE OIL TRUST, AND POPULARLY KNOWN AS THE ^'FATHER OF THE INDUSTRIAL COMMISSION." The testimony of Vice-Chairman Phillips, who is popularly known as the "father of the Industrial Commission," is given here in full. Mr. Archbold, while on the stand, had made some startling statepients regarding Mr. Phillips in relation to the Pure Oil Trust, and Mr. Phillips took occasion, on the following day, to reply to this testimony. Those who read this testimony will be struck by the remarkable state- ment? it contains. The witness appeared to be blind to what would have been the real effect of his own proposition to Mr. Archbold which, had it been accepted, would have wiped out competition in the oil industry through an understanding between the Pure Oil Trust and the Standard Oil Company. It would have been a very convenient arrangement for Mr. Phil-* lips, as it would have had the effect of allowing the Pure Oil Trust to enjoy the benefits of monopoly, instead of being placed at the inconvenience of competition. He appeared to think that it would have been right that he should have had some "arrangement" which would "let him live," whether or not he was able to "live" under a competitive system. The reader can judge of the real effect of the character of the "voting trust" under which the Producers' Oil Company. Limited, was organized. This trust eliminated the stockholders as a controlling power in the organi- zation and placed all such power in perpetuity in the hands of 15 trustees. When the fact was so forcibly demonstrated that Mr. Phillips was one of the leadins? men in the organization and management of the Pure Oil Trust, and that the trust features of that company surpassed any provisions that could be found in the old Standard Oil Trust, members of the commis- sion were shocked to a degree that was evidenced by their manner and in several cases by their language. Those who had cherished the idea that the Industrial Commission was to be the means for bettering the condition of the toiling masses and for raising labor to a higher plane throughout the country, were filled with regret that it had become apparent to every one that the man who had proposed in Congress, and secured the passage of the law authorizing the President to appoint the commission, was really using It 262 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. as a club to injure his competitor in business, and whereas they had re- garded him as a pure philanthropist, suspicion was created that he was chiefly engaged in adding to his wealth. This revelation caused the circulation of a report that Vice-Chairman Phillips would resign his position on the commission, in order not to nullify the effect of its recommendations to Congress and to State Legislatures by the suspicion that he was inspired by selfish motives in the course he had taken. Mr. Phillips apparently had no such intention. He had not worked for years for a chance to inflict injury on his business competitors only to resign at the approach of what he perhaps regarded as his great oppor- tunity. He was succeeding in spreading scandalous stories about the Stand- ard Oil Company throughout the newspapers of the country and he doubt- less hoped for still greater victories. Doubtless he also felt less interest in the good reputation of the Industrial Commission than he did in his success in his own private affairs. In order to check any scandal caused by his conduct, some members of the commission assembled and gave their vice- chairman a vote of confidence, at the same time declaring that they did not intend to ask him to resign. As will be seen by anyone who reads this testimony, a good many state- ments of the witness were in the nature of hearsay evidence or were acknowledged to be guess-work of a very wholesale character. Mr. Phillips acknowledged that the privileges of the Pure Oil Company under the laws of New Jersey, were identical with those of the Standard Oil Company. He was very positive, however, in saying that the organiza- tion of the Pure Oil Company was not for the purpose of securing a monop- oly, and before he concluded his testimony, he stated very plainly that, should the trust in which he is interested, in the course of events, become too successful in securing the great bulk of the oil trade of this country, he would have nothing to do with it. In other words, he was nurturing a child which, under his tender care, was already showing evidence of vigorous manhood; yet, should it become strong and powerful, he would disown it, Mr. Phillips said that the dividends of the Standard Oil Company showed that, beside their accumulated surplus, they had made at times more profit on every barrel of oil they handled than they paid to the pro- ducer for it. He arrh^ed at this conclusion through the means of a very vague calculation. He expressed himself as very much shocked because of this exorbitant profit, as he regarded it. He frequently asked other wit- nesses what they thought of such a state of affairs, by which men could make as much profit on every barrel of oil they handled as they paid for it. Had Mr. Phillips been questioned he would have been obliged to admit that as a producer he had received not only as much but many times as much profit on every barrel of oil he had handled as he had paid the farmers from whose fend it had been taken, for it. No testimony was submitted to the commis- sion to show that Mr. Phillips had ever regarded his profit as a producer as excessive, or that he had ever sought to lower his profits in order to keep them from being exorbitant, although according to common report these profits made him a multi-millionaire in comparatively a few years, Mr. Phillips made various positive statements retiarding the profits of the Standard Oil Company and said that the profit of the independent refiners was not so great, but when asked to give an estimate of the profits of the latter he merely replied that he was not well informed, but that during a number of years they had lost a very considerable amount of money. He appeared to be more familiar with the business of his competi- tors than with his own business. He promised to submit a statement of all the companies with which he was connected, but when that statement was submitted it was treated by the commission as a confidential document, not being publi'^hed in its report. Considerable surprise was expressed that the witness could state the profits of the Standard Oil Company off-hand, while he could not say what were the profits of his own company. His testimony in this connection was remarkable. When questioned about his own stock in the Pure Oil Com- pany he «aid he would not sell it for 100 per cont. premium, as he consid- ered it worth more than that "prospectively," He said they (the Standard VICE-CHAIRMAN THOMAS W. PHILLIPS. 263 Oil Company) had "offered to pay that," but this statement does not appear in the official report. He wanted it, he said, to protect his interest as a pro- ducer of oil. Mr. Phillips admitted that three or four years previous to giving his. testimony he had sought a combination with the Standard Oil Company, his object being to obtain from that company a "cessation of hostilities against iim," both in regard to piping the oil and selling it. It was to secure with- out their opposition, the right to deliver in New York the capacity of the then existing lines of the Pure Oil Trust, which he said would not exceed 7,000 or 8,000 barrels of oil per day. He said Mr. Archbold had refused absolutely to grant any concessions. He denied that he had called upon Mr. Archbold since the organization of the commission for the purpose of combining with the Standard Oil Company. He said that if others had called upon the "Standard Oil Company people" it was without his knowl- edge, advice or approval. The witness, in explaining how the Pure Oil Company was organized T)y uniting a number of companies under one head, said that it was not their purpose to get control of any other per?on's business. They sought to con- solidate the companies into one, because practically the stockholders were the same. He might have added that a similar condition is found in most ■cases of consolidation. Mr. Phillips said he did not wish to be connected with a monopoly, and that he would not be connected with a company to control a great product. He said that if his company should become large enough to monopolize the lausiness by means of fair competition he would no longer have anything to pe indicates matter omilliu, in tl-ie course of editing, from tiie official report. LEWIS EMERY, JR. 339 of oil, about 3.000,000 barrels a year, all told; that is all. Out of 23,000,000 barrels produced, there is only about 3.000,000 barrels that is not handled by the Standard Oil Company. *We are not even a fly on the griddle. Q. (By Mr. A. L. HARRIS.) If the competition does not exceed 10 per cent, of the trade at any point, do they pay any attention to you? A. Oh. yes, sir; if we go in with a carload of oil it is quite sufficient to create a flurry. Q. (By Mr. FARQUHAR.) Now, Senator, oil for oil, and quality for qual- ity, does the European consumer get his oil cheaper than the American con- sumer? A. Yes, sir. Q. How much cheaper? A. I cannot give you the percentage. I can say to you this: In many instances, I should say that oil of this quality is 25 per cent, cheaper in Europe to-day than the same quality sold on the average in this country. Q. Now. does that arise from the competition of the Russian crude with the American product? A. It arises from the fact that they are in these mar- kets as competitors, and the Russians are there as competitors and the com- petition unquestionably brings that product down. Q. The independents and the Standard Oil Company sell at about the same rates in Europe? A. Yes, sir. Q. And you have got to meet the Russian competition? *A. No, sir; you are not obliged to meet it; the Russian people sell very little oil compared wi;h the Americans: they would rather have the American at a half a cent advance than the Russian. It goes farther and there is no smell about it; it is a first-rate oil, *but they are not in it as far as that is concerned. Bur ihey cannot get in. and *^he distribution of the Russian oil is very smaii. indeed — very small. *! don't know how it has grown in the past few years; I kept track of the statistics before that time. You must excuse me for not being posted on these things, because for the last ten days I have been in bed with gastritis and have not been able to look them up as I wisied. Q. (By Mr. KENNEDY.) There is one point I want to knovv' about. I don"t know whether it was Senator Lee or Mr. Lockwood who testified that this business was not profitable until you secured the German market. Now, you testify that the oil is cheaper to the Germans than it is to the people in this country by 25 per cent? A. I do say that; it has been a good deal more than that at times. Q. (By Mr. A. L. HARRIS.) Now, following that up. Senator, why is that? Is it because the German government does not permit cut rates to the extent of destruction? A. No. I don't know that that is it; but, understand me, until we got firmly established in the business over in Europe, there was a deter- mination that we shouldn't go there, and they commenced the same tactics in that country that they did in this: selling oil, for instance, on the Rhine, at one cent or two cents, or half a cent a gallon cheaper than they did at the next point where we were not present. In other words, in the adjoining dis- trict it would be higher than in the district where we were — they would not cut the prices where we were not. Then, again, where we were we were obliged to cut the price perhaps below its cost, on the Rhine, and they levied a tribute on the people of the Elbe to make up what they might have lost there. When I sold oil in Philadelphia as low as three cents a gallon, it was selling at eight cents in New York, a distance of a hundred miles away. *Q. (By Mr. FARQUHAR.) Wasn't it a good business proposition on the part of the Standard Oil Company, if they had to sell it for 25 per cent, less than they were selling it in the American market to try to get the advantage, back at places over in Germany where there was no competition? Wouldn't you have done the same thing? A. I don't understand that question, Mr. Far- quhar. Q. Wasn't it good business policy on the part of the Standard Oil Com- pany, where they had no competition in Germany, and they knew that they could sell at 25 per cent, more than they could in the American market, to hold these places where there was no competition and keep up the prices? Isn't that good in any business? A. That was not the case until that com- petition came in. *Black faced type indicates matter omitted, in the course of editing-, from the official report. 340 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. But where you had no competition, would you, if you could get 25 per cent, more, try to hold that market and take it at the better rate than where you had competition? A. Certainly, I would hold the price as long as I could, certainly; but I would not put it up unreasonably. Now, I want to answer you this: If you had competition in this country, you would cut the oil, at least — well, I might say, take it on the average, and you would cut it 50 per cent, cheaper, *would I be wrong in that statement, oil men, about oil? Mr. George RICE. No. The WITNESS. (Resuming.) In the State of California, where I have bought oil as I started to say to you before, I have gone to the markets and paid 20 cents a gallon, *in cans, and the same oil I was selling out of my fac- tory and glad to get four and one-half cents; glad to get four and one-half cents. Q. (By Mr. CLARKE.) Put up in the same way? A. Put up in the same way. I have gone to Valley Springs in California and bought gasoline ihat was marked on the head "Double deodorized gasoline." and paid 25 cei.':- a gallon for it, and when I paid that I was selling those goods, hundreds of bar- rels of them, at my factory, at four cents a gallon. *Q. (By Mr. FARQUHAR.) And what was the distribution? A. I don't know. The charge on oil to-day, from the Atlantic to the Pacific is 75 cents a hundred. Who knows anything about what the Standard Oil Company pays? I do not. They may pay $L25 or 50 cents or 25 cents. Q. Do they pay the same as the independent freight would pay? A. I don't know, sir. Suppose the goods were worth four or five cents. That would be five and three-quarters, including the fi'eight, if freight is 75 cents. *l have had occasion to inquire into that within the last few days, the freight, and I say that goods could be laid down there, for instance, at a cost of five and three-quarter cents, call it, if you choose, six and one-half cents, with the probable leakage, and it should be sold on that coast to-day, and make a good, round profit — it should be sold at 10 or 12 cents a gallon. *Q. (By Mr. CLARKE.) Retail? A. If you choose. Q. (By Mr. FARQUHAR.) If the goods were sold at retail? A. Well, if the goods were sold at retail, that would be the outside figure. t Q. (By Vice-Chairman PHILLIPS.) How much did you pay for it? A. At retail I paid 20 cents. Q. (By Mr. FARQUHAR.) Do you know what profit the retailer got out of that — independent or Standard? A. No, I don't know what the price was to him. *Q. These are special cases, though? A. But I do know that I paid 25 cents for gasoline, double deodorized, and when I opened it, it was made from Lima benzine, *and stunk like a dog coming out of a tanyard. Now. double deodorized gasoline is like ether, and you can take it and smell of it. and it will make you drunk in ten minutes; but one snuff of that would knock you down. Q. You cannot tell us what the middle man makes on this? A. The quality of the goods for America is not like it is in Germany, because the inspector of this oil does not do his duty. *! am not going to go into this. While I might be very radical upon these questions, Mr. Chairman, and gentlemen of the commission, because I know the inside of it — the whole of it — I will not go into it. I might make charges here that 1 could prove, *Black faced type indicates matter omitttfl, in the course of editing-, from tlie official report. ilt will be seen that Mr. Emery, according to the stenographic report, referred to the retail price of a single can of oil, wlK-rca.s, by the testimony as recorded in the official report (p. 6.3,T), he is made to appear as giving the price per case, or what might be reg.arded as a wholesale price, or at least the price of a considerable ouartity of oil. Mr. Clarke's question and its answer do not appear in the official report, and Mr. Farquhar's question and its answer are given as follows: "Q. (By Mr. FARQUHAR.) By tlw case or ;it retail'' "A. Tiy the case. I have given the outside limit." According to Mr. Emery's statement of the price of oil in California and the freight he would have to pay to place his own product there, there appears to be no reason why he should not h.ave reaped a handsome profit by enterirg that market. LEWIS EMERY, JR. 341 that would make your hair stand, but I am not going to do it. It is not within your province, I suppose, to know anything of that kind; it is not testimony. *Q. (By Vice-chairman PHILLIPS.) We want to know anything in re- gard to discrimination. A. Well, that is what it is not. Q. (By Mr. A. L. HARRIS.) Do I understand then that it is the ques- tion of transportation that prevents you from competing in this country with the Standard as you compete in foreign countries? A. That is just exactly it, and that is all there is to it. If this government can know, and will know, what the manifest is upon a railroad, and its charge attached thereto for freight, and will see that there is fair competition in the market — *l cannot buck against five hundred thousand million, but if it is fair trading I ask no odds of the Standard Oil Company. I ask no odds of them. I can manufacture goods just as cheaply as they can, in spite of all their asser- tions — just as cheaply as they can. Q. (By Vice-Chairman PHILLIPS.) And as good? A. And as good as they can. They have got nothing better in any of their works than I have got in mine, *or any of the other works of the independent refiners; except it be. perhaps, all their fine laboratories for manufacturing residuums, or the by-products, which we raise no question about. The whole question, Mr. President and gentlemen of the commission, is the question of transpor- tation. If you will force the railroads of this country to obey the law, you will have cured this evil. Q. (By Mr. FARQUHAR.) A simple question there: That brings the commission face to face with this matter. You make assertions here, and so have others, as to the rebates. Here the Standard Oil Company comes for- ward with the letters of 20 great railroad managers, and we can neither verify your statement nor discredit the statements of these managers. A. Well, I will put you so you have got to say one way or the other. Q. That is why I put this thing plainly to you, because the commission has both of these stories, and we do not know exactly which way to turn. A. Mr. Chairman and gentlemen, my secretary has not brought up the im- portant documents that I ought to have here in this case. But I trust that you will rely implicitly on my statements relative to what I am going to say, because this case that I am going to bring before this committee, on the question of discrimination, I have the documents for. Here is an ab- stract from the records of McKean county, from the appellants' docket No. 130, December term, 18S7. It was the case of A. H. Logan, Lewis Emery, Jr., and W. R. Weaver, partners under the firm name of Logan, Emery & Weaver, vs. the Pennsylvania Railroad Company. Q. (By Mr. CLARKE.) Let me inquire, Mr. Chairman, if that case oc- curred from alleged discrimination before the passage of the interstate com- erce law? A. Yes, sir, it did. *Q. Before? A. Yes, sir. Q. Well, we want something since. A. And leads up to the adoption of the law, and a suit was brought for rebates or differences in freight up to 1888. In the settlement of the case it was agreed between the Pennsylvania Railroad and ourselves that no further suits would be brought because they paid a certain sum of money to me to settle the case. The rebates existed for 1887, and I have the testimony to produce, if necessary, to that effect. *Q. (By Mr. CLARKE.) That is what we want. A. But I will produce the testimony here and prove it in the same case, showing that rebates were paid up to 1887, in the same suit. Q. What time of the year was the law passed? A. In 1887 the inter- state commerce act wenc into effect. Q. (By Mr. FARQUHAR.) There has never been a question before this commission about rebates and discriminations in freights before the passage of the interstate commerce law. *There is no question of it at all. The Interstate Commerce Commission had formulated or extended their own jurisdiction for possibly two years, until about the spring of 1889. It has been a very difficult thing, I know, with them to make up many of the cases of rebate themselves; but, as I stated before, these railroad men have written *Black faced type indicates matter omitted, in the course of editing, from the oflicial report. 342 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. letters to this commission of conditions after 1889, or rather they were produced by the Standard Oil Company. You must concede, as all of us will concede here, that out of the dozen or sixteen men probably half of them have arisen from quite obscure places on these roads by their own energy and their own honesty; men of as fine character as we have in this country, or as fair as any person's character could be, so that they stand with the commission, just where they are. We concede, or acknowledge, that the wildcat system of making freights existed up to 1889, two years succeeding the passage of the act. There are plenty of cases on file now showing that rebates have been issued? A. Yes, sir; and there is a case in which I am interested at the present time before the Interstate Commerce Commission, in which we have proven rebates to 1893. *Q. Well, that is the kind of case we want now to make it a matter of record, is that evidence? That is just where we want it. A. Yes, sir. iVIr. A. L. HARRIS. Don't understand that all the commission concede the statement that you made. Mr. FARQUHAR. I made no statement on behalf of the commission, but stated the evidence that had been brought. Mr. A. L HARRIS. In regard to the standing of the railroad men, don't commit all the commission. Mr. FARQUHAR. I merely said it was generally well known, the his- tory of most of these men. Mr. Knott, of the Louisville & Nashville — we know where they came from, Vice-Chairman PHILLIPS. It is not competent for a commissioner to make that kind of statement. Mr. FARQUHAR. That is the view that I take. Vice-Chairman PHILLIPS. That is the view that is generally taken of all of these railroad people, that they are of the highest character and standing. Mr. FARQUHAR. There is not any need of showing this fact; there is the need of saying here, however, that until these men stand fairly repudiated by the testimony, their statement shall stand. It is testimony against testi- mony. Mr. A. L. HARRIS. As I understand, it is simply a statement against testimony — a simple writing of the railroad officials denying the charges that have been made. Now, of course, it goes for what it is worth. That is all I have to say. Mr. FARQUHAR. That is right. Mr. KENNEDY. The officers of the Standard Oil Company swore that they had neither received nor asked rebates since the passage of the inter- state commerce law, and then in another part of their testimony they bring these letters from the agents of the railroad companies. Mr. A. L. HARRIS. That may be true in the manner of giving rebates, but we know that the ways that are dark and the tricks that are vain are sometimes practiced by the great high officials. The WITNESS. I desire to present to this commission a document filed with the court in McKean county February 17, 1890; and also an order from the court, a rule to take testimony. I would be glad to have you examine this document, showing that it is filed with the court, because there is very important testimony in it appertaining to the transportation of oil, and that you may be able to identify it in the future. *Now, I desire to say in answer to Mr. Commissioner Kennedy and Mr. Commissioner Farquhar and others, as well as my friend, the chairman, that in tills suit of which I have a transcript here from the dockets, which is subscribed to by the county clerk or the prothonotary, George W. Mitchell, we called to the stand George B. Roberts, president of the Pennsylvania Railroad, and the question' was asked him if his road paid rebates on the transportation of oil. Q. (By Vice-Chairman PHILLIPS.) At what time? A. In 1890; that is when the suit was tried. The rebates that we claimed were up to Janu- ary 1, 1888, I think. He replied: "No rebates are paid by our railroad on •Black faced type Indicates matter omitted, In the course of editing, from the official report. LEWIS EMERY, JR. 343 the transportation of oil." He was asked the question in various ways, and he said he knew nothing of any rebates; that it was against the policy of the road. John S. Wilson, the general freight agent of the road, was put on the stand. Many in this room may know Mr. Wilson. He said positively that no rebates had been paid on their road since the suits of 1879 upon petro- leum. He said: "As general freight agent of this I'oad, I should know, and I give my oath that no rebates were paid." The auditor of the road. *IVIr. Downing Mr. LEE. Mr. Taylor. WITNESS. Mr. Downing. Mr. LEE. Taylor. WITNESS. Taylor was the clerk. Mr. LEE. Justis was the auditor. WITNESS. Well, Mr. Justis or Mr. Taylor— I think both of them— one was the auditor and the other the assistant auditor. I thought Mr. Taylor was the bookkeeper. Mr. Taylor stated that rebates had been paid, and if I had my books here I could read you when they were and under what circum- stances. Next was called Mr. Justis, I believe, and he corroborated Mr. Taylor that rebates had been paid on the Pennsylvania Railroad. Q. (By Mr. CLARKE.) I was perhaps at fault in not hearing your reading of this and I did not hear when and where and before whom this testimony was taken. A. This testimony was taken before the master, under the court requirement. Q. Can it be produced? A. Oh, yes, sir; I have the testimony. I have sent for it. Mr. Roberts was examined in court and I haven't his testimony here, Mr. Clarke. The next man called in the case was the bookkeeper. *You gave his name, which ! have forgotten (turning to Mr. Lee). Can you remember it? Mr. J. W. LEE. Thayer. The WITNESS. Thayer, who had stood at one desk, he said, 26 years, keeping accounts in a certain department, and he was asked the question if rebates had been paid by any shippers of oil over the road, and he said they had. We called a large number of witnesses. Q. (By Vice-Chairman PHILLIPS.) What were these rebates? How large were they? To what extent were the rebates paid. A. The rebates ran from eight cents a barrel to 28 cents. Eight to 28 cents a barrel. Under the anti-discrimination law of Pennsylvania the penalty prescribed was that three times the damages could be collected by the man bringing the case. A large amount of our shipments of crude oil fi"om the oil regions to Philadel- phia, where Logan, Emery & Weaver owned their refineries at w'hat is called Greenwich Point, on the Delaware, was shipped from Olean, N. Y. When we came into the court with our evidence, exceptions were taken to that part of our claim relating to shipments to the State of New York, which was opposed in the decision of the court as interstate commerce. We com- menced this suit early in 1887, and it was not concluded until 1890. The rail- road people were able to send word to the master that they could not come to-day, but they would come some other day, and we traveled with our attor- neys. 500 miles simply to go home again. We were punished for nearly three years in taking that evidence. It was expensive; it was annoying; *it was unkind in every way; but the court had no power to compel these people to come to the stand. When we got them to the stand, certain ques- tions were propounded, and they refused to answer — under the advice of counsel — the screen which all of the criminals in this country, who are against these laws and the rights of the people, get under. *They all get under that very same scheme. "We can't answer that question because it might incriminate us." *But at the end of this term of years my partners became discouraged and disgusted. They would not even attend the court in McKean county, and the judge issued a bench warrant and sent a consta- ble to Philadelphia and brought Mr. George B. Roberts *and Mr. Justis and *Black faced type indicates matter omitted, In the course of editing, from the official report. 344 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. Green and Mr. Downing and others to the bar of justice. *They were brought by a bench warrant from Philadelphia. Not Justis, because in th& name of justice he was there. When they got up into the county of McKean, my partner said to me: "There is a proposition to settle this case." I didn't want to settle it. *Mr. Lee was my attorney — one of them, and I wanted to fight the thing through. We had compelled the Pennsylvania Railroad to bring their books there, and there were three tons of them that they had to bring up on the train to answer the summons of the court. But we were more than a year getting possession of those books or getting them into court — more than a year. As they were cornered up, and we had the abso- lute proof that from eight to 28 cents a barrel rebates had been paid. I had been practically driven out of the business in Philadelphia, where I went to manufacture oil in 1880 at the instance of the railroad officials themselves, after they had a little bit of a quarrel with the Standard Oil Company, after the close of the suits of 1879 of the Commonwealth vs. the Pennsylvania Railroad. I was invited again to put my refinery there, and I went there at their own solicitation, and built these works, and ran them from 1879, or rather from 1881, when 1 completed them, up to 1887. But I was devilled to death. *l cannot tell you the story, but the story is in that little book, in my testimony, and shows exactly what methods were used in driving us out of the trade; and I wish every commissioner would read my testimony in that book. (Referring to his book of testimony.) Their attorney came to our attorney and said: "We will give you $35,000 to quit, and the expenses of the suit." We took the money. We didn't go on with the interstate com- merce suit because we knew that we would never get through with it; because 1 entered one suit here in the Interstate Commerce Commission, and it was seven years before I got a decision upon that case. Q. (By Vice-Chairman PHILLIPS.) What was the amount of your claim that you so compromised with these people? A. My claim was $107,000. A great portion of that was on the shipments handled from the State of New York. If I had gone on with that suit we could have secured a large sum of money from the shipments of oil, but I hadn't the heart to do it. I was not able to do it. My finances were not such that I could spare the money to go into the courts at the enormous expense and overcome the dilatory actions of the railroad officials irv giving testimony. I simply dropped it in disgust and took the $3.5,000 and they paid the costs of the suit. This is the docket of the court in McKean county, and it is only a few words that I wish to read to you. This is the testimony of B. B. Campbell. I cannot leave this with the commission, but I will furnish it or, in fact the whole testimony. I will give them a copy of it, or a copy of the whole testi- mony in this suit, if they would like it. If the chairman desires me to read this for the information of the stenographer. I will do so. "B. B. Campbell, in the suit of Logan, Emery & Weaver vs. the Pennsyl- vania Railroad Company. "B. B. Campbell, being first duly sworn, testified as follows in answer to questions of Mr. Lee. (Senator Lee, on my left) : "Q. You were sworn as a witness in this case and testified before? A. Yes, sir. "Q. And certain questions you declined to answer, under the advice of your counsel? A. Yes, sir. "Q. You received certain allowances on freight shipped over the Penn- sylvania Railroad. From what place and by whom was that freight shipped? "(Counsel for the defendant objected to the question in the manner in which it is put, if it is assuming the fact that he did. Second, the form of the question is bad.) "Q. You may answer whether you received any allowance on freight shipped by the Bear Creek Oil Refining Company, Limited, over the Pennsyl- vania Railroad, and from what point that freight was shipped and to what point. A. Those matters are fully stated in my answers to questions pro- pounded under the rule of court. The freight from the Bear Creek Refining Company was shipped from Coleman Station, on the Allegheny Valley Rail- *Black faced type indicates matter omitted, In the course of editing-, from the official report. LEWIS EMERY, JR. 345 road, as far as the junction, and from the junction, I believe, to Bolivar, over the West Pennsylvania, and from thence mostly to Philadelphia; some few shipments were made to Communipaw and some few to Bolivar. There was some little local trade, but the great majority were shipments of export oil to Philadelphia. "Q. During what period were these allowances made to you? A. That is fully stated in my answer to the court, which was carefully made up and fully stated; from October 1, 1884, until July 1, 1888." A year and four months after the interstate commerce act went into effect. "Q. You may give the allowances by the year? "A. They are already given. From October 1 to September 30, 1885, the rebates were $8,607.51; until September 30, 1886, $10,313.47; until Septem- ber 30, 1887, $15,200; until July 1, 1888, $13,980.15; total received, $48,101.13." Q. (By Mr. CLARKE.) Nearly all of that was before the passage of the interstate commerce law? A. Yes, sir; there was a year and a half of that time, or a year and four months, after the passage of the law. Q. The last item given there is the only one which includes any since the passage of the interstate commerce law, is it not? A. No, sir; the interstate commerce law took effect in 1887. From September 30, 1886, to September 30, 1887, it was $15,200. Q. Now, from April to September? A. All of the last item and part of the next to the last. Now, then, let me state that we knew that these same rebates were continued up to that time, and therefore the bringing of our second suit which was settled for the $35,000; so we dropped the whole case. Now. I desire to further fortify this statement if I can. After this suit was decided, a great number of suits were brought against the Pennsylvania Railroad Company, *a very large number of them, in all of which cases Sen- ator Lee here, was in as the attorney. There was the Independent Refinery, of Oil City; S. Y. Ramage, of Crown Oak, Pa.; the Germania Refining Com- pany; the Continental Refining Company; the American Oil Company, of Titusville; Rice, Robinson & Foggan, of Titusville; the Seneca Oil Works, of Warren; and the Cornplanter. of Warren. All of these companies brought suit against the Pennsylvania Railroad Company and other roads. This is a dispatch that I received to-day. I had other memoranda of this suit, but I wanted to be able to speak definitely upon this question, so I sent another telegram yesterday, and if it is required, of course, the court record of these suits can be produced to the commission, but I make affidavit here that this is true and correct to the best of my knowledge and ability. This is addressed to myself, care of the Industrial Commission: (Reading.) "Refiners' claims were filed with Roger Sherman;"' (he was also an attorney with Mr. Lee), "against Pennsylvania up to August 1, 1888" (which was contemporaneous with those that I have read) ; "compromised and set- tlement agreed." That is to say, they compromised these suits and took their money. The amount collected at that time, as I recollect it, was about $84,000 — on these several suits. It may have been a good deal more — ^I may have been mis- taken^ — or it may have been less; but I understood that that was the amount. Q. (By Mr. CLARKE.) Were these suits all settled by the railroad companies? A. Yes. sir; by the Pennsylvania. "Claims therefor filed with the Interstate Commerce Commission." *These claims that were already filed, so that claim represents up to 1893. The case was tried in the — will the commission permit me to ask Senator Lee? He was the attorney, and I am not entirely familiar with it — when that case was tried. Vice-Chairman PHILLIPS. Without objection. Senator Lee may inform Mr. Emery on this question,. The WITNESS. Therefore the claim was filed up to 1893 before the Interstate Commerce Commission, and the Interstate Commerce Commission acted upon it and rendered a judgment against the railroads for $86,000; a finding against the railroads of $86,000, which takes the rebates up to 1893. ♦Black faced type Indicates matter omitted, in the course of editing, from the- official report. 346 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Mr. CLARKE.) And dates them back how far? A. Dates them back to 1888. They settled up to August, 1888, and from August, 18S8, up to 1893, the Interstate Commerce Commission has rendered a decision that the railroads are responsible to these refiners for $86,000. Q. Is that decision reported in their annual report of that year? A. Yes, sir; you will find it in that case. *The Independent Refiners' Associa- tion against the Railroads would be the title of the case, if you will please take a memorandum. The railroads have refused to pay this $86,000 and it has gone to the Circuit Court of the United States at Pittsburg, where a suit is now pending for the collection of this money. *l think I have an- swered this question right up to after the existence of the Interstate Com- merce Commission. I think that I have fully proven that rebates have been paid up to 1893. Now I want to clinch this thing right here and I am going to do it by reading you a letter. You will excuse me, Mr. Chairman and gentlemen for a minute. *Vice-Chairman PHILLIPS. Certainly, take your own time. Q. (By Mr. FARQUHAR.) What document is that you are reading now, Senator? A. 1 am reading from a letter addressed to the Interstate Commerce Commission by tlie receivers of the Baltimore & Ohio Railroad Company. Q. (By Vice-chairman PHILLIPS.) Under what date? A. December 22. Q. 1898? A. 1898; less than a year ago. "Will Maintain Rates. "Baltimore & Ohio Adopts a New Policy." *l may say to the commission, Mr. Chairman, that a certified copy of this can be obtained by any member of the commission, undoubtedly, if you were to demand it. Q. (By Vice-Chairman PHILLIPS.) To the Interstate Commerce Com- mission? A. Yes, sir; the Interstate Commerce Commission. Q. (By Mr. FARQUHAR.) Who was the author of that letter? A. It was published a short time ago; it is a public matter. I don't know who published it; I don't know the Washington parties that published it. Q. That is all right enough; but who is the authority for the letter. A. Mr. Co wen. Q. Mr. Cowen of the Baltimore & Ohio Railroad? A. Yes, sir. Q. He signs this letter? A. To the Interstate Commerce Commission; yes, sir. Q. That is all we are looking for — to know the author. A. Yes, sir. "Plan to prevent rate-cutting. — Receivers Cowen and Murray address a letter to the Interstate Commerce Commission, stating their purpose to adhere to the published tariff, and to report to the commission, in lieu of other agency, the failure of other roads to do the same. "Chairman Knapp, of the Interstate Commerce Commission, has received a letter from Receivers Cowen and Murray, of the Baltimore & Ohio Rail- road, announcing that after January 1 that railroad will maintain scrupu- lously the published tariff and rates filed with the commission, and will appeal to the commisison for aid in cases coming to their attention of rail- roads failing to maintain rates to the detriment of their interests. This step is an important one, which will interest largely all other railroads. What the attitude of other roads will be is unknown here. The letter in full follows: " 'Within the territory north of the Ohio river and east of the Mississippi the railroad carriers are transporting the larger part of the interstate traffic at rates less than those shown on the published tariffs filed with your com- mission, which are by statute the only lawful rates. " 'While this condition continues, there will exist the unjust discrimina- tions and the unjust preferences and advantages between persons, localities and particular descriptions of traffic, the prevention of which is the main object of the act of Congress establishing your commission. Only by secur- ♦Black faced type Indicates matter omitted, in the course of editing, from ilie official report. LEWIS EMERY, JR. 347 ing the uniform charging of the published rates can the just equality of ser- vice and of charge required by law be secured either between persons or between localities. " 'Heretofore the Baltimore & Ohio Railroad Company and its competi- tors within the territory above mentioned have maintained joint agencies or associations under various agreements intended to act as a restraint upon each carrier, and to prevent the secret cutting of rates on competitive traffic. It has been the practice for each carrier to report to the joint agency or association any departure from published rates by a competing carrier to the end that the facts might be fully ascertained and the unfair competition stopped. " 'The Supreme Court of the United States has now finally determined that tlie so-called anti-trust act applies to railroads' carriers, and in legal effect prohibits any agreement between them which restrains competition in any degree, even though such agreement goes no further than to secure the observance of t^e restraints imposed by the act to regulate commerce. It is therefore no longer lawful for the carriers to create by agreement between them, joint agencies or associations, as formerly, to prevent the cutting of rates, however unlawful. Without some impartial body to investigate the complaints of one competing carrier against another, and to check illegal rate cutting, if found to exist, it will be practically impossible for the rail- road carrier alone to prevent that form of competition between them, how- ever earnest the great majority of the carriers may be to stop it. " 'The Interstate Commerce Commission not only commands the respect of the railroad carriers for its impartiality, but also, in its powers to investi- gate complaints of illegal rate cutting and to put a stop to all illegal prac- tices, far surpasses any association which the carriers have ever created by agreements between themselves. " 'We see no reason why the commission should refuse Its aid to the carriers in an effort to prevent competition from taking the form of illegal concessions through secret rates, drawbacks, rebates, and other devices, and we see no reason why the carriers should not seek the aid of the com- mission in such an effort by reporting to the commission any departure from published rates, to the end that the facts may be fully ascertained and the illegal practice stopped. " 'The receivers of the Baltimore & Ohio Railroad Company will main- tain, on and after January 1, 1899, upon the lines operated by them, the rates, fares and charges shown on the tariffs published and filed with the commis- sion as required by law. " 'We believe that all or nearly all of the railroad carriers within the territory above mentioned will likewise maintain their published tariff rate" from that date. To prevent a relapse, however, to the conditions now exist- ing, it is necessary that no important carrier shall long depart from the pub- lished tariff rates. Should such a departure occur, to the detriment of the interests in our charge We shall invoke the aid of the commission to stop it. We hope and believe that many other carriers will do the same. In the anticipation that the other railroad carriers formerly associated with the Bal- timore & Ohio Railroad Company in traffic associations will adopt the course decided on by us and above outlined, we have taken the liberty of transmit- ting to each such carrier a copy of this letter.' " Q. (By Mr. RATCHFORD.) Is that letter signed? Is the original of that letter signed by the receivers of the Baltimore & Ohio Railroad Com- pany? A. It is on file; I suppose it must be; it is on file with the Interstate Commerce Commission. Now, gentlemen, there is an absolute admission on the part of the Balti' more & Ohio Railroad, that rebates, drawbacks and other features have taken place up to January, 1899. Q. (By Mr. CLARKE.) Have you any evidence that connects that with the business of the Standard Oil Company? A. Oh, no; no, no; these dis- criminations are not upon oil, but they are upon the tonnage of these large corporations; there is no question about that. Q. Possibly; I suppose so. A. Individuals as well; people and corpora- tions. That is the point of the whole thing, the discriminating rates. I 348 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. think the commission can understand clearly from that paper that the Balti- more & Ohio Railroad Company has given these rebates, and they got tired of doing it, and they want to obey the law. *Q. (By Vice-chairman PHILLIPS.) You may make the further state- ment that that has been done, and they desire the other rates. A. To con- form to other roads. Q. (By Mr. RATCHFORD.) The hour of adjournment has about arrived now, and there is nothing special to be gained by continuing, and I move we adjourn. Q. (By Mr. FARQUHAR.) If you will wait just one minute, I would like before we leave this point to ask a question. You presented the evidence of Mr. B. B. Campbell, in reference to these rebates. Mr. Campbell was the signing party in respect to the suppression of all rebates and drawbacks? A. Yes, sir. Q. The document was drawn up in April, 1880? A. Yes, sir. Q. That is between B. B. Campbell and the Pennsylvania Railroad Com- pany? A. Yes, sir. Q. Did he turn as a witness after he had received the rebates himself? A. Yes, sir. Q. Against his own reception of rebates? A. Yes, sir; he couldn't help himself. They kept him out of our way for a long while, *but we were after him with a sharp stick and we finally got him. Q. Then Campbell himself was the signer of the original agreement between the Standard Oil Company and the Pennsylvania, and all you other producers? A. No, sir; *no other producers ever signed the contract but one. Q. I have the evidence taken by the Bacon Committee. A. The only thing I want to explain to you before I complete this argument is this, and then I will answer all these questions. The commission adjourned until 10 o'clock to-morrow morning. Washington, D. C, September 12, 1899. The commission was called to order by Mr. Phillips, Mr. Lewis Emery, Jr., resuming his testimony. Vice-Chairman PHILLIPS. We will proceed with Senator Emery's tes- timony. You can resume your testimony and proceed in your own way with- out any questions from the commission at present. *The WITNESS. Mr. Chairman and Gentlemen of the Commission — I don't know but that I am committing a breach of etiquette in what I am going to say, but there seems to be a good deal of question relative to this matter of rebates and drawbacks. I did not sleep very well last night, but I slept enough to have a dream, and I thought that this commission had called to its presence Mr. Cowen and Mr. Murray that they might explain the letter I read to you yesterday, which was addressed to the Interstate Commerce Commission. It may be that I am a little ahead of the times, but I would like to know and feel that that letter is explained. Now, Mr. Chairman and gentlemen of the commission, I have no doubt that you want to get rid of me quickly Vice-chairman PHILLIPS. I say, Mr. Emery The WITNESS. Just let me get through, Mr. Chairman — and I am per- fectly willing to go Just as soon as you want me to go. Now, I can get through quicker and perhaps Just as well if you will permit me to tell this story, if you want it told. If you do not, shut me off. I am perfectly willing to be questioned about any point that I bring out, and I stop right here to say to you candidly again to stop me in answering, and ask any questions that you wish to propound to me, because I think I can answer them. All this subject is printed in evidence from 1871 to the present time, and I am telling nothing now outside of what has absolutely been proven. I am perfectly willing to answer any questions, but we can get through much quicker if you will permit me to go along in my own way and Jot down any questions that you desire to ask, so that you can ask them when I finish, and I will hurry along. *Black faced type indicates matter omitted, In the course of editing, from the official report. LEWIS EMERY, JR. 349 *Mr. KENNEDY. You must not assume that the commission has any desire to hurry you or to be rid of you at all. The WITNESS. No, no; I understand that, and I treat it in that way, and anything that you gentlemen may say, I will endeavor to answer you. I did not make the remark in that spirit, but if you have got lots of time, I have; I don't care. Mr. KENNEDY. We will hear anything you have to say. The WITNESS. But let us take it up in order. For instance, you only permitted me to get to 1872 yesterday, and you carried me along to 1879 with questions. *and I was going to reach this very point that you questioned me upon, and I was going to give you a more detailed reply than I gave you, through the evidence and references that I have got; but if it is the desire of the commission to stop me, I will gracefully submit to whatever it may desire. Vice-Chairman PHILLIPS. Without objection. Senator Emery will pro- ceed in his own way. Tiie WITNESS. Mr. Chairman and gentlemen, I got up to this South Improvement Company contract and showed you its repeal. I will read you from a public document as follows: "A history of the rise and fall of the South Improvement Company. Report of the executive committee of the Petroleum Producers' Union, em- bracing the reports of the several committees, transportation, legislation, investigation, and producers' report, at Oil City, Pa., 1872." This is not in my book, I am sorry to say. There is so much to put into a little pamphlet like this that I got up in the space of four or five days, and I could not incorporate everything appertaining to it. Therefore, I beg the indulgence of the commisison to listen to this: "On February 20, 1872, rumors were rife in business circles that the railroads having their main lines or feeders extending into the oil regions, had formed a joint arrangement to advance the freights on crude and refined oil from the fields of production to the seaboard. "With a production of 16.000 barrels of oil per day — and the coming of spring — which always brings renewed energy to operation — and an already depressed market, this rumor created the greatest uneasiness in the minds of all operators and shippers. Nothing definite could be ascertained, and nothing further than the rumor could be heard, and the region settled back to fancied security. "In a few days, however, a second rumor was circulated that not the railroads, but a company bearing the wonderfully inappropriate cognomen of the 'South Improvement Company' had purchased a right to all petroleum transportation, and were to arrange the rates of shipment of all the oil pro- duced, and that an immediate advance of 50 per cent, was but the first advance, with promise of more in the future. "This, however, seemed so quixotic that it did not meet with general credence, until it was confirmed by telegrams on the 26th. from railroad officials to their agents at shipping points in the oil regions advising them of the new rates, to take effect immediately. An advance of 100 per cent, on all freight charges on crude and refined, was equivalent to a complete par- alysis of all operations for and in oil in the entire region. But oil men are made of sterner stuff than to tamely submit to so gross an outrage, let it come from what quarter it would. "The thousands of operators were electrified with indignation and rose as one man to defy and resist the levying of a tribute so palpably unjust. Meetings were called in all the principal towns and cities. The honor of calling and organizing the first meeting is conceded to Tidioute. E. E. Clapn was elected to the chair, and resolutions indicative of the spirit and determination of the producers of that field was passed. It was resolved, inter alia, to shut down all their wells until the old rates were restored, or until a pew outlet could be found to remove their oil to outside markets, if such a step were necessary. *Black faced type Indicates matter OTiitted. in the coi:rse of editing, from the official report. 350 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Delegates were also chosen to attend a mass meeting called to assem- ble at Titusville, on the evening of the 27th, 'To consider the necessity of constructing a railroad from Erie, by the way of Titusville, into the oil regions, as a competing railroad, connecting with water communication to New York and Europe, and such other business of interest to the people as might come before the meeting.' "The meeting at Titusville demonstrated the fact that the wealth, deter- mination, spirit and practical ability of the men of the oil regions would render victory for them in the battle with monopoly an absolute certainty. "The wonderful resources of oil men, when pressed by great difficulties, here became apparent in the plans and suggestions laid before the meeting. Railroad routes, with suggestions and estimates of cost, to reach the lakes on the north, and railroads not in the combination of the south, pipe lines and other remedies were suggested and the feasibility of some, if not all, did much to reassure the mass of people that they would speedily find a solution of the difficulty." I rf-ad only so much of it only to show you the spirit aroused at the time of the first notice of the complete formation of the South Improvement Com- pany. I need not make any remarks upon that question, excepting this fact. Let me read you the repeal of the South Improvement Company act. Now, Mr. Chairman and gentlemen, if you will turn to page 15 of this book: (Reading.) AN ACT TO REPEAL THE CHARTER OF THE SOUTH IMPROVEMENT COMPANY. Section 1 — Be it enacted by the Senate and House of Representati^•es of the Commonwealth of Pennsylvania, in General Assembly met, and it is hereby enacted by the authority of the same, that the act entitled "An Act to incorporate the South Improvement Company," approved the 6th day of May, Anno Domini 1871, be and the same is hereby repealed. WILLIAM ELLIOTT Speaker of the House of Representatives. JAMES S. RUTAN. Speaker of the Senate. Approved the 2d dav of April, Anno Domini, 1872. JOHN W. GEARY. This act I read to you. or Senator Lee did, in full yesterday. The body of it is known as the Pennsylvania Company act. Then, if you recollect, I referred you to page LS^A to call to your attention the purchase of the same identical act by the National Transit Company, which is one of the com- panies of the Standard Trust. *Q. (By Vice-Chairman PHILLIPS.) Another Act being the same, was it not? A. That is what I say. Q. (By Vice Chairman PHILLIPS.) You said this identical act? A. I said the identical act has been repealed. The other was an absolute copy of it, which was purchased, as set forth on page 15%, which I need not read again, and I will say that it was purchased by parties who were then, or soon after became, connected with the Standard Trust, Clement A. Griscom being the president of the National Transit Company, and I understand at this moment he is a director of the Pennsylvania Railroad; he was president of the National Transit Company. I know Mr. Griscom; I know when he took possession — but that does not matter. I have explained to you and read to you from my book aboiit the demoralized condition of the trade at the time the South Improvement Company act was repealed, through this tremendous pressure of the producers upon the railroad, which formed a part of this South Improvement Company. This is a very important matter, and I am goina: to follow thi'^ through, and you will see that all this work that was done between these two northern trunk lines of railroad and the Pennsylvania, and the South Improvement Company, was repealed by this act. But I trust to show you also in my evi- dence that although the contract was annulled, both the South Improvement Company's contract, as well as the contract between the Standard Oil Com- ♦Rlack faced typo indicates matter omitti d, in the course of editing, f'-om the official report. LEWIS EMERY, JR. 351 pany and the railroads, that it was never lived up to, and the business of the company proceeded just exactly as though the South Improvement Company was in full force. If you will turn to page 48: (Reading.) "Agreement between the railroads and the petroleum trade executed the 25th day of March, 1872: "That all arrangements for transportation of oil after this date shall be upon a basis of perfect equality to all shippers, producers and refiners, and that no rebates, drawbacks or other arrangements of any character shall be made or allowed, that will give any party the slightest difference in rates or discrimination of any character whatever. "That the present rates from Oil City, Union, Corry, Irvineton, Pitts- burg, Cleveland, and other competing points shall be and remain in full force at following rates: ON REFINED OIL, PENZINE. ETC. From Oil City, Union, Corry and Irvineton to— Per barrel Boston $1.65 New York 1.50 Philadelphia 1..35 Baltimore 1.35 From Cleveland to— Boston 1.65 New York 1.50 Philadelphia 1.35 Baltimore 1.35 From Pittsburg to— New York 1.50 Philadelphia 1.35 Baltimore 1.35 ON CRUDE OIL. From Oil City, Union, Corry and Irvineton to — Boston 1.50 New York 1.35 Philadelphia 1.20 Baltimore 1-20 Cleveland 50 Pittsburg 50 "And said rates shall not be liable to any change, either for increase or decrease, without first giving to William Hasson. president of the Producers' Union, at Oil City, at least 90 days' notice in writing of such contemplated change. "In the distribution of cars for shipments, it shall be done without dis- crimination. "On the basis as hereinbefore stated, the parties respectively agree to carry out the arrangements in good faith and work for the mutual interests of each other. "In witness whereof, the parties have hereunto affixed their signatures this 25th day of March, A. D. 1872. "For the Lake Shore & Michigan Southern Railroad Company — H. F. Clark, President. "For the Erie Railroad Company — O. H. P. Archer. Vice-President. "For the New York Central & Hudson River Railroad — William H. Van- derbilt, Vice-President. "For the Atlantic & Great Western Railroad Company — George B. Mc- Clellan, President. "For the Pennsylvania Railroad Company — Thomas A. Scott, Vice- President. "On behalf of the Producers and Refiners — G. Shamburg, E. G. Patter- son, William Hasson, Henry Byrom. William Parker, .lohn .1. Fisher. Oil City Producers and Refiners; J. J. Vandergrift. A. P. Bennett, William M. Irish, William T. Scheide. Oil City Producers and Refiners; Henry N. Rogers, F. C. Flerains". Josiah Lombard, Jr., New York Refiners; B. Vaughan, Boston Re- finers." 352 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-chairman PHILLIPS.) Is that the same Mr. Rogers who tes- tified before us? Do you know whether that is meant for him or not? A. No, sir; I do not know. This was in the year 1874, and I think Mr. Rogers did not go into the Standard Oil Company until 1875; but I think it was meant for him. I don't know as I have anything to say about that. I don't tnow whether it is his name or not; but it don't make any difference. Q. (By Mr. FARQUHAR.) But this Rogers was one of the New York refiners, allow me to suggest; this is another Rogers, I think; this is H. N. A. Yes, sir; I think you are right. Q. The Oil City producers and refiners are headed by Shamburg, and then Vandergrift headed the others. A. Well, it does not make any differ- ence. Vice-Chairman PHILLIPS. The Senator will proceed. The WITNESS. The date of this contract, if you will bear in mind, Mr. Chairman and gentlemen of the commission, was March 25, 1872. I want right here to put in a word and that is this: I tried to get yesterday a copy of the Hepburn report, but I couldn't, but in 1879, George R. Blanchard, the present manager, I think, of the Central Traffic Association of Chicago — am I right? Mr. CLARKE. He has been; I am not sure whether he is at present or not. A. Well, he was called to the stand by the Hepburn Committee, and you all know what that is — a committee of the New York Legislature. He swore that this contract that I have just read which is so solemnly and so fairly worded, was not respected two weeks. I put that in as a part of my evidence and refer you to the Hepburn Committee; that this agreement so solemnly drawn and signed by the railroads, that I have raised a question about in my argument here before you — or, rather, my testimony — was abrogated within two weeks after it was signed; according to the testimony of George R. Blanchard. Q. (By Mr. FARQUHAR.) Before the Hepburn Committee? A. Yes, sir. Now, does this committee want me to go into the fact and prove re- bates and drawbacks from the date of this contract up to 1877? *Now, it will take me two or three hours. I can do it if you want me, or I can give you the evidence and you can look it up for yourselves. Q. (By Mr. CLARKE.) My understanding, Mr. Chairman, is that these rebates and drawbacks are conceded by the railroad companies and the Standard Oil Company until the passage of the interstate commerce law. If that is so, it is not necessary to prove it. A. Well, I can produce every contract. Mr. FARQUHAR. In the matter of 1880, which concerns the agreement of the Producers' Union, would you have had that agreement at all unless they had been giving rebates? It is conceded in the arrangements you made with the railroads there that the rebates were granted clear from 1870 to 1880. A. By whom? Q. (By Mr. FARQUHAR.) By all parties. A. No, sir; only to those con- nected with the Standard Oil Trust or South Improvement Company, sir. Q. Well? A. If you were not a member of that organization, you couldn't participate in the drawbacks; that is true. Q. But that agreement of 1880 was entered into afterwards, at the time Camp])eH. 1 think, was president of the Producers' Union. A. Now, if you are going that far, Mr. Commissioner Farquhar. I will prove the Campbell agreement and give you a perfect history of that. Q. I understand that; it is all in black and white. A. Oh. if you go into that agreement, I will give you the whole history; but I want to know if I should go on to prove to this commission that rebates were paid from 1872 to 1877, when the business became an absolute monopoly; when the Pennsylvania Railroad surrendered everything it had to the Standard Oil Company. Q. (By Mr. KENNEDY.) I think, as the other commissioners have said, that there was no question about drawbacks and paying rebates be- •Black faced type Indicates matter omitted, in the cour.se of editing, from tlie official report. LEWIS EMERY, JR. 353 fore the passage of the interstate commerce law. Since then there is some question, and it seems to me that the issue shapes itself up just this way. The Standard Oil Company people have come here and sworn that they have not asked nor received rebates since the passage of the interstate commerce law; they say that they did not participate in the practice of taking rebates, if there were any; that all they desired was that there should be published rates and that others should be held to them. Now, it seems to me that the thing for you to do, if you can do it, is to prove that they have taken rebates since that time. If you do that you will convict somebody of perjury. Mr. FARQUHAR. That is just the point. The WITNESS. Why, my dear Mr. Commissioner and others of this commission. I think that the case is clearly proved, that rebates were paid. Mr. Roberts, the president of the Pennsylvania Railroad, went upon the stand in the Court of Common Pleas of McKean county and testified that the railroad had not paid rebates from the time the interstate commerce law took effect. Mr. John S. Wilson, whose testimony I have shown you. corroborated Mr. Roberts, and I can read here from this testimony that I have in my hand. I have here the testimony of all the witnesses, a hundred men, proving that Mr. Roberts and that Mr. John S. Wilson were mistaken in their state- ments. You were saying, Mr. Chairman and gentlemen of the commission, that you have letters here filed by Mr. Archbold, from honorable men represent- ing the several railroads of the country. I have no doubt of their honesty; I have no right to even cast a reflection upon Mr. Archbold or upon these letters, but I do venture to say that if Mr. George B. Roberts, president of the Pennsylvania Railroad at that time, now deceased, and Mr. John S. Wilson, its general freight agent, will go upon the stand and make oath that no rebates were paid since the interstate commerce law took effect, and following their testimony the auditors and bookkeepers of the road go upon the stand and swear that rebates were paid, and one proved, from 8 to 28 cents a barrel, and my claim of $107,000 was settled as I told you yesterday, for which I received my $3.5,000 and costs in the suit, may not these gentle- men who have written these letters be mistaken? I would like to see their auditors and their bookkeepers upon the stand, as we put them on in the case of the Pennsylvania Railroad. *Do you think that they would swear to a lie? For they had to bring their books into court, as we had them, and we didn't get this information until these books did come; and when they saw they were in a corner they surrendered. I told you yesterday, or in my evidence I stated that out of the production of 2,'?, 000, 000 barrels of oil a year the few outsiders handled of that, not to exceed 3.000,000 barrels, in- cluding the fields of Ohio, West Virginia, New York and Pennsylvania. And do you think that if these small men handling this small quantity of oil can go into the courts and prove rebates from April 4, 1887, to August. 1888 — as we did in my own suit — and then bring suit before the Interstate Com- merce Commission for rebates from that time up to 1893. and the Inter- state Commerce Commission rendering a verdict of $86,000 against the rail- roads (and they carried it to the United States Court for the Western Dis- trict of Pennsylvania) ; if these men with their ability, as one of the wit- nesses has said, with their very great competency, their very great brain, having carried this great product of oil to the ends of the earth, as nobody else could — and yet these men that haven't got the brains nor the ability come into court and prove that these rebates were paid upon oil. Do you think for one moment that the Standard Oil Company will allow them to beat them in the transportation? *Haven't they provided in their contract, Messrs. Commissioners, in the Fourth Section of the South Improvement contract that the rebates of any others must be paid to them? Why, it don't admit of an argument. There is no doubt about the complaint in addition to the suits brought by the associated refiners and the individual refiners, Logan, Emery & Weaver, that I named yesterday. Why, gentlemen, there •Black faced type Indicates matter omitted, in the course of editing, froin the official report. 23 354 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. is no court in the land that will not construe the fact that the Standard Oil Company, shipping nineteen or twenty millions of barrels of oil in this- unfair way, and receiving in the neighborhood of $160,000 or $175,000 in. drawbacks from the shipping of only a trifle — half a million barrels of oil — would not allow twenty million barrels to go unsettled for. It is sheer nonsense; and no court in the land would for a moment hesitate upoa such evidence. Therefore, with no feeling of animosity towards the gentle- men, I ask you, as jurors in this case, what are your conclusions on the evidence? Bring into the courts of this land the books of these railroads. They are responsible to-day not only for the acts of the Standard Oil Com- pany, or the illegal acts of discrimination, but years ago rebates were levied of $1 a head on cattle that left the western country to go to the eastern market, or on the barrels of flour that come from the western limits of the country. The interior mills of this country are paralyzed because of this discrimination. I am a miller, and I make 500 barrels of flour a day, *and I make no money, because of these trusts which I say, are built up at the instance of the railroads. I make the bold charge, that, if we had had under the law, the rights of eminent domain, equal rights to all shippers, there would have been no trusts, *and there would have been no dissatisfaction. Why, gentlemen, go to Duluth, if you choose, and try to buy a carload of coal that you wish to take into Northern Dakota, where I have a wheat farm. The coal is mined by the miner at from 35 to 50 cents a ton, drawn to Buf- falo, I think, at $1 and loaded on the ship at a cost, I understand, of less than $1.75. Allow 75 cents for transporting it to Duluth. and you have $2.50; 334 miles from Duluth. by the Great Northern road, to my farm, west of Grand Forks 16 miles, bituminous coal is sold at $6 and $7 a ton. I say the discrimination is the result of the coal combination, and the rail- roads are responsible for it, *and you are called here as a committee of these great United States to rectify these rates. Vice-Chairman PHILLIPS. Not to rectify; but to suggest. The WITNESS. To suggest legislation. The milk in the cocoanut of the success of the Standard Oil Company is transportation; unfair, illegal transportation, *because there was an undue discrimination, as our Con- stitution says there must not be between shippers. Do you think you cannot prove rebates upon oil, if you call before you. as you have the power to do, witnesses, books and papers? *Why, great God, the Pennsylvania Railroad would have given $200,000 rather than permit Logan, Emery & Weaver to look through the three tons of books that they brought up to the court house in McKean county. It would have sent them to prison; and the unjust thing in this country is that the poor devil who goes along the street and steals a loaf of bread when he is hungry and out of work is arrested and taken to the courts and sent up for 10 or 15 days: if he steals a coat or something of that sort to keep his body warm, he is sent to prison; and yet these great corporations, and the men managing them, come into the courts and say: "We won't bring our books; we won't answer your questions, because if we do we will incriminate ourselves." There is the difficulty; there is the difficulty, I say. The Sherman act — call it the Federal act if you choose, has been pronounced constitutional by the highest tribunal of this land, and if it is enforced these people will go to prison. *! don't want to take up your time by making a speech; you can prove it. Mr. Chairman and commissioners, if you choose; it is in your power to prove those discriminations, I believe, to this moment, if there is any truth in the letter of Mr. Cowen and Mr. Murray. *Now, Mr. Chairman and Gentlemen, I want to say to these gentlemen, in answer to their questions, that I am not here to prove anything against the Standard Oil Company; they are not my mark, although I may be an oil man. I am that, it is true, but I am a miller and I am a farmer and I ♦Black faced type Indicates matter omitted, In the course of editing, from the ofncial report. LEWIS EMERY. JR. 355 *am most everything in the shape of business, and I have a knowledge of most all of the industries of the country, and I am here for the purpose of giving you information upon the subject for which you invited me. If you want me to go into the condition of the farmer, I shall do it, or many in- stitutions connected with the business of this country. Therefore, if you put me down here as after the Standard Oil Company, I am not with you; I am after the wrong that is being done the common people in this country; that is what I am after, and they have got to be righted, too, and I will tell you so in my wind-up. Now, I want to say this much, and I want you to turn to page 78 of my pamphlet, and I wish to say that in this list there are some refiners that went out of the business in 1867, if I understand. I don't charge that to anything appertaining to the South Improvement Com- pany; I don't charge their going out of business to the South Improvement Company contract that was entered into by the railroads. They went out previous to that date, 1867, but now we can come up to 1870 or 1871, when the rebates were very large to some refiners and very small or none at all to others. Previous to that date there had been a good many, as I said yesterday, equal to the Standard Oil Company. They got drawbacks and rebates. These same railroads have been violating the law ever since they were created in this country, by giving rebates and drawbacks, but they were never so large previous to 1872, but that the average business man could stand up under them. He could not make so much money as his neighbor and he used to wonder why, and since this thing has come out he understands it. In the explanation of all the acts of the railroads pre- vious to that time he has learned the reason was discrimination. As I have shown you, that the contract of the South Improvement Company and the roads with their rebates larger than 100 per cent., given as privileges to certain people, was the means of these refiners — most of them — going out of business. I have here a list of them. Now then, these refineries were all in existence, Mr. Chairman and gentlemen, at the time of the South Im- provement Company. That is in accord with the date of 1872, I mean the contemporaneous date. I have read to you this morning the repeal of the South Improvement Company's charter. I have read to you the contract between the producers and refiners and the Standard Oil Company and the railroads. I have also said to you that that contract, which was so fairly drawn and so nicely worded, was violated within 1.5 days or within two weeks, according to the evidence of Mr. George R. Blanchard, the foiiner, or perhaps now. Central Traffic Association manager. The rebates from 1872 that were supposed, and it is said went out of existence practically, were so great that the business of the average refiner was silenced. I want you to listen to this marvelous statement; now it is a marvelous statement, and it is in evidence. Now, Mr. Chairman and gentlemen, I am going to read to you from the evidence of Frank Rockefeller — testimony given before a Congressional committee on July 7, 1876. I will read from clause 1. (Read- ing) : "Q. Do you know how many refiners there were in Pittsburg prior to this alleged combination?" (The combination of 1872.) If you will refer to my reportf — I did not get them from Mr. Rockefeller even— I got the names of these refiners by wading around through the country myself, and if you will look on page 82 you will find that in Pitts- burg there were 58 refineries in 1867. Thirty refineries have been crushed out and dismantled. No record left. The 58, understand me. were those that were run and that were not. Q. (By Vice-chairman PHILLIPS.) What date was that? A. The date is 1877, when I took the inventory. Thirty refineries have been crushed ♦Black faced type Indicates matter omitted, in the course of editing-, from the official report. tThis list of refiners is taken from Mr. Kmpry's testimony before the Committee 071 Manufactures, House of Representatives, 1888, and appears on page 234 of the report of that committee. 356 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. out and dismantled. No record left. The remaining 28 have been bought up or leased by the great monopoly; they are as follows: Style of Works. Firm Name. American Holdship & Erwin Aladdin Aladdin Oil Company Brilliant Loclihart & Frew Ely's David Bly & Co cosmos i<. S. Waring Citizens' Citizens' Oil Works Crystal Livingston Bros Central Central Refining Company. Eagle William P. Logan & Co Federal iving & Goodman Fairview D. Hostetter Iron City John Spear & Co Keystone P. Weisenberger & Co Liona J. C. Kirkpatrick & Co Lilly Brooks, Balentine & Co Liberty J. A. McKee & Son Model Model Refining Company.. Miller's A. D. Miller National Standard Oil Company Nonpariel Loekiiart & Frew Penn H. S. A. Stewart Peerless Central Refining Company, Petrilite Warmser, Myers & Co Radiant J. D. Stockdale Riverside Elkins & Flack Star E. J. Waring Standard Standard Oil Company Vesta R. J. Waring Weekly Number Crude of Capacity. Stills. 6.82S 3 4,017 3 13,078 9 2,490 4 7,394 6 6,072 9 3,624 3 21,867 13 2.444 4 2.456 2,136 3 1,600 3 1,018 2 564 2 2,072 6 5,498 1 3,233 2 5,238 4 5,538 6 1,318 3 1,854 3 3,758 2 1,703 2 1,906 3 1,809 5 3.718 a 7,250 9,058 8 Now, listen to Mr. Rockefeller: "Q. Do you know how many refiners there were in Pittsburg prior to this alleged combination? A. I have been told that there were 60 and odd refiners. "Q. How many are there now? A. I was told by the same parties that there were now less than 20, and very few doing any business. "By Mr. REAGAN." Congressman and former Senator of these United States. "Q. What is the cause of the reduction in the number of refineries?" Mind you, this is the brother of John D. Rockefeller. "A. I suppose the main cause has been the fact that they could not make money. I have understood that the same lever was brought to bear upon them as upon the Cleveland refiners. We had in Cleveland at one time about 30 establishments, but the South Improvement was formed and the Cleveland companies were told that if they didn't sell their property to them it would be valueless; that there was a combination of railroad and oil men; that they would buy all they could, and that all they didn't buy would be totally valueless, because they would be unable to compete with the South Improvement Company, and the I'esult was that out of the 30 there were only four or five that didn't sell. "Q. From whom was this information received? A. From the officers of the Standard Oil Company. They made no bones about it at all. They said: 'If you don't sell your property to us it will be valueless, because we have got advantages with the railroads.' "Q. Give the names? A. John D. Rockefeller, H. M. Flagler and O. H. Payne. "By Mr. ROSS. "Q. Mr. Payne is the son of a member of Congress of that name? A. Yes, sir. "Q. Have you heard these gentlemen say what you have stated? A. I have heard Rockefeller and Flagler say so; other iiartios have told me that Payne had used the same argument with them. LEWIS EMERY, JR. 357 "Q. What other parties? A. I won't give you the names now. There are some 20 men In Cleveland who sold out under the fright, and almost any of them would tell you that story. "Q. Give us the names of some of those that sold out? A. J. W. Fau- cett, of Cleveland; W. C. Scofield, Joseph Stanley, John Critchley, John Stanley. These are some of them. "By Mr. BUNNELL. "Q. Do you make the same statement with regard to the shipment of crude oil to the seaboard that you do with regard to the shipment of re- fined oil? A. We do no business of that kind." Now, I do not read from the same book, but it is the same testimony and it is in the same book, but I can find it quicker in this one. Shall I proceed? Vice-Chairman PHILLIPS. Certainly. (Reading) "Q. You spoke a while ago of having personal knowledge of certain railroad officials having been stockholders in the Standard Oil Company. How do you know that? A. I know it from the officers of the Standard Company telling me that they were stockholders. "Q. Who are they? A. William H. Vanderbilt, vice-president of the New York Central Railroad Company, was at one time a stockholder in the Standard Oil Company; also Amasa Stone, of Cleveland, the general man- ager of the Lake Shore road, and I have very good reasons for believing, though I don't know it, that Mr. Devereaux and Mr. Newell, both got rebates. Mr. Stone sold his stock two years ago, or before the time when he quit the railroad. He put the stock on the market in Cleveland and sold it, and he is not, I believe, a stockholder to-dav. "Mr. KERR. "Q. Therefore, the fact is that whilst he is a railroad official he dis- posed of his stock in the Standard Oil Company. A. Yes. sir; but that was previous to the time when we surmised that this arrangement was made by the pooling of freights. "Clause K. "(Vanderbilt. Tom Scott, Devereaux, Newell and other officers of these roads got rebates.) "By the CHAIRMAN. "Q. Give us the names of the officials of the railroads that you think received the benefit of this rebate? A. Understand me, I do not say that they did get it. It is merely my opinion. "Q. Give us the names of the gentlemen who you think do reap the benefits of that rebate? A. I think that Mr. Deveraux gets it, and that Mr. Newell gets it. and that Tom Scott gets it. that Vanderbilt gets it, and other officers of those roads, whose names are not in my mind just at present. "Q. What do you mean by a pool, a pool among the railroads or among the oil men? A. I do not give this as a positive fact, but as I understand the arrangement, this is a pool that they went into; I understand that the New York Central and the Erie, the Atlantic & Great Western, the Pennsyl- vania Railroad, the Cleveland, Columbus & Cincinnati and the Baltimore & Ohio railroads had that pool and are combined for the purpose of shipping oil and oil only, and in this pool the Baltimore & Ohio gets a certain number of barrels to go over its road, the Lake Shore so many barrels to go over its road, and the Pennsylvania so many barrels to go over its road from different points in this country, and on oil that is shipped over these roads in the pool the Standard Oil Company draws a rebate or a drawback from the shipments of so much, which is put into this pool, from which- ever road the oil can go over, and the rebate is divided up between the Standard Oil Company and the railroad officials. "Q. The railroad officials, do you say? A. So I understand it; I don't Bay that of my own knowledge. No, sir. "Q. Then it does not go to the railroads themselves? A. No, sir; to the railroad officials. "Q. To the railroad officials? A. Yes. sir. 358 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Q. And do you think it extends in reality to Cleveland? A. Well, we should do the same as we have done in past years and are doing at the present time; we are shipping our oil at the present time by lake and canal^ because we cannot ship our oil by rail without losing money; by lake and canal we can just about save ourselves." This was testimony in 1876, and this contract that I have just read was dated October 1, 1874. Have you any doubt of rebates (after this evidence of these men) extending between 1872 and 1876? Why, I could read you volumes about it. Q. (By Mr. RATCHFORD.) 1 want to remind the witness, with your consent, Mr. Chairman, that even if he succeeds in proving before this com- mission that rebates were paid 22 or 23 years ago, his testimony falls very short. What we want to know, Mr. Witness, is whether these rebates have been paid last year or the year before. You are wasting your time in en- deavoring to prove something that is of but little consequence. I do not understand that the Standard Oil Company has disclaimed discriminations in their favor prior to the passage of the interstate commerce law. I do not understand it that way, but I would ask that in order to make your testimony effective and to say the most in the least possible time, that you confine yourself to recent years. A. Very well, that is what I asked yester- day morning, whether this testimony was to be taken up from the beginning, and I understood the only object was to trace it right up to the present time and to show the discrimination from the evidence, the witnesses on the stand saying that no rebates were paid. I was endeavoring to show that the contracts were still in existence at the present time that were made in 1872, and I was requested to follow that up. Q. (By Mr. RATCHFORD.) If those contracts are still in existence and are observed, you will certainly make a strong point if you show us that. A. I don't say they are in existence except carrying them out in the rebates and in the methods of competition. Vice-Chairman PHILLIPS. Perhaps Mr. Ratchford may have been absent yesterday when he showed that the Standard Oil Company was or- ganized — that is, the National Transit Company — under precisely the same language as the South Improvement Company? Mr. RATCHFORD. Yes, I understand that. Vice-Chairman PHILLIPS. Then he is tracing it up from that. The WITNESS. I beg your pardon, Mr. Chairman and gentlemen of the whole commission, but I have been simply following out that which I was asked to do, *and if it is to be cut off I am perfectly willing to retire at once. Q. (By Representative LIVINGSTON.) Do you lay down the proposi- tion that that contract is pending now and is enforced? A. No, sir. Q. Then how long since it has expired? A. It expired two wppks after it was made so far as fair rates were concerned, *if you understand what I am speaking about. The agreement between all the railroads that were in this combination to stop the rebate system entirely and give the op- portunity to the trade to go on as it had done in former i-ears, and I am trying to show you that from that time on up to the present time these rebates were participated in. I do not say by the Standard Oil Company, but I do say that we have collected them on oil we shipped and I "uippose they have with others. *l have no right to say whether they have or not. Q. How lately have you collected any rebate? A. Up to 1893. Q. That is the way to get down to it? A. Well. I have stated it; I stated it frankly yesterday. *Vice-Chairman PHILLIPS. Colonel Livingston happened to be absent. Representative LIVINGSTON. No, I was not. Vice-Chairman PHILLIPS. This morning when he stated the case. Th(; WITNESS. I gave the evidence yesterday that rebates had been paid and acknowledged to the Interstate Commerce Commission up to 1893. *l don't know whether that gentleman was present or not, but that 1 proved by reading the document, and the cases are right there. ♦Black faced type Indicates matter omitted, In the course of editing, from the official report. LEWIS EMERY, JR. 359 Q. (By Representative LIVINGSTON.) Now, then, Mr. Ratchford's point is this: If this is acknowledged, what is the use of going behind 1893? A. I don't want to, if you don't want me to. *l thought I had my orders yesterday morning to proceed in that way, but I am ready to quit. Q. (By Mr. KENNEDY.) These rebates that were ordered paid in 1893 were for oil carried when? A. From 1888 up. Q. Up to when? A. Up to 1893, because they got judgment up to 1888 in the courts of Warren county, and they carried the balance into the Interstate Commerce Commission *because of some dispute in court, and the Interstate Commerce Commission rendered this judgment of $86,000, as J have told. Q. (By Mr. RATCHFORD.) I hope the witness will not misunderstand my suggestion. I want to give the witness all the time he wants, as every other witness has had. A. I don't want any. Q. You don't want any? A. No, I am at your service. Q. Well, sir, we want you and we want to give you all the time that you require, but the commission would like to deal with present conditions as near as possible, showing us what exists to-day, and we want to give you all the time you desire, and if you wish to go back and refer to it fully to make the record complete we will hear your testimony just the same: at least I am in favor of it. A. Well, sir, I am right here to be asked questions. Vice-Chairman PHILLIPS. Is there any objection by the commission that Senator Emery should proceed in his own way? Mr. CLARKE. The testimony of the witness has been interesting and instructive, and I have been glad to hear it, but my understanding is that it is conceded by the Standard Oil Company and the railroad companies and everybody else, that there were discriminations and rebates prior to the passage of the interstate commerce law. That being the case we need no evidence to establish that fact. We are ready to vote now that such re- bates and such discriminations existed, without doubt. All we want is to have the witness give us all the information that he can as to what he claims have been unfair discriminations on the part of the railroad com- panies since the passage of the interstate commerce law. Now, if he will confine himself within those limits we shall be glad to hear all that he has to say. Vice-Chairman PHILLIPS. He has agreed to do so. If that will be agreeable to Senator Emery he can proceed. The WITNESS. I am right here to answer questions. Vice-Chairman PHILLIPS. Well, if it is agreeable to you, confine your- self to testimony in regard to rebates since the passage of the interstate commerce law. as it is already conceded that there have been very large dis- criminations before that. You can take it up at that time and go on further from there if you want to add to your testimony. The WITNESS. If it is the question of rebate you have asked, I have given you the proof: and I have nothing more to say. Q. (By Representative LIVINGSTON.) I will ask you a question now. Was there any obstruction at that time, or has there been at a recent date, on the part of any corporation or trust or combine, to lessen or retard com- petition in the oil business in any of its branches? A. Yes, siree. Q. Now, please give the commission that? A. That is just what I was leading up to, and I was going to bring it up to these days, every bit of it. I was goinq to bring it right up to date, and I was very near to it. Q. (By Vice-Chairman PHILLIPS.) How near were you to it? A. Mr. Chairman and gentlemen, 1 have only tried to make these things plain to men that perhaps had a limited knowledge as to how a company obtained entire possession almost, and practically the entire monopoly of a business Ihat, as I said yesterday morning, ranks third to-day in the matter of exports, and during the war you had to depend upon oil for gold, because it brought it back to this country. Q. (By Representative LIVINGSTON.) I suppose he is endeavoring to do a thing that perhaps we have not considered and have not appreciated. ♦Black faced type indicates matter omitted, in the course of editing, from the official report. 360 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *it may be that the Senator is trying to put this in an accumulative form — this testimony before the commission — so that it cannot be denied. The baie-naked fact that he has asserted, in answer to my question, I suppose may be denied by somebody in the future. Isn't that the purpose? A. They cannot deiy it truthfully, Mr. Livingston. Representative LIVINGSTON. Then I think we had better allow the Senator to go on in his own way. The WITNESS. I do not ask it, I am ready to be dismissed. Representative LIVINGSTON. I do not think the commission wants to dismiss you. The WITNESS. Not that I care anything about this. I was called here by your commission. Representative LIVINGSTON. Well, it is our duty to economize time, you understand. A. Well, my time is as valuable as yours. I have an enormous business on my hands, and I am here at the expense of that now; and you must say what I am to do and what I am not to do. Mr. RATCHFORD. Continue in your own way. Senator. Vice-Chairman PHILLIPS. If there are no objections the Senator, at the suggestion of Representative Livingston, will continue in his own way to give his testimony. Representative LIVINGSTON. I would suggest to the Senator that as far as transactions are concerned, down to the interstate commerce law — down to 1887 — we understand that, and I suppose Mr. Ratchford had his mind's eye on that fact when he interrupted. Therefore, unless it is abso- lutely necessary to bring it out step by step, in the accumulated form, so that it cannot be disputed hereafter, I would suggest that everything back of that is irrelevant now. A. Well, I was going to show you the contract that existed between the railroads in 1874 and 1876, and I was going to prove that it was the contract in existence to-day, and that the system of attempt- ing to break up competition in trade was going on through certain con- tracts. Then I will stop. Q. It is better to proceed. A. I don't think I can educate this commis- sion on anything unless you ask me questions. Representative LIVINGSTON. How was that? A. I don't think I can educate this commission on anything unless you ask me questions. Vice-Chairman PHILLIPS. I don't think the Senator means to cast a reflection. The WITNESS. I beg your pardon, no reflection, indeed. I profess to be a gentleman. No reflection whatever, because I care nothing about it. Q. (By Vice-chairman PHILLIPS.) But you meant to say the better way to educate us would be to answer questions? A. Yes, sir. I said I was here to answer questions. Vice-Chairman PHILLIPS. The other, then, will be stricken out of the record. The WITNESS. No, I think the gentleman misunderstood me. I would not for the world say anything to offend anyone. Mr. FARQUHAR. I will also state to the Senator that this commission understands pretty generally, I know quite a number of the members do, the investigation by the Committee on Manufactures in this volume here, which was taken up to 1888. and we know these contracts and other matters that you are discussing, are contained in extenso in the Bacon report. The whole of that mass of testimony is of the Standard Oil Company from begin- ning to end, up to 1888. I thought of asking some questions out of this, but it seems to be the sense of most of the commission here that it is not neces- sary to go into it prior to that. But I may say here that we can sit for one whole month, and we cannot get any more than is given in the Bacon report, because the original documents, the very ones that are being discussed by the Senator, are in it. Yet, after all, on the ground that it is both interesting and possibly instructive to know how business was done on the railroads from 1870 to 1887, I certainly, as a commissioner, haven't a particle of objec- *f!lack faced type indicates matter nmittcd, in the cour.'.-e of editinff, from the official report. LEWIS EMERY, JR. 361 *tion. I would like very well to hear Senator Emery explain the Campbell contract and the Scott contract, and everything else. To an unprejudiced man there is no trouble in looking over this report. The WITNESS. That is back in 1872. Mr. FARQUHAR. Between 1870 and 1880. When a new contract was made, it impliedly declared that there had been discriminations without number before that; yet it is simply a matter of record here. We may have it from the remarks of Senator Emery and he read a good part of this pamphlet before that covered a good deal of this ground. I join, however, in the idea with some of the other commissioners here, that for our report to Congress, it is the discriminations from 1887 that we would like to get hold of, if we can. This evidence is very strong, I know. Mr. A. L. HARRIS. How are we utilizing that testimony that has been taken by Congress? It has been used by Congress, but how are we utiliz- ing it? Mr. FARQUHAR. Well, that was the very reason that I sav now that I am very willing, as a commissioner, to hear Senator Emery give the testimony that he has with regard to this report, to the Campbell agreement — to all of those things tnat are germane to the question. But I would rather like to proceed in that way, and I would suggest to the Senator that as a mere matter of time — of course. It is not his own fault — but he sometimes drifts on to a side issue, a good deal as we do in stump speaking — and sometimes loses the exact line of the evidence he wants to bring out. The WITNESS. Well, gentlemen, a man can't help it sometimes. Mr. FARQUHAR. As I say, I feel quite interested, and yet it is very plain, Mr. Chairman, that we can use this only as a historical or a chronolog- ical review, in making a report to Congress, unless perhaps the witnesses were summoned, just as we did in the case of Havemeyer and Elder, right before the commission, then having the whole testimony to prove it. Mr. A. L. HARRIS. Now, Mr. Chairman, as I understand, the witness is attempting to show conditions and contracts and charges of years ago. He is showing conditions that existed prior to the passage of the interstate commerce law, and he will follow that up no doubt by showing that the same conditions exist now, notwithstanding the fact that the fnterstate commerce law has been passed. The WITNESS. Yes, that is it. Mr. A. L. HARRIS. And those are the circumstances and the facts, I think, that the Senator has gone over. That, I feel, will be necessary when it comes to wind up his testimony. While we are consuming some time with him, yet at the same time I, for one, feel like permitting Senator Emery to go on in his own way for the purpose of showing facts that we desire to take hold of at the present time. Vice-Chairman PHILLIPS. At the request of Mr. Livingston, Governor Harris and Mr. Ratchford, the Senator will proceed in his own way, unless there are some further objections. If not the Senator will proceed. Representative LIVINGSTON. I want to bring to the Senator's atten- tion one thing. I am very anxious to hear him out, and it is a duty made incumbent upon this commission by the United States Congress when we were appointed, to endeavor to ascertain the facts. It was made incumbent upon this commission by Congress, and we were appointed for a single pur- pose, to-wit. to learn, if possible, if combinations, trusts, combines, or corpora- tions lessen legitimate competition in any way in any of these industrial pursuits. I want to know if you have any testimony to lead up to the fact that the railroads, as you asserted on yesterday or the day before, are largely to blame for this discrimination in favor of one oil company and against another. I want you. before you proceed, to refresh your memory A. I did not say that yesterday. Q. You did not say it in that way. A. No. sir; I did not even say it. I said that the Standard Oil Company under its former contracts had had rebates, and I said that these contracts, although they had been repealed, some of them, were practically carrying out their provisions. That is what I said. *BIack faced type indicate? matter omitted, in tlie course of editing, from the cfTicial report. 362 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. That Is wTiat I understood you to say. A. And I cited to you instances in which the trade was being affected at the present time. I don't know whether the commissioner was present or not. I did not see him. Representative LIVINGSTON. I wanted your testimony explicit before you went on — before you got through with your testimony. Vice-Chairman PHILLIPS. Now, the Senator will proceed in his own way and come to that at the last, or whenever there is an opportune time, as requested. ^Representative LIVINGSTON. Yes, sir; whenever it suits you to bring it up. I don't indicate the time at all. Vice-Chairman PHILLIPS. He has been requested to proceed in his own way by unanimous consent. *The WITNESS. I want you to understand, gentlemen, that I am per- fectly willing to leave this desk and I will leave it. I did not come up here at my own request. I came from my home by invitation, and I will feel just as well towards you if I stop. I came here at your solicitation, and I was told yesterday morning to go on and give this testimony, and I have done it; and if you see fit to call me down now, I will feel just the same as I did yesterday. Vice-Chairman PHILLIPS. By unanimous consent of the commission you are to proceed. Senator Emery, in your own way. *The WITNESS. I have been in public life myself, and I have been speaking a good part of my life, and I know pretty near what to do. I have some knowledge of law and things. Of course, I am not here. ! suppose, to tell you anything appertaining to the government of this country or the States. I am here, perhaps with my intelligence equal to anybody's else, and I am ready to assert what I know, and put it in shape. My life has been just as checkered as anybody's else; I vvant to say to this commission and to the gentleman referring to the Campbell contract as ancient history, that I know all about it, and I can explain it, and if you hadn't asked me for any ancient history of this business, I would not have said a word about the Campbell contract. You may think you have got me in a hole about the Campbell contract. I want to give you to understand that you can't corner me. Mr. FARQUHAR. This is a little ungenerous in the witness. Vice-Chairman PHILLIPS. I would say that there is no idea of anybody to attempt to corner you. Senator. The WITNESS. I am not responsible for anything to this committee under its orders. Not a single thing. And there are men who have occupied this chair two days at a time that were not interrupted that I know of, that were rendering testimony that was not germane to this question at all. Mr. CLARKE. I hope the witness will not entertain the idea that any- body in this commission wishes to corner him. The WITNESS. On the questions, that is all, Mr. Clarke, on the ques- tions that may be propounded to me. I know the preparation that has been made. Mr. CLARKE. The witness is here to give us light, and we are here seeking light, and we wish him to give us all he can, being careful not to unnecessarily repeat statements or to dwell upon matters which we all recognize as truth, and to proceed as rapidly as he can, with the understand- ing that we are prepared to believe what he is saying, and that we have no desire to embarass him in any way whatever in presenting his testimony. Vice-Chairman PHILLIPS. Senator Emery, then, will proceed in his own way. Mr. RATCHFORD. I want to say a word now, aside from what the wit- ness has stated, about our inability to corner him. The WITNESS. No, now, I take exception. Permit me, Mr. Ratch- ford Mr. RATCHFORD. That is quoting your own language; if you want to correct it, we will be glad to have you do it. *P,l;;.-k faced type indicates matter omitted, in the couipe of oditinp, from the official report. LEWIS EMERY, JR. 363 *The WITNESS. I beg your pardon. I said so far as questions were concerned. Now, I understood that there was to be somebody from their side, and that I was to be presented with some very hard questions and that I cculd not answer them. Understand, it is not a reflection on the com- mittee. It is on somebody else — that they were going to put me in a hole. That is the only point. I said it could not be done. That is what I meant, I said it could not be done. I take no exceptions to what you have said. I have been too long standing up before people in the Senate and in the House and receiving my rebukes; that is all right; I take no offense. Representative LIVINGSTON. I do not suppose any of the members of the commission said that you would be put in a hole, did they? The WITNESS. No, no, no; not by any means; and I don't want you to understand it that way. Mr. RATCHFORD. Now, I want to take exception to the statement made by the witness that other witnesses have been in this chair for two days at a time, and have not been interrupted. The WITNESS. No, I said that they had occupied the time; I don't care about the interruptions. Vice-Chairman PHILLIPS. You said that they had not been interrupted; I refer to the stenographer's notes. (A pause.) The WITNESS. Well, then, take it that way. I meant to say they had occupied the time. Mr. RATCHFORD. No witness has ever occupied the chair one hour or one half hour without interruption. The WITNESS. I don't care how much time they occupied. I prefaced my remarks yesterday morning by saying that I had no animosity against anybody at all; that I was here simply at your solicitation, and I feel now, in this discussion here, that I have rather imposed upon your time, and of course I do not desire to continue Representative LIVINGSTON. V\/ell, we have wasted 40 minutes now and we all feel better, and the witness is rested, and we have had this little pow-\Aow, and I move now that we go on. Vice-Chairman PHILLIPS. Well, he has been requested to do so, by unanimous consent, in his own way. The WITNESS. I trust that you gentlemen will not harbor anything against me for anything I may have said, for I had no intention whatever of delivering an insult or any rebuke in any way, as it is beneath my diginity to do so. Mr. KENNEDY. For one, I want to hear all you have to say, if it takes a week to cay it, in your own way. The WITNESS. A little explanation if you will permit me. I venture to say this to the commission: I don't think — ^1 will not even except Mr. Phillips, who has been in the oil business for the last 30 years Vice-Chairman PHILLIPS. More than that. The WITNESS. Yes, sir; 35 years, but I have known him for 30 years. I thiok I have told him things that he never knew about the oil business — about the trade. I have told him things that he never knew, and I was sent for to educate this committee, as I understood, in the fact of the injury that has occurred to this great industry that has been monopolized through cer- tain methods. I venture to say you gentlemen did not know how it was brought about. That is all. To a man that has 35 or 40 years' experience in the business, and I being a manufacturer and desiring to continue in the business, as I do, and following these things from America to Europe — all over the wor^ — and making it a study for 17 years of my life — I don't think Mr. Phillips himself knows one-half as much about the subject as I do. Q. (By Vice-Chairman PHILLIPS.) That is about the manufacture, transportation and so on? A. I mean about the methods of transportation and taking it out, as I have shown you. I have produced evidence here as simple as any man has ever seen, so that you can see that this great indus- try has been throttled, and I understand your duty is to frame some law, to *Black faced type indicates matter omitted, in the course of editing, from ilie official report. 364 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. ♦recommend some law for saving a business whose interest is as great to the people of this country as this is. That is what I think. Vice-Chairman PHILLIPS. The Senator will please proceed. The WITNESS. I wish to say Mr. A. L. HARRIS. You were dealing with the subject of the refineries that have gone out of existence. Mr. FARQUHAR. The Pittsburg refineries. The WITNESS. Well, we will just drop that part of it and say that more than 95 per cent, of the refineries that existed in 1872 were driven to the wall before 1877. Now, I can give you the proof of that, and I will make that bold statement. I will also state to the commission that I proved yes- terday, by the testimony of Mr. H. M. Flagler, that the Standard Oil Com- pany was formed in 1870 in Ohio. I also proved that Mr. William H. Van- dcrbilt and other magnates became stockholders in it. I also proved that rebates had been paid and I am prepared to prove that they were paid clear up to 1879, *which you acknowledged; and I am prepared to prove that the rebates were paid from 1872 up to 1879, when the testimony was taken before the Hepburn Committee, and Mr. H. M. Flagler swore that they had a capacity of 600 barrels per day of crude oil in their refinery. Not the Hepburn Committee, but the committee of 1888. *Q. (By Mr. FARQUHAR.) The Bacon Committete? A. Yes, sir; the Bacon Committee. Q. The Committee on Manufactures, as it was called? A. Yes, sir; he swore that they had 600 barrels a day capacity at that time. The production at that time was about 16,000 barrels a day, which would give them 4 per cent, of the refining capacity at that time. At that time there existed in the oil country, or spread out from Louisville, Ky., to Portland, Me., upwards of 250 refineries. Mr. Henry H. Rogers — I was going to read you this testimony, but I am afraid I will dwell upon your time: it is all contained in this book. Mr, Henry H. Rogers and Jabez A. Bostwick, deceased, members of the Standard Oil Trust, swore in 1879 before the Hepburn Committee — made affidavit — ■ that they owned 90 per cent, to 95 per cent, of the oil industry of America — that is to say, these refineries. Bear in mind that in 1870 and 1871, they owned 4 per cent, and in the brief space of seven years they had silenced the fires in all of the refineries, all 250, except their own. The history is here. You ought to have it. Every man ought to read it to know the method in W'hich they accomplished that great feat of throttling that industry from 1872 to ]879. Q. Do you desire that it should be put in the record so that it may be put before the commission? *Vice-Chairman PHILLIPS. He said he had omitted calling attention to these contracts. Mr. A. L. HARRIS. What I had reference to was the means of utilizing that testimony. Representative LIVINGSTON. Let him state. Mr. Chairman, in his own way, how they did that in seven years. The WITNESS. Mr. Commissioner, it is simply on record in this book, the Commonwealth of Pennsylvania vs. the Pennsylvania Railroad, which suit was for three years being tried and testimony being taken. This is the evidence. There it is. Q. (By Representative TJVINGSTON.) Can you state in a few words how it was done? A. Discrimination. Q. What particular method? A. No different method; only w^hat I have stated. The railroads paid it to them. Q. If the railroads wore guilty of this, tell us how they did it. By con- tract? By agreement? Did they give it to them in the form of rebates? A. Certainly; certainly; a rebate on crude oil. For instance, a man owned a refinery or several refineries in the oil country. At the beginning of the business, the Standard Oil Company didn't have any. They gave a rebate to a man that owned a pipe line, of 22 cents a barrel for all oil loaded upon •Black faced type inrlicate.s mattfr -imitted, In the course of editing, from the ofllclal report. LEWIS EMERY, JR. 365 the cars at the railroad. The man that owned a refinery, I care not where, and owned his own pipe line, was not permitted to have that rebate. There was 22 cents against him right there. That is the contract. Q. And that is one of the methods by which they drove them out of the business? A. Certainly. How could you do any business against 22 cents profit which they did not earn, and you were manufacturing oil. The 22 cents alone would have driven you out, but in addition to that they got 49 cents more. Q. For what? A. Transportation by railroad, under agreements; and that is the way they got from 4 per cent, of the oil industry in 1871, to 90 or 95 per cent, in 1879, and the whole country was silenced. Q. What did the Standard Oil Company give the railroads for doing that for them? If they used the railroads as a means for doing that, what did the Standard Oil Company pay the railroads? *A. Didn't I read this testimony just now? Q. I want it brought out right here. I want it for the purpose of con- necting it with this testimony. A. Very well; but I just read you from Frank R'.)ckefeller"s testimony that it was divided among the officials of the road, and he gave the names of the men. He said the railroads didn't get it; that is his say-so in it. I read you his evidence and you can take it for what you choose. He was driven out of the business. Out of the fifty-odd refineries in Cleveland, 20 remained, and they were owned by the Standard Oil Company. Q. You don't mean to say that the railroads lost that 49 and 22 cents? They recouped somewhere? A. I mean to say that the stockholders did not participate in it; that is what I mean to say. Q. The stockholders lost it? *Mr. FARQUHAR. The officers, then, must have got It; where did the money go? Representative LIVINGSTON. That is what I am trying to find out. The WITNESS. I can answer the question. There were times when these I'obates were 40 cents a barrel, and at times $1.06 a barrel, and at times $1.32 a barrel — rebates paid to these people, not only on crude, but on refined as well — on the product, not only on their oil, Mr. Commissioner, but on the oil that everybody else shipped. *Q. I understand that. A. Yes, sir. Q. Now. then, as the stockholders evidently lost that, as you state, where did the money go? Where did it go? That is the question. A. Well, they maj- have spent it for wine or they may have bought a farm with it; I don't know anything about that. Q. You cannot trace it and you have no evidence to show? The WITNESS. Where it went? Representative LIVINGSTON. Yes, sir. The WITNESS. No more than the evidence that was taken at the time of the investigation of Congress, which proved where this money went. *That is what I wanted to show you, to give you some knowledge upon these questions. Q. What does the evidence say? *A. I don't know; I will read it. Vice-Chairman PHILLIPS. Refer to some special evidence. The WITNESS. I will take Mr. Rockefeller's testimony and it gives the whole history, but it takes time to read it. He is not a short witness. *Q. (By Vice-chairman PHILLIPS.) You have read part of it, have you? A. I have read part of the history. Q. (By Vice-Chairman PHILLIPS.) Does that state how it was di- vied? A. Yes, sir; I read this morning that it was divided between the railroads; that Mr. Vanderbilt got some of it, Mr, Devereaux got some of it, *and Mr. Scott got some of it; and they asked if the road got any of it and he did not know. Representative LIVINGSTON. My purpose was to put it right here where we could grasp it in the proper shape when we come to make our reports, and not have to go through all these papers. That was my purpose. *Black faced type Indicates matter omitted, in the course of t^ditirig, from the official report. 366 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Q. (By Vice-chairman PHILLIPS.) That testimony was read just a few minutes before the question was brought up by Mr. Ratohford. Is that correct? A. Yes, sir; there is no question about that. Q. (By Mr. KENNEDY.) I would like to have you state to the commis- sion how you disposed of your different refineries. What became of them? You had one in Crawford county and one in Philadelphia? *A. Yes, sir. Q. I think it would be interesting to have the history of them; that is, your own personal experience. A. Undoubtedly somebody has told you that I sold out to the Standard Oil Company? *Q. No, sir; I did not know anything about that. A. From the fact that I went to the office of the company these reports got around. Q. 1 have no such information as that at all. A. *l understand that, and I want to explain about this, too. In Titusville, Pa., the Octave Oil Company owned a refinery of about 800 barrels capacity, 800 to 1,000, and the Standard Oil Company — *now, this is ancient history again, gentlemen — I went over it, but I want to tell you how the Octave Refinery was disposed of. I am going to repeat now what I have said, that we were invited to come into the Standard Oil Company, they saying that if we would come in we would be allowed quite a large amount of money for our refinery — to be taken in the stock of the company. There was no money used in the forming of this octopus, at the first, sir. They only had a capital of $1,000,000 and the system was to turn the crank and make the stock, and you would take it for your property. We refused to go in. The contract was presented to our com- pany, and we felt as though it was illegal and not right, and we refused to go in. We continued the business the balance of 1872, and these rebates that I have named here were against us, although the South Improvement Company contract had been repealed. We struggled along until the latter part of 1873, and we had to quit and shut our refinery down. It probably cost us $85,000, and I think we got $45,000 for it; we were forced out. Q. So they dismantled your refinery? A. That refinery ran for two or three years, and finally was dismantled like every other refinery on the creek. The industry, which at one time was located on the creek and in its vicinity at the head of Oil creek — or at least 97 per cent, of the products of oil was in the State of Pennsylvania, and at New York and in Philadelphia; but the whole country has been depleted excepting the recent production of some few refineries belonging to the independents; demolished, *and vines are growing over the tops where the refineries stood. Q. I asked you about the other one. A. The other is in Philadelphia. Q. Is that dismantled? A. Yes, sir; dismantled. Q. When was that established? A. That was built in 1880 or 1881. I think, at the solicitation of the Pennsylvania Railroad, after the close of the suits of 1879, in which they said they were going to do better; but discrim- inations again drove us out, which I have shown you. Vice-Chairman PHILLIPS. He went over that very fully yesterday. The WITNESS. In this mass of business, I believe there was on every barrel of oil that I shipped to that port and to that works an average of 28 cents per barrel. Who can do business against it? I own a pipe line in the oil country from my wells and other lines down to the railroad, and they refused to furnish me any cars, the Pennsylvania Railroad owning 1,126 tank cars, bulk cars. I used them for a time until the order came from the Stand- ard Oil Trust that I must get no more oil. Previous to that time they had been delivering the oil. The evidence all shows it. and there is the whole history right before you in that very book that you referred to — *the whole history of my being choked off. There is no way of my getting over it,^ unless you want to listen to it. Q. (By Mr. FARQUHAR.) A good deal of that evidence is there? A. It is all there. Q. You make that a part of your evidence? A. Anything you want to use as evidence, use it; and anything you want to cut out. cut it out. Do you want me to go on about the Philadelphia refinery? Do you want me to tell how it was sold? •Black faced type Indicates matter omitted, In the course of editing, from the offlcial report. LEWIS EMERY. JR. 367 Q. (By Mr. KENNEDY.) I want to know what became of them. A. It was sold to the Standard Oil Company; they took it. Q. I want to know whether it was dismantled or not. A. It was dis- mantled and torn down and has gone. Another refinery right close to it, an. investment of $4,000,000, that is gone and torn down. Q. (By Mr. RATCHFORD.) Did they buy it to dismantle it. as far as; you know? A. Yes, sir; I suppose so; they never held it, of course. Q. The dismantling took place after the sale, did it? A. *Right soon after; within a year — *and let me say to you (a pause). Well, I won't say it. Mr. KENNEDY. Say it. The WITNESS. I will say it later on.t I have got so many things to say. I am afraid I am going to trespass upon your time; I am timid now; I am getting timid about this. Vice-chairman PHILLIPS. Don't feel so; we want to hear you fully and give you the same opportunity as we did the other side. We design to be entirely impartial in this investigation — to both sides of it. The WITNESS. *l know that, and you are acting all right. Now then, let me explain about the refinery which was sold, and I was forced out; and these cars were sent off clear into Colorado, Louisiana and all over the country. A requisition was made for these cars and every one of them was sent out of the State except 248, by absolute count. I sent three men in different directions in the country to know what had become of those cars so quickly. The oil got into my tanks so that I couldn't do anything with it, and my property was put into the hands of the Producers' Protective Association, because they wanted me to shut down my wells. I had a very large production at that time, something like 2,700 barrels a day, and I was blocked in it with a great big refinery in Philadelphia, and a railroad run- ning through the land where my oil wells were and a pipe line coming up to it. I could not get a single car, because Mr. Merchant, of the Rochester and Pittsburgh Railroad Company, told me — and this is in evidence — that "they are going to take our coal trafl[ic away from us if I draw your oil." I imme- diately applied to the courts against the Rochester and Pittsburgh Railroad, and made them bring the cars in as much as I could, and I got one in a week or two weeks or three or four weeks, and I was devilled to death until I had to quit. Q. (By Mr. KENNEDY.) Now, I want to say to you, in all kindness, that I think you have made a remark that was rather discourteous and unkind in regard to somebody having told me that you entered the office of the Standard Oil Company first, in order to see them about buying your property. When Mr. Archbold was on the stand he told about other people having gone to the Standard Oil Company to enter a combination with them, but your name wasn't mentioned among them, and I have never known about you going to the Standard Oil Company at that time. A. Let me say to you, that this charge was made before the committee of 1888, and I have had to face it every single time — the charge that I was groping around trying to sell to the Standard Oil Company. Q. (By Representative LIVINGSTON.) Don't you think you had a good cause to sell after they put the screws to you? A. I didn't want to. Q. I should have sold out a long time ago. A. Well, I would not. I stuck to my text; I didn't like it; it was a gross violation of rights. Q. It is a question of sentiment with you, is it? A. No, it is a question of principle; I can't afford to disobey the law; not now. I am in this thing, and if it keeps up eight or ten years longer, if God permits me life, I may go *into the office of the Oil Company some day to protect my own rights, if necessary.J ♦Black faced type Indicates matter omitted, In the course of editing, from the official report. fMr. Emery never said it, and his threat that he would say it was stricken from the official report. JThis answer in the nfflcial report is recorded as follows: "No: it is a question of principle. I cannot afford this— not now. I may if this thing keeps on. in ten years longer, if God permits me life. I will go in the face of the law and protect my own rights if necessary." 368 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Mr. FARQUHAR.) In this matter of the Standard Oil Company buying up refineries and demolishing them, delocalizing them, hasn't this been in Pennsylvania, for a great many years, quite an irritating subject with a great many of the smaller places there where they had refineries, that were abolished, after which the trade passed away from those sec- tions? Has it not caused an embitterment on the part of the people where the local refineries had been established, and were then taken away? Isn't it a common saying in Pennsylvania, as against the Standard Oil Company, that by changing the business from the Pennsylvania field to New York, it has caused an immense amount of hatred and abuse and vituperation against the Standard Oil Company? A. Oh, no. Q. You say no? A. I say no positively, from this fact. Q. I want to quote your own testimony here, in which three of the gentlemen complained — that is you and the Pennsylvanians— that Pennsyl- vania, and especially Pittsburg, had been robbed of the legitimate work that belonged to the refineries, and that the whole labor of refining had been swept out of the State of Pennsylvania, and the works had been taken away from Pennsylvania? *A. Very true. Q. And had been taken down to New York? *A. Yes, sir, Q. And the through pipe line established? A. Now then, we are not; since that time Pennsylvania has got more refining capacity than she had in those days, and Philadelphia has grown to be one of the largest manu- facturing places, and in Pennsylvania they themselves have come back to that country and built up the most enormous works; and they have got them now. That wasn't the condition when this testimony was given, but in these times it is different. Q. I am glad to know that. Now, as a refiner and business man, don't you think there was a legitimate reason why a great deal of that refining could be better done in New York, more especially as the by-products come into genera! use, than it could have been in scattered communities in Penn- sylvania? A. No, and I will tell you why. Q. So you think the Standard Oil people were incorrect when they testified before this commission that it was for purely a business reason, and not a matter of prejudice, that they had dismantled these refineries in Pennsylvania and Ohio and substantially done the work in New York? A. No, that is entirely wrong. They are mistaken in their answer to that question from the very fact that they have come back there to-day and they are manufacturing largely of the by-products, and they have come back there because it was the natural place. They have come back there be- cause there is natural gas there in endless quantities. There is most ex- cellent water for the manufacture of oil, which is required, and I believe to- day that they are sorry that every single refinery they have is not located somewhere in the central part of Pennsylvania. They have come back there and spent millions and millions of money in the State since they made that excuse that they drove those refiners out because it was not the proper place to refine. It is sheer nonsense. *Q. Now, you were permitted to go on in your own way, and we would be glad to make this difference. A. I think you are getting more out of me by going as you were. I think the more questions you ask the deeper we will get into the subject. Q. You were about to go into the discriminations before the Interstate Commerce Commission, and you said you were nearly up to that. Now, have you indicated to your satisfaction the discriminations up to the time of the interstate commerce act? A. Yes, sir; to 1893, and followed it up to about 1899. Q. Then have you any further evidence on that? A. No, sir; I haven't any further evidence on that. Q. Then you have covered that ground, you think? A. I think I have; but I have some other matters. *But still it doesn't matter, I have proved that part of it so far as I care to say anything. *Black faced type indicates matter omitt('pe indicates matter omitted, n the course of editing, from tlie official report. LEVv'IS EMERY, JR. 371 of the road, his name I forget, who was present at the conversation, as also with Mr. King, of the Columbia Oil Company. He said: "You wire Mr. Durr, the division superintendent of the Susquehanna division, to meet Mr. Emery at Hancock to-morrow morning and go with him to locate their oil pipes, either in the deep water of the Delaware or to pass through the bank of the Erie grade." I took the 9 o'clock train. This message was sent; I saw the gentleman write it; I took the 9 o'clock train and went to Hancock; I got there at 2 o'clock in the morning, and I immediately went to the Chandley House, which was nearby. I was anxious to know whether Mr. Durr was there. I was afraid something would happen even before my getting to Hancock; but to my surprise Mr. Durr's name was registered; he was waiting for me. The next morning I took a carriage — my wife was with me — Mr. Durr and my wife and myself — we rode to the Delaware river, which was not half a mile away, crossed the river, it being low, and sounded the water, and went upon the bridge and looked down to see where the rocks were, and concluded the best thing we could do was to go through the bank. There were the two ends of the pipe 120 feet apart. He said: "Mr. Emery, I will make a profile of this, and we will have it in your office one week from to-day." That was about on Thursday. I said: "All right." I went home and I started our pipe, and the very first place that we had to lay the pipe was under the Erie track — the Erie Railroad track. It was in the switch yard, and there were four tracks side by side, and it was a pretty difficult thing to get under there. We went there innocently, supposing that we had the right to do so. I had spoken to the superintendent about it; he didn't know anything different; when I returned to New York two or three weeks previous to that time it was all right. We were working away there with our men, and the first thing we knew down came a force of two or three handcars and they jumped off on the track and attempted to put our men out of the ditch. I was up at my office uptown. They went to the nearest telephone, and they telephoned, and I went down there and they were having a contest. My refinery was close by. I commanded the whole force out, and we had what they term, no doubt, "a scrap;" and we drove them away and went on with our work. Q. (By Vice-chairman PHILLIPS.) That was near Bradford, was it? A. Right in the city of Bradford. Next morning we were enjoined by the court. This is the Erie Railroad that was objecting, understand me. Q. (By Vice-chairman PHILLIPS.) And was it in the State of Penn- sylvania, where you had the right of eminent domain? A. The State of Pennsylvania has a free pipe law — what is called the right of eminent do- mnin — quite correct. I should have stated that before. Now, a letter was addressed to me by our attorney. This I will put in evidence, because I know all the facts. Hon. Lewis Emery, Jr., Bradford, Pa.: My Dear Mr. Emery— In reply to your inquiry, am pleased to make the follow- ing statement: The first legal opposition that we mft with in constructing the line of pipe of the United States Pipe Line Company was an attempt to prevent us from laying pipe under the track of the Erie Railroad within the limits of the City of Bradford at a point where both the National Transit Company and the Tidewater Pipe Company had previously laid their lines, and, so far as can be learned without the slightest objection on the part of the Railroad Company. We presented our bond and petition to the Court of Common Pleas of McKean county, and were met by attorneys on the part of the railroad objecting to the granting of the prayer of the petition and the approval of the bond. They had at this hearing a very exhaustive brief with which they .seemed not to be familiar; they apuiogiztd fo the court for the way in which they presented game, saying that it was prepared by Mr. Elliott (Mr. Elliott was the attorney for the Standard Oil Company at that time, located in Oil City) and they had not had the time to carefully consider the same. I took very full notes of the authorities cited and of the points made by the attorneys for the Railroad Company. A short time alter this I had occasion to appear in the court of Tioga county representing the United States Pipe Line Company in opposing a bill to restrain the company from laying a pipe under the Tioga branch of the Erie Railroad: the attor- neys at this hearing seemed to have the same brief as was used in the hearing in Mc- Kean county, citing the same authorities and making the same points. Later I rep- lesented the United States Pipe Line ComPany presenting a petition and bond to the 372 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. court of Bradford County for the right to lay a pipe under the track of the Northern Central at a point south of Elmira, and was again met by what appeared to be the same brief, authorities and points. The objections in all the caaes were many and the authorities cited numerous, and what seemed to me straige was the fact that in each appeared to be the most complete harmony. It is wonderful how the minds and labor of attorneys, so far separated, should bring out the same objections and sup- port them by the same argument, yet so it was. Very truly yours, W. E. BURDICK. Now, we bought our way under every single rod from there to Hancock, and what do you think? When we got to Hancock (I knew there was something wrong before I went there) I went with my men to put these two pieces together, 120 feet apart, we were met first with two derricks and two locomotives, a flat car containing lumber and a little brass cannon that had been used for shooting holes through a tank that was run off the track; a load of lumber, and a car holding about 75 men. The moment we got there with our men, they supposed of course we were to connect up these two pipes, and they threw off these old slabs and stuff, and they built a sort of a cob fire over each end of the pipe, and they threw off the lumber and they built a house on each side of the track, and put two men in it, W'ith Winchesters; and we stayed there three months, looking one another in the eyes. We never got under that track. We spent $75,000. The Ontario & Western were induced to violate their contract, and I may state, for the information of this commission, that we went to the Ontario & Western because we got the contract out of them by which we might ship our oil down to Cornwall-on-the-Hudson. and from there we were going to put it into boats, and draw it down to New York and deposit it in our tanks. That contract gave us the right to construct a pipe line over the right-of-way to the Hudson, for which we were to pay them a royalty of two cents a barrel. We were even ctxt off from that contract by the same power, but they kept a standing armj^ there at Hancock, and we came back 70 miles to the Susquehanna river, and we flanked the enemy until we got down to Wilkesbarre. At Wilkesbarre we had contest after contest, and contest after contest, passing under the tracks of the Delaware, Lacka- wanna & Western and the Lehigh Valley and other roads. This same brief came into court, and seven lawyers were representing all the different lines that were against us, each one reading the same brief and making the same points. We beat them, and we built our line and we connected up with the Jersey Central Railroad, a friendly railroad, that contracted with us to draw oil for a term of 99 years, with the right to cancel the con- tract by a certain number of months' notice. Q. (By Vice-Chairman PHILLIPS.) Who had the right to do that; to cancel the contract — the United States Pipe Line or the railroad? A. The United States Pipe Line. We stopped there for a while because we were out of money. It cost us more than $150,000 to fight our way to that point — their keeping us from going to Hancock, the extraordinary expense made to us to get it through to Wilkesbarre and the litigation and the loss of time and the loss of our business. Then we stayed at Wilkesbarre for about a year and a half or two years, and we concluded we would go on; so we secured the right-of-way from Wilkesbarre, over to *Mr. FARQUHAR. Bethlehem. The WITNESS. Just a little above Bethlehem. Vice-Chairman PHILLIPS. Well, it is not important about the point now. The WITNESS. *Anyhow, within about oO miles above Easton. and we built that line through to the river, and then we went into Jersey. The first thing we had to pass under was the Pennsylvania Railroad. Q. (By Vice-Chairman PHILLIPS.) Was there a free pipe line law in the State of New Jersey? A. Oh. no, sir. Q. (By Mr. KENNEDY.) Is there in New York? A. Yes, sir. Do you want me to explain the law to you? Mr. KENNEDY. No, sir; I don't think it is necessary. •Black faced type indicates matter omitted, in the course of editing, from the official report. LEWIS EMERY, JR. 373 The WITNESS. Well, I think I had better do that since he has asked the question. In 1878 the first pipe line law was passed in this country; that was passed about the same period in which the Pennsylvania law was passed. It was a good, free, open law and the Pennsylvania law is a copy of it, but some one in 1890, before we got down to Hancock, went in and had that law amended, and it became absolutely inoperative. Q. (By Mr. KENNEDY.) And you couldn't get the right of eminent domain under it. A. You couldn't get a right of any kind under it, *until you published a certain number of days, where you wanted to go; and your routes had to be published and everything, which gave an opportunity for everybody to come in and take up a line ahead of you. Draw your own conclusions. Q. (By Mr. FARQUHAR.) I think the commission's law of the State of New York covers that ground. You have got to make publication there, under the law creating the railroad commission of the State of New York. A. Now, this was the law passed in 1878, and was amended. The law was operative and the work was done under it. The pipe line to Buffalo was laid under the original law and it was a good law. We had to get under the Pennsylvania Railroad, and fortunately we found one of the secretaries of the treasury of the United States, who lives at Trenton — I cannot think of his name — but we searched the title and we found that he owned an acre of land, just one acre, which was used many years ago, during revolutionary times, for a wharf and a dumping place for a very, very old furnace, an iron furnace used to be there; the most of you that have been in the district know where it is. He didn't know that he had it himself until we searched the title, and we bought it and paid $500 for it and went under the Pennsyl- vania Railroad track. *We had a scrap there, and a very severe one. The owner had the title to the land, and they had an easement for the rail- road; that is all; we had it decided, and went under there after a long con- flict. We got through to the Delaware, Lackawanna & Western within the borough limits of Washington, New Jersey, and we bought a farm, the Stewart farm, through which the old Morris & Essex Railroad passed. The charter was granted in 1836, and an easement had been bought through that land and paid for; had a deed of it; and we bought the fee title to the land over which the right-of-way was given. Our attorney said that we had a right to occupy that land. We had, six or eight months before that, put in a piece of pipe to test what they were going to do, and they tore it out, so we thought we would not be beaten, and I took 50 men from off another line, and we went over there in the dead of the night, and I placed my men on both sides of the hill. They had a watchman on the road passing up and down with a lantern in his hand, back and forth, and coming up to the culvert in which we possessed the right of way, 14 feet high from the ground, he would look down and see that silence prevailed, and he went away. About 4 o'clock in the morning we took possession. When 9 o'clock had arrived on Sunday morning we had two pipe lines buried four feet under the earth, fastened to timbers as heavy as a span of horses could draw, piled rocks on top of them, anchored them with chains, built a house on each side of the right of way, and took our breakfast in the camp or shanty. About 12 o'clock some men came in there and said: "You get out of here," and I said: "Not a bit of it; no, sir." They said: "You w^on't get out?" and we said: "No, we belong here; it is our land; we haven't disturbed the railroad; we have got rights here." He said: "You will get out: go on." "Boys," I said, "don't be hasty;" but he was a little bit hasty, and I told the boys to take him by the seat of the pants and shoulders and carry him out and lay him down carefully, which they did, with the rest of his companions. On Monday morning, two wrecking cars and 250 men rode in from Hoboken and made a charge on the little band in the pit and we drove them out. That is all there was about it; we drove them out. Q. (By Mr. CLARKE.) When was this? A. This was in 1891: no doubt you have read about it; some of these men are familiar with it. They wanted to compromise the matter, and wanted to go to the courts, where we *Black faced type indicates matter omitted, in the course of editing, from the official report. 374 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. wanted them to go. They said: "You permit our men to come into this subway, and permit them to move some earth, and let them go through the formality of arrest, and put some of your men in there and let them take a little, and you can go through the formality of arrest." I said: "All right." When they got down they wanted us to move the wagons away off the pipe. I said: "No, here is six or eight feet." They said: "The wagon is in the way." I said: "They are there on purpose. I don't want you to have any advantage, and I am not green enough to give you any advantage just now." I said: "The wagon will stay there, and if you want to do any business of this character, go on." So we arrested their men and they arrested our men. And they wanted to know if we would go up and have the trial; so we went up in the town, and the sheriff had the men, and we went before a Justice of the Peace. Each one had his trial and they were bound over to the court, and the issue was made up. We went off to our dinner to the hotel as I suposed, when a man came rushing up on horseback and he said: "They are in a fight down at the crossing." I jumped into the first buggy I found. I didn't know whose it was, and I rode there as quickly as possible. I found these traitors who had promised me they would put this thing into court, there with two locomotives, standing on top of the track, lashed close together, and they were running hot steam and hot water down into this pit on my men. And they went to the fire box [at this point the witness was overcome and wept] and threw hot coals down on them; and they threw stones at us and clubbed us; but we whipped them. I ordered every man out of the pit; I told them that if they came back there I would shoot them. We barricaded ourselves, and the Grand Army of the Republic gave us 48 muskets, and I sent to New York and got 18 Springfield rifles, and we bound them in with wire and tied our pipes down, barricaded our house and stayed there for seven months, holding possession until the court decided that we had a right to stay there. And the very men who were at the head of this — I know them — the men who were there on watch were in the employ of the Tide- water and the Standard Oil Company. We are pumping oil through to the junction, after the difliculties we had in getting these rights of way through Jersey; here came the very same men that we found up in New York, offering as high as $5 to the farmers, instead of $1.50. which was our price, to give them the right of way instead of us at the other price, and the farmers saw that we were in a hole in it and they turned out to help us, because it was a public wrong, and we built that line through. Q. Through to where? A. Through to the junction, 50 miles from New York; from there we have a rate of freight which was termed here, by one witness on the stand, a discriminating rate. The total price, I believe, as given here, for transporting a barrel of oil from the oil regions to the sea- board — I think by Mr. Rogers — was 45 cents. *Am I mistaken? Mr. A. L. HARRIS. That is my recollection; I think that is right. A. Forty-five cents. We pay for that 50 miles on our refined oil. seven and two- tenths rents, and on our crude oil we pay six and one-half cents for hauling it 50 miles; *and we don't give them — it is not by the car load, or, as stated by the witness, amounting to only $6 or $7 a car. We give them cars that hold from 132 to 150 barrels, that is $7 and $3 are $10 a car.f A great big rate of freight for a haul of 50 miles, and the road is awful glad to get it, because it gives them a revenue of about $200,000 a year from the product they bring over it. Q. (By Mr. CLARKE.) What road is that? A. The New Jersey Central, friendly to us; I commend them. No discriminating rate; it is a rate that is open, fair and square to anybody else that wants to ship on it; they can *Black faced type Indicates matter omitted, in the course of editing, from the offlcial report. tMr. Archbold, in his testimony, gave the exact rates that were charged the United States Pipe T^ine Company l)y the Central Railroad of New Jersey on the crude and refined nil transported over that lino from thoir terminal point at Hampton Juncticn, N. J., to Bayonne, N. J., a distance of 52>4 miles, the witness stating that he considered it a lower freight rate than the Standard Oil Company evor had for an equal distance at any time in the history of Its business. (See Mr. Archbold's testimony, page 410 or 619.) LEWIS EMERY, JR. 375 come in and get the same price; but we pay from that point seven cents, if we choose to, or six cents, and we beat the Standard Oil Company in the marliets wherevei' we have fair competition and fair railroad rates. Now, we have contested this suit in the courts of New Jersey for the last four years and a decision was rendered. *There is a law there that 1 will not judge. The judgment was handed down by the Chancellor's Court that the rights of the United States Pipe Line under the Delaware, Lackawanna & Western were not valid ; we have notice now that we must take these pipes out from under that road, and under that decision the railroads of this country are a barrier to any modern means of transportation. Q. What was the ground of the decision? A. On the ground that they had a title — not only the easement — but they had a title or a fee in the land, although they didn't buy the fee. There were two decisions by the Vice- Chancellors; one by Vice-Chancellor Emerick, and the other — I don't recol- lect his name — but they reversed us and our line has got to come out from under that road. It is doing no harm laying in the midst of a large open cut and the old farmer reserved the right to have egress and ingress to his fields on both sides, but nevertheless the court is against us. I think I can produce the letter giving notice that we must remove those pipes imme- diately. Q. In what State is that? A. New Jersey; in the State of New Jersey, about nine miles from the State of Pennsylvania. Q. (By Vice-Chairman PHILLIPS.) The decision in the lower court, as I understand, was in your favor. A. Sustaining that we had title. Q. (By Vice-Chairman PHILLIPS.) Was reversed in the Supreme Court? A. Reversed in the Chancellor's Court. There is another court which is higher than that — called the Superior Court. They have the old English practice. Chancellors and Vice-Chancellors. Q. (By Vice-Chairman PHILLIPS.) Has your company appealed the case? A. Oh, we have gone through all of it. Now, then, that is the story of attempting to stop competition in the business. Note- — At this point the commission took a recess until 2 o'clock in the afternoon. The commission was called to order by Vice-Chairman Phillips at 2:20 o'clock. Vice-Chairman PHILLIPS. The commission will please be in order. Senator Emery will proceed with his testimony in his own way. Mr. EMERY. Mr. Chairman and gentlemen, I desire to take up, in resuming where I left off, the subject of competition. The United States Pipe Line Company was organized with a capital originally of $600,000; at the present time its capitalization is $2,000,000, I believe. We formed in that company a voting trust; I may say that the United States Pipe Line Company was organized under the General Corporation Act of the State of Pennsylvania. We formed a voting trust for the purpose of keeping the stock out of the hands of anyone that was disposed to attempt to control our operations. There was at the time this trust was formed. I think, about $800,000 of the stock subscribed for, and every dollar of it was in the trust. However, regardless of the provisions of this trust, the Standard Oil Com- pany purchased at an advanced price over the par value, which was 100 cents, $386,000 worth of the stock. Before they purchased it, however, the stock taken had been increased by new subscriptions to about $1,200,000. but their expectation and attempt was to get control of the stock. *The parties that sold this stock to the Standard Trust — now remember this was not the Standard Oil Company — you see I always used the word "trust" in addition to the Standard Oil Company, because there are so many Standard Oil Companies throughout the United States, and it should be the Standard Trust in every instance. Owing to the loyalty and determination of the balance of the stockholders, they were unable to purchase any more stock; and that trust is in existence to-day, a voting trust. When the Standard Oil Company presented themselves at one of the yearly meetings of the United States Pipe Line Company they attempted to vote that stock. We refused. *Black faced type Indicates matter omitted, In the course of editing, fidm the official report. 376 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. by resolution, by unanimous resolution of the stockholders, to allow the representative of the Standard Oil Company or the Standard Trust to vote that stock and he was ejected from the room, out of which grew the suit of the National Transit Company and J. C. McDowell vs. the United States Pipe Line Company. Q. (By Vice-Chairman PHILLIPS.) In what court? A. That was brought in the McKean County Court and was appealed to the State Su- preme Court and was never heard by the Supreme Court; the case was not even called up; but our attorneys were notified that the appeal was illegally taken, because an officer of the company had not made affidavit to the bill of appeal, although a stockholder had made the affidavit. I was absent from home. On that ground the Supreme Court of the State of Pennsylvania threw it out, although we gave to the court several decisions wherein other courts had held that the affidavit being made by a stockholder of a company was quite sufficient for an appeal to the Supreme Court. This is the case. The Standard Oil Company representative has been admitted to the meetings and has listened to its deliberations and has been allowed to vote upon such questions as he chose to vote, ever since they have held this stock, and they still vote it. Q. (By Vice-Chairman PHILLIPS.) Was this gentleman elected as a director or not? A. He was elected, under the circumstances. He having the stock, we recognized them, and he has been elected a director of the company and voted every time we have had a meeting, and things have gone along in his presence, he knowing just exactly what we were going to do, and participating in everything appertaining to the general business of the company. Q. (By Mr. A. L. HARRIS.) Was he prohibited by the law of the State of Pennsylvania, or by a by-law of your company? The WITNESS. From owning? Mr. A. L. HARRIS. From voting. Mr. CLARKE. From voting the majority. The WITNESS. He was; yes, sir. Well, now, I can answer that ques- tion later; I cannot just at the moment, because I will have to read the pleas of our bill. It is here, but what it is I don't know. It was on some ground, but we thought it to be a legal ground and we still think so. But when we were cut off by the Supreme Court's decision that the affidavit was improp- erly made, of course our case fell, and we couldn't renew it; that is all there was about it. Our attorneys simply denominated it a technical decision, not one of good law. That is what our attorneys said; of course I don't know anything about that. The stock that these people purchased in the United States Pipe Line, belonged, some of it, to three of the largest owners in the association of refiners. I want this commission to understand right here, Mr. Chairman and gentlemen, that all of the refineries belonging to the inde- pendents have no connection with any of the stock companies. The refiner- ies are owned by individual operators and have nothing to do with the United States Pipe Line or the Pure Oil Company or the Producers' Oil Com- pany, Limited, or any other transportation or marketing company. They market their oils independently; they are competitors with one another. Now, bear that in mind. I go into the market and I meet my brother refiner and I put a price upon my goods and he goes to that same customer and he puts a price upon his goods; no combination there; free, open competi- tion among all these refiners that are in the field. There are to-day some- thing like 15 of them who furnish the oil to the said transportation companies, and we sell oil. not only to the Pure Oil Company, doing business in Europe, but we sell oil to Italy, France, England and every other country, independ- ently of the Pure Oil Company. So. do not confound these refiners with what we are going to finally deal with — the trusts; because they have no connection whatever with that. They are independent, and are competing to-day in the markets of the world. Q. (By Mr. FARQUHAR.) Do these refiners ever sell to the Standard Oil Company? A. Oh, yes, sir; I sell the Standard Oil Company oils myself sometimes, and I make them pay all I can, too. LEWIS EMERY, JR. 377 *Q. Oh, you are right. A. Like everybody else. These three gentlemen that I referred to as owning three of the largest refineries connected with this refiners' association, if you choose to call them such — they are not an association — I would say three of the largest, among that number of 15. not only sold their stock, but they sold their refineries as well, for which they received a large sum of money, and the ownership of these refineries has been in the Standard Oil Company, and within the last eight months one refinery, belonging to Mr. Ramage, was destroyed and dismantled. The next to be partially dismantled was that belonging to the Hon. John Fertig, of Titusville, known as the National Refining Company. Mr. Ramage's refinery was known as the Mutual. It doesn't make any difference. The next was the Continental Refining Company. t All of these refineries were first class, and built, especially the last two, in modern times, and were very improved. So was Mr. Ramage's; in fact, he made more by-products in his than any other. All of these refineries have been demolished and taken from the ground where they originally stood. That has all been since 1895. Is there anything further in that connection? Q. (By Vice-Chairman PHILLIPS.) Was any effort made to buy other refineries, or all the refineries connected with your lines or not? A. Oh. yes, sir; these people seemed to constitute themselves a committee and they labored with me and labored with others; said it was the best thing to sell out and quit. The balance of us didn't think so, and we are on earth yet. I would have been glad for Mr. Ratchford to have heard this recitation and also the other gentleman who was so very anxious to hear about this this morning. Q. (By Vice-Chairman PHILLIPS.) Now, will you state something in regard to the Producers' Oil Company? A. I desire to also say it has been referred to in evidence that the Standard Oil Company bought a majority of the stock of the Producers' Oil Company, Limited. Its method of operation in purchasing that stock you have before you already and there is no use of my going into it; but through the same method they purchased a majority of the stock of this Pure Oil Company, Limited, and they have not been per- mitted by the courts to vote it, and it has gotten back into the hands of the orieinal owners after the privilege of voting it was denied them by an order of the court. Q. (By Vice-Chairman PHILLIPS.) Now, then, will you make some statement in regard to the Pure Oil Company, which was organized there- after? A. The Pure Oil Company was organized under the laws of New Jersey; I don't know what you would denominate the law, but I think it was under the general incorporation act. Its capital at present, I believe, is $2,000,000, with $377,000 paid in. We are very much afraid that when our United States Pipe Line Trust expires, which will be within the next 15 months, there will be some attempt to get possession of some more of that stock, and we have felt the necessity of combining, or putting our stock into the hands of the Pure Oil Company and to form a voting trust, solely for the purpose of protection. I desire to say that the paper to which Major Farquhar referred last week, has been amended. First, it is not a perma- nent voting trust. Second, three-fifths of the stock voted at any time can dissolve the trust, or can overrule the power of the voting trust — three- fifths of the stock. t *The power is entirely in the hands of the stockholders; *Black faced type indicates matter omitted, in the couree of editing, from the official report. tThe Continental was not sold nor dismantled and is still in operation by its original owners. tThe original voting trust of the Pure Oil Company provided that four-fifths of the stockholders could terminate the trust. Tn both agreements it is provided that the stock of the company, which had a par value of $5 per share, should be re- deemed at $110 per share before the voting trust could be dissolved. The voting trust, both as originally formed and as later amended, provides: "Third— This agreement may be changed at any time only with the consent, in writing, of the Pure Oil Company, three-fifths of the persons at the time acting as trustees hereunder, and of the equitable owners of three-fifths of the shares held in trust hereunder." It will be seen that three-fifths of the shareholders "can overrule the power of the voting trust" only when three-fifths of the trustees agree that they themselves shall be overruled. Mr. Emery says, "The power is entirely in the hands of the stockholders." As will be seen, if the stockholders should unanimously vote for any change of the trust agreement they could do nothing without the support of three- fifths of the trustees, and they could exercise control in no other way. 37S REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *and understand that only one-half of this stock is put in the trust with the exception of 10 shares over and above that; but three-fifths of the whole at any time can control the policy of the company, under the terms of the charter, which terminates within 46 years. Therefore it is not perpetual. Q. (By Mr. FARQUHAR.) Is that one of the new amendments? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Was the company originally formed for over 50 years? Was it chartered for over 50 years originally? A. No, sir; it was chartered for 50 years. Q. (By Mr. FARQUHAR.) The old form was for four-fifths? A. Yes, sir. Q. It required four-fifths? A. Yes, sir. Q. Section 4 of this agreement is: "This agreement may be cancelled and the trust hereby created dissolved only by the winding up of the Pure Oil Company, or by the consent in writing duly executed, of the equitable owners of four-fifths of the shares held in trust hereunder " A. (Inter- rupting.) Yes, sir. Q. (Resuming.) " and of four-fifths of all the other shares of the company, after providing in full for the redemption or purchase at $110 per share in cash of all the preferred and common shares of the company at the time outstanding." A. Yes, sir. Q. Does that remain intact, with the exception of the three-fifths? A. Yes, sir. Q. With the exception of three-fifths, then, that paragraph remains intact in the new corporation? A. No, sir; it is amended; it has been cut to three-fifths. Q. Is this redemption feature in it, that the trust cannot be dissolved until "after providing in full for the redemption or purchase at $110 per share, in cash, of all the preferred and common shares of the company at the time outstanding?" A. That provision is wiped out by the fact that three-fifths can control and change the by-laws and change anything apper- taining to the organization or management of the company. Q. Is this stock redemption feature still retained? A. I don't know, sir; I cannot answer that question. Q. Now, it has been represented here. Senator, that this Pure Oil Com- pany is not a trust. I called the attention of another witness to the fact that it is specifically mentioned as a trust here in the articles of agreement, and also in the incorporation; so that you are not afraid to call it a trust? A. No, I should call it a voting trust. Q. Well, a voting trust; let us get down to it now. A. I will submit that question to the decision or to the definition of a trust, if you please. The definition of a trust, given by the Commercial Year Book of the New York Journal of Commerce, is: "As popularly used, the word 'trust' is now applied to any consolidation, combine, pool, or agree- ment of two or more naturally competing concerns that establish a partial or complete monopoly in certain territory, with powers to fix prices or rates in any industry; viewed from the standpoint of the consumer, any formal agreement and an iron-clad combine look alike, if the one has the same effect as the other upon prices." Now, there is nothing in the world about the Pure Oil Company that leads up to that definition. There are several other definitions that I can refer to. Let me suggest that there are five full definitions given by Mr. Cook, an authority, one of the greatest lawyers in the country; and also by Mr. Von Halle. There are five forms of trusts. Q. (By Vice-chairman PHILLIPS.) I would like the Senator to read the definition under the Sherman act, if he has it. A. It needs no argument to show that the Pure Oil Company is not a trust; it lacks every element of a trust. A trust is defined by the anti-trust law, known as the Sherman act of 1890, as follows: "All trusts and combinations in restraint of trade are unlawful." ♦Black faced typ« indicates matter omitted, In the course of editing, from the official renort. LEWIS EMERY, JR. 379 Another accepted definition is, that corporations or combinations of corporations with vast capital, made for the purpose of securing and main- taining a monopoly in any branch of industry, is a trust. The odious feature is the aim and purpose to secure a monopoly. The Pure Oil Company was organized, not to secure a monopoly, but to prevent a monopoly in the oil industry. The Pure Oil Company is not in restraint of trade, but in aid of trade, and to maintain competition. It expires by the expiration of its charter. 46 years from the 6th day of next November. It is, therefore, not permanent nor perpetual, as alleged. It would be silly to hold that a cor- poration with a paid-up capital of only $377,000, opposed by a trust in the same industry with a par value over 200 times and a market value over 1,000 times as great, could be a monopoly or restrain trade; and unless it is a monopoly or is restraining trade, it cannot be a trust. One-half of its stock being held by trustees to vote the same and to prevent the intrusion of a great monopoly to destroy it, does not change the character of the corporation, or make it a trust. If the Pure Oil Company should develop monopolistic tendencies, the present holders would be glad to have it destroyed. *And I would agree as quickly as possible to let it stop In case of any change or any attempt to control any trade. If any anti- trust legislation at any time, brings within its restrictive or destructive provisions the Pure Oil Company, the stockholders of that company will welcome its destruction. Q. Just there. Senator Emery, you are a large holder in most all of these companies, and you are president of the United States Pipe Line Company. A. Yes, sir. Q. And also a large holder in the Pure Oil Company. Did you ever authorize, or do you know of any effort ever having been made to make a combine of these various companies with the Standard Oil Company? A. No, sir; never. Mr. FARQUHAR. Before we leave the matter of the Pure Oil Company, will the Senator pardon me? The WITNESS. Will you allow me to answer this question first? Q. (By Mr. FARQUHAR.) Can you furnish the commission the original form of incorporation of the Pure Oil Company, and it will be printed as a part of the minutes of this commission. Can you furnish with your testi- mony a copy of the amended form of incorporation? A. Oh, yes, sir; cer- tanly. Q. That is all I care for. A. I will be very glad, indeed. Now, under- stand, Mr. Farquhar, these recommendations concerning the changing of the trust. Understand, we haven't got the voting trust yet. We perhaps are crossing the bridge before we get to it; it has not Ibeen accomplished, so far as the combination of the stock of these companies is concerned. All there is to-day that is in the shape of a trust, out of about three or four million dollars, is $377,000. The other is in contemplation, because we fear that when this present trust of ours, the United States Pipe Line Company, runs out, we shall be in danger, and we are going to put ourselves under cover; that is all. Q. You say you have incorporated this Pure Oil Company in the State of New Jersey? A. Yes, sir. Q. You have so much capital paid already into your company? A. Three himdred and seventy-seven thousand dollars. Q. You are still under the operation, possibly, of a merger, to bring in other companies or other stock? A. No, it is not a merger: we are simply talking about doing this, and we expect to expand it, call it what you choose, a merger or whatever you choose. It is not a question that has been abso- lutely accomplished, but we are going to do it. These forms have not been printed, but we are going to try to get this stock in for self protection; that is what we are now putting it into a voting trust for; it is not accomplished by any means. *Vice-Chairman PHILLIPS. I would state to Mr. Farquhar that ! will see that when they are issued, one of the amended forms will be presented to this commission. ♦Black faced type indicates matter omitted, in the course of editing, frum the official report. 380 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Mr. FARQUHAR. So that we will have a copy of both; it will be right to get the amended features. Vice-Chairman PHILLIPS. Certainly; certainly; we want it for the information of this commission. Mr. FARQUHAR. Certainly; that is all I care for. Q. (By Vice-Chairman PHILLIPS.) Now, Senator Emery, will you answer the other question in regard to any effort amongst all of these other companies to make a combine with the Standard Oil Trust? A. Mr. Chair- man and gentlemen of the commission, I was president and general manager of the United States Pipe Line Company from its inception up to a little over a year ago and probably I would have been still in the management of it had my health not failed. I was always present at the general meet- ings, and had, under our by-laws, the appointment of all committees. Dur- ing our dire trouble that I have recited to you this forenoon relative to the construction of this line, I appointed a committee, as chairman of the board of directors to go to New York and see if some arrangement could not be made with the Standard Oil Company by which they would permit us to go under the railroads of the country. We didn't go to the railroads; the rail- roads had nothing to say about it; but we went to the Standard Oil Com- pany for the purpose, not of selling one single share or dollar's worth of our property; that never entered into the resolution. The resolution, or motion, was that the committee go to New York for the purpose of seeing if the Standard Oil Company would not let up and allow us to go through to the coast. I appointed that committee under that resolution myself, and Mr. Phillips, Mr. Lee, Mr. Murphy, Mr. King, Mr. Jennings, of Pittsburg, and some other gentlemen were appointed to go there for that purpose. There was no proposition made — or at least if there was they had no authority to make it under the resolution — and I don't think there was any proposition made to sell any portion of this property, or to make any settlement with the Standard Oil Company on any such basis as selling out any of the com- pany's property. t *And any charge that is made against Mr. Phillips is absolutely and unqualifiedly wrong. And just here, Mr. Chairman and gen- tlemen of this commission, I feel it my duty, and I beg you will give me the indulgence to correct the testimony that has been given or the general im- pression that has been given to the public by the Washington Post and the Pittsburg Post relative to Mr. Phillips' connection with that matter. I would defend either of you gentlemen were I acquainted with you in your career of life, just as quickly as I would defend Mr. Phillips at this moment; and I believe it is due to Mr. Phillips and due to this commission that there should be no besmirching of the character of any member of this commis- sion. The Washington Post of September 11 says: "The Commission and the Trusts. "Ex-Congressman Phillips, acting chairman of the Industrial Commis- sion, which is now engaged in the investigation of trusts, combinations, etc., made a statement last Saturday which we find extremely interesting. Sig- nificance is added through the circumstances that Mr. Phillips is the head of a tribunal before which the trusts occupy the attitude of a defendant. Let us quote, however, from the Post's report of the incident, as it appeared in our edition of Sunday: "'Mr. Phillips admitted that some four or five years ago he had called upon the Standard Company authorities with the view of making a combina- tion, but said that he had not done so since. The object then was to secure a cessation of hostilities in the piping and selling of oil and to secure the right to deliver oil in New York. The Standard people had refused to make any concessions, and had proposed in lieu to buy the independent pipe line. There never had been a time when he would have been willing personally ♦Black factd type indicates matter OniittPd, in tlie couisc of editing, from tiie offlcial report. tin the official report the following, which is not in the stenographic report,. appears: "I am sure they did not make any such proposition " LEWIS EMERY, JR. 381 *to go into a combination with them, and the insinuation of Mr, Archbold that his people lacked faith in the independent managers was, he said, a gratuitous insult to a large body of business men of high character.' "The 'gratuitous Insult' in question consisted, we fancy in a suggestion by Mr. Archbold to the effect that the average complainant against the trusts is a person who once endeavored but failed to get into one of them. No doubt Mr. Phillips, who is not only acting chairman of the industrial Commission, but an official and a large stockholder in the Pure Oil Com- pany, regarded this as a thrust at him, and at the business concern in which he was involved. No doubt Mr. Phillips was perfectly correct in his assump- tion. Most people, we think, will agree that an outside corporation which has tried to get into a trust is but poorly qualified as a witness against the trusts. To the unprejudiced bystander its antagonism seems to be inspired more by vengeance than morality. Mr. Phillips frankly admits that, on behalf of the Pure Oil Company, he once approached the Standard Oil Com- pany — which is notoriously one of the worst of octopuses — 'with a view to making a combination.' He has 'not done so since,' he says — which we can well believe — but is now, on the contrary, one of the severest critics of the trusts in general. He recognized his mistake — after the Standard Com- pany's refusal to negotiate — and is no doubt sincere at this time in his hos- tility to trusts. But we must confess that the case would be stronger for the Industrial Commission, and the attitude of that tribunal much more impressive, if its chairman were not a disappointed aspirant to 'combina- tion' with the Standard Oil Company." Vice-Chairman PHILLIPS. Now, I am satisfied. Senator Emery, I did not know that you would read that paper and I wanted to ask you a legiti- mate question. You heard my testimony on this question? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) And did I, in that, state that I had ever endeavored to combine with the Standard Oil Company? A. No, sir, Q. rSy Vice-chairman PHILLIPS.) But did I, or did I not, absolutely say that I rever have? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) On that occasion or on any other occasion? A. No occasion. Q. (By Vice-Chairman PHILLIPS.) On any occasion attempted a com- bine? A. No, sir. Mr. RATCHFORD. Is that an editorial from the Washington Post? A. Yes, sir. Q. Let me ask you this: Is it your intention that that shall become a part of your testimony? A. Oh, no; I just called this up because the ques- tion of trusts was here, and I felt that I should defend the gentleman whom 1 have known for his high integrity for more than 20 years. Q. Without wishing to have it in your testimony? A, Yes, sir. Q. (By Vice-chairman PHILLIPS.) I hope, without objection, that the editorial read from the Washington Post will be stricken from the evidence. You have no objection to doing that. Senator? A. No, sir. Mr. FARQUHAR. And the remarks that precede it and follow it will have to go with the editorial, so that Senator Emery is simply addressing the commission now in a personal way, and his remarks will not be made a part of the record of testimony of this commission. Is that understood? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) I will just state this, Mr. Farquhar: 1 did not know that he was going to read the paper, and I will ask him the question, if he heard my testimony, whether I had ever made any such statement as alleged; that is, I will put it in this form: Did I ever, in my testimony, state that I sought a combination with the Standard Oil Company? That was the question; I think that was the ques- tion, and it was legitimate. A. No, sir; not in any testimony, nor ever in your life since I have been by your side; not since 1872 did you ever venture *Black faced type indicates matter omiltfd, in the course of editing, from the cfflcial report. 382 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *to say that you had sought any connection with the Standard Oil Company or any other combination. I have known you, Mr. Phillips, for 50 years, and I know you to be a highly upright, conscientious. Christian man, and when the editor of the Post says that, he does not know the man. Vice-Chairman PHILLIPS. Please do not refer to the editor of the Post, A. I want to pay the gentleman a compliment. If the editor of the Post, a gentleman I do not know, had had the facts of this case fully before him, his mind would have been very materially changed relative to his assertions in the editorials. I have the highest regard for editors; I have the highest regard for newspaper men in every sense of the word, but sometimes they are apt to say things that they do not fully understand, with no intention of hurting or abusing the character of any gentleman; and I do certainly be- lieve that the editor of the Washington Post is a man who, if he understood exactly the situation in this question, would soon actually publish a retrac- tion of what he has said about Mr. Phillips. Q. (By Vice-Chairman PHILLIPS.) Have you anything further to say in regard to combination. Does that cover the ground in regard to combina- tion? A. Yes, sir; it covers the ground on any question that has been asked me. Q. (By Vice-Chairman PHILLIPS.) Well, you haven't referred — proba- bly you have referred to it before. Senator Emery, but I do not know that you have given a full statement. I believe you did say in regard to the oppo- sition these companies met in Europe. If that ground has been fully cov- ered in the testimony that has been given, we will not desire you to repeat it. A. I think I detailed all of that, there: the conduct of the business in Europe, how it was carried on, and I hope the other will not go into the record. Q. (By Vice-Chairman PHILLIPS.) That will be stricken out, without objection. Now. Senator, have you anything further to state in regard to this matter? I know there has been some question about the Oil City Der- rick being an organ of the producers, or an organ of the Standard Oil Com- pany. Do you know the relation that paper sustains to the oil industry? Mr. FARQUHAR. Now. Mr. Chairman, before that question is an- swered, I do not see what it has to do with this commission. The Oil City Derrick is not here; the Oil City Derrick is not a trust. Objection has been made to that class of testimony heretofore, and it stood good with the com- mission: and I maintain it would be improper to drag it in; we will have to stay vA'here we were before. Vice-Chairman PHILLIPS. In regard to that I will state this: The reason I raised this question was that I wanted Mr. Boyle's position defined as a witness when he came here — whether he came here as a representative of the Standard Oil Company or not. We understand that Mr. Boyle is here in defense of the trust question; the same as Mr. Rogers or Mr. Archbold. When we asked him the question in regard to the Oil City Derrick, he stated it was an organ of the producers. The question is whether this puts him in his proper position as a witness here; whether he is pro or con on these questions, and that was the only reason I had, the only object, for asking Mr. Boyle that question — to define his position before this commis- sion. Mr. FARQUHAR. In our orderly way of doing business, we have a committee on procedure, which usually investigates the witnesses as to tlieir knowledge, and that committee has passed upon this question, and their report has come before the commission, and Mr. Boyle was invited here to give testimony. The commission don't take these things into con- sideration, unless it is a question of a doubtful matter in the committee. Vice-Chairman PHILLIPS. Well, we will withdraw the question and the stenographer will not make this a part of the record, if there is objec- tion, unless by request of the commission. Q. (By Vico-Chairnian PTTITJJPS ) Therp was a quostion came up here if I recollect it, in Mr. Archbold's testimony, in resjarrl to onnosition, some years ago, to laying a pipe line through Pennsylvania, in which it was ''Blark faced type indicates matter Dmittcd, in the course of editing, from the GfTicial report. LEWIS EMERY, JR. 383 slated by Senator Lee that certain dodgers were circulated in the eastern part, if I recollect, of the State. That was confirmed by Senator Lee and denied by Mr. Archbold. Can you state the purpose of these dodgers, or have you any knowledge of them? A. In 1868, in the Legislature of Penn- sylvania was introduced a bill for the incorporation of a free pipe line law, and as I told you yesterday we secured it only through the permission of Mr. Thomas A. Scott, for eight counties in the northwestern part of Penn- sylvania, and the Wallace act of 1874 repealed that law. We immediately, upon the passage of that repeal act, attempted to get a law passed giving us the right of eminent domain for the construction of pipe lines. That was introduced regularly from 1874 to 1883 — every session. During my career in that body, both in the House and Senate, for 10 years, it was my duty to introduce this bill, and endeavor to pass it. In 1883 the bill was pending. The Standard Oil Company, by its agents, had gone all through the southern portion of Pennsylvania, which is a very beautiful farming country, as you know, and they had said to the farmers that if pipe lines were laid through that country there would be a general destruction of their orchards and the springs would be spoiled, that there would be general havoc with their property, even that the pipes would blow up and probably kill somebody. At the same time they had thousands and thousands and thousands of miles of pipe lines through the State of Pennsylvania. Ohio and West Virginia. In order that we might counteract the impression upon the people, Senator Lee and myself, night after night and week after week, visited the school houses and the court houses and every place where we could get a gathering of peo- ple to listen to our explanation of the necessity of the passage of this law. Dodgers were issued in every single case, and pushed in my arms wherever I was. to get attention to them; and as I entered the court house in Lancas- ter, Pa., there was pushed under my arm a paper which read: "Look out for false prophets." Beneath it read: "These people are endeavoring to pass a law that will destroy the springs on your farm; it will blow up your houses; it will create havoc in the field when a pipe bursts, killing all the grass. The most dangerous of all laws." We had placed our circulars on all of the seats of the court house in Lancaster, Pa. And there some miscreant, whoever he might be. undoubt- edly he was paid 25 cents or so for it, went in and took all of our circulars set ting forth our object, or the object that we had in view, and in their stead he dropped into those places these yellow papers on which was written: "Look out for false prophets." These dodgers were printed — I don't care what Mr. Archbold says. He was not on the ground; he made no speeches in their behalf in the oil country, and on the contrary he cannot say that these dodgers were not printed; if he does say it, he certainly speaks of that of which he does not know anything. I was there through the whole of it and we went on with the operation, week in and week out, and for months and months, and we were from 1874 to 1883 getting that law. Q. (By Vice-Chairman PHILLIPS.) Now. there was one other question of testimony that was brought up by Mr. Archbold, about that $10,000,000 of rebates that was said to have been paid in a given time. Mr. Archbold, I believe, I think it was in that case, denominated this as a lie, or a lusty lie, in the report. I think it was in connection with this question. A. Well, I don't mean to lie; I don't mean to do anything but tell the truth, as I understand it, and I have said nothing before this commission *as evidence that I cannot prove, and my statements made in 1888 are just as sacred to me as they were when I made them. If I have told any lie I shall beg the pardon of the great United States of America, and of all my friends therein, and endeavor to rectify any wrong that I have done, or anything that I have said. My authority upon that, which I will produce, is unquestioned, and I defy anybody to prove that my statements or my assertions at that time were false. I desire you to turn to page 101 in the book that I have given you. I do not know that I need take up your time by reading from that evidence. It is there, on pages 101. 102 and 103. and you can read it just as well as I can; but we will go over to 104, where there is a recapitulation of the whole business. *Black lacel type indicates matter omitted, In the course of editing, from the official repTft. 384 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Now, Mr. President and gentlemen, this is ancient history again, but now that you have called it up, you must bear with my explanation. Vice-chairman PHILLIPS. Please state it as briefly as you can. 1 want you to put yourself right before the commission. You have the right to answer a question of that kind. The WITNESS. If you ask me the question before this committee I will answer it in my own way. Vice-Chairman PHILLIPS. Certainly; the chair has no objections. The WITNESS. *That Is all right. Now, gentlemen. I will hand you a book called the Commonwealth of Pennsylvania vs. the Pennsylvania Rail- road Company. This testimony can be had, I think, in the Library of Con- gress; also in the library at Harrisbiirg and in many other places. It is the testimony that was brought out by the Attorney-General of the State of Pennsylvania, or rather of the Commonwealth of Pennsylvania. I had the honor of being one of a committee of three that visited Governor John F. Hartranft to lay before him our grievances, and we invoked the aid of the Commonwealth of Pennsylvania. That great and good man gave it to us; he required the Pennsylvania Railroad to answer the charges made against them as preferred under the South Improvement Company act, and their acts from the commencement of the oil business or the commencement of the history of the South Improvement Company and the Standard Oil Com- pany, from 1872 to the final hearing of the suit in 1879. This is the testi- mony of Mr. Cassatt, the first vice-president of the Pennsylvania Railroad, making a clean breast of everything appertaining to the contract, and the combinations with the Standard Oil Company are made clear in this book. From his admissions and from the admissions of other officers connected ■with the road, I have computed by actual figures the shipments of oil during 1878, and the total shipments of the first quarter of 1879, making a grand total of 18,556,277 barrels of oil shipped; and from this testimony I have deduced the fact that 55 cents per barrel was paid upon the transportation of that petroleum. I charged it all to the Standard Oil Company, or at least I charged that the rebates were paid on all that oil; not only on what was shipped to the coast, as I showed you yesterday, but on the oil that went to the west also. They had to have their rebate upon that, as I clearly showed you in the contract, and this action was carrying out the provisions of the old agreement under the South Improvement Company contract, although that had been repealed. I say right here that the drawbacks on that oil are even greater than that which I made and published in this report of it in my evi- dence of 1888. Q. (By Mr. KENNEDY.) How much space does Mr. Cassatt's admis- sion occupy in that book — the admission on which you made this computa- tion? A. Some 50 or 60 pages; it starts on page 660 (very fine print) and goes to page 737. That is the size of it, but I refer you to the book. Look at my evidence. I refer you to the pages in this book, where you will find the confession of the rebates paid, the amount of them, and everything. Make your own calculations if you choose. The total amount of oil is 18,556,277 barrels. Now, I cannot say any more, gentlemen. Here is my authority, and I have given you the pages in my testimony. Let anybody else prove that I am mistaken. *lf I am, then I will make every redress possible. But $10,000,000 is nothing compared to the rebates paid; why, it is a mere bagatelle. Nothing further on that point. I was upon oath, and to the best of my belief and knowledge that is true. Q. (Mr. A. L. HARRIS.) I think Mr. Archbold stated that the testi- mony of Mr. Cassatt had been perverted and conclusions drawn not war- ranted by the testimony. Is that correct? *Mr. KENNEDY. That is correct; yes, sir. Mr. A. L. HARRIS. That is the reason, I suppose, that Mr. Kennedy asked you to refer to the exact proof as testimony in which these admis- sions were made. *RIack faced type Indicates matter omittci, in thf cour.sc of editing, from the official report. LEWIS EMERY, JR. 385 The WITNESS. I gave all the pages in this book where you can find it. In 1888 Mr. Gowen asked me from which page the calculations were made. They are all right there, and if you desire me to go over them I will do so. Mr. KENNEDY. I thought perhaps it was a paragraph which was the "basis on which you made the calculation. The WITNESS. No, the testimony was by Mr. Cassatt, Mr. Justis, Mr. Downing and the clerks of the Pennsylvania Railroad. That was the object, to find out what the discrimination was. It is in the whole book. Q. (By Mr. KENNEDY.) I think Mr. Archbold's testimony was to the ■effect that this $4,471,000 which the Pennsylvania Railroad Company paid, was all the money which you could figure from this statement and that all the rest was presumption. A. Oh, no; because, understand me, I only had the Pennsylvania Railroad. If he admits that they got four millions, then this will be swelled to twelve or fifteen million, because the New York Central and Erie participated. Don't let him confound you in that. Q. He says this is a presumption. A. No presumption at all; because it has been proved before the Hepburn committee just as plainly as this is proved. If he admits that $4,000,000 was paid by the Pennsylvania Railroad that is all more than I counted in that. This is computed on the total shipments that went from the oil regions, and I didn't say that the Pennsylvania Railroad alone paid it. I do make this statement that such rebates were so large on the amount of oil going to the coast, basing them proportionately on the New York Central, the Erie, the Pennsylvania and even the Baltimore & Ohio. That is the ground. Q. I do not know that he makes the admission in regard to Mr. Cas- satt's testimony. According to his statement I believe it was in regard to the Pennsylvania Railroad's participation in it and not in regard to the others. A. Yes, but in all of my evidence I have shown conclusively all these rebates by contract. *You did not permit me to go on this morning. I would have produced three contracts that were not cancelled up as late as 1879; *l would have shown all these things. It was a part of my argument. Vice-Chairman PHILLIPS. There is a question that I would like to ask the Senator. Q. (By Mr. KENNEDY.) One commissioner suggests, and it was in my mind, that you were permitted to give any testimony that you wanted to. You have not been prevented. A. I wanted to show you the contracts exist- ing between these roads on the very point that you are raising — that these contracts were in existence between all these three roads. Q. (By Vice-chairman PHILLIPS.) From which you deduced the $10,000,000? A. Why, the $10,000,000 was the total rebate paid by all these roads. Q. (By Vice-Chairman PHILLIPS.) And did these contracts appertain to this very question? A. Yes, sir. No, sir; I don't say they appertained to this, no, sir; these contracts show that the railroads were under contract to transport certain classes of oil for certain prices. That has all been, as I showed you this morning, from 1872 to 1879 or 1877, when I showed you 22 cents for the pipe lines from the well to the car and the 49 cents was to go for the transportation of oil from Cleveland and the common points in the oil country to New York; that has all been proved. *Q. (By Vice-Chairman PHILLIPS.) Well, then, you withdraw vour statement that you were prevented. You don't mean to say that this com- mission prevented you from going into that; you were given liberty to go through it in your own way. A. Oh, no, sir; it was a part of my argument. I would have produced them this morning — don't take me down that I am thin-skinned — and I don't think any man at this table is thin-skinned. I didn't mean anything of that kind. If they had been hounded around the country for 30 years in this business, as I have, their hides would have been callous. Please omit that part in the testimony. Q. (By Vice-Chairman PHILLIPS.) I will ask you a question that oc- curred to me through this telegram. It had slipped my memory, and I will •Black faced type Indicates matter omitted, in the course of editing, from the official report. 25 386 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. state that the question is this: IVlr. Boyle, in his testimony stated that the cost of drilling wells in the last 10 years was about $2,000. *Mr. Boyle, am. I correct? Mr. BOYLE. You are correct, Mr. Chairman. Q. (By Vice-Chairman PHILLIPS.) Mr. Emery is a large operator in all the fields, and we would like to have his opinion, or his estimate, of the cost of drilling wells during that time. *The commission will see that some importance is attached to this because it shows a very large amount of profit to the producers according to his estimate. A. Why, Mr. Chairman and gentlemen, of course I have drilled a great many wells, lunning into several thousand, and we always keep track of the expense in our office, the cost of each and every well. We have drilled wells in the lower country, which we call deep territory, and they have cost us $8,000 and $10,000 and some as high as $30,000 each to drill them. When it gets up to $30,000 of course it is accounted for by the fact that something would happen to your tools — that you dropped something in the well, or that your well would cave in and you are obliged to remove that, which is often the case. We have always figured that our lower country Avells cost us. on an average, $8,000. In the upper country we had figured that we could drill our wells for $2,500; we can't do it now. That was when we could get pipe cheap — for less than it is at the present time. The reason that the wells are so expensive in the lower country is that you have to put in three strings of casing, and some of your casing runs down into the earth 1,600 and 2,000 feet — solid, I mean. You can put into a single hole 1.50 tons of iron. I should say this: Without going into a close calculation of it and being a question that is sprung upon me here at this moment, that the average cost of a well in the oil country, under the present condition of things, is fully $4,000 ;t that is my judgment about it. Q. (By Mr. FARQUHAR.) On account of the high cost of iron at the present time? A. Oh, yes, sir; if you come down to that, it will cost a. good deal more. I will put that as the cost of the well even before iron advanced so largely; you can't do it for that now; you can't drill wells now profitably at the present prices of the oil, although it is twice as high as it has been on an average for the last five or ten years. Iron has gone up 100 per cent, and more. Q. (By Vice-Chairman PHILLIPS.) *There is one question that I would like to ask you, which is suggested by Mr. Boyle, (which he has a perfect right to do, and I am always glad to have a question suggested by any person in the room — the chair, especially, at least). What is your esti- mate of the average production per well, taking the wells as a whole, in the period named, from 1890? What would be the average production of a well in the period from 1890 forward? *You can go back further if you desire, supposing that the life of the well was for 10 years. A. That I haven't got — the amount of production. If you want me to compute that I would be glad to answer the question, but I cannot do it off-hand. It is a mathe- matical problem. Q. (By Mr. CLARKE.) Mr. Chairman. I would like to inquire what the present status of the United States Pipe Line is in New Jersey? Are you carrying oil there? A. Yes, sir. Q. And carrying it a part of the way by the railroad that you use there?" A. Yes, sir. Q. Is that the case of the right-of-way under a railroad which is in litigation? A. No, sir; it has been settled by the Chancellors' Court. Q. Settled in your favor? A. No, sir; we have to take up our pipes. We have got to quit; we have got to quit and go to Philadelphia. The right of eminent domain in the State of Pennsylvania gives us the right to go to the seaboard at Philadelphia. We have .got to throw away all of our ex- pense, which is upwards of $150,000, and turn around and go to Philadelphia with our line. *Black faced type Indicates matter omitted, in the course of editing, from ttie official report. tin tlic official report tfie word "nearly" instead of "fully" is used. LEWIS EMERY, JR. 387 Q. And make Philadelphia your seaport, so as to keep within the State of Pennsylvania? A. Yes, sir; we have got to do that. *Q. And what remedy would you suggest for that State of affairs? Vice-chairman PHILLIPS. Could you, if you had had the right of emi- nent domain, have gone through New York or New Jersey? Mr. CLARKE. Let me see if that is his view. The WITNESS. Let me ask you to ask that question again, Mr. Clarke, Q. (By Mr. CLARKE.) You say you could not cross certain railroads in the State of New Jersey and could not get to the seaboard there? A. No, sir. Q. With your pipe line? A. No, sir. Q. What remedy would you suggest for that state of affairs? A. Well, I would suggest that New Jersey pass a law to let us go; that is what I would suggest, but I want to say to you that I went to Now Jersey. *Now, I didn't want to call this thing out, but since you have I am going to make my criticisms. I went to New Jersey, or went — I don't know that I have any right to refer to any of the officials of the United States government, but I suppose I have. They are public officers and I have a perfect right, if I choose, I suppose. I don't know how the committee would view that. Vice-Chairman PHILLIPS. Does any gentleman of the committee ob- ject? The WITNESS. I am in the habit of calling black, black, and white, white; but there may be a time when I should stop. Mr. CLARKE. Exercise your own judgment as to what you say about individuals; but I would like your idea of a remedy for this. The WITNESS. In order to answer that question, in order to have you understand it, I would have to refer to some individuals that I don't care to. They stand very high in office; one of them is the next highest officer in the United States, and the next is the third officer of the United States. Q. Let me ask you this simple question: Do you think the passage of a free pipe line bill by the Legislature of New Jersey would give you the light you have so long sought? A. Oh, yes, sir; the free pipe bill, certainly. Of course it is only a question then of getting through by paying damages; by paying the same as the railroad does. That is what we couldn't get. I argued the question long and loud in the Senate of the New Jersey Legisla- turn, and my experience there in the Legislature was one that the public ought to know; but it is so disgraceful that I am ashamed to state it. By the way, I didn't answer a question that somebody put to me. *Q. (By Mr. FARQUHAR.) Have you finished now? A. A question was asked me here by somebody; I started to refer to this and you got me off the track. Q. (By Mr. KENNEDY.) I asked you about the testimony of Mr. Cas- satt. A. Yes, sir, exactly; and in relation to that the outcome under it of the Campbell contract. Mr. Farquhar has been desirous of getting some expression about this. The contract is in my hand right here now, and everything appertaining to it, everything, right here; but I want to say to this commission that the outcome of the suit brought by the Commonwealth of Pennsylvania against the Pennsylvania Railroad was this — and I think you ought to know it — an indictment No. 25, April session, 1879. I will lead the indictment. The indictment is as follows: (Reading.)t ♦Black faced type indicates matter omitted, in the course of editing, from the official report. tThis indictment and bill of particulars was not published in Mr. Emery's testi- mony in the official report. 388 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. INDICTMENT. No. 25, April Session, 1879. Commonwealth of Pennsylvania | In the Court of Quarter Sessions of the vs. r Peace for the County of Clarion. John D. Rockefeller et al. ) Clarion County— ss. The grand inquest of the Commonwealth of Pennsylvania inquiring in and for the County of Clarion, upon their respective oaths and affirmations, do present: That heretofore and before, and at the time of the committing of the offense hereinafter next mentioned, the production and selling of crude petroleum, at the County of Clarion aforesaid, was and is a large and important occupation and business, where- from and whereby many of the citizens of the said county derived and procured great profit and increase; and in which the citizens of the Commonwealth of Penn- sylvania had invested large amounts of capital, and large numbers of laborers with their families were dependent thereon for their employment and maintenance, and derived therefrom their living and support; and the said business was, and is, an important branch of the public trade; that John D. Rockefeller, late of said county, yeoman; William Rockefeller, late of said county, yeoman; Jabez A. Bostwick, late of said county, yeoman; Daniel O'Day, late of said county, yeoman; William G. Warden, late of said county, yeoman; Charles Lockhart, late of said county, yeoman; Henry M. Flagler, late of said county, yeoman; Jacob J. Vandergrift, late of said county, yeoman; Charles Pratt, late of said county, yeoman; George W. Girty, late of said county, yeoman, together with divers other evil disposed persons, to the said inquest as yet unknown, heretofore, to wit, on the fifteenth day of April, in the year of our Lord one thousand eight hundred and seventy-nine, with force and arms, to wit, at the County of Clarion aforesaid, did combine, conspire, confederate and unlawfully agree together to cheat and defraud the citizens of the Common- wealth of Pennsylvania by obtaining and securing to themselves and their confeder- ates, to the said inquest as yet unknown, a monopoly in the commerce, business and occupation of buying and selling crude petroleum, at the county aforesaid, and did then and there, falsely and fraudulently, and in pursuance of the conspiracy, combination, confederacy and agreement aforesaid, combine, conspire and confed- erate to prevent all other persons engaged in producing, buying or selling crude petroleum from making, receiving or obtaining the legitimate price, profits or re- turns from, out of, or incident to such trade, business, commerce or occupation, and by divers indirect, subtle and fraudulent means, impeding and preventing all other persons in obtaining due transportation for petroleum, and by extorting, levying and collecting fraudulent and unlawful rebates and commissions upon the transpor- tation thereof, and to prevent free and voluntary competition by the public and citizens of the said Commonwealth of Pennsylvania, and to compel the producers and owners of the crude petroleum to sell only to the said above named defendants and their confederates unknown, the crude petroleum by them produced and owned, below its actual market value, to cheat and defraud the citizens of the Common- wealth of Pennsylvania and the public, which said combination, so as aforesaid entersd into, is in restraint of public trade, of grievous prejudice to the common and public good and welfare, to the great damage of the citizens of the Common- wealth of Pennsylvania and the public, contrary to the form of the act of Assembly in .such case made and provided, and against the peace and dignity of the Common- wealth of Pennsylvania. Second— And the grand inquest aforesaid, inquiring in and for the county afore- said, do further present that John D. Rockefeller, late of said county, yeoman; Will- lam Rockefeller, late of said county, yeoman; Jabez A. Bostwick, late of said county, yeoman; Daniel O'Day, late of said county, yeoman; William G. Warden, late of said county, yeoman; Charles Lockhart late of said county, yeoman; Henry M. Flagler, late of said county, yeoman; Jacob J. Vandergrift, late of said county, yeoman; Charles Pratt, late of said county, yeoman; and George W. Girty, late of said county, yeoman, and divers other evil disposed persons to the said inquest unknown, fraudulently and wickedly contriving to injure one J. A. Vera and others to the said inquest unknown, as much as in them lay, unlawfully to injure him and the said other persons unknown. In his and their trade and business of producing and selling crude petroleum which he and they then and there used, ex- ercised and carried on, and to hinder and prevent him and them from using, exer- cising and carrying on the said trade, occupation, commerce and business in as full, ample and beneficial a manner as he and they was and were used and accustomed to do, on the day and year aforesaid, to wit, on the fifteenth day of April, A. D. 1879, at the county aforesaid and within jurisdiction of the said court, unlawfully, wickedly and maliciously did conspire, combine, confederate and agree together with divers indirect, subtle and fraudulent means and devices to Injure, oppress and impoverish the said J. A. Vera and others unknown as aforesaid, and wholly to prevent and hinder him and them from usifig, exircislng and carrying on his and their said trade and business of producing and selling crude petroleum; to the great damage and oppression to him, the said J. A. Vera, and the others to the said in- LEWIS EMERY. JR. 389 IMS, Second Vice-President. Secretary. THE NATIONAL TRANSIT COMPANY, (L. S.; By C. A. GRISCOM, Attest: JOHN BUSHNELL, President. Secretary, The WITNESS. Mr. Chairman and gentlemen: According to the pro- visions of this contract, first, the rate must be maintained as established by the pipe lines, which was an open rate of 45 cents. The contract was made for the purpose of maintaining rates. The outside refinery was compelled before the construction of the United States Pipe Line to ship all of its oil by rail to the sea for export. The reason that this contract was made, guar- anteeing 26 per cent, of the tonnage to the coast, was that the rate should be maintained according to its provisions. If there was not 26 per cent, of LEWIS EMERY, JR. 401 oil shipped over the roads, the Standard Oil Company was obliged to make that up in dollars and cents for the payment of the freight at the rail rates. Now, the point is this: The cost of collecting oil from the well to the rail- road, by what we term the gathering lines, to the storage tanks, is from three to five cents a barrel. 1 speak intelligently upon that point, because I am a collector of oil myself by a number of hundreds of miles of line be- longing to myself — *five cents a barrel gathering charge. The ruling charge to New York, or rather to a point in New Jersey, 50 miles from New York (and you could carry it there at the same cost because we could pump there), is about five cents a barrel; or we gather and deliver oil in New York from the wells at a cost not exceeding 10 cents a barrel at the present time. Now, then, if this contract was out of the way, as has been held many times, the railroads would seek that freight, the same as they go and seek your freight at present to carry to Chicago, as they did a number of per- sons. But this practically compels them to keep the rate up, and it compels the outside refiners to pay this enormous rate of freight, if you call it such, while the Standard Oil Company deliver all their oil in New York at the cost not to exceed 10 cents a barrel. By the railroad a barrel of oil has to pay 45 cents, and the Standard does that by guaranteeing 26 per cent, of the tonnage to the several railroads, which are classed as oil railroads. Now, then, the by-products of petroleum are just about what this 26 per cent, would amount to. Now, they are not by-products — there is benzine, and there is gasoline and there is tar. The by-products come from the tar. but anyliow there is in the neighborhood of 26 per cent, that they couldn't pump through, because it consists of lubricating oil and tar and benzine, etc.; but the intent of this is to maintain rates that there may be no competition between the railroads and the National Transit Company as a carrier. That is what 1 object to, and that is what the contract says. It is a combination which is illegal. Q. (By Vice-Chairman PHILLIPS.) Then we understand from your tes- timony that, having this amount as by-products, that they ship — benzine, tar, etc. — therefore they do not ship any crude or refined oil by rail in conse- quence of this contract? A. No, sir; the railroads would have to have this carrying anyhow; they would have to carry the benzine, and they would have to carry the lubricating oil. You can't pump it and you can't pump the wax. There is 26 per cent, of oil that you couldn't get through the pipe line if you wanted to. Q. (By Mr. CLARKE.) Then, as I understand, you are not complaining at all as to the percentage or apportionment of this freight? A. Oh, no. Q. You are finding fault that the price is too high, and that it is an agreement to maintain rates? A. Oh, no; I am finding fault because they cut off this competition; they have cut off every man in the transportation of oil products. The railroads have carried this stuff as low as eight cents a barrel *and they can carry it and make money. I paid for several years only 33 cents a barrel to carry this stuff through, and at the present time the rate on this product is 16% cents a hundred, making 52 9-10 cents a barrel for oil in bulk. The railroads have raised the rates, and then in barrels you laave to pay for the weight of the barrels, which raises the total to something like 66 cents. Q. Then, you criticise this partly because the rate is too high? A. Yes, sir; partly on that ground; it has been raised from the original 45-cent agreement. Q. (By Mr. KENNEDY.) Senator, that contract was entered into three years before the passage of the interstate commerce law? A. Yes, sir. Q. Have you any evidence that it is still in force? A. *Yes, sir; the evidence — well, I have no evidence, only I know it has never been repealed; at least I say I know it; I only know, well, I say. from the admission of a rail- road man who said that it was. He came to my place and invited me to go to a certain point and establish a loading station to ship oil by water to New York. Well, it is the Buffalo, Rochester & Pittsburg Railroad. I went to Rochester and met the gentleman. I picked out a location for our station ♦Black faced type indicates matter omitted, in ttie course of editing, from the official report. 26 402 REVIEW OP TESTIMONY— INDUSTRIAL COMMISSION. and made arrangements with him for the transportation of my oil to the Erie Canal. The station was to be built on their own land with a nominal rentage, which was agreed upon, and the transportation of that commodity Irom Bradlord was to go that way. And he then said: "I would like to have you build a pipe line down to a place called Irvings, and bring the oil down to the Rochester & Pittsburg Railroad, and let me draw it up here to your factory," all of which I agreed to. He said: "They don't see fit to recognize us as an oil road, and I am going to do some of this business. " All at once he began to be recognized as an oil road, and he was to get his percentage under this contract. My station was not built; my pipe line was not built to bring the oil on his road. That was two years ago, and this contract was in existence at that time. From this circumstance I believe it to be in exist- ence now. Q. (By Mr. CLARKE.) Was that contract made for a term of years or was any limit named under it? A. I don't know that there is. *l did not read the articles; I did not notice tlie reading of it; just let us see. I think it is even perpetual. Vice-Chairman PHILLIPS. Has any gentleman of the commission any ftirther questions to ask Senator Emery? Mr. RATCHFORD. Yes, sir; before he closes I have a question to ask the Senator. Q. (By Mr. FARQUHAR.) I would like to clear up one matter for the benefit of the record of the commission, and I have no question to ask further than that. In a part of your testimony, early in this session, you. read the testimony of Peter H. Watson in respect of the South Improvement Company contracts? A. Yes, sir. Q. And you read from a pamphlet here, which of course is not authority for the commission. A. But that was evidence; it was on the files. Q. But we want to know where the evidence came from, who took it, etc. A. You will find it in the report of the Congressional investigation of 1870 and 1871. *l cannot tell you anything further about it. Q. There is the report of this committee, and it seems this was before the sub-committee on commerce. A. I don't know what it was. Q. This testimony that you have read — now, I want the correct date of this. This may be an important matter. Your own reporters may have come here to take that testimony here in Washington. They had an interview with the Congressional committee on the 25th of the month, at which time a sub-committee The WITNESS. What year was that? Mr. FARQUHAR. 1872; at which time a sub-committee was appointed to take the testimony which shotild be offered, and subpoenas were issued for Watson and Lockhart. Of course, if this is simply a printed pamphlet of the official record of Congress, we want to know it. A. You have your official record here; you have it in the library — the investigation of Con- gress. I haven't seen it, but it is here, the same as the investigation of 1888; Q. And this was April 5, 1872. A. I say it is the same as the investiga- tion of 1888. It should be on file, because it was an investigation by Con- gress which took up that question. Q. (By Vice-Chairman PHILLIPS.) Is it in the Hepburn report? A. No, sir; this was in 1871, and the Hepburn report was in 1879. It was the first investigation that was ever instituted. Q. (By Mr. KENNEDY.) You said yesterday that you did not know who had taken the testimony. That is what he wants to find out — what house of Congress and what committee? Q. (By Mr. FARQUHAR.) That testimony ought to show the commis- sion officially where it is from. I merely suggest that to you. A. If you will give me access to your library, I will find it. Vice-Chairman PHILLIPS. I will ask Mr. Boyle to make a statement about that — simply for information on this question. Q. (By Mr. P^ARQUHAR.) As it is presented here it is unofficial. A. I refer you to the library. "Black fuced type indicates matter omitted, in the course of editing, from the official report. LEWIS EMERY, JR. 403 Vice-chairman PHILLIPS. Mr. Boyle will tell you about that. Mr. BOYLE. I have been searching for that report all through the books, and I haven't been able to locate it. But from the newspaper reports at the time, it was a sub-committee of Congress. Mr. KENNEDY. In the spring of 1872? Mr. BOYLE. Beginning on the last day of March, in 1872, and extend- ing at various dates through April. I think there were about three hearings. Q. (By Mr. FARQUHAR.) The chairman of the committee seems to have been a gentleman known to all of us — that is C. W. Gilfillan. A. I think he was a member of Congress at that time. Q. And that is the identification you make? A. That is the identifica- tion that I make — a Congressional report that was published at that time. I can read the testimony now as I have it here. I know that it was an investi- gation of Congress, and I suppose it is on file, the same as all other books are on file; it should be. Q. (By Vice-Chairman PHILLIPS.) You do not know, of your own knowledge, that that is true; but if it is found by this commission on file, you want it to be considered as a part of your evidence? A. Yes, sir; I do know that the investigation took place, because I was in Washington myself in 1872, and I know the investigation took place, and I know I read these proceedings, and I know I have a complete copy of it; a paper file of it at home in my scrap books. I think I can produce the investigation; I think I can produce the book; I think I can produce the stuff itself, and if I can I shall be very glad to get it here. Mr. FARQUHAR. I should like to make a statement, from Mr. Gilfil- lan's own report — that we all know is read everywhere. It seems that these people took these reports themselves; they came down here to present this matter to the Committee on Commerce, and they had their own reporter. The question is, was it ever reported oflicially by this sub-committee. The WITNESS. Well, does a Congressional committee go into a room to make a report without a stenographer? Mr. FARQUHAR. Sometimes, and quite frequently. The WITNESS. It is the straneest act I ever heard of, then. *IVir. KENNEDY. Sometimes they take testimony and don't pri it it even. The V/ITNESS. And to have taken the testimony and filed it and not printed it! I am talking from Congressional experience. Mr. FARQUHAR. The fact is, Mr. Watson's testimony is a complete contradiction to other testimony in respect to the South Improvement Com- pany, and in that way it seerr.s very valuable. Now, the question is the other side's testimony. The WITNESS. Can you produce any testimony contradicting him ex- cept what has been given upon the stand? Mr. FARQUHAR. I am not discussing where the testimony came from. *The WITNESS. Well, I would like to know that, and I will look It up. Mr. FARQUHAR. I think the origin of the testimony should be ascer- tained as this is not verified. The WITNESS. Well, I rely upon that testimony as being valid, and I think the investigation can be produced. It is dated from Washington and I know the investigation took place and I know Mr. Gilfillan was on the commission; I don't know whether he was here on that day or not. Q. (By Vice-Chairman PHILLIPS.) You said that on your information and belief, you believed this testimony to be true— this transcript of it. A. Just exactly as I believe my own testimony to be true. *Q. (By Vice-Chairman PHILLIPS.) It will be competent to receive it on that ground; on the ground that that portion of your oath says that from information and belief, you believe your testimony to be true. A. Yes, sir. It is very unfortunate that it is not here. I want to say to you right here that of this testimony of 1888, there were several thousand volumes printed, and I understand there are only 300 of them in circulation to-day. I didn't get one myself until just fortunately I came across one the other day of a ♦Black faced type indicates matter omitted, in the course of editing, from the ofRcial report. 404 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. friend who had two. Nobody knows how that evidence was spirited away from here, but it is gone. Q. (By Mr. FARQUHAR.) 1888? A. Yes, sir; there are only 300 vol- umes that are out. I sent to Congressman Stone, from our district, for one. *Mr. FARQUHAR. Well, I think there are some old booksellers that will sell you any amount you want of the Bacon volume; there is no scarcity of that volume. Q. (By Mr. RATCHFORD.) I want to refer briefly to the question of rebates and discriminations. We went over that pretty fully, but we inter- rupted the Senator as little as possible. Referring to that subject. Senator, I understand from your testimony that you make the broad statement that if the books of the railway company could be brought into court some of the officials would be sent to prison. A. If you can send anybody to prison for violating the interstate commerce act. I am not positive whether there is a criminal clause attached to it or not. Q. If you wish to modify that statement, you can. A. I do not wish to modify it, if there is any criminal clause in the law. I will let it stand. If it is in the law, I stick to my statement. Q. Did I not also understand in the previous part of your testimony that you caused one or more of these companies to produce their books in court? A. The Pennsylvania Railroad Company. Q. The Pennsylvania Railroad Company? A. That is all. Q. And they are in the courts of Clarion county? A. In McKean county, where I lived. Q. You said yourself that you produced convicting evidence. A. They didn't examine the books at all. Q. Why? A. Because the case was settled. Q. Why did you settle it? A. Well, I told you yesterday that my part- ners got tired of fighting. We had been at it for three or four years and $35,000 was offered and we took the money. The claim was $107,000. Q. And you settled for $35,000? A. And costs. Q. Now, I want to ask you in that connection, if the discrimination jiractised by railroads and rebates that are given by railroads are so in- jurious to the interests that you represent and to all other interests, why you settled it for $35,000; or whether you believed yourself justified in settling for any sum? A. *Because 1 was too poor to carry it on. Onv ^ssoriation was too poor to carry it on. They could have gone on and could have ex- tended it for ten years, *and kept it In court all that time. Q. And yet you are satisfied, and have been satisfied, that convicting evidence would have been adduced in court had the case been investigated? A. We got all the evidence that we wanted for them to settle upon. You imderstand, we tried to get the books into court in the early history of the trial, but we couldn't get an order when it was before the master, in taking this testimony, because he hadn't the power, and when we got them before the McKean county court, the Circuit Court judge having the power, we demanded the books and papers. He issued that order and the books came, and if my disposition had have been followed, even in the depressed finan- cial condition that I was in, if I had had my way about it I would have ex- amined every single one of those three tons of books that came in. But I had a partner. Mr. Logan, who had lost every dollar he had in the world in speculation, and he said: "This money will do me good, and I would like to have you let up." Q. You assign then, as a cause for settling the trouble, the fact that the association represented by you was too poor to fight it? A, It was the dilatory action of the courts. *Q. Well, that covers the point. Now, there is another matter that I want to call your attention to. You made a statement this morning that I do not believe you intended to make; yet it is a matter of record, and if you did it without intention I want to give you the opportunity to correct it. A. That is very kind of you indeed. *Rlack faced type indicates matter omitted, in the course of editing, from the official report. LEWIS EMERY, JR. 405 Q. You stated that rebates had been paid prior to 1872, "and you ack- nowledged it," addressing the commission. I don't know whether you ad- dressed any member of the commission, or whether you addressed the com- mission as a whole. I want to say, as one commissioner, that I make no such acknowledgement. A. I don't understand you, Mr. Ratchford. Mr. RATCHFORD. I make no acknowledgement that rebates were paid prior to 1872, and I haven't heard the acknowledgement made by any one of the commissioners. The WITNESS. Really, I don't understand you, Mr. Ratchford. I can- not understand what you are getting at. Q. (By Mr. RATCHFORD.) You don't understand my question? A. No, frankly I do not. Q. In your testimony this morning you made the statement that re- bates had been paid up to 1872; and addressing the commission, as you did, you stated: "And you acknowledged that such was the case." A. I said that rebates had been paid previous to 1872. Q. Or up to 1872? A. Yes, sir. Q. And addressing the commission, you stated that "You acknowledged such to be the case," or words to that effect. Now, I wish to give you an opportunity at this point, if you made that statement without consideration, to correct it, and to state, if you please, for myself, as one of the commis- sioners, that I want to disclaim any acknowledgement; I want to disclaim that I acknowledged any such thing. A. I don't know what you are getting at, I cannot understand. Q. Well, I will put it in this way: Do you admit having made that statement? A. I said that rebates were paid before 1872. Mr. RATCHFORD. And you stated to the commission that they ack- nowledged it. The WITNESS. That who acknowledged it? Mr. RATCHFORD. That the commission acknowledged it. Vice-Chairman PHILLIPS. Not the commission. The WITNESS. I still don't understand what you are driving at. Mr. RATCHFORD. Well, I can't talk any plainer, Senator. The WITNESS. I do not really understand. Am I so dumb that 1 can't understand? Mr. RATCHFORD. Well, I cannot talk any plainer. The WITNESS. Well, I don't know what you mean, sir. Mr. RATCHFORD. You addressed the commission and you said that rebates had been paid prior to 1872, "and you gentlemen acknowledge it." Vice-Chairman PHILLIPS. The chair may explain that. The WITNESS. Weil, it is merely technical, anyhow. Mr. RATCHFORD. Well, it may be technical, but still I don't want to be put on record that way. The WITNESS. Well, let them correct the record, then. Mr. RATCHFORD. I want to give you the opportunity to correct It, I want to say that I make no such acknowledgment and make no such ad- mission. If you were addressing a single member of the commission at that point it should be known, and I want to give you an opportunity of making the correction; that is my purpose in raising the question. Mr. KENNEDY. I think that if Mr. Emery made such a statement this morning he would perhaps have been justified in making it, because at least three members of the commission said in referring to the testimony which he was bringing out connected with the rebates, prior to 1887, when the inter- state commerce law was passed, that there was no dispute as to the practice of giving rebates prior to that time. I made that remark. Mr. Livingston said something of the sort as well as Mr. Clarke. Mr. RATCHFORD. That was not acknowledging they had been paid. Mr. KENNEDY. That was not acknowledging they had been paid, but the commissioners — several of them — made that remark — that there was no dispute about the rebates having been paid prior to 1887. *Black faced type indicates matter omitted, in the course of editing, from the official report. 406 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *The WITNESS. I cannot understand yet what Commissioner Ratchford is trying to get at. I may have used "the" and should have used "an," but I cannot understand what you are driving at, and I cannot see anything in it anyhow. Mr. RATCHFORD. The position is this: I will admit that it is technical, yet it might compromise this commission, and I, for one, don't want to be compromised. I have given you the credit by saying that I believed it was unintentional on your part, and I believe that yet; but I simply want the statement corrected. The WITNESS. If I made a mistake in the language, I have no objec- tion to correcting it. Mr. RATCHFORD. It is not a matter of objection or misunderstanding, but just what you said; and I want to give you the opportunity of correct- ing it. The WITNESS. I shall correct it, if you wish it; but I cannot see that I made any mistake. Mr. RATCHFORD. It is not a matter of my wishes; it is just that this commission has stated — what ar;y member has stated. The WITNESS. Stated what? Mr. RATCHFORD. That we admitted that rebates had been paid prior to 1872. Vice-Chairman PHILLIPS. If you understood that the whole commis- sion acknowledged it, Mr. Ratchford says that he did not acknowledge it. The WITNESS. You knew just as well as I do that I did not know you, and did not know that you ever shipped a barrel of oil, and I would not have made that remark for anything if I had thought it was objectionable. By Heavens, it is the furtherest from me — and if 1 did, it was simply a slip of the tongue, the same as you would do, if you were making some remark. But that is all right. Mr. RATCHFORD. That will be stricken out — that the commission ack- nowledged it; because the commission would not have acknowledged it. Vice-Chairman PHILLIPS. Without objection that will be stricken from the testimony if it appears in that way. Is there any other gentleman who has any question to ask? The WITNESS. I would like to ask, Mr. Chairman, if the reporter has got that? If I did say it, it was unintentional. I cannot see wherein I have brought any reproach upon the commission. It is the furtherest thing from me in the world. Vice-Chairman PHILLIPS. Mr. Ratchford simply stated that you had said that the whole commission had acknowledged this. Somebody, per- haps, said there was no dispute as to that. The WITNESS. On the payment of rebates. Vice-Chairman PHILLIPS. But Mr. Ratchford and a number of others have no knowledge one way or another, and would not say that they had admitted it. Now, is there any other gentleman who has any further ques- tions to ask? Q. (By Mr. CLARKE.) Just one question if he can answer it in a sen- tence, otherwise he need not answer it. Are you able to state whether the condition of the oil business generally is more or less prosperous now than it was two years ago? A. I think it is more prosperous now, from the fact that all the refineries in the country are running; there is an enormous de- mand for goods and the production of oil is not adequate, at the present time in New York and Pennsylvania, to the demand. That is one more rea- son for the advance in the profits of petroleum. Every factory and every spindle is running and every coal mine and every iron mine; there Is an enormous demand for goods. We could sell from my factory five times as much as I can make, if T had it, and at good profits. t Q. (By Mr. FARQUTTAR.) *Now, Senator, you can answer this or not, just as you please. I would like you to answer just one question. Have 'Black faced type Indicates matter omitted, In the course of editing, from tlio official report. tThis statement indicated that Mr. Kmery was not suffering from any restric- tion of his market In the sale of refined oil. LEWIS EMERY, JR. 407 you frequently, in your own business, enjoyed rebates? A. Never. Now, let me modify that where I say never. In my business, previous to 1872, in the refinery at Titusville, Pennsylvania, rebates were a common thing; but we were young and new in the commercial world, and the fellows in Cleve- land and Pittsburg had been in it longer. We had had very little experience, and we didn't seem to make very much money and we were running full tilt with other wells and other shippers, and everything, and we began to look about to see what was the matter. We went to Pittsburg, and we learned, to our astonishment, that certain concerns were getting 25 cents a barrel, and we, being large shippers, demanded that it be granted to us — away back in 1870 — and we were granted 25 cents a barrel, and still we got on to the fact that some refiners were receiving 75 cents and some other refiners were receiving 50 cents a barrel right at that time. The rate at that time was in the neighborhood of $1.50, and oil can be carried at a profit to-day at 25 cents; but from that time to this, no. Q. (By Vice-Chairman PHILLIPS.) Following that up, have you in recent years received rebates? A. No, sir; none. Q. (By Vice-Chairman PHILLIPS.) For how many years? A. No, sir; not since 1872; except the rebates we got on oil by law. Q. (By Vice-chairman PHILLIPS.) Not since 1872? A. And I state here that the president of the Pennsylvania denies giving any and the gen- eral freight agent denied giving any, but the auditor and the bookkeeper ad- mitted it. Q. (By Vice-Chairman PHILLIPS.) I have been requested to ask Sena- tor Emery a question. Mr. Logan was one of the parties to the South Im- provement Company, I believe? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Now, is he the same Logan who was a partner of yours in Philadelphia in recent years? A. No, sir; Al. H. Logan was my partner, and the two Logans that were connected with the South Improvement Company were William P. and John B. Logan, both of whom are, at the present time, living; but Alfred, my old partner, is dead. Q. (By Vice-Chairman PHILLIPS.) We have been in the habit of asking persons here whether they have any remedial legislation to propose along the lines of the inquiry. If you have anything to propose to the commission in the way of remedial legislation to meet these problems we would be glad to hear from you. A. I will simply state very briefly, because I don't want to go into it at length. *While I had expected to go into some argument on that point, I will not; I am too tired, and you have gotten tired of my face; and 1 will simply say this: That I am an absolute believer in the govern- ment ownership of all transportation facilities, and especially of railroads. I *have laid awake at nights, and thought this matter over, and was anxious that, when the United States government had the opportunity of taking in the Central Pacific Railroad, they would do it. All the roads of Germany excepting two in the south are owned by the government, and discrimination is not known; nor is there any dissatisfaction or trouble there. They haven't gone so far in that country as to take the canals, but everything is free. If the water ways and the railroads can be put under government control, gentlemen, you will do away with all of the difficulties that exist to-day, because. I say right here, that the prime movers of all these troubles are the railroads, through giving discriminating rates, or giving rates to favorite shippers that are lower than they give to the general public. I know of no better remedy, and the time has come when it is necessary, because these conditions have been forced upon you, to call a halt to the present condi- tion of things. If you would make an example of these men. if there is a criminal clause in the interstate commerce law, and put them behind the bars, I think there would be a stop put to these things. I recollect that owning a large flour mill in Southern Michigan and being quite a large wheat grower in Northern Dakota, I desired to ship some of that most ex- cellent hard wheat down to Three Rivers, Michigan, to manufacture it. and I wanted a transit rate. It was given me previous to the Interstate Com- merce Commission by the then manager of the road. I went back the next ♦Black faced type indicates matter omitted, ia the course of editing, from the official report. 408 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. year and he said: "I can't do by you as I did last year; the criminal amend- ment to the interstate commerce act is such that if I violate it I am liable to go behind the bars," and he said: "I am afraid of that, and therefore I can't make you the rate by which you can ship your wheat from North Dakota to your place and manufacture it."* fThat was his version of the law. Now, I say, Mr. Chairman and gentlemen, that this question has got to be met in some way in order to cut off the rebate and drawback practices of the railroads, because the masses of the people of this country are incensed and that dissatisfaction is reaching to the minds of men, many of whom are way above par. You will find that class of men dissatisfied with the present condition, and I am firmly a believer that if the government would take charge of the railroads of this country, as they take charge of the transpor- tation of the mails (which is acknowledged by all the people of the earth to be the best in the world) these conditions can be improved. They can as well control the railroads and water ways of this country as they can, manage and control the transportation of the mails. The example of Ger- many is before you; the example of Norway and Sweden is before you; and I desire to call them to the attention of the commission at this moment. If I recollect right in reading about the railway systems of Norway and Sweden, 18 years ago the kingdom of Norway and Sweden didn't own a mile of railroad in that country. Poor as she was as a nation she saw that English capital was coming into that country and building the railroads north and south up to the great Bessemer mines in the northern part of Sweden, and their own manufacturers were unable to compete, shipping from the same mines, over the same lines of road. Complaint was made to their Congress, or whatever they call it, and they at once adopted a measure and said: "We will own these roads ourselves;" and then they bought them from the English capitalists. When I was in Norway and Sweden three years ago the government took in the roads, and they own to-day the roads running north and south through both of those countries, not particularly bothering with the lateral lines to the east and west, but they make a rate from the common points on these lateral lines to the water front, and they pro-rate with the lateral line belonging to the smaller companies. They have brought back in the market their own manufactures and they are to-day a happy people, because the government has taken hold and made the roads equal to everybody — the Englishman, Frenchman and the German, and to everybody else. We distribute oil in those countries and we have no discrimination. We go all through them. Government ownership is my remedy. You have upon the statute books to-day one of the best laws that was ever written, known as the Federal Act, or the Sherman Act, passed in 1890. The ditficulty in this country is that you can't enforce the laws, or at least you don't. Complaints were made during the Cleveland admin- istration, to the attorney-general of the United States, and no answer was made by the recipient of the letter, tit was pigeon-holed. Complaint was made to the present administration eight months ago; tno acknowledgement of the letter; pigeon-holed. In the State of Pennsylvania we have asked the aid of the Commonwealth by application to the Governor, since the suit that I have mentioned, and have received no answer to the letter; pigeon- holed. tDoes that look like an enforcement of the laws? The power of these monopolies and combinations is such that they nominate and elect their own men to serve in the Legislature — tor many of them to serve in the Legislatures of the several States of this Union. They make their own nominations a year ahead all the time, and he is schooled to know their wants first and the people's wants second. I say that if our courts of the States, our Attorneys-General of the States and our Attorney-General of the United States would put forth the strona: arm of the government under the laws that are passed, they can stop this en- croachment upon the rights of the people. I say if they will not do it, you must get the control of these great transportation lines that are causing *No one asked the witness the direct que.stion whether he had received a r.Tte in violation of the law in the previous year to which he referred. ;T?lac'k faced type indicates matter omitted, in the course of editing, from tlie official report. LEWIS EMERY, JR. 409^ all this trouble, and that by government ownership. And I simply say ta you that I have traveled this world over; I have been a traveler in every part of the world that I can reach by water or rail and this country is advertised from China and the islands of the East as being a country that is bound and tied hand and foot — the people in it — by corporate power. *You can't step upon a train of cars without hearing a man in front or back of you speaking of the unfair advantage the commercial industries of this country that hire men, take of them; and using harsh and rough language against their government — blaming it because it don't give them relief; and as I told you yesterday, we came to Congress, as you saw here, in 1872, and we came here time and time again. We have been to work here before the Attorney-General of the United States half a dozen times without result, and it seems to me that the courts are approached in the same way. Any- how, there is delay in getting the litigation settled before the courts. The corporations come along when they please, *and when they do come In they don't come to testify. They defy the courts under the plea that they will criminate themselves if they give evidence. What are you going to do about it? If the arm of the government would be stretched out and take these men and say: "Answer these questions or go to prison for contempt of court," they would answer them. Now, I say, government ownership of railroads would be my remedy unless we can get the Attorneys-General of the United States and of these several States to enforce the laws. Q. (By Vice-Chairman PHILLIPS.) Suppose that the government did own the railroads to-day, would not this great corporate wealth — giant cor- porations or monopolies or trusts, as they are sometimes called — still have the power to follow the small merchants into other States and towns and sell oil or any other merchandise very low? With that great accumulation of wealth, can they not still prevent the small corporation from doing busi- ness — the merchants from handling these goods or selling these goods in various markets? A. Well, for that difficulty you would want a law like the one I spoke of yesterday, such as I think has been adopted in Germany, Intended to prohibit unfair trading. You have got to take care of the inter- ests of the common people of this country. If you don't, you are going to have trouble, *and I am afraid I will not live long enough to be in the front ranks of that fight. Q. (By Vice-Chairman PHILLIPS.) Any other question by any gentle- man of the commission? Now, have you any statement to make or anything to add to your testimony. Senator Emery? A. No, I guess not. I only want to know if the commission wants any of my papers before I quit. I will be very glad to assist you in any way that I. can. I said to Mr. Farquhar that I have this copy of the report of the 1872 investigation and I will find out about that. Q. (By Mr. FARQUHAR.) As I stated, it seems to me to be unverified, because it seems to have been taken by outside reporters. A. It was done by Congress. Isn't that official? Mr. FARQUHAR. Well, the matter was referred to a sub-committee, and it was done before them, if it was done. The WITNESS. Well, gentlemen, I am certainly under very many obligations to you for your kindness, and I am only sorry that yesterday morning, when I started in, I did not fully understand your views and wishes. Certainly I had rather not have said as much as I have. I am pretty nearly a sick man, but I feel that what I have said and done is consistent with my conscience, and, therefore, I do not regret anything. Vice-Chairman PHILLIPS. I will state, Senator Emery, that the chair is authorized by the commission to express to you our thanks for appearing before us and giving us this full and clear statement in regard to the petroleum industry. The commission then adjourned until the following morning at 10 o'clock. *Black faced type indicates matter omitted. In the course of editing, from the ofRcial report. 410 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. CHAPTER XVIL TESTIMONY OF MR. W. H. CLARK, OF NEWARK, OHIO, DISCHARGED EMPLOYE OF THE STANDARD OIL COMPANY. The remarkable statements offered as testimony before the Industrial Commission by Mr. W. H. Clark, of Newark, Ohio, who, as shown by the testimony of other witnesses, was discharged from the employ of the Stand- ard Oil Company because he was short in his accounts, forms but a single chapter of the studied attempts to bring that company into disrepute. Mr. Clark was previously a witness in the case of the State of Ohio vs. the Standard Oil Company of Ohio. This man went before the commission on June 8th, 1899, and confessed to a disgraceful career and endeavored to implicate in it other employes of the Standard Oil Company who are men of character and standing in the communities in which they live. His evidence was refuted in the most com- plete manner. His statements were sent broadcast over the land, being widely published as the confessions of a Standard Oil Company official who might be regarded as giving way the real methods of business of that com- pany. These were striking statements, and as they made much more inter- esting reading than the denials, told in moderate language by means of affidavits, they naturally received wider circulation and were read with greater interest, as infamous charges appeal to the imagination much more strongly, because of their sensational garb, than do denials of such charges. Mr. W. H. Clark was hired when a youth by the Standard Oil Company to work at Marietta, Ohio, as office and warehouse boy and was promoted in position and salary until he was made local agent at Newark. Mr. B. A. Mathews, a manager of the Standard Oil Company, with an office at Columbus, Ohio, testified that, while at Newark, Clark became short in his accounts. This fact was discovered and Clark was discharged, which was the only incentive Mr. Mathews knew for "the series of un- truths and malicious statements made by Clark before the commission." When Mr. Mathews was on the stand he referred to Mr. Clark's state- ments seriatum. and produced numerous affidavits which proved the true character of the witness. Clark's testimony was shown to be inaccurate even as to immaterial statements. The witness was introduced by Mr. Phillips, who said: "I will state to the members of the commission that Mr. Clark, of Newark, Ohio, who has been a long time in the employ of the Standard Oil Company in handling especially the refined and lubricating oils for the company, is before us this afternoon to give us some information in regard to the methods of the Standard Oil Company in doing business." Representative LIVINGSTON. In what capacity was he employed? Vice-Chairman PHILLIPS. He will state that he was in the habit of selling refined oil and lubricating oil, as I understand it. He will make a very full statement, if he is called upon. Professor Jenks will take the lead in examining Mr. Clark. I am pleased to present Mr. Clark to the com- mission. Mr. Clark said he began work for the Standard Oil Company in 1892 and was promoted to be warehouse man or cooper while working at Marietta, Ohio, at which place and time the Standard Oil Company uad four com- petitors, these being the Producers' Refining Company, the Argand Refining Company, The George Rice Oil Company, and The Marietta Oil Works. An old tank wagon driver named Mr. Curtis was selling oil for the Argand Company, and the Standard Oil Company secured the service of Mr. Frank Davis, for whom a tank wagon was bought, and through him oil was sold at a price cheaper than the Argand Oil Company could manufacture it. W. H. CLARK. 411 Q. (By Professor JENKS.) Was Mr. Davis an oil dealer before you got him? A. No, sir; we hired him by the week. He went on quite a while and finally Mr. Curtis began to get tired of his business, so he came to us and told us if we would make some arrangement by which he could buy his oil of the Standard Oil Company he would buy of us. So we made an arrange- ment and we had a mortgage on Mr. Davis' wagon. We put up a bluff, closed in on the mortgage and let him go. Q. As soon as Mr. Curtis came to terms with you, did you stop the busi- ness of Mr. Davis? A. Yes, sir; and the price went up. Q. Can you tell us about the price at which you sold while Mr. Curtis was selling the oil of the competing company and what price was made after- wards? A. The oil was 7 cents while Mr. Davis was selling, and as soon as he quit it went to 12 cents. Curtis kept up his competition for three or four months before he yield- ed the first time. After the oil was put up to 12 cents a gallon by the Standard he again began buying from the Argand Company when Mr. Ebright was sent by Mr. B. A. Mathews, a manager of the Standard, from Columbus to again compete with them. Speaking of Ebright, he said: "He came down there and we played the farmer racket with him; went out and got a big cart and put a barrel in with a faucet and he went around selling oil cheap." At Marietta, he said, they had two storage tanks and from them sold eight grades of oil, at eight different prices, beside selling gasoline. There was about half a cent difference between the prices. They gave the cus- tom.er whatever grade of oil he wanted, the prices being from six to 10% cents a gallon. He said that Mr. Hollingsworth and Mr. Mathews gave him orders to sell oil in that way. He said they also put three or four gallons of gasoline in a barrel of turpentine, the gasoline worth seven cents and the turpentine 40 cents, and sell it as turpentine to druggists. He said Mr. Mathews had taught him "this trick in turpentine." They had sold it in that way to Siler Bros., druggists. Mr. Clark went to Springfield and took charge of a country tank wagon, operating in 21 towns outside of Springfield. The business there was in- creased so that the company had to put on another wagon in his district, in charge of George Blazer. Mr. Cragin, a brother-in-law of Mr. Mathews, told the witness to explain to Blazer how to sell different grades of oil out of the same tank. Mr. Foley, the agent at Springfield, wanted Mr. Cragin to tell Blazer about this. Blazer said that if he could not work for an honest com- pany he would quit, and he did quit that day. While at Springfield, the witness continued to sell as many as four grades of oil at different prices out of the same tank. They gave rebates to some customers, but not to others. They would sell as low as four cents a gallon to some customers and would charge others as much as seven cents a gallon. At Springfield, the Charles Ludlow Oil Company was selling oil in competition with the Standard. Mr. Clark said he was engaged in selling different grades of oil out of the same tank for about seven years. Q. (By Mr. KENNEDY.) Did you feel that you were engaged in a dis- honest work while you were doing that? A. Why, I spoke to them about it, but they said it was not for me to say what to do, but to do what they said. That is the reply they gave me. He said that while at Springfield he got $35 a month, went to work at 4 o'clock in the morning and many a night worked as late as 10 or 11 o'clock. The witness explained, in reply to a question by Mr. Farquhar. that they had but one grade of oil in the tank from which they were selling oil under different names, and at different prices. He said the Standard Oil Company, to his knowledge, made three grades of oil, the Diamond White, the Water White and Eocene. He had never known them to make more than that, yet he had seen a dozen grades at different stations, with from one-half to one-fourth of a cent difference in the price. They sold oil under about eight different names at each station. At Columbus and Urbana, they would drop the Southern names and put in new names. 412 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. Phillips asked the witness if he could tell what distinguished the three grades of oil he said the Standard Oil Company made. He replied: "Diamond White stands 150° open cup and 120° closed cup; 120° is the State test and 150° closed cup is our test. There is about 10° difference in each test, except the fire test, the test of the State, which will run about 120° on each one. Of course the cheaper the oil the lower the fire test; the better the oil is the harder it is to ignite." From his position at Springfield, Mr. Mathews promoted him and gave him an increased salary as cashier of the Standard Oil Company at Colum- bus, at the oil works, where he received $40 a month. At that place he said he had charge of the work, looked after the shipments, took care of the money and sent out bills. He also kept stock for compounding different oils. They mixed two barrels of miner's stock with three barrels of cotton seed oil to make miner's oil. By mixing the oils they could furnish a cus- tomer anything he called for, and they charged him for it accordingly. They never had the genuine oil of the special grades called for. They mixed Japanned dryer and linseed oil, the result being a product of a dark color, which passed off as boiled linseed oil. This was not as valuable as boiled linseed oil, but by resorting to this process, instead of boiling the oil, he thought they saved five or six cents a gallon. They followed a custom of branding the barrel to suit the customer. The price of miner's oil, the wit- ness said, varied from 22 to 34 cents. Mr. Clark, referring to the method of the Standard Oil Company at Columbus, said they received all their oil from Cleveland in barrels with blank heads. If a person wanted oil to rub furniture, light rubbing or dark rubbing, ozone parafRne, diamond paraffine, golden machinery or a good straight machinery oil, they turned it out to him and charged him a price ac- cordingly. He did not do the mixing he had described, but he furnished the slock with which it was done, to Paulus, who was the mixer. He furnished reports of what he did to the general office at Columbus. He knew nothing about com- pounding oil beyond his experience with the Standard Oil Company. They always sold oil about a cent cheaper per gallon at Columbus than they sold it in other towns, on account of the Cleveland Refining Company being there as a competitor. Finally, he said, the Standard Oil Company hired E. M. Shoemaker to start the E. M. Shoemaker Oil Company. Shoemaker's wagon was loaded at the Standard oil station and was run in the name of the Shoe- maker Oil Company. From Shoemaker's wagon oil was sold at reduced prices. This was done because people believed that while buying from the Shoemaker Company they were buying from a rival of the Standard. He said that Shoemaker drew a straight salary from the Standard, as did Mr. Clarence Toland, Shoemaker's bookkeeper. The Standard's business at Columbus "lots of days" was $700 or $800 a day. He had seen Mose Grad- wohl's wagon alone take in as high as $200 a day. The witness said that the Standard Oil Company at Columbus watched their competitors to see how much oil they shipped out each morning, and they sent a report of this to Cleveland. They had a boy whom they paid $15 a month to report every tank car that came in for their competitors. When they found a man buying from a competitor they went to him and did everything to get his trade. He did not know that the competitors of the Standard Oil Company at Columbus deceived the public in regard to the quality of oil they sold as he did. At Columbus, the Standard Oil Company cut the prices, he said, so that their competitors were finally forced to make an arrangement with them to "hold the pri(;e" for a certain time. When the Standard Oil Company tele- phoned their competitors to raise the price, the price was raised. Their competitors handled but three grades, Penoline, Safety Oil and Electric Light. The Standard Oil Company would sometimes get trade by buying empty barrels of the retailers and paying more than the regular price for them. Mr. Clark read letters signed by Mr. B. A. Mathews, general manager, inclosing what was termed a competition sheet, which he was asked to fill out and give full information with reference to parties on the list, and to W. H. CLARK. 413 add other names to it if he knew of people buying outside of the Standard. These letters were dated May and July of 1896. He filled out these competi- tive blanks regularly. He was at Columbus from March 20 to December 16, 1896. He was promoted and removed from Columbus to be manager of the Standard Oil Company at Urbana, Ohio, and in the following March his salary was increased $15 a month. At Urbana, he said, he had full charge of all the business and received his instructions directly from Mr. Mathews. They did not have much com- petition at Urbana. William Helmick became their competitor. Helmick had inherited some money and invested it in the oil business. H. S. Hollings- worth, of Columbus, came down to Urbana and with the witness went to Helmick's house and tried to scare him out of the business, telling him they would cut prices on him. Finally Mr. Welsh, another employe of the Stand- ard Oil Company, came there from Springfield, and all three of them talked to Helmick of selling out his oil business at the price he paid for it. They cut the prices of oil on him at a few places, and threatened to cut still further. He put up a building outside of town for storing his oil, which, because of its isolated location, made necessary by an ordinance of the City Council, was a total loss to him after he left the oil business. Finally Hel- mick quit the business and went to the poor house, from which his sister in Iowa took him. Helmick's father had been in the oil business for 20 years and Helmick had driven a tank wagon for his father. After his father's death he bought a farm with the money he inherited and, as he could make nothing out of it. went back to Urbana and started in the oil business. At Urbana. the business amounted to forty or fifty thousand gallons a month. In the following fall, the witness went to Newark, Ohio, where he was paid $2.25 a day as manager. Newark being a lareer station than Urbana. The Newark business amounted to about 80.000 gallons a month. The work at Newark was harder than it was at Urbana, because, the witness said, they had about 25 prices. They had a special price for different people, and sometimes rebates for some of them. They charged J. P. Lamb & Co. seven cents for gasoline, and J. M. Brown, opposite him. nine and one-half cents. They charged Mr. Rankin six cents for oil and Showman Bros, seven and one-half cents. He m.ade Hagmeier's ticket the same as the others, but always rebated him one cent for gasoline and two cents for oil. He could not change the price for anyone without authority from Mr. Mathews. If a customer should buy oil of a competitor, the witness would report the case to Mr. Mathews and get authority to change the price. He said their price for ea'^oline ranged from seven to nine and a half cents a gallon. Mr. Al. Donaldson started in the oil business at Newark for Scofield, Shurmer & Teagle, in a leased building. The witness had the owner of the land pi?n a contract that no oil should go on that lot, and then he hired a Mr. Rodbury and the two went down and threw out the tanks of their com- petitor and left the building empty. Donaldson then got "scared" and sold his oil and his wagon to the Standard. The witness said he had been told by Mr. Hollingsworth if he would get Donaldson out of the business inside of two v,'eeks he would be given a two weeks' vacation on salary. He suc- ceeded in doina: this at a cost of $2.50, which the Standard Oil Company paid for the building, which was a mere shed. When Donaldson returned to the city, he found his building gone. The witness said he was compli- mented by Mr. Mathews for the way he had got this competitor out of the business. The witness went back as manager at Urbana, staying there six weeks, after which he again was sent to Newark, where he remained about two years. He said that through the influence of a man named King, who had been an employe of the Standard Oil Company for a year and a half or two years, the tank wagon men at Newark got to selling any kind of oil a person wnnted. If a man wanted 15 cent oil, he could get it, and if he wanted a 10 cent oil he could 2:et that. He told how he came to leave the Standard Oil Company. One evening Mr. E. C. Lockwood. a Standard Oil manager from Cleveland, came to inspect his staition. and the witness did not know who he was. Mr. Lock- 414 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. wood undertook to give the witness instructions in regard to his work and they got into a controversy. The result was that the witness was laid off by Mr. Mathews, in order that the business of the station might be checked up. They had tried to re-employ him, he said, through Mr. Fonts. The wit- ness said he did not want to work for them any more, as any losses resulting from errors at his station were deducted from his pay, no matter who made the mistakes. Mr. Clark said that the Standard Oil Company always kept their price below that of their competitors, but that some of the independent dealers could sell oil at a price higher than the Standard could get, because the people disliked the Standard. These competitors sold Pennsylvania oil, while the Standard's oil was from Ohio, the former being the better oil. The witness said they had two lamps in which they tested Ohio and Pennsyl- vania oil and that, by a trick in turning the wick, they were able to disguise the smell of sulphur in the Ohio oil. He said he was instructed by Mr. Mathews to do this, his instructions being verbal. He had no letters nor any written instructions to pursue the methods he had referred to. He had furnished the Baltimore & Ohio Railroad with refined oil and made out the bills, showing the number of gallons, after which the bill was sent to Columbus, where the price was put on it. He knew nothing about the prices charged for lubricating oil. They sold from 60 to 80 barrels a month in the summer and as much as 1.50 barrels in the winter of Water White to the Baltimore & Ohio Railroad. That company bought its lubri- cating oil from the Atlantic Refining Company at Pittsburg, which, he thought, was not connected with the Standard Oil Company. He at first said he could not give any names of men who could come before the commission and corroborate his testimony, thoush he said: "They would all tell you just the same; they could not tell you anything different." He finally gave the names of W. W. Hughes, H. A. Day, tank wagon driver at Newark; James King, Will Donaldson and Frank Hurst as men who could corroborate his testimony. In reply to a question by Mr. Ratchford, the witness said that they sold only "to the trade" and not to the consumer. Notwithstanding the unequal price at which they sold to the stores, he said that most of the stores sold at the same price. Some of the stores would charee the same price for a cheap grade of oil as other stores would for a hich grade. When they succeeded in driving out competition, they put oil back at the old price. In towns where there was competition, oil was cheaper than where there was no competition. When asked by Representative Livingston whether there had been any litigation in regard to the matters of which he testified, the witness said he did not know of any such litigation. CHAPTER XVIIL TESTIMONY OF MR. B. A. MATHEWS, MANAGER OF THE STANDARD OIL COMPANY FOR CENTRAL AND SOUTHERN OHIO. Mr. B. A. Mathews, so frequently referred to in W. H. Clark's statement in the preceding chapter, went before the commission on September 7. 1899. He stated that he had charge of marketing the products of the Standard Oil Company in a portion of Ohio, having managed the business for Central and Southern Ohio for six years and having been engaged as manager in other departments previously to that. In contradicting the statements of Mr. Clark, Mr. Mathews submitted a large number of affidavits from men who had personal knowledge of the facts concerning the matters testified to l)y Clark. These affidavits corrobo- B. A. MATHEWS. 415 rated Mr. Mathews' statements in every detail. The affidavits are all pub- lished in connection with Mr. Mathews' testimony in the official report of the commission. They are merely referred to in the summary of testimony contained in this chapter. Mr. Clark had testified that he went to work for the Standard Oil Com- pany in 1892, whereas Mr. Mathews, speaking from the record, said he went to work in 1893.* "Mr. W. H. Clark, of Newark, Ohio, who has given testimony before this commission," said Mr. Mathews, "was hired, when a youth, to work at Marietta as office and warehouse boy, at a salary of $15 per month to learn the business, and as fast as he became proficient in the work was promoted in salary and position until he became local agent at Newark, at a salary of $2.25 per day. While at Newark he became short in his accounts, was discovered and discharged, which is the only incentive that I can discover for the series of untrue and malicious statements made by him before the commission. "His statements about competition and variation in prices at Marie ta are untrue," said Mr. Mathews. "His position as office and warehouse boy did not bring him in contact with the trade. He could not be intormed and, therefore, would know nothing about methods of marketing oil or prices. Davis, the peddler referred to, has never been in the employ of the com- pany, and the 'farmer story' has been refuted by Mr. Ebright." Mr. Mathews submitted a certified transcript of portions of testimony of William Ebright, taken in the case of the State of Ohio ex rel. F.'S. Mon- nett vs. the Standard Oil Company. Ebright denied that he sold oil as an independent dealer, and as a "farmer," or that he had cut the prices. He was not there to run out Curtis and he sold out to another man. He did not even know Curtis. Mr. MATHEWS. "His statements that we marketed eight grades of oil at eight different prices from two storage tanks at Marietta, and that the manager (meaning me) gave him such instrtictions are false. Not being agent, no instructions would be given him concerning prices. The facts are- We have three grades of oil at Marietta, and eight names. Ohio State Test and Prime White are two names for the same grade of oil, and both are sold at the same price. Ohio State Test is a brand adopted by some of the trade when Ohio passed its inspection law. while others adhered to the previously well-known trade name of Prime White, thus creating two brands for the same oil. Water White, Red Star Water White, Silver Light and Crystal are four names, for the same grade of oil, which are sold at the same price. These four brands are trade names, having been established by ctistom in different localities to meet the requirements of the local demands. Eocene and Hyperion are not the same oil, but are two different grades of oil. Eocene is manufactured in Cleveland, and Hyperion at Parkersburg, Eocene being sold at one-half cent per gallon above the price of Hyperion, and is kept in storage at Marietta, while Hyperion is shipped direct to the trade from the Parkersburg refinery. There are but a few places near Marietta where it pays better, on account of saving in freight, to give the buyer Eocene (a better oil) under the Hyperion brand, rather than make the ship- ment of Hyperion from Parkersburg at a lower cost for the oil. Water White was furnished to one of the jobbers at Marietta under the brand of 'Crystal Oil' (and sold to them at the Water White market), which was his trade mark brand. "Clark's statement about mixing gasoline with turpentine is absolutely false and malicious. Instructions to all my people have been to give the pur- chaser what he buys, both quality and quantity. The officers of the com- pany have always impressed me with the importance of this principle; further, a buyer can determine adulteration of the turpentine with gasoline instantly by the use of an ordinary hydrometer, which all druggists keep. The falsity of Clark's statement about the alleged 'trick' I taught him is emphasized by the position he held of warehouse and office boy, the agent •111 the cfflcial report of testimony, Clark's statement is made to show that he began work in isy3. 416 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. l)eing the only one who received instructions. I have the affidavit of W. A. Reed, local agent at Marietta at the time Clark was there, which I submit." In his affidavit Mr. Reed said that Mr. Frank Davis was never in the employment of the Standard Oil Company, but he wished to go in the oil peddling business, and they sold him a wagon and sold him oil outright at the ruling market prices, he selling it at prices fixed by himself in competi- tion v.'ith other peddlers and retail grocers at Marietta. The Standard Oil Company had nothing whatever to do with regulating his retail price. The affidavit of Mr. Reed continued: "Davis continued this business until his death, when his father sold the wagon to a man named Twiggs, who soon after sold it to the Producers' Refining Company, which ran the wagon until it discontinued business. "Curtis was also a peddler, buying and selling oil in the same way a.t Marietta. It is not true that he purchased his supplies from the Argand Refining Company. He bought his supplies from the Producers' and the Rice Companies until those companies shut down, after which he purchased his oil from the Standard Oil Company. "It is not true that we played the 'farmer' or any other racket with Mr. Ebright. Ebright was another peddler, who bought and paid for his oil sup- plies the same way as any other peddler, and sold the oil thus purchased at retail in Marietta. I had nothing whatever to do with retail prices of oil in Marietta, which were regulated entirely by the competition between the peddlers and the retail grocers of that city. "The statement is absolutely false that we sold oil from the same tank at different prices, representing it to be of different grades, or that we mixed gasoline with turpentine, or practiced any deception of any kind whatever with regard to the quality of our products in selling the same." Mr. Mathews submitted certified transcripts of testimony of William Ebright taken in the case of the State of Ohio ex rel. F. S. Monnett, vs. the Standard Oil Company of Ohio, in which Ebright denied that he had ever sold oil to dealers as a farmer. Affidavits of C. W. Foley, local agent of the Standard Oil Company at Springfield, Ohio, and R. A. Fonts, of Marietta, Ohio, were submitted in relation to Clark's statement that George Blazer was instructed to seil dif- ferent grades of oil out of the same tank. Mr. Foley said he had never had any conversation with Mr. Cragin, now dead, or any one else about drawing different grades of oil from the same tank and charging different prices for it. It was not true that they ever sold any oil at that station in that manner. "All our grades of oil," said Mr. Foley, "were sold for precisely what they were, and no deception of any kind was practiced upon our customers as to the quality or price of the oil furnished them. It is not true that Blazer quit the employment of the company because he was required by that employment to deceive customers as to the quality or price of the oil sold. The only reason given by Mr. Blazer when he quit was that the work was too hard for him." The affidavit of Mr. R. A. Fonts stated that he went to Springfield and had an interview with George Blazer. Mr. Fonts in his affidavit said: "He (Blazer) stated that he resides at Springfield, Ohio, and worked for a short time for the Standard Oil Company, while W. H. Clark was there. He stated that he never said to Mr. Clark or anyone else that if he could not work for an honest company he would quit, and for that reason must leave the Standard Oil Company's employment, or that he was leaving or had left the Standard Oil Company's employment because he could not conscien- tiously draw different grades of oil from^ the same tank. He also stated he left the employment of the Standard Oil Company because he did not like the tank wagon work, and for no other reason. He made the above state- ment to me, but declined to make affidavit." Mr. MATHEWS. "His statement that we drew four different grades of oil out of the same tank, and charged four different prices, is absolutely false. Mr. Clark, as well as all other tank wagon drivers, was not allowed to discriminnte between one buyer and another, but charged all customers the same price for the same grade of oil. In proof of this, in making his B. A. MATHEWS. 417 returns at night to the cashier his total sales had to be accounted for on the basis of the ruling market. Therefore, he could not cut the price to any buyer without paying it out of his own pocket, and it goes without saying that no retailer would pay more than the market. I have the affidavits of Mr. Toland and Mr. McMahon, both tank wagon drivers at the time Clark was at Springfield, the only two men who were doing the same kind of work that Clark did at Springfield, showing their method of conducting the busi- ness, which I submit." The affidavits of W. W. McMahon and C. M. Toland flatly denied Clark's statements in regard to selling oil from the same tank as of different grades and at different prices. Mr. MATHEWS. "His' statement with reference to rebates at Spring- field is untrue. We did not allow Mr. Clark, while at Springfield, to make rebates. "His statement concerning hours of labor is misleading and untrue. Our tank wagon work is planned with the view of a day's work constituting 10 hours. In making drives to country towns, from eight to 14 miles, it is understood that when a driver returns his day's work is completed. "His statements about fire test governing the quality of oils are not true. One hundred and twenty (120) degrees of fire test, by Ohio law, is the equivalent of one hundred and fifty (150) degrees by the Tagliabue open cup. Concerning our three grades, there is no difference in the fire test of the same. His statement that there is 10° difference is false. They are all 150° fire test by the Tagliabue open cup, or 120° fire test by the Ohio State test, Foster cup, which is the State test required by Ohio. "The fire test of oil required by Ohio statutes does not represent quality, but simply safety. Oil may be exactly the same fire test but different in illuminating power. The quality of an oil is distinguished by its illuminat- ing quality. "His statement that he was promoted to the position of cashier at Columbus and had charge of the work around the warehouse is false and absurd, for the reason that his position was simply shipping clerk, under a superintendent, who had entire charge of everything around the works. "His statement concerning boiled linseed oil is false and malicious. The dryer used in boiling was a pure linseed oil dryer, which cost 10 cents per gallon more than linseed oil and increased the cost instead of decreasing it, and improved the quality, instead of adulterating it, as testified by Clark. "His statement that miners' oil is made by compounding cotton seed oil with 40 per cent, petroleum is false and malicious, because the Ohio law prohibits such a large percentage of petroleum being used. The law is rig- idly enforced on gravity and smoke qualifications, which would absolutely prevent more than 14 per cent, of petroleum. Miners' oil is known to the Ohio State officials to be cotton seed oil, compounded with petroleum. The price of miners' oil is regulated by the price of cotton seed oil, and sells about two cents per gallon below. It was malicious for Clark to state that a dealer would pay 34 cents for miners' oil, when the dealer could buy cotton seed oil for 24 cents. "His statement that lubricating oil is received in blank heads at Colum- bus, and shipped out to meet the requirements of the trade, without regard to contents, is untrue and absurd, because if the barrels came unbranded it would be impossible for the warehouse man to tell the contents, and an order for cylinder oil might be filled with a barrel of sewing machine oil, or vice versa, if Clark's statement were true. I have the affidavit of Adam Paulus, referred to by Clark as 'mixer.' which I submit." The affidavit of Adam Paulus, who did the mixing of linseed and cotton seed oil, referred to by Clark, was submitted. It corroborated Mr. Mathews' testimony. Mr. MATHEWS. "In reference to his statement concerning cut prices and rebates at Columbus, as he was only a shipping clerk (and absolutely without knowledge regarding marketing matters) his statements are purely malicious. On the general question of competition we always seek to pro- tect our trade, and when any competitor makes a cut price for the purpose of taking our business away from us (quality considered) we do not hesi- tate to meet it." 27 418 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The affidavit of Moses K. Gradwohl denied that he had ever taken in $200 a day from his wagon, as stated by Clark. He said his average daily deliveries were about $50. The largest daily delivery he ever made was $100. Mr. MATHEWS. "His statement with reference to having an arrange- ment with competitors to advance markets at Columbus, is false. Strong^ competition still exists, which in itself contradicts his statement. He had no knowledge on the subject, being only shipping clerk at the works, located a mile and a half away. Therefore he would know nothing of what was going on in the office. "His statement naming competitive brands of oil at Columbus is untrue. Their brands being Ohio State Test. Prime White, People's Headlight, Sun- cene, Water White, and Diamond Light — not Penoline, Safety Light, and Electric Light, as stated by him. Ohio State Test, Prime White and Peo- ple's Headlight cover one grade of oil; Suncene and Water White another; Diamond Light a third, showing clearly their trade requirements. "His statements concerning the hiring of a boy to watch tank cars and being paid by him are false. "His statement that we took empty barrels at an exorbitant price, in order to hold trade on oil, is false. He had nothing to do with purchasing or handling of empty barrels, and had no knowledge whatever about empty barrel prices. Our price at Columbus is strictly uniform on empty barrels to all customers. "His statement that he was manager at Urbana is untrue. His position was simply local agent, three-quarters of his time being occupied in driving a tank wagon. He did not have full charge of all the business, as stated. "His statement about William Helmick at Urbana is untrue. Mr. Hel- mick bought only one carload of competitive oil, and, after he had sold about half the car, he became satisfied that he would lose money on account of leakage and poor quality. We helped him out by purchasing the other half of the car. and he discontinued jobbing oil, but remained in the oil business as a peddler for about two years thereafter. We did not at any time drop the price while he was in the business; on the contrary, what little oil Helmick marketed was sold by him at a cut price. No threats were made by Mr. Hollings worth or Mr. Welsh, as stated by Clark. I have their affidavits, which I submit, and also the affidavit of W. H. Hurley. "Helmick's so-called warehouse, that Clark refers to. was simply a temporary shed made of refuse old car lumber. It had no value except for kindling wood, and Helmick afterwards used it for that purpose." * * * "Mr. Helmick did not lose any money during the few days he was try- ing to wholesale oil: therefore it is absurd and malicious for Clark to state that any action of ours drove Helmick to the poorhouse. The loss of his money was due to an entirely different cause." Affidavits of H. S. Hollingsworth. William Welsh. W. H. Hurley, Thomas Powers and N. P. Cone were submitted utterly refuting Clark's testimony on the several matters referred to in the above testimony of Mr. Mathews. The affidavit of N. P. Cone stated that William Helmick's destitution resulted from the extravagance of his family and other domestic troubles complained of by him. and was due to no other cause. Mr. MATHEWS. "His statement that the business at Urbana ran about 40.000 to .50,000 gallons per month is false, the average being only about one-half. "His statement that he held the position of manager at Newark is false. His position was that of local agent, same as at Urbana, three-quarters of his time beine: occupied in driving tank wagon and dray. "His statement that the average monthly output at Newark was 80.000 gallons is not true, the correct figures being less than one-half that amount. "With reference to variation in prices at Newark on stove gasoline, the same situation was true elsewhere, on account of the marked advance in prico of easoline. Many dealers at the time of the advance were under contract for a period of time; consequently the advance only applied to those who were not under contract. But as contracts expired the advance in price was charged to them, as well as others. B. A. MATHEWS. 419 "Answering the general statements made by Clark relative to selling refined oil at cut prices at Newark: All dealers were treated alike. His statement that at Newark we charged Mr. Rankin six cents for oil and Showman Bros, seven and a half cents is false. The facts are: Showman Bros, bought their oil in bulk from the tank wagon, while C. C. Rankin bought oil in barrels and paid one and a half cents per gallon more than Showman Bros, paid for the same oil, but we allowed Rankin 75 cents when he returned the empty barrel, the equivalent of one and a half cents per gallon, which made the net cost to both dealers the same. "His statement that Hagmeier, a dealer at Newark, was rebated one cent per gallon on gasoline and two cents on oil, is false. Clark was given special permission to pay a rebate which was one-half cent per gallon on both oil and gasoline, under a contract. Mr. Clark paid the one-half cent himself and then testified here that he paid one and two cents. He also presented a letter from George J. Hagmeier stating that he had received rebates and I have an affidavit from Mr. Hagmeier showing how that letter was procured." The affidavit of George J. Hagmeier stated that under a contract for a large quantity of oil he had received a rebate of one-half cent per gallon on both oil and gasoline. He said it was not true that he had ever received a rebate of one cent per gallon on gasoline and two cents per gallon on oil. He had never received more than the one-half cent per gallon, as per his con- tract. In regard to the note or statement, signed by Mr. Hagmeier, and read by Clark before the Industrial Commission in regard to rebates on goods, Hagmeier stated in his affidavit that he had signed some such statement in order to assist Clark in straightening out his accounts with the company, as Clark had stated that his shortage had been occasioned in part by the payment of rebates. Mr. Mathews said that Clark's statement in regard to a trick he alleged the witness had taught him in making lamp tests by turning the wick in a way that sulphur could not be smelled when Ohio oil was used, was untrue. He said it was the height of folly for any man to say that the people could be humbugged by the turning up of one flame higher than the other. The witness submitted affidavits of D. J. Hull, H. S. Hollingsworth, E. G. Mathews, W. W. Hughes and W. A. Reed (the last named not being in the employ of the Standard Oil Company when Clark or the witness testi- fied) which characterized Clark's statement about the trick of turning the wick as utterly false. The names of Hull, Hollingsworth, Mathews, Hu2:hes and Reed had been given by Clark, who said they had knoweldge of these frauds being used in making lamp tests. All of these witnesses testified that when Ohio and Pennsylvania oils are tested lamps of the same size, burners of the same kind, wicks of the same make and chimneys of the same make are always used, and at the beginning of the test the height of the flame in each lamp is precisely the same. They all said that they had never known of any deception being used in these tests. The witness said that in order that the commission might fully under- stand the falsity of the statements made by Clark in relation to the drawing of seven different grades of oil from one tank by a "twist of the wrist," that he would state that the Standard Oil Company had a tank wagon at Newark with three compartments, showing conclusively that they carry three grades of goods. . Mr. MATHEWS. "Concerning his general statement on lubricating oils: He refers to our trade mark brands on which there is no competition, and for which we have a regular schedule, the price varying only in accord- ance with the quantity used and the cost of delivering same to the con- sumers. Inasmuch as no competitor can sell these oils, there is no neces- sity for our making any different price other than our schedule. "His statements concerning the purchase and removal of the alleged warehouse at Newark, in order to drive out a competitor, are false. After the so-called warehouse was purchased. Donaldson, the person whom Clark claimed we drove out of business by the purchase of a shed from its owner (without Donaldson's knowledge), continued in business by renting a barn. 420 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Further, Clark purchased the shed unknown to and unauthorized by me or Mr. Hollingsworth, and moved the building to his (Clark s) own pri- vate lot, for his own private use, and paid for by him and not by/us. "We derived no benefit from the transaction and I criticised Clark severely when the subject came to my notice. This so-called warehouse, emphasized so largely by Clark, was only an old shed, about lour leet by four feet, with capacity for simply one barrel of oil. I have photograph of shed and Mr. Hollingsworth's affidavit, which I submit." The affidavit of Mr. Hollingsworth corroborated the above statements of Mr. Mathews. He said that the first he knew of the transaction in regard to Donaldson's warehouse, Clark had purchased the building for $2.50 and moved it on his private lot, stating to him that he bought the shed because he needed it for an out-house. The so-called "warehouse" was about four feet by four feet, with a capacity for storing a single barrel of oil, and in the judgment of Mr. Hollingsworth, $2.50 was an excessive price for it. He said that the purchase of the shed did not drive Donaldson out of the busi- ness, as he rented a barn afterwards and stored his barreled oil in it. Mr. MATHEWS. "His statement concerning Mr. King and others at Newark, running tank wagons, is very misleading, because the term gener- ally applies to our method of delivery to the retail trade, whereas they were peddlers who ran their own wagons, bought their oil from us and made whatever price to the consumer they desired and were practically regulated by the price made by retail stores. We had nothing to do with fixing such prices — these peddlers all working for themselves. "Mr. Lockwood was not a manager, nor a special inspector, but simply a traveling auditor, whose duty it was to visit stations, check up stocks, balance cash, check accounts and see that our agents were conducting the business honestly. Mr. Clark's reports were not received regularly, and after I had requested him repeatedly to give the matter prompt attention (and he having failed to do so), at my request Mr. Lockwood was sent to Newark to check Clark up. He did so, and after balancing the cash (which is the first thing an auditor does) he found it short. This was reported to me and I suspended Clark until Mr. Lockwood had completed his examina- tion. Further investigation disclosed the fact that collections had been made by Clark and not reported. "Some of these items were made good by Clark from day to day by pay- ments to Mr. Lockwood on the theory that they were errors. They, how- ever, became so numerous that Mr. Lockwood finally refused to receive any more payments until he had completed his examination, when, according to custom, he would make a final report, and leave the adjustment to the officers of the company. "From the time that I suspected him up to date. I have never tried to re-engage him, directly or indirectly, through Mr. Fouts or anyone else. I submit Mr. Fonts' affidavit showing that he has not." The affidavit of Mr. Fouts stated that he had never had any talk of any kind whatever with Mr. Clark upon the subject of his re-employment by the Standard Oil Company; also that he was a traveling man and had no author- ity to employ anyone for the company. Mr. Mathews denied the truth of Clark's statement that the Standard Oil Company deducted from his salary errors which others had made. Mr. Mathews said: "The final report of our auditor showed Mr. Clark's shortage to be $23L57. He made good $121.93. The balance, $109.64. was paid in full by his bonding company after they had examined the report and found it to be correct. "He was finally arrested by the bonding company who had signed his bond as agent." Q. (By Vice-Chairman PHILLIPS.) What became of him after his arrest? A. He was arrested on the charge of embezzling $109.64, which is a sum largely in excess of the amount, $35, required under the Ohio laws to constitute a felony. He was bound over by the examining magistrate. It appeared that the aggregate was taken in small sums and at different times; no one sum amounting to $35, or sufficient to constitute a felony under the Ohio statutes. Therefore the grand jury failed to indict him, GEORGE RICE. 421 on the ground that the offenses could not be joined together, and that no felony had been committed; only petty larceny. Mr. Mathews said that occasionally his company had a contract with a dealer who would buy all of his oil from them for a half cent a gallon off the price. Such contracts were very rare when he testified. The amount off never exceeded half a cent. The consideration for that concession was that the dealer should purchase all of his oil from them, such contracts usually being for a year. Such contracts related solely to illuminating oil. The witness said he had nothing to do with railroad oils and had no knowledge on that subject. He said that as a rule it was not their custom to put down the price of oil in a locality where there was competition unless the competitor should cut the price first, and if the quality was the same, they did not hesitate to meet the price in such cases in order to hold their business. He said that about three-fourths of the affidavits he had presented to the commission to sustain his reply to the charges made by Mr. Clark were from people who were connected with the Standard Oil Company. These af- fidavits had been given voluntarily and no one who had been shown Clark's testimony, and who had personal knowledge of the matters testified to by him, had declined to make affidavit. CHAPTER XIX. TESTIMONY OF MR. GEORGE RICE, OF MARIETTA, OHIO, PRODUCER AND REFINER OF OIL. For many years Mr. George Rice, of Marietta, Ohio, has been one of the most picturesque men among those who have gained prominence throughout the country because of their failure to attain success as producers or refiners of oil. Most men achieve lame by their successes in life, but Mr. Rice has secured either fame or notoriety, according to the point of view one may take of the course he has pursued, by his failures in life. Of course he has held the Standard Oil Company responsible for every failure of his life. Mr. Rice went into the oil business when it yielded large profits and be- fore competition had placed it on a level with other business enterprises. It did not require a great deal of business ability for a man to succeed at that time, provided he was fortunate enough to get hold of paying properties, iviature was lavish in yielding up the wealth stored in the earth and little ingenuity was required to develop the wells. The development of the oil btisiness ran in parallel lines with every other new enterprise that is based on a wide-spread demand and a limited source of supply. The large profits attracted both capital and men of ingenuity. In the field of competition, which was entered by more men than could make a success in it, the same restilts were shown as will always be found under similar conditions, what- ever the branch of industry may be. Those of least business ability and with small capital had to get out of the btisiness wherever ingenuity and large capital were absolutely necessary for success. The production of oil offered a field for those who liad but a small stock of these necessary requisities be- catise everything attending that branch of the btisiness was quite simple when once paying oil property had been secured. It was quite another matter in the refining of oil. In order that oil could be refined on the most economical basis, it was necessary to do btisiness on a large scale, and above all to find a market for the finished product. The marketing facilities involved the construction of pipe lines and an organiza- tion of superior character. Mr. Rice was a jovial and sanguine man in the early days of the oil de- velopment. It was in 1865 that he located at Pithole, Pennsylvania, and he remained there until 1870. He was a producer and a speculator in oils, lands and leases. He was fairly successful and drew from the land of many a struggling farmer, in periods of a few months, more wealth than that farmer 422 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. had been able to secure by tilling the soil during a lifetime. About 1870 he located at Marietta, Ohio, near what was commonly known as the "West Virginia field." At that time oil was bringing good prices. From 1870 to 1872 it sold on an average for from $3 to $4 a barrel. At the end of that period, or in 1872-73, an association was formed and a compact was made with the refiners to fix stable prices for crude oil, which was done by the adoption of a sliding scale. When refined oil on the market advanced one cent per gallon, crude oil was advanced 25 cents per barrel. This ratio con- tinued for three or four years. Mr. Rice made money and might have con- tinued to do so uninterruptedly had he continued to be a producer, for which his talents fitted him. He became ambitious to be a refiner, and, as both pro- ducer and refiner, naturally expected to receive a double advantage through the operation of the sliding scale. This sliding scale was operated on what was known as the West Virginia plan, and it was thought that it would ex- tend throughout the country. Under its operation Mr. Rice started a refinery with a capacity of 500 barrels a week. In this new field of industry a very different class of talent was demanded of him, and he had to market a small quantity of oil in an economical way. His task would have been a difficult one had he been operating on a larger scale, but he was met with one of those exigencies that are unfortunate for any business man. The high prices of oil had stimulated men of brains, energy and capital in the development of oil fields. The result was an over-production in oil and an immense development in the Pennsylvania field, which had the nat- ural effect of reducing the value of that commodity in the markets. This over-production caused the destruction of the sliding scale system, which had acted as a strong stimulant in maintaining and equalizing the prices of crude and refined petroleum. Refiners had turned their attention to the Pennsylvania fields, where the energy of ex-Representative Thomas W. Phillips, vice-chairman of the Industrial Commission, contributed largely to over-production and the falling of prices. Undoubtedly the large production secured by Mr. Phillips tended materially to wreck the fortunes of Mr. Rice. Mr. Rice was continuing to produce and to refine oil, and having to rely upon his own resources sought nearby markets in the State of Ohio, and for his small shipments was obliged to pay heavy rates. He was struggling along when his whole enterprise received a terrible blow through an act of Congress passed in 1879. That act prohibited the carrying of crude or refined petroleum on passenger steamboats as freight. He had been shipping his oil in barrels by means of river transportation, which was cut off from his tise by reason of that act. Refining centers changed rapidly. Some had been moved to Pittsburg where advantage could be taken of the cheaper prices that v/ere reigning, and where water transportation was frequently available. The bulk of the l)usiness done by Mr. Rice was not large enough to permit him to ship his refined oil by barges and he was obliged to depend entirely upon the railroads to transport his oil. In that day railroad rates were not published and the amount of freight charged on every shipment was the result of a special contract relating to it. Mr. Rice struggled for a time against the inevitable, but was finally obliged to give up the contest, and from that day until this he has occupied himself by carrying on a persistent fight against railroads and the Standard Oil Company. He fought the rail- roads because he argued that had they co-operated with him in his business, and given him the lates he desired, he might not have failed. He fought the Standard Oil Company because that company, managed on a larger scale than his own business, and enabled to lake advantage of a hundred econo- mies that were beyond his reach, continued in business by adapting itself from time to time to changing conditions, the men connected with it m.eet- ing prosperity instead of adversity which was the portion of Mr. Rico. Had Mr. Rice continued as a producer of crude oil he would probably have re- mained a prosperous man and perhaps would have become a millionaire, as did some other producers who were wise enough to remain in a business which tliey understood and lor which their talents fitted them. He testified that no obstacle was thrown in his way as a ])roducer of oil. Mr. Rice appeared before the commission on NovcMuber in. ISft!*. to give his testimony, but did not go on the stand until the following day, when he consumed nearly five hours in presenting his case. His suggestion of legis- GEORGE RICE. 423 lation to prevent the alleged injustice which he claimed, was altogether ■unique. It was summed up in his recommendation that the railroads of the United States be owned by the government, that the 800,000 employes on these roads be disfranchised, that railroad and trust officials be shot as a last recourse, and that the protective tariff be taken off of goods manufactured ty trusts. Mr. Rice's appearance at the rooms of the commission caused quite a commotion because of the manner in which he proposed to place his state- ments before the commission. He had prepared and printed a pamphlet of 77 pages which contained a very exhaustive review of the testimony he had given on numerous occasions during a number of years. He had entitled his pamphlet "The testimony of George Rice, given before the Industrial Com- mission, at Washington, D. C." For some reason, known only to himself, he liad copyrighted his statement. Of course neither Mr. Rice nor anyone else could be warranted in copy- righting testimony which would naturally be the property of the government, and his statements could not become testimony until they had actually been given. The commission took exception to his method, and after the com- missioners had examined the pamphlet and found that it contained attacks on a number of government officials, including President McKinley and two ex-Presidents of the United States, refused to recognize the little book and criticised the method adopted by its author who announced that it was his purpose to use the document for campaign purposes. Mr. Rice saw that he had committed a serious error in the course he had pursued, and promptly took steps to change the copyright name of his pamphlet, calling it "The proposed testimony of George Rice to be given before the Industrial Commission." He was told that the purpose of the commission was to secure information and that it would not lend itself to any attempt to attack the character of individuals by the making of mere declamatory statements. It was agreed that Mr. Rice should rearrange his printed statement in accordance with this decision, which did not involve any change in his very extravagant and unwarranted language used in referiing to the Standard Oil Company and those connected with it. All this had taken up so much time that Mr. Rice could not go on the stand until the next day, when he proceeded to recount the old story of his failure to succeed in business ascribing all his misfortunes to the Standard Oil Company. He was like a sick man who attributed his ailments to some imaginary disease, being unable to diagnose his own own case in a rational manner. At no time did he doubt that he had conducted his busi- ness with all that ability that is necessary to insure success and he was con- vinced that he had always been pursued by a relentless Nemesis under the name of the Standard Oil Company. Mr. Rice began his testimony by a long review of his business troubles, tracing to the railroads of the country and to the Standard Oil Company every misfortune of his life. Before he was permitted to begin his testi- mony he was questioned by members of the commission in order that it might be shown that the pamphlet he had prepared and had at first entitled "Testimony given before the Industrial Commission." was not the result of any questions submitted to him by anyone connected with the commission, and that in no way could it be connected with that body. This course was taken by the commission in order that Mr. Rice should not be able to attach any responsibility to the commission for those portions of his pamphlet which he was told he would not be permitted to bring before the commis- sion. The portions of this pamphlet which he was not permitted to intro- duce as evidence follow: "Section 6 of the interstate commerce act provides that all original tariff sheets: "Shall also state separately the terminal charfjes and any i-uJcs or resulation.s which in any wise change, affect or d*>termine any part or the aggregate of snt-li aforesaid rates and fares and charges. "The railroads, in gross violation of this section, issue and file with the commission, general rate tariff sheets for public use, and then side- track these by the issuance of innumerable supplements, special oil tariffs, special circulars, commodity rates, etc., that are often and indiscriminately 424 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. filed, as substitutes to change, cancel and amend the original tariffs, and to such an extent is this done that in reality there is no head nor tail left to it, very little of the body, but it stands inviolate for public use. "The query is: Why is it that for 12 years the Interstate Commerce Commission have neglected their duty and not corrected this gross evasion of the law, and allowed such special tariffs to be filed, and why is it that all general tariffs omit this wise provision of the law, and why is it that rail- roads do not comply with the law in any of its essentials, nor forced thereto? "The interstate commerce act provided a penalty on carrier officials, and, by amendment, on the shippers, of $5,000 fine and two years in the penitentiary for each and every offense, and with such stringent measures no deterrent effect is had on rail or trust officials. The same old unbroken line of freight discriminations for 27 years in the form of 'secret rates, drawbacks, rebates and other devices,' have continued to exist up to date without a break, and for the reason that not a violator of the act has yet been sent to the penitentiary to atone for his misdeeds; for when the doors have nearly been reached a pardon from the President has annulled the act and set the convict free. All this, in very truth, has so far made the statute but a farce instead of a very solemn Congressional enactment intended for the benefit of the people. And those who are charged with its proper administration and execution should blush for shame to know that those who have been and are so monstrously and recklessly defiant of It should go so long unwhipped of justice. "It costs $200,000 per annum to run the Interstate Commerce Commis- sion, or two and a half millions already expended since its inception, and what do the people get in return? Nothing. No relief whatsoever, with 12 years' trial of the act. from the gross rebates or freight discriminations, W'holly in the interest of the exclusive few, and the question of the hour is: How much longer will the people stand those highwaymanlike tactics and piratical assaults upon their sacred rights of eminent domain? "The State exercises its right of eminent domain to give the right of way to railroads: the people thus part with their property to these corpora- tions on the faith that they shall exercise the franchises thus granted hon- estly and with an equal hand. "It is a burning shame that these rights and franchises, the gifts of the State, should be administered by railroad magnates to the impoverishment and slavery of the people. "If the Federal anti-trust act had been immediately and properly en- forced by the Attorney-General, as is specifically required, all the then existing trusts would have long since been destroyed and no more would have been formed, and the present epidemic of trusts unknown. "The Congress, on demand of the people, passed certain special laws for their relief, but because of their non-enforcement by certain delegated officials, the act becomes a nullity, by the non-action of one man, a sworn government official, who seems to use his power to do or not to do. "Eleven years ago (1888) there was an exhaustive investigation by Con- gress of trusts, which resulted in the enactment in 1890 of this broad, most comprehensive and important of all acts, for the well-being and commercial relief of the citizen, and if said act had been enforced at an early date by the Department of .lustice, through its Attorney-General, as the act specifi- cally requires him to do, the then existing unlawful trusts and combinations would have long ere this ceased to exist, no more would have been formed, and the present epidemic of trusts would be unknown. 'If trust and rail officials had complied with the anti-trust act, as it ■was their duty to do, or been forced thereto, there would not now exist that great unrest and discontent that at present pervades the land and there would have been no cause for the creation and appointment of this commis- sion. To the great credit of the United States Supreme Court, they have taken a broad and liberal view of the Sherman anti-trust act. and decided that it 'applies to and covers common carriers by railroads' which adds vital importance to the act. GEORGE RICE. 425 "By the Official Railway Guide of September, 1899, there exists to-day 44 separate and distinctly illegal combinations, composed of joint railroad, lake and ocean steamship lines, thus precluding excuse for water competition. "These several pooled traffic associations and freight committees (latter new term) represent all the principal railroads and water lines in the United States, including some of the Canadian railways, working unitedly and in unison for the unlawful maintenance of joint freight rates, both rail and water, which is in 'restraint of trade' as forbidden by the Federal anti-trust act and confirmed by the Supreme Court. "Section 5 of the interstate commerce act reads as follows: " 'That it shall be unlawful for any common carrier subject to the provisions of this act to enter into any contract, agreement, or combination with any other com- mon carrier or carriers for the pooling of freights of different and competing rail- roads or to divide between them the aggregate or net proceeds of the earnings of such railroads, or any portion thereof; and in any case of an agreement for the pooling of freights as aforesaid, each day of its continuance shall be deemed a separate offence.' "And why Is it that the Interstate Commerce Commission for 12 years have not entered complaint against these unlawful combines as required so to do, under section 12 of the act? "This act was passed during the administration of President Benjamin Harrison, in the second year of his term, who signed it, and who was finally cognizant of its terms, and whose sworn duty it was to have directed his own appointed attorney-general to vigorously execute the same, and who becomes the most responsible for its non-enforcement, and the enormous attendant evils resulting therefrom. "His successor, Grover Cleveland, did no better, and our President, William McKinley, follows in their foot-steps. Is this not an appalling ex- posure of the dereliction of official duty, a dishonored and prostituted ad- ministration of the solemn laws of our land. "Trusts continue to fatten and spread their spawn, and the law is im- potent, made so by reason of its non-enforcement by public officials sworn to enforce it. Years of pleading and appeal by the people to their repre- sentatives in Congress for the passage of an ideal act like this, the prompt enforcement of which would have relieved them of their great burdens and of the increasing pressure and oppression of these gigantic and unlawful trusts and combinations which are now making them serfs and vassals to the piratical schemes of a few men, who, in bold defiance of our laws, un- lawfully exact from off the honest labor and toil of the masses hundreds of millions of dollars, have proved unavailing. "A century ago the American colonies, goaded to despair by long-con- tinued injuries, insults and exactions, broke the fetters that had bound them for many years, and appealing to the Supreme Judge of the world for the rectitude of their intentions, 'assumed amongst the powers of the earth the separate and equal station to which the laws of nature and of nature's God entitled them.' In that renowned Declaration of Independence our fore- fathers asserted 'that when a long train of abuses and usurpations, pursuing invariably the same object, evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off their oppressors and provide new guards for future security.' "The last resort is for the people to retake into their own hands the power that has been delegated and abused. Vigilance committees have more than once had a purifying influence. There may be conditions which will again render them a necessity. There is a limit to human forbearance. Has that limit yet been reached? "I am free to assert that unless some drastic measures are soon taken to do justice for the people the end will come in an ugly shape. The colossal fortunes that have been piled up as a result of the advantages enjoyed by the few and denied to the many, represent just that much money coined from the blood sweat of the masses. I do not believe any system will be permitted to exist which allows one man to accumulate a fortune of four or five hundred millions of dollars, while millions of his fellow creatures are suffering for the bare necessities of life. 426 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Every great wrong of the people can be traced back to the greed and selfishness of the men who have cornered the resources of the earth, who keep the 'corner' Intact by reason of an illicit power bestowed upon them by corrupt officials who for the time being constituted the State. These criminal monopolies would be impossible if officials who administered the laws performed their sworn duty to the people. But they persistently re- fuse to do this. Men may impoverish themselves in an effort to secure rights which the constitution gives to them, but for want of an official execu- tion these rights are denied them. This is a condition wholly incompatible with the principles upon which our government is founded, and should not continue. The people will soon throw off the yoke if relief does not come soon. They have a right to life and some of its enjoyments. They have the former, but only because it is necessary to the furtherance of the ends of the selfish rich. As to the enjoyment of life, look for them in the poverty of the common people and find them not. The people of this country are its sovereigns, and it is not only a crime, but a monstrous crime, to rob them so flagrantly and with so much persistence. "The voice of genius has sent a trumpet blast in response to the cry of the oppressed. The dawn of emancipation should be near at hand. There is a rebellious spirit stirring within the people which may burst into a whirl- wind of wrath. 'The man with the hoe,' whose terrible aspect Professor Markham has so powerfully portrayed, may yet hoe his row, throw off his burden and deliver his fellowman from the toils of the down-trodden and oppressed." The story of Mr. Rice's unfortunate business experience has been told so often that it is well known. It deals with past decades, and can have no bearing on present conditions in the petroleum industry. He has been be- fore numerous investigating committees, and over and over again has re- counted his failures. Mr. Rice appeared before the commission on November 11, 1899. His testimony, as actually given, contained a number of statements that were not permitted by someone to appear in the official record. On the other hand, the official report of the testimony contains much material from Mr. Rice's book which is not in the stenographic report. His declaration that railroad officials who are interested in freight rate discriminations should be shot was stricken out. What Mr. Rice said on this subject, when talking about alleged freight rate discriminations made against him, the basis of which consisted chiefly of surmises, follows: STENOGRAPHIC REPORT. OFFICIAL REPORT (p. 748). A. * * * There is no question * * There is not any question in regard to it v,-hatever, that they in regard to it whatever. There is raised the rates on me, 50 per cent, not any question that they raised the within five days under that letter, rates on me 50 per cent, within five What have you to say to that? That days. I have had men tell me that man ought to be shot. Do you know they would shoot such a man as that, that? I have had men tell me that There is not language strong enough they would shoot such a man as to express a man's disgust at the that; he is an arrant f^coundrel. Of execution of our laws. How any man course I don't like (o use epithets, can excuse such men or have any but any man that will do that Avill belief in them I can't understand. do most anything under the light of that will do such outrageous things, the sun. By God, it is awful. Think Q. (By Mr. CLARKE.) Do you of it! Any railroad man ought to recommend shooting as a I'emedy? be shot that would do such a thing A. T think it will come to something as that; it is outrageous to violate of that kind if you cannot get relief, the laws of this country in this way. What did our colonists do over in You know there isn't language Boston? They threw the tea over- enough to express a man's disgust board, did they not, because of op- at the execution of our laws. How pression? We are just as much op- anybody can excuse such mon or pressed to-day as they were, and have any belief in them. I cannot m.ore so. understand, any men that will do GEORGE RICE. 427 such outrageous things; they ought to be wiped off the face of the earth. Q. (By Mr. CLARKE.) Do you recommend shooting as a remedy? A. Oh, God, I think it will come to something of that kind, Mr. Clarke, if we cannot get relief. What did our colonists do over in Boston there? They threw the tea overboard, didn't they, because of oppression. We are just as much oppressed to-day as they were, and more so. Hundreds of millions of dollars are involved, and there was only a few thousand there; that is what they did over there; they put on masks and went aboard like Indians and threw the tea overboard because of a little extra tax, threw it overboard. Don't you think that some of these railroad men ought to be thrown overboard? I do. I will tell you what it is, peo- ple are getting tired of this thing, I think. The following testimony does not appear in the official report: "I think it is ridiculous and foolish, all this thing; the idea of a great institution like the Standard Oil Trust charging an individual with being a blackmailer, why it is so ridiculous, you know, on the face of it. when they are getting these extraordinary, outrageous freight discriminations from the railroads, robbing the stockholders of the roads out of hundreds of millions of dollars, and because somebody has asked more for their property than they think it is worth he is a blackmailer, and they get their organs to publish it all over the country, you know, that is what they do." Another example of the striking of extravagant statements from Mr. Rice's testimony follows: STENOGRAPHIC REPORT. OFFICIAL REPORT (p. 755). Q. (By Mr. CLARKE.) Do you Q. (By Mr. CLARKE.) Do you not think freight discriminations can not think that discriminations can be provided against effectively with- be provided against effectively with- out government ownership of the out government ownership of rail- railroads? A. No; I don't know how;' roads? A. No; I do not Icnow how I don't know kow it could be done, it can be. They pay no attention to because in the experience we have this severe penalty clause; and as had for the past 12 years, with this everything ^-hows, discriminations severe penalty clause which they put are about as bad today as ever; in for the violation of the law, but of course, they are more covered everything shows the discrimina- up, and you do not get on to the tions are about as bad to-day worst of it. There vas nn expert as ever. Of course, they are that was employed on the books more covered up, and you don't of the Atchison, Topeka & Santa Fe get at the worst of it to-day. when that $7,000,000 of rebates was A friend of "line told me lately — he discovered five years ago. This rail- was the expert on (he books of the road expert told a friend of mine — Atchison. Topeka & Santa Fe Com- this expert who was put on the pany, in which that $7,000,000 of re- books — that he was .iust getting into hates was discovered three or four the "meat" of it. and discovering this years aeo — and that expert told a discrimination, and he had got on to friend of mine within a few davs — it through a certain key. of a pencil this railroad expert who was put on mark on the books, which turned out the books — that he was .iust getting to be the secret. He was just get- 428 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. ting into it when he was shut off, after he had discovered rebates to the extent of $7,000,000; and he said he thought more could have been discovered if he had had time lo worlc it out. This was told to me by friends on whom I can rely — that the expert told him, and I have no doubt that it is so. into the "meat" of it, and had discov- ered these discriminations, and had got on to it through sn entry of a pencil mark which is put upon the books. This pencil mark turned out to be a secret mark which he finally demonstrated to be the key which led him up to get into where he could find out where the rebates v ere. He was just getting into it when he was shut off, after he had discovered re- bates to the extent of $7,000,000, and he said he thought there were some $20,000,000 or $30,000,000 of rebates which could have been discovered, if he had had more time to work it out. A friend of mine told me that the expart told him this und I have no doubt it is so. The following is another example of the liberty taken in the prepara- tion of the testimony for official publication: OFFICIAL REPORT (p. 74,5). The WITNESS. And you can get rid of this political bugbear, centrali- zation, and all that. Just disfran- chise the railroad employes. There are only about 800,000 of them, and there are 1,000,000 men to-day that do not vote. Then you would get rid of all the political end of it. STENOGRAPHIC REPORT. Q. (By Representative LIVINGS- TON.) Suppose the government owned all the railroads and built up a protective tariff, then what would you do? A. I don't believe there is anything else that would break it up in any manner, shape or form. Q. Then you mean that your rem- edy would be to draw off all the pro- tection, and own the railroads; is that your suggestion? A. Yes, sir; take off all protection on any trust or combinations. Q. And then own the railroads? A. Yes, sir; I do; and you can get rid of this political bugbear that they may say may make centralization, and all of this and that. Why, just disfran- chise the employes of the railroad, and what does that amount to? There are only about 800.000 em- ployes, and there are 1,000,000 men to-day that don't vote; if you would disfranchise them then you would get rid of all the political end of it. While Mr. Rice was explaining his theory that railroads should be owned by the government and that railroad employes should be disfran- chised, he remarked: "We gain .3,50,000 to 400.000 voters every year. We have more voters now than we need." This foolish remark was eliminated from the edited testimony. When asked by Mr. Clarke whether he had any remedy othe'- than the government ownership of railroads to recommend, in order to prevent rail- way freight discriminations, he said he had not. and remarked (all of which is eliminated from the official report): "If these men have robbed in thp nast by means of thepc discriminations, as T have shown here, and they Fo on. I don't know what they won't do; and unless you can get these men behind the bars in the penitentiary they will never stop freight dis- criminations." GEORGE RICE. 429 The witness was questioned by Mr. Clarke and made statements which relieved the commission of all responsibility for the pamphlet he had pre- pared and printed as his testimony. Q. (By Mr. CLARKE.) Mr. Rice, have you prepared, printed, copy- righted and published a pamphlet which purports to be testimony given, or to be given, by you before this commission? A. I have. Q. Were you under oath when it was prepared? A. No, sir. Q. Was it known to any officer of this commission that such a pamphlet was being prepared? A. Yes, sir, it was. I notified Professor Jenks, and also the secretary, that I was getting up such a pamphlet of my tegtiraony, to be put in pamphlet shape, and I was also directed to send two copies here two days before the time that I should appear, which I did. Q. Were any questions asked of you or answered by you in the prepara- tion of this pamphlet? The WITNESS. In what way? Mr. CLARKE. By members of the commission. The WITNESS. No, sir; not any members of the commission that I know of have asked me anything in regard to the preparation of it; no, sir. ♦Representative LIVINGSTON. Ask him if there was a schedule of the questions sent him by the commission. Mr. CLARKE. *That is what I was about to inquire. Was any schedule of questions sent you? A. No, sir; nothing of the kind. Q. Do you claim, then, any right to issue that pamphlet as in any sense authorized by this commission? A. Why, no, sir; I do not claim that they have authorized me in any shape or manner to issue a pamphlet of any kind; I have issued it or published it and copyrighted it on my own re- sponsibility. Q. Did any member of the commission know or have any notice of the contents, or the proposed contents, of that pamphlet before you printed and published it? A. Not that I know of. no, sir. Q. You do not claim, therefore, that you have any right in any way to authenticate that by the use of the name of this commission? A. Why, no, sir; I do not claim any authority from the commission for the use of it; I have not been authorized in any manner, shape or form. Mr. Rice then began a review of his own career as a producer and refiner of oil. He said he had been a producer of oil for more than 30 years and a refiner for 20 years, but his refinery had been shut down during the past three years, owing, he said, "to the powerful and all-prevailing machina- tions of the Standard Oil Trust, in criminal collusion and conspiracy with the railroads to destroy my business of 20 years of patient industry, toil and money in building up, wholly by and through unlawful freight dis- criminations. I have been driven from pillar to post, from one railway line to another, for 20 years, in the absolutely vain endeavor to get equal and just freight rates with the Standard Oil Trust, so as to be able to run my refinery at anything approaching a profit, but which I have been utterly unable to do. I have had to consequently shut down, with my business absolutely ruined and my refinery idle. This has been a very sad. bitter and ruinous experience for me to endure, but I have endeavored to the best of my circumstances and ability to combat it the utmost I could, for many a long, waiting year, expecting relief through the honest and proper execu- tion of our laws, which have as yet, however, never come. But I am still living in hope, though I may die in despair." The witness spoke of the magnitude of the petroleum industry, saying the total production of oil in the United States, from its discovery in 1859, had been 886,442,759 barrels of 42 gallons each, about one-third of the total having been produced from 1894 to 1898 inclusive. The total average annual exports in value for the years 1897-98 being 990,389,183 gallons, valued at $55,804,277. The total value of exports from 1864 to 1898 was $1,445,941,156. The WITNESS (Reading). "The combined wealth of the railroads and trusts are jointly owned and used by railway and trust officials to absolutely control the internal commerce of this great Nation and absorb unto them- *Black faced type Indicates matter omitted, in the course of editing, from the official report. 430 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. selves for their own private gain, the immense profits to arise from off all- producing interests and manufactured products, by higher rates of freight through unlawful rebates or freight discriminations, to be increased as they see fit, through compulsory railway tariff exactions, under-hand secret tribute and demands, that must absolutely be complied with if shipments are made. "The Standard Oil Trust officials, presidents and directors in one-fifth total railway mileage of the United States. "I shall be able to fully prove to this commission a living and prominent example thei-eof, as embodied in the Standard Oil Trust which has thus achieved its great wealth and power by dishonest and criminal methods in the unlawful use of our public highways, and through this means have be- come the largest owners in railway bonds and stocks, and to-day its officials are presidents and directors in one-fifth of the total railway mileage of the United States, all accomplished since 1S72. This state of affairs is abso- lutely startling to contemplate; appalling indeed, and as monstrous as it is infamous. This could not have been done except through one source, the railroads, whose officials have criminally conspired with Standard Oil offi- cials, for the past 27 years, to give them their great power and unlawful, ill-gotten wealth.* "Railway freight discrimination is the father and breeder of trusts. "I understand Mr. Havemeyer says that 'the tariff is the mother of trusts,' while I assert that railway freight discrimination is the father of them, the breeder of trusts, from which the greatest commercial evil of the present day arises. Although the tariff has its material effect, it is in no wise at all commensurate with the frightful freight discriminations; promi- nent example — the Standard Oil Trust. "Under the tariff it is not questioned, but that everyone pays the same duty, which is not the case in the payment of railway freights, for all com- petitors of the trust must pay the enforced full tariff rates jointly made by trust and rail ofl[icials, while trust freights are carried for nothing — one- fourth and one-half of the regular established rates, as is easily proved in the case of the Standard Oil Trust. There is no question in my mind but all recent formation of trusts and combinations, and in which Standard offi- cials are largely interested, are based upon and permeated with the same general plans, and investors therein privately advised, that necessarily great advantages will accrue and larger dividends declared on watered stocks through freight discriminations in the concentration of freight. "The Standard Oil Trust was the first industrial trust organized in this country, the originator and father of them all, from which all the rest have been bred. It is directly responsible for the formation of many subsequent trusts, because at an early date it lent its aid and support in the organiza- tion of other trusts, receiving therefrom large sums of money, to the extent of $2.50,000 from some of them (Cottonseed Oil Trust) for a copy of the secret unlawful trust agreement, decided illegal by two States, Ohio and New York, consequently all subsequent acts and resolutions, changing into corporate form, etc., are regarded illegal." He said he would file with the commission exhibits to show that since their "pretence of a dissolution." in March, 1892, the Standard Oil Trust had paid out in dividends $170,730,279; also that the trustees of the Standard Oil Trust testified, in 1879, that they controlled 9.5 per cent, of the oil in- dustry, whereas seven years previously they had only 5 per cent, of that trade. He also filed an exhibit which he claimed showed that a combination of railways forced the independent pipe lines of the oil region to sell out to the "Standard Oil Monopoly at the price of old junk," and gave them ad- ditional discrimination in the shipment of refined oil in gross violation of the agreement of March 25, 1872. Mr. Rice also filed exhibits on the following subjects: *The following appears In the official ippnrt though it is not in the stenographic report: "In 1887 the interstate commerce act was passed to stop these criminal conspiracies, hut with 12 years' trial it has proved absolutely abortive." GEORGE RICE. 431 "1877-78 — Attack by the rail lines upon the Empire Transportation Com- pany by which its refineries, pipe lines, 1.000 tank cars and 400 rack cars were forced into the hands of the Standard Oil Company at a ruinous price. Freight rates cut to eight cents per barrel less than nothing during the fight, and when ended, competitors of the Standard Oil Company were charged $1.90 per barrel, while Standard oil was carried at 11 cents per barrel net in tank cars, lump sum, regardless of weight. Sixteen hundred per cent discrimination." "1879 — Attack by the rail lines upon the Tidewater Pipe Company to crush and destroy it in the interest of the Standard Oil Company. The trunk lines of railway against the Philadelphia & Reading Railroad Com- pany bj" which rail rates were reduced to one-sixth of a cent per ton per mile, and 'barely yielded the cost of the fuel for the engines.' " "This ought to be sufficient," said Mr. Rice, "to briefly summarize how the Standard Oil Company acquired its monopoly of the petroleum industry, and still holds it with a bull-dog grip, and by its actions considers all com- petitors as interlopers or outlaws." The witness submitted to the commission the authorized Official Rail- way Guide of the United States for September, 1899. The WITNESS. You will also perceive on the front page of said guide. an advertisement of the Galena Oil Company, the Standard Oil Trust, in which this trust advertises its goods as follows: "Galena oils are used on nineteen-twentieths of the total railway mileage of the United States, Canada and Mexico, and are being introduced in Europe." That is to say, the Standard Oil Trust here admit that they furnish their lubricating oils to 95 per cent, of all the railways in the United States, Canada and Mexico, and portions of Europe. That is to say, this trust fur- nishes 95 per cent, of all such oils as used by the railways mentioned, for no railway would use trust and competitive oils in conjunction. These oils are taken by the railroads at most extraordinary prices, ranging from 25 to 75 cents a gallon, and here comes another species of favored freight dis- criminations, and in this connection I would like to read Q. (By Mr. FARQUHAR.) That seems to be quite a large claim in respect to the Standard Oil Company in the matter of Galena oils. What is the character of Galena oils in the market among railroad men and among buyers? A. Well, I know from hearsay that they furnish different grades of lubricating petroleum running anywhere from 25 cents up to cylinder stock. All high grades of lubricating oil are generally cylinder stock — cylinder goods. Q. Has it not been a fact that the Galena oil held the American market for years as one of the best standard oils that has ever been manufactured? A. I don't know anything about their quality. Q. Is it not a fact that their Headlight oil is the best in the world? A. I don't know it to be a fact. Q. Is not its general use a good reason to think that that is so? A. I suppose they would have to make a pretty good quality of oil to get good prices, but at the same time they get greater prices than any competitor can get and a competitor can hardly get any chance. I know that on general hearsay. The parties that have told me have tried and cannot sell the rail- roads of the country lubricating oils, because if they did the Standard Oil Trust would not give them any freight, you know^ Q. Do you know whether it is a fact or not that the Standard Oil Com- pany paid what would be called an exorbitant price for the Galena formula? A. No, sir; I don't know anything about that. Q. Have you ever sold any oil in competition with Galena oil any- where? A. No; I have sold some, but I am not in that market. I have never manufactured any fancy brands of lubricants. I only manufacture the ordinary brands, the ordinary oils, the ordinary lubricants — a cheap grade. Q. (By Professor JENKS.) You spoke a moment ago about the high prices the Standard Oil Company received from the railroads for this lubri- cating oil. Were you going to support that statement by the specific prices 432 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. that had been paid? A. No, I cannot support that by specific prices, except by what I have been told by persons that knew about it, persons who have tried to sell to the railroads and have been told this. It is only hearsay evidence as far as that is concerned. Q. (By Senator KYLE.) What is paid for this kind of oil? A. From 25 to 75 cents a gallon. There is some lubricating oil that sells as high as $1 a gallon. Q. Is that statement on the authority of any of the Standard or railroad officials? A. No, sir. Mr. Rice presented a letter from James W. M. Newlin, of Philadelphia, who was attorney for Fenaille & Despeaux, in their case against the Pennsylvania Railroad Company for alleged freight discriminations which were said to have occurred in 1882 and 1883. These cases, he said, were tried last year. He said that Mr. Newlin had suggested that he (the witness) could put his letter in his testimony. Mr. Rice said this letter referred to important contracts made by the Standard Oil Company and the Standard Oil Trust, with the National Transit Company and the Pennsylvania Rail- road, by which the Standard Oil Trust, through the National Transit Com- pany was to pay to the Pennsylvania Railroad Company, 26 per cent, of all the petroleum freights carried from the oil region to the seaboard at the tariff rates. Mr. Newlin's letter follows: Philadelphia, Pa., November 2, 1899. Dear Mr. Rice— Referring to your request for information as to the facts devel- op-^d in the taking of testimony, in the case of Fenaille & Despeaux vs. Pennsyl- vania Railroad Company, in the Circuit Court of the United States for the Eastern district of Pennsylvania, and In the case of Ladenburg, Thalmann & Co. vs. the Pennsylvania Railroad Company, in the Court of Common Pleas No. 4 of Philadel- phia county (both of which cases are still pending) I beg to say as follows: In the Fenaille & Despeaux case it was shown that the plaintiff paid local pipage 20 cents per barrel to Foxburg and other points in that region on crude oil, and that in addition thereto the plaintiff paid to the Pennsylvania Railroad Company 48 cents per barrel for its carriage, all rail, from Foxburg to Communipaw during the years 1881, 1882 and 1883. It was also shown that the Pennsylvania Railroad Company at the same time and between the same points carried crude oil for the Standard Oil Company of New York at a reduction of 22% cents per barrel. It was further shown in the same case that the plaintiff paid 20 cents local pipage on crude oil to McCalmont and other points in the same regions, and that the Pennsylvania Railroad Company then carried it to Communipaw and charged the plaintiff 3.3 cents per barrel. At the same time the Pennsylvania Railroad Company was carrying crude oil between the same points for the Standard Company of New York FOR 19.875 CENTS PER BARREL. THE REDUCTION IN FAVOR OF THE STANDARD OIL COMPANY OF NEW YORK WAS* proven in this way: On May 6, 1881, the National Transit Company made an agreement with the Pennsylvania Railroad Company concerning the shipments of crude oil to the sea- board under which these reductions in favor of the Standard Oil Company of New York were affected. I have furnished you a copy of this agreement. It was shown on the trial of the Fenaille & Despeaux case that at the time named a majority of the stock of the National Transit Company was deposited, with other corporation stock, with the Standard Oil trustees, who also held practi- cally all of the stock of the Standard Oil Company of New York, and that, upon tiie basis of the stockholdings of the trust, the Standard Oil Trust certificates were issued. The agreement between the National Transit Company provides for a division of the through rale on crude oil from the wells to the seaboard between the National Transit Company and the Pennsylvania Railroad Company. The clauses of the con- tract particularly referring to this are paragraphs 4 and 8 thereof. Now, taking Foxburg to Communipaw, the local pipage being 20 cents and the all rail carriage 48 cents to 68 cents, and the evidence showing that the Transit Com- pany under this agreement delivered large amounts of oil to the Railroad Company at Foxburg, which oil it was shown by the Transit Company's secretary, Mr. John Bushnell, belonged to the Standard Oil Company of New York; this particular oil was paid for on the following basis: ♦The lines in capitals are not in the official report, probably being omitted through a clerical error. GEORGE RICE. 433 Starting with 6S cents as the through rate from the wells to Communipaw, via Foxburg, one-fourth of 68 cents, viz. 17 cents, went to the local pipe line (i. e. the Transit Company) "and one-half of the difference between this one-fourth (1. e. 11 cents) and the said public rate (i. e. 68 cents) shall be considered as due and to be paid to the railroad." The charge is worked out thus: Cents. Local to Foxbug 20 Through to Communipaw (New York) 48 68 One-fourth to local pipe 17 This leaves balance of 51 One-half of this balance to Railroad Company is 25V4 The amount paid Railroad Company by Fenaille & Despeaux was 48 Amount paid by Standard to Railroad Company 25V^ Rebate to Standard Oil Company equals 22Vi In other words, whilst the word "rebate" nowhere occurs in the agreement be- tween the Transit Company and the Railroad Company, all the Railroad Company received was the 25^^ cents per barrel. See paragraph 8 of the contract of May 6, 1881. It is to be observed that this par- agraph in terms only applies to cases "where the through rate from the exit point of fathering pipe shall be less than 40 cents." This is the only provision in the contract and in terms would only apply to Mc- Calmont and similar shipments, which were 33 cents per barrel, but not only is this the cnl>' provision in the contract for the division cf the through rate between the Transit Company and the Railroad Company, but in addition thereto the officers of both the Railroad Company and the Transit Company stated in evidence that the Railroad Company received payment from the Standard Oil Company of New York on the rail shipment from Foxburg to Communipaw under this contract and received what the contract called for. It was further testified by these officials that what the Railruad Company got it collected directly from the Standard Oil Company of New York, and that the Railroad Company received no money from the Transit Company on these shipments. The evidence was to the same effect as to all rail shipments between McCalmont and Communipaw, Fenaille & Despeaux paying 20 cents local pipage and 33 cents open rail rate to Communipaw, making 53 cents in all. The evidence further was that the Transit Company furnished to the Railroad Company crude oil of the Standard Oil Company of New York for carriage between McCalmont and Communipaw, for which the Railroad Company was paid directly by the Standard Oil Company, the amount called for by this agreement of May 6, ISSl. Hence the Railroad Company charged Fenaille & Despeaux between McCal- mont and Communipaw, N. Y., 33 cents and charged the Standard Oil Company 19.875 cents a barrel. This is worked out thus: Cents. Local pipe rate 20 Open rate rail McCalmont to Communipaw 3-'5 Through rate 53 One-fourth local pipe 13.25 39.75 One-half of this balance paid by the Standard Oil Company of New York to the Railroad Company 19.S75 Tender the contract of May 6, 1881, the Railroad Company was to be guaranteed one-third of the total movement of oil to New York. TTndpr a subsequent contract between the National Transit Company and the Pennsylvania Railroad Company, dated August 22, 1SS4, of which I have furni.'^hed you a copy, the Railroad Company was to be guaranteed 26 per centum of the total movement of oil to the Atlantic seaboard, which would include Baltimore, Phila- delphia, New York and Boston. Prior to 1884, the railroad rates to seaboard, 1. e. New York, were: From Fox- burg 48 cents, and from McCalmont 33 cents. There was a difference in favor of Philadelphia of five cents per barrel. From 1884 to 18S7 the rail rate between Foxburg and similar points and Communi- paw was 55 cents per barrel and between Clarendon and Kane and similar points and Communipaw was 45 cents per barrel. There was a difference in favor of Philadel- phia of five cents per barrel. It was in evidence in the case of T/idcnburg, Thalmann & Co. vs. the Pennsyl- vania Railroad Company as to shipninnts made between 1SS4 and 1S87, under the con- tract of August 22, 1884, between the National Transit Comrany and the Pennsyl- vania Railroad Company, that monthly settlements v,ere made between the Transit 28 434 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Company and the Railroad Company showing the total movement of oil to seaboard and rhe amount carried by the Pennsylvania Raihuad Company on account of its 2S per centum allowance and then the deficiency on the 2U per centum (and there wa3 always a deficiency) was settled between the Transit Company and the Railroad Company in this way: I take for illustration the settlement made for the month ending September 30, 1884, as sliown by a copy of the settlement certified to be correct by John Bushnell, comptroller of the National Transit Company: Total number of barrels so transported 1,574,961 Railroad Company's share 409,490 Amount carried bv railroad 325,59& Deficiency 83,894 On this deficiency the Railroad Company was allowed on New Yorlt oil "at one-half of the current through rate, 45 cents" equals 22i/. cents per bar- rel on 43.665 barrels $ 9,824.63 Less compensation allowed Transit Company for pumping tlie same at nine cents 3,929.35 Total $ 5,S94.7S The Railroad Companj- was allowed on Philadelphia oil, for 40,229 barrels at one-half current through rate, 40 cents, equals 20 cents per barrel $ 8,045.80 Less allowed National Transit Company for pumping same at eight cents... 3,218.32 Total • $ 4,827.48 Total payment hy the National Transit Company to the Pennsylvania Rail- road Company for deficiencies for the month ending September 30, 1884. .$10,722.28 In tlie Fenaille & Despeaux tliere are two cases against the Pennsylvania Rail- road Company, one for $10,722.26 and the other for $104,220.03. This is exclusive of Interest and treble damages. In the smaller case the treble damages were remitted in order to allow the plaintiff to call the oflicers of the defendant company as wit- nesses. In the case of Ladenburg, Thalmann & Co. against the Pennsylvania Railroad Company, the amount claimed is $172,832.46, with interest and treble the amount of the claim, for damages, also with interest. lieferring generally to tlie contract of August 22, 1884, that contract was for the purpose of keeping up the freiglU charges by making the rail rates and pipe rates the same. Ycu will obser^•e, however, that if the Standard Oil Company of New York, on its sliipm-jnts, went through the form of pa>ing the full rates, inasmuch as practi- cally all of the stock of the National Transit Company (viz. 96 per centum) belonged to the Standard Oil Trust, >t all came tjack again e.xcept the actual cost of pumping, and then .vou will observe that in the case of the Railroad Company it was only allowed one-half the current rates which were open to the public in the settlement made between it and the National Transit Company for montlily differences, as per the settlement above quoted. Yours truly, JAMES W. M. NEWLIN. George Rice, Esq., Astor House, New Y'ork, N. Y. Mr. Rice referred to the report of the investigation of the Standard Oil Company by what is commonly termed the Hepburn Committee of New York, to show that in certain cases railway officials were stockholders or officers in the Standard Oil Company or companies allied with it. Mr. Rice said that, outside of the question of rates and freight discrim- inations by the railroad, he had no show as a competitor with the Standard Oil Company, as the great wealth and power of that company permitted it to cut the price of oil wherever he might send his refined product, and so- destroy his profit. Being shut out of the markets of the North. East and West, he turned his attention to the South, where, he claimed he w^as peremptorily brought up with a short and decisive turn by an attack by the railroads at both ends of the line by means of a discriminating rebate, not only upon his refined product, but upon the transportation of crude petroleum to his refinery. The witness said that in 1S81 a Standard Oil official wrote to .1. M. Culp, the general freight agent of the Louisville & Nashville Railroad Company, telling them to "turn another screw" upon his shipments, which he said they did in five days, exacting from him 50 per cent, more freight that he had been payinsr, which shut him out of the Tennessee markets. In reply to questions, he said that Chess. Carley & Co. wrote this letter to Mr. Culp. The WITNESS. The firm of Chess. Carley & Co.. that sent this letter, Is under the management of the Standard Oil Trust, or Standard Oil Com- GEORGE RICE. 435 pany, or was at that time. They wrote a letter to J. M. Ciilp, who was the general freight agent of the Louisville & Nashville Railroad Company, and this is the original and has the stamp of the receipt of the railroad company at that time. This is the original that I will read to you: Chess, Carley & Co., Louisville. J. M. Culp, Esq., General Freight Agent: Dear Sir— Wilkinson & Co., Nashville, received car of oil Monday, 13th— 70 bar- rels—which we suspect was shipped there in the USUAL fifth-class rate, and "in fact we might say" we know it did, paying only $41.50 freight from here. Charges 157.40. Please turn another screw. Yours truly, June 16, 1881. CHESS, CARLEY & CO. And that screw was turned on me to the extent of 50 per cent, in five days. Q. (By Senator KYLE.) Was the contract he speaks about the same that was charged the Standard Oil Company to that point? A. Yes, sir; I suppose it was. Q. (By Professor JENKS.) Forty-one dollars and fifty cents? A. Yes, sir. I don't know about that. I cannot say that about the $41.50. Q. (By Senator KYLE.) You had not an inside rate? A. No, sir; I had not. Q. (By Mr. FARQUHAR.) Is not the $41.50 the open rate? A. No, I will tell you how it is. The $41.50 is the rate from Louisville to Nashville, and the $57.40 was the previous rate from Marietta to Louisville, *paying only $41.50 freight from here (from Louisville to Nashville), where I had an agency, and the proposed charge was $57.40. Q. (By Vice-chairman PHILLIPS.) They added 50 per cent, to that? A, Yes, sir; on me; not on the Standard Oil Company, of course. *Q. (By Vice-chairman PHILLIPS.) Fifty cents a barrel? A. No, sir; 50 per cent. They raised the rate on me in my shipments 50 per cent, in five days. Q. (By Mr. SMYTH.) Was that the open rate? A. Yes, sir; the open tariff rate. Q. (By Mr. FARQUHAR.) It was not a discriminating rate made against your product at this time, but a new rate for all? A. Why, yes, sir; certainly. Of course the tariff rates are published rates. Of course I paid tariff rates, and the Standard paid less rates, you know. Q. (By Vice-Chairman PHILLIPS.) Were there any other shippers to that point at that time? A. I don't recollect. I think I was the only com- petitor at that time; that is my impression. You see, it is a good many years as-o and I don't recollect. Q. (By Mr. CLARKE.) How do you know they did not make the same rate to the Standard Oil Company? A. I don't know; but it is fair to pre- sume that they did not, by all past experience. I don't know it certainly. I cannot prove it. It is a pretty hard thing to prove rebates. Q. (By Senator KYLE.) You do not think they intended to turn another screw on themselves? A. Not much; *they never do that, you bet. Q. (By Mr. SMYTH.) I thought if you got this letter, you might be able to find out what rates the Standard Oil Company paid? A. I think you would have a nice time at that sort of thing. I would like to see anybody bring an action in court and get them to show their books. Q. I thought if you had the opportunity to get the private correspond- ence of the railroad company, you might be able to find out what their private rates were? A. 'You can't sue them and have them show their books. Q. I am only comparing your getting this private letter from Mr. Gulp's office, and your not finding what these privates rates were? A. Well, that it what I want to know. Q. I don't know how you got this letter? A. Of course you don't. (Laughter.) Q. If you are able to get the private correspondence of the railroad company why are you not able to find out their privates rates? A. There *Black faced type indicates matter omitted, in the course of editing, from the official report. 436 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. are some things that are impossible, and that is one of them. It is a mighty hard thing to find out rebates. Q. But the rates are generally on their books; it must show in some way. A. I don't know whether it shows on their books or not. Q. (By Mr. FARQUHAR.) Do you know, of your own knowledge whether other parties had to pay this increased rate, as you did? A. I don't know that; but if they shipped, of course they would have to. Q. Was it well understood that that was the rate known and given to all shippers? A. I always shipped on tariff rates, and of course that is public to everybody. (Reading.) "Phineas Pease, receiver of the Cleveland & Marietta Rail- road Company, under th-e jurisdiction of a United States Court, suddenly doubles its crude petroleum freights on me without previous notification or warning, from 17 Vz cents a barrel to 35, in the carriage of the same 25 miles from the oil producing fields of Macksburg to Marietta, Ohio, where my refinery was located, while at the same time, he makes a rate to the Standard Oil Trust of 10 cents a barrel, or 250 per cent, of a discrimination against my shipments." The witness read the opinion of Judge Baxter in this case, and said the excess of money he had paid was returned to him by order of the court. The WITNESS. (Reading.) "United States Judge Baxter delivers the following opinion of the court in Handy et al. vs. the Cleveland & Marietta Railroad Company et al.: "It appears that the Standard Oil Company and George Rice were competitors in refining oil; that each obtained supplies in the neighborhood of Macksburg, a sta- tion of said railroad, from whence the same was carried to Marietta or Cleveland, and that for this service both were equally dependent on the railroad, then in the hands of the receiver. "It further appears that the Standard Oil Company desired to 'crush' Rice and his business, and that, under a threat of building a pipe for the conveyance of Its oil and withdrawing its patronage from the receiver, O'Day, one of its agents, 'compelled Terry,' who was acting for and in behalf of the receiver, to carry its oil at 10 cents per barrel and charge Rice 35 cents per barrel for a like service, and pay it 25 cents out of each 35 cents thus exacted from Rico, 'making,' in the judgment of the receiver, '$25 per day clear money' for it 'on Rice's oil alone.' "But it is due to the receiver to say that, notwithstanding his admitted 'reluct- ant acquiescence' in the contract made by Terry on his behalf and the endorsement thereof by Rapello, and the further conceded fact that he charged the Standard Oil Company 10 cents and Rice .35 cents per barrel as aforesaid, he denies that he ever paid to the Standard Oil Company any part of the money received from Rice." It was proved afterwards that he did. "We will, therefore, for the present accept his afflrmation touching this matter, as true. , "But why should Rice be required to pay 250 per cent, more for the carriage of his oil than v^as exacted from his competitor? The answer is that thereby the re- ceiver could increase his earnings. This pretence is not true. But suppose it was, would that fact justify, or even mitigate, the injustice done to Rice? May a recei.yer of a court, in the management of a railroad, thus discriminate between parties hav- ing equal claims upon him, because thereby he can accumulate money for the liti- gants? "It has been repeatedly adjudged that he cannot legally do so. Railroads are constructed for the common and equal benefit of all persons wishing to avail them- selves of the facilities which they afford. AVhile the legal title thereof is in the corporation of individuals owning them, and to that extent private property, they are, by the law and consent of the owners, dedicated to the public use. By its charter and the general contemporaneous laws of the State, which constitutes the contract between the public and the railroad company, the State, in consideration of the undertaking of the corporators to build, equip, keep in repair and operate said road for the public accommodation, authorized it to demand reasonable compen- sation fro.Ti every one availing himself of its facilities for the service rendered. "But this franchise carried with it other and correlative obligations. Among these is the obligation to carry for every person offering business, under like circum- stances, at the same rate. All unjust discriminations are in violation of the sound public policy, and are forbidden by law." That was before the interstate comerce act. "We have had frequent occasion to enunciate and enforce this doctrine in the past few years. If it were not so the managers of railways, in collusion with oth- ers in command of large capital, could ccntrol the business of the country, at least to the extf nt that the business was dependent on railroad transportation for its suc- cess, and n'ake and unm;ike the fortunes of men at will. GEORGE RICE. 437 "The idea is justly abhorrent to all fair minds. No such dangerous power can be tolerated. Except in the modes of using them, every citizen has the same right to demand the services of railroads on equal terms that they have to the use of a public highway or the government mails. "And hence, when, in the vicissitudes of business, a railroad corporation be- comes insolvent, and is seized by a court, and placed in the hands of a receiver, to be by him operated pending the litigation, and until the rights of the litigants can be judicially ascertained and declared, the court is as much bound to protect the public interests therein as it is to protect and enforce the rights of the mortgagors and mortgagees. "But after the receiver has performed all obligations due the public, and to every member of it, that is to say, after carrying passengers and freight offered, for a reasonable compensation, not exceeding the maximum authorized by law, if such maximum rates shall have been prescribed, upon equal terms to all, he may make for the litigants as much money as the load, thus managed, is capable of earning. "But all attempts to accumulate money for the benefit of the corporators or their creditors, by making one shipper pay tribute to his rival in business at the rate of $25 per day, or any greater or less sum, thereby enriching one and, impov- erishing the other, is a gross, illegal and inexcuable abuse of a public trust, that calls for the severest reprehension. "The discrimination complained of in this case is so wanton and oppressive it could hardly have been accepted by an honest man liaving due regard for the rights of others, or conceded by a just and competent receiver, who comprehended the na- ture and responsibility of his office; and a judge who would tolerate such a wrong, or retain a receiver capable of perpetrating it, ought to be impeached and degraded from his position. "A good deal more might be said in condemnation of the unparalleled wrong complained of, but we forbear. The receiver will be removed. "The matter will be referred to a master to ascertain and report the amount that lias been, as aforesaid, unlawfully exacted by the receiver from Rice; which sum, when ascertained, will be repaid to him. The master will also inquire and report whether any part of the money collected by the receiver from Rice has been paid to the Standard Oil Company, and if so, how much, to the end that if any such payments have been made, suit may be Instituted for its recovery." (B-111, etc.) *Q. (By Senator KYLE.) What is that reference? A. Well, it is one of my exhibits; I put B-111 on one of my exhibits. Q. What was the outcome of that matter, may I ask? A. The court appointed a master commissioner, who was the present elected Governor of Ohio, George K. Nash. The court appointed him master commissioner to investigate this matter and he found these to be the facts of the case, as I have stated. Q. Did he collect the money and pay it over? A. Yes, sir; it was not very much: I got on to it right quick before it had injured me. *Vice-Chairman PHILLIPS. A little louder, Mr. Rice, Mr. FARQUHAR. A little louder, please, Mr. Rice, because we are inter- ested in that. The WITNESS. I mean to say that I got on to this discrimination very quick after it occurred, for just as soon as — I allude to it in another paper, but I will explain that as soon as they doubled the rate of freight on me, I thought there was something wrong, and I immediately went to Cambridge, the headquarters of the road, in person, to see the receiver and ask him about it, and ask him why my freight rates had been doubled, which I did, and he said — he pretended to know scarcely anything about it. He said that was a matter that belonged to the freight agent, and he said: "I under- stand that there has been an advance, but I understand it is necessary that the road should have more revenue." Well that was the substance of the interview, and he gave me to understand that the rates were going to remain. He did not give me any good reason why they were advanced at all, and of course I thought there was something up, and I went back home and got up a correspondence with him to put him down on paper, to have him say whether he would let us know whether or not he would make any evasions or give me some good reason by which I could find out what to be able to say, and I did write him and he made some replies that were not to the point, you know — that were evasive, don't you know; and I had counsel at ♦Black faced type indicates matter omitted, in the course of editing, from the official report. 438 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Marietta to write to Judge Baxter, who had charge of this road, on which he* was engaged as receiver, asking for a hearing, if a private hearing could not be had before him in chambers, upon what these letters showed. He granted the request at once, and I went down to Cincinnati with my at- torney, and the local attorney of the road went down, and he owned up the. whole business right there before Judge Baxter, although this thing had all passed through ihe hands of ex-Judge Rapello, of New York city, who was then the leading counsel of the road, and that is the way it came out. Q. (By Mr. FARQUHAR.) Do you know it was customary in those days, Mr. Rice, before the interstate commerce law was passed, for re- ceivers, usually under instructions from the court, to get all out of the roads that it was possible to get for the benefit of stockholders? A. (Laugh- ing.) I don't know anything of that kind. I don't think, Mr. Farquhar, that any receiver of a road should charge any less to a big shipper than to a small shipper, because he violates the common law of the land, which no load had a right to do, even before the interstate commerce act was passed, as Judge Baxter here says. It was just as bad to discriminate before 1887, you know — that is, it was unlawful, and as I understand it, the only additional thing that was put in the interstate commerce act was a penalty clause by which every shipper and every carrier (that is, every carrier was put in first, and afterwards it was amended by which it would include shippers as well) would be subject to a penalty of $5,000 and two years in the peniten- tiary for each and every offense, and what good has it done? They discrim- inate to-day just as much as ever. It has had no effect whatever, and I can show you as I go along here, by my own cases before the Interstate Com- merce Commission. Q. Hasn't it been a fact that there were some very great discrimina- tions made by receivers in cutting rates? A. I don't know that. Q. As against all competing roads, and that the court itself would sus- tain that in the working for the benefit of stockholders and for the benefit of the road itself, to have all the revenue that it was possible to get out of it. A. No, sir; I don't believe that, no; no honest judge would ever decide that a railroad could discriminate for a large shipper against a small shipper; yif he did he was not doing his business. Q. Isn't it a fact that receivers have discriminated and cut rates against other roads? A. Right in my own case they did; but here are Receivers Cowen and Murray admitting themselves that they were giving rebates when they wrote that letter, criminally doing it, too; criminally doing it. Q. (By Mr. RATCHFORD.) Isn't it a fact that the majority of rail- ways generally follow that practice — discriminating in favor of large ship- pers, giving them inside prices? A. Why, certainly. Q. That is your observation, isn't it? A. Yes, sir; certainly. Q. That being the case, doesn't it follow that receivers necessarily have to resort to the same practice in order to compete? A. Well, I don't think that the receivers of a road ought to violate the law, nor any oth^r man, and particularly the receivers of a road; it don't make any difference how it strikes the road. Q. Do you I'ecognize their inability to compete in case they do not resort to the same practice? A. Well, very likely they do; tbut I cannot conceive that In case of a man who is sworn to do his duty as the receiver of a rail- road and who is honest, which he is supposed to be. He is appointed by a court specially, and it is supposed that courts don't want to sanction any unlawful acts. 1 cannot conceive how the receivers of a road — that is, I mean to say there is a greater obligation on the part of the receivers of a railroad, not to discriminate; that is it, because they are appointed by the court; they are under the jurisdiction of the court, fand have got the power back of them, you know. Supposing a railroad does lose freight, that is no reason; they must obey the law. That is the trouble in this country here, the laws ain't obeyed, nor enforced either. •Phineas Pease. ililack faced type indicates matter omitted, in the course of editing, from the offlcial report. GEORGE RICE. 439 Professor JENKS. There are some points that I think he had perhaps better read here, and then put it in as an exhibit. The WITNESS. (Reading.) "Threats and intimidations used by the Chess, Carley Company (Standard Oil) on my agents that 'competition will not be confined to coal oil or any one article.' Also 'that the Standard Oil Company had authorized him to spend $10,000 to break up any concern that bought oil from anyone else.' " (B-84.) Now, I refer to one of my exhibits, B, p. 84.* Q. (By Professor JENKS.) Perhaps you can state what the substance of this is and put it in as an exhibit; it will save you some time. A. Well, it is merely that the company wrote my agents, Wilkinson & Co., of Nash- ville, threatening letters, of which I have copies in these exhibits here. They had tried to buy them out, and one thing or another, and made threats that if they didn't come to time, that they would not only cut their prices on oil, but on all the general goods that they sold. That is the substance of it, but I have it all here. Q. I understand from what you have said elsewhere, that they did, as a matter of fact, set up a separate grocery store? A. No, not at that point; that was another place; that was in Mississippi. Q. But that was the same company; they did set up a grocery store? A. Yes, sir. Q. In order to drive a rival out? A. Yes, sir; that is true; oh, yes, sir; the same company. tQ. If that is the substance of it, you may put it in and have it printed as an exhibit, and go on from there; it will save you some little time; if that is the substance of it there. A. Yes, sir. Q. (By Mr. FARQUHAR.) How far did this extend in 1884? I want the definite words here. A. Well, I guess I will read here a little; I have it right here: (Reading.) "Rust-proof oats, meats, sugar, coffee used as weapons by the Standard Oil monopoly to kill off competftion." fThat is what they do, and that is what they say to-day. I do not know now, but I have known them to do the same thing from time to time in some other way, but it is the same thing. (Reading.) "R. M. Eraser, general freight agent of the Marietta & Cin- cinnati Railroad, wires a Standard official as follows: " , at Marietta, is inquiring for rates of freight on oil to Chillicothe. Don't you control that field? "Colonel Thompson to Mr. Eraser: "Yes, that is our meat." (B-85.) Q. (By Mr. SMYTH.) Can you give us the date of that telegram? A. I don't know whether I have the date of that or not; I refer to it as B-85, but it is true all the same. tQ. (By Professor JENKS.) No, there is no date put down here. A. Maybe there is not. Q. (By Mr. FARQUHAR.) This occurred in 1881? A. It comes along in there: I guess it is somewhere along in there, tl don't know. Q. (By Professor JENKS.) There are several letters right along in this immediate connection dated 1880 and 1881. A. Well. I calculated all these things, where there were not dates would come along in and about that time; twhere I didn't have the dates, I calculated where they would come. Q. Did you get the name that you have left blank here? A. Well, no; I didn't get the name; it came over the wire; a friend of mine heard it com- ing over the wire, who was a telegraph operator himself. (Reading) : "Standard Oil also establishes a grocery house at Columbus. Miss., and sells groceries at cost in order to force merchants to buy their oil." (B-86.) There is quite an extensive account there in connection with that. Q. (By Senator KYLE.) How prevalent is that custom with the Stand- ard Oil Company? A. Well, it is not so prevalent now, because they are *The exhibit referred to is in pamphlet copyrighted by Mr. Rice. tBlack faced type indicates matter omitted, in the course of editing, from the official report. • 440 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. establishing their agencies, you know, all over the United States, and they don't have to go into that kind of work. Q. Efforts* have been made, haven't they? A. What is that? Q. They resorted to such efforts* formerly? A. Oh, yes. sir; there is no trouble about that. Now, I will read from the bottom of the page: "The Standard Oil Trust makes contract with a merchant of New Or- leans to pay him the sum of $48,000 not to handle my oils and while I was down there to re-establish another agency I was apprised by wire that my rates to Memphis and New Orleans were doubled, without previous warn- ing." The witness said that when he inquired why the rates had been doubled on him, Mr. Eraser, general freight agent of the roads going out of Marietta, said that the connecting lines made all the trouble, that the connecting lines had been writing them, saying they must have the freight rates ad- vanced and they couldn't see any other way to do it except increase the rate on him. After two or three months' correspondence they restored the rates as they were formerly, but in the following year, on July 15, 1886, they raised the rates on his shipments, which were about all the shipments out of Marietta, from 43 to 162 per cent., and he said they didn't raise them a cent on the Standard Oil Trust, which had a big refinery at Parkersburg, 12 miles from Marietta, the tariff rate from both places being equal. The WITNESS. * * * on subsequent investigation I got the Attorney-General of Ohio to bring an action, and I bore all the expense of it; he allowed me to use his name, to forfeit the charters of the Cincinnati, Washington & Baltimore Railroad and the Queen & Crescent Road for these infernal, accursed discriminations, and we spent a lot of money and a lot of time, and it didn't amount to anything. We got a verdict in the Supreme Court after a while, saying that they couldn't do that any more, but it didn't amount to anything. tQ. (By Senator KYLE.) They went on and did it? A. They went right on, of course, and continued to do this right under my nose, you know. Well, and the effect of it was that it shut up 19 of my agencies out of 24, and 39 towns out of 73 in five months; that is what it did, and these men here, Orland Smith and R. M. Eraser, are responsible for this collusion to ruin my business. Q. (By Mr. FARQUHAR.) What year was this in, Mr. Rice? A. In 1886. Q. (By Mr. SMYTH.) Were the published rates the same from Par- kersburg as from Marietta? A. Certainly; the tariff rates were the same all the way around. Q. Do you believe the Standard Oil Company received the rebates? A. Well, of course; I proved they did; I proved what I say; I proved 43 to 162 per cent.; I went into court and proved it before a referee; it was on two suits to forfeit the charters of these roads, and the court simply said that you couldn't do this any more. They would be ousted from doing this. That was a very fine sort of a verdict; of course it had a very great effect on it. Q. (By Professor .lENKS.) I see in connection with the statement that the Standard Oil Trust made a contract with a merchant of New Orleans to pay him the sum of $48,000 not to handle the oils. In the exhibit you set out the contract in full? A. Yes, sir. Q. You are perfectly sure as to the trustworthiness of this? A. Oh, yes, sir; I got the facts from Mr. Ong; I got the contracts; without a question, these are — without a question these are genuine contracts. He said the general freight agent of the Little Rock & Memphis Rail- road Company wrote him on November 17, 1890, that because they were haul- ing his oil the Standard Oil Company would not route any of their freight over their line. •"Threats." in ofRcial report. i-p.iack faced type Indicates matter omitted, In the course of editing, from the ofllclal report. GEORGE RICE. 441 Because of his "supposed controversy" with the Standard Oil Company, he could not purchase tank cars except for cash. He submitted the follow- ing letter, which he said he had received from Murray, Dougal & Company: Office of the Milton Car Works, Milton, Pa., Dec. 6, 18S7. George Rice, Esq., Marietta, Ohio: My Dear Sir— We have just wired you as follows: "Our financial friends decline to advance the money. We cannot build them, except for cash," which we confirm. Our Mr. Dickerman returned this morning, and after using every exertion, fail- ed to negotiate the deferred payments on your cars. Our financial friends state that they have declined to do this mainly on account of some supposed controversy which they claim you have had with the Standard Oil Company and various rail- roads in the West. They feared you could not use these cars to advantage if the railroads should be hostile to your interests. We regret this very much, as we nave been to considerable trouble and ex- pense in making arrangements to build the cars, and are now seriously disappointed at the refusal of the parties to take the deferred payments, as they had partially promised to do. ^^'e should be very much pleased to build these cars for you if you can nego- tiate :he notes with your friends and pay us the cash. Please let us hear from you at your earliest convenience concerning your ability to raise the money. Yours very respectfully, MURRAY, DOUGAL & COMPANY, LIMITED. You see there was a discrimination in the carriage of oils in barrels as between tank cars of about 25 per cent. And if anybody could afford to buy tank cars— rolling stock for the railroads — you know, of course, all shippers had to furnish them. Of course they had to do that; the shippers had to furnish the railroads all the cars they wanted, don't you know, and let them charge what they please- — and so I saw that it was necessary to get hold of some cars — to buy some cars. It is generally done in this way: Persons come and contract for cars — tank cars — and pay 20 or 25 per cent, down, and then pay the balance in instalments of four or five years, and they hold the title to the cars, don't you know, and all that. *The Standard Oil Trust could get all the credit they wanted, but they don't need credit. They have got plenty of money. Q. (By Mr. FARQUHAR.) And yet that is the trouble, I suppose. Mur- ray, Dougal & Company said if you ftirnished the cash they would build the cars? A. That they would, yes, sir; but the trouble was it would take just so much money out of my business, and of course that would cramp me so much that I couldn't afford to do it. Q. You built tank cars afterwards, didn't yoti? A. Yes, sir; I bought 10 cars later on. I paid the Pennsylvania Works to build them for me, and I paid 25 per cent, down and the balance on time — five or six years. Q. You thought it was an advantage in the oil business to have tank cars? A. Well, that might be; if everybody got the same rate; if the rail- road would ftirnish the tank cars, but they didn't furnish the tank cars. The Standard Oil Company in the early days bought up all the tank cars from the railroads, no doubt with the imderstanding that they must not build any more tank cars. The railroads have not furnished tank cars to the shippers, which they ought to do, so they had to carry oil in barrels in the box cars, as the Pennsylvania did, until the Interstate Commerce Com- mission act came into effect, and then the Standard Oil Trust got them to charge for the weight of the wooden package. Q. You made quite a contention against the tank cars for a long time? A. Certainly. It is all right if the roads would only furnish that means of carrying oil. but they will not do it, and they know that the independent refiners of small means can't afford to buy tank cars to take it in. It is the duty of the railroads to furnish all the cars that are necessary. It is only a freeze-out; that is all. *Black faced type Indicates matter omitted, in the course of editing, from the official report. 442 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. Mr. Rice, that is the question we are reaching now. You know the private car system in the United States to-day in transportation — of re- frigerator cars and everything of that kind. These are furnished by private corporations. A. Yes, sir. Q. (By Professor JENKS.) Is not the use of these tank cars a positive advantage for the transportation of oil? A. No, sir; I think it is the greatest evil, for the reason that the railroads carried tank cars for the Standard Oil Company at a lump sum tank car rate, don't you know, *and I pay four times as much freight. I proved before the Interstate Commerce Commis- sion that between barrel rates and tank car rates I paid four times as much to Birmingham, Alabama. Q. Where they were able to furnish tank cars, did not the railroads try to discourage the use of the barrel? A. Why should they? Q. I cannot answer that. Was it not a condition while you were ship- ping? A. I will say yes they did, and they did it for the purpose of freezing out the refiners. I will answer that, yes, sir. They did it, certainly, because they wanted to discourage the smaller ones, because all the railroads and trusts worked hand in hand together; each one owned stock and bonds in the others. Thus I think they all work in collusion and conspiracy to freeze us out. Q. Did any railroad ever propose that you should put on >our cars and they would pull them at so much mileage? Did they ever refuse to do that? A. Yes, sir; I have had roads refuse me. I forget now what the lines were. Q. But some roads did? A. Certainly. *But what has that got to do with the question anyhow — because some of the roads did? They discrimi- nate and all this kind of thing. Just look at it here. Now, I will tell you something about the tank car business, *l don't know but maybe you know it, but I can give it to you here, and I will explain it; I will because I have it right here, where there is 1,600 per cent, discrimination. Now, gentlemen, that seems incredible, that the Standard Oil Trust should have gotten 1,600 per cent, discrimination in the carriage of oil from the oil regions to the seaboard. Now, I will explain it to you in this way: In 1S7S, J. H. Ritter, general freight agent of the New York Central & Hudson River Railroad Company, in the investigation before the Hepburn Committee, of New York, said this, and it is on record published in the special tariff sheet. Vice-Chairman PHILLIPS. A little louder, please. The WITNESS. Published in the special tariff sheet of rates to the Standard Oil Company, and in that tariff sheet was a particular and special rate on tank cars of $60 a tank car in lump sum from Cleveland to New York, which would be 60 cents a barrel; the outside tariff then was $1.90 a barrel to all competitors. They also got a reduction off that 60 cents for carriage of crude oil from the oil regions to the refineries at Cleveland, on the basis of 35 cents a barrel of crude oil. Fourteen barrels of crude at 35 cents a barrel were allowed for against 10 barrels of refined shipped from Cleveland to New York, to come out of that 60 cents: on the liasis of 10 barrels, that would be $6. They got a drawback of $4.90, which made $1.10 for transporting 10 barrels of oil from Cleveland to New York; that is 11 cents a barrel as against $1.90. or 1,600 per cent, discrimination. *These are absolute facts; they are not any worse than these contracts of 1872, you know, when they got 19 times more rebate from off competitive shipments than they did from off their own; I have skipped all that, gentlemen. Q. (By Vice-chairman PHILLIPS.) And you have put it in the exhibit? A. Yes, sir. Q. (By Mr. SMYTH.) Do you know of any railroad company in this country that owns tank cars? A. Well, I think the Pennsylvania Railroad Company has a lot of tank cars, or did have, but in the early days no com- petitor — that is, it was almost impossible for any competitor to get the use of themt *Black faced type indicates matter omitted, In the course of editing, from the offlclal report. iTn tiip official report the following arlditlonal comment ajipears: "The Staml- ard Oil Trust had practically the exclu.slve use of them." GEORGE RICE. 443 Q. Isn't it the general custom now in all oil refineries, both cottonseed oil as well as petroleum, that the tank cars are owned by the refiners? A. I think the cottonseed oil refineries are owning their own cars more or less. *Q. They ate owning their own cars more or less? A. Yes, sir; cer- tainly they are. Q. And the railroad companies do not furnish any cars? A. I think not. Q. (By Mr. RATCHFORD.) Are you aware that the representatives of the Standard Oil Company have stated before this commission that no such thing as rebates are given them The WITNESS. That is since the interstate commerce act? Mr. RATCHFORD. Yes, sir. The WITNESS. Yes, sir; yes, sir; I am coming to that. Mr. Ratchford. Q. (By Mr. RATCHFORD.) Now, in support of the case that you have just mentioned, referring to the rebate from Cleveland to New York, there Is a case that you should support by the strongest possible testimony, if you can present it; letters and proof are what we want. A. Well, I am going to give you that as I go along here; I am going to give you plenty of proof as to freight discriminations since the interstate commerce law went into effect; *is that what you want? iVlr. RATCHFORD. Yes, sir. The WITNESS. Well, I have just about gotten to that now; *l don't know where I stopped here. Vice-chairman PHILLIPS. You stopped at the top of the 36th page. The WITNESS. Well, shall I read further down? Vice-chairman PHILLIPS. You haven't read any of that. The WITNESS. Well, I will read it then. (Reading.) "I have for years vainly sought government protection through Congress and the Interstate Commerce Commission and get it not; also through State Legislatures and get it not; through the courts and get it not. Soon there will be trouble in the land if such nefarious work does not cease, for anarchy will be supreme. The railways and the trusts are run conjointly on a fraudulent, dishonest and destructive basis. The channels of trade and transportation are no longer open free to the people at large. Our greatest criminals and cor- ruptionists are at the head of these mighty and all powerful institutions, who also use their vast resources to corrupt our politics. They have no fear of the law, because of the fabulous fortunes so easily and quickly obtained, from which they expect to buy immunity. "It is quite evident our government is a failure, because of non-enforce- ment of our laws against this piratical crew who infest our inland com- merce, under the secret cover of unlawful rebates and commissions and thus rob the people out of hundreds of millions of dollars. "The trusts are worse than the pirates of the sea, for they sailed in the open; and though they gave no quarter, they did their work under their own pirate flag, and not under the livery of the law. "I have had a number of applications from unknown correspondents to take hold of new oil developments in different States, and have invariably replied that it would be useless; that however prolific an oil field might be it would be made unprofitable and no money in it, as against the power of the Standard Oil monopoly over the rail lines of this country." At this point the commission took a recess until 2 o'clock, at which time Mr. Rice continued. Chairman Kyle presiding. The WITNESS. (Reading.) "John D. Archbold and Henry H. Rogers, trustees of the Standard Oil Trust, testify before this commission September 8th and 9th, that this trust has not received discriminating freight rates, since the interstate commission act took effect, April 5th, 1887. "In 1886 I entered complaints, with the attorney-general of Ohio, to forfeit the charters of the Cincinnati, Washington & Baltimore, and Cin- cinnati, New Orleans & Texas Pacific Railroad, for gross oil freight dis- criminations. The petitions were filed December 23, 1886. and depositions filed November 23, 1887. The referee made his report July 3, 1889, and the Supreme Court rendered its decision March 4, 1890. I proved that the *Black faced type Indicates matter omltte-J, in the course of editing, from the official report. 444 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Cincinnati, Washington & Baltimore Railroad Company, the initial line out of Marietta, and governing connection lines, issued an order to take effect July 15, 1886, by which freight rates were not only advanced, but that my shipments were discriminated against by this road in favor of the Standard Oil Trust from 43 to 162 per cent. "That the Cincinnati, New Orleans & Texas Pacific had so discrimi- nated from 29 to 212 per cent. That the Louisville & Nashville Railroad Company had so discriminated from 35 to 260 per cent. That the St. Louis, Iron Mountain & Southern Railway had so discriminated from 48 to 191 per cent., which continued at least to March 4, 1890, and probably much longer, regardless of the order of the commission (see pages 582, 583, 584, 585 Congressional Investigation 1888). These unlawful freight discrimina- tions had the effect to close up 19 out of 24 of my agencies, and shut me out of 39 towns in 73 within five months. "The Supreme Court of Ohio, after this abundant and most extraordi- nary proof before them, ignored the people's sacred right of eminent do- main, and simply decided that these roads be ousted from charging less- rates per 100 pounds on tank car shipments, as compared v/ith barreled oil, which decision proved ineffective." This suit was to forfeit their charters for discriminatons. "In November, 1887, before the Interstate Commerce Commission, I proved the following gross freight discriminations, which were exclusively in favor of the Standard Oil Trust and for no one else; cases were decided February 23, 1888, and the several defendant rail lines pretended to ac- quiesce in the verdict by simply changing their mode of rating. "The following outrageous and most extraordinary of freight discrimi- nations, exclusively in favor of the Standard Oil Trust, were proved by me and existed at least up to April 1, 1888, that we know of, and from my sub- sequent complaints and proofs it is exceedingly doubtful if the decision of the commission had any appreciable effect on the railroads." Now, I have here the exhibits which show discriminations to the extent of 333 per cent.; there are a lot of them, but I just merely mention them; I put in the exhibits here which show that the highest discrimination was 333 per cent* (Reading.) "The above gross freight discriminations continued for at least one year of the interstate commerce act, regardless of the penaltj^ of $5,000 fine and two years in the penitentiary for each and every offence. "On May 28, 1888, the Missouri Pacific Railroad regardless of this deci- sion, were still carrying cars by the lump sum. (A-15) This same road (1888) in the State of Arkansas were carrying petroleum in iron barrels for the Standard Oil Trust, at 284 per cent, discrimination in their favor. (A-21) "In 1889 I made several general complaints to the commission of gen- eral violations of the interstate commerce act by the southwestern lines of railroads, reaching to the Pacific coast, of which the Cincinnati, Wash- ington & Baltimore Railroad Company was the initial line out of Marietta, where my oil refinery was located, and at my request the commission issued notices to 151 contiguous lines as parties thereto to appear and be heard, if they so desired. The substance of these complaints were embodied in these notices, as follows: "It appearing to the commission in the above cases that in addition to the ques- tion of reasonableness of rates, the following other questions are also raised, namely: "1. The question of the like classification of barrel and tank oils, and of the rigrht of the railroad companies to charge for the weight of the barrel package in addition to the weight of the contents. "2. The question of discrimination arising from the returning of empty tank cars free of charge and also of the paying of mileage rate on such empty tank cars. "3. The question of whether railroad companies are not obliged to furnish tank cars as well as cars of other description for oil transportation. "4. The question of the proper classifiiation of cottonseed oil and turpentine- as compared with petroleum and its products. ♦These exhibits are publislied in Liie ufficial report. GEORGE RICE. 445 "5. The question of discrimination in favor of petroleum and its products when carried in tank cars, resulting in giving a low rate on cottonseed oil or turpentine, or either, when carried as back loading in such tank cars. ••6. The question of the duty of railroad companies to furnish shippers with tank cars in cases where the traffic of their lines can profitably or properly be car- ried in such tank cars and is large enough to justify the expenditure. "7. Long and short haul. "The four separate cases were tried together in December, 1889, and thoroughly done by that astute and experienced lawyer in railroad matters, Franklin B. Gowen, for many years the president of the Philadelphia & Reading Railroad Company. The cases were duly argued and a partial but insignificant decision rendered, but not until two years had elapsed, when the commission decided that 'All the cases are held open for additional evidence,' which so thoroughly disgusted me after having expended so much time and money thereon, that I then determined to proceed no further, and abandoned the apparently hopeless ptirsuit of combined and confederated iniquity, and resolved to have nothing further to do with any future pro- ceedings before the Interstate Commerce Commission." *Q. (By Vice-chairman PHILLIPS.) The balance for the next two pages there are simply illustrations of these discriminations? A. Yes, sir; all fully and clearly proved the following facts Q. (By Vice-chairman PHILLIPS.) Perhaps we had better put in these details as an exhibit from there until say the middle of page 42. A. If you say so; I would like to read this. Q. (By Vice-Chairman PHILLIPS.) Well, if you would like to read there, keep on; it was simply a question of whether that was a repetition of facts, at the same time, it will be printed, of course, and we will not take the time to read all this. A. Well, I guess I had better read this. I fully and clearly proved the following facts: (Reading.) "That the Trans-Continental Association, composed of 2] lines of road, bad advanced freight rates in 1889 over 1887, when my first complaints were brought to the extent of 83 per cent., which was unreasonable. Also proved that these lines carried cottonseed oil, worth four times that of petroleum, at 26 cents less per 100 pounds. That the Trans-Missouri Freight Associa- tion charged 25 cents per 100 pounds more for carrying petroleum than cottonseed oil. "That the Southern Railway and Steamship Association, (,f which the Louisville & Nashville Railroad Company was a member, advanced freight rates in 1889 over 1887 from 10 to 121 per cent, which was clearly unrea- sonable. Also proved that the Chicago, Rock Island & Pacific Railroad charged 25 cents more per 100 pounds for carrying petroleum than cotton- seed oil. "Up to March 15, 1890, the Standard Oil Trust got 1^^ per cent, of its shipments carried free by a rebate reduction of 62 gallons on each tank car. "I also proved that the Standard Oil Trust had an exclusive secret re- bate reduction on quantity shipped, in place of a monied rebate, of 62 gallons deduction on each and every tank car, or 114 per cent, of its ship- ments, carried free." No one else got that at all. These are absolute facts; no one else got that rebate or reduction. Q. (Vice-Chairman PHILLIPS.) Is that supposed to be on tank cars as compared with barrel shipments? Was that the reason they themselves gave? A. There was no reason given for it. *There was no reason given for it at all. I expect that probably the only reason I ever hoard for it was that it was wind in the bottom of the car, or something of that kind. *Q. (By Vice-chairman PHILLIPS.) That is the question I want to ask you. A. There was no reason for it whatever; that is, no good leason; no good valid reason. Q. (By Vice-Chairman PHILLIPS.) The question was: What reason did they pretend there was for it? A. Well. I don't know; I don't know. I never knew^ of their pretended reason for it. There w-as no good reason. *Black faced type indicates matter omitted, in the course of editing, from tli€ official report. 446 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-Chairman PHILLIPS.) Of course, when this matter was brought to their attention, both the railroads and the Standard Oil Company presumably assigned some reason for it? A. I presume they did. I do not recollect what reason they did assign. I suppose probably leakage or one thing or another. I don't know. I don't know what they did assign now. There was no value received in any sense whatever. (Reading.) "This continued until March 15, 1890, when it was changed to 42 gallons deduction, and continued to September 1, 1892." *Now, these 42 gallons was made open to the public; the 62 gallons was not. It was never filed with the Interstate Commerce Commission; that 62-gallon deduction was not until I developed it in my case. That was all. (Reading.) "Also proved that the shippers of oil in barrels should not be charged only for the oil shipped, and not for the barrel, to offset the re- turn of empty tank cars that can't bring back other freight (except extreme cases), while a box car can. Besides, a tank car weighs 3,500 pounds more than a box car of the same capacity." Up to 1888 the Pennsylvania Railroad carried oils in barrels, including the package, for the same rate that they did for so many gallons in a tank car, but after the interstate commerce act took effect, about a year after- wards, they changed that the other way; so that the independent shippers would have to pay for the weight of the package. *Q. (By Mr. KENNEDY.) I would like to ask you now if you want that word "not" in there at the end of that line? "also proved that the ship- pers of oil in barrels should not be charged only for the oil shipped;" it should be "charged only for the oil," etc. A. Yes, I guess "not" ought to be out; yes, I guess it ought to be out; yes, that is it; I see that is a mistake, a clerical error. Q. (By Mr. RATCHFORD.) Before you pass that point, what reason do you assign for the change in the rate of shipment in the tanks as com- pared with the same rate in barrels? A. I think it is done at the instiga- tion and power of the Standard Oil Trust. Q. Did the Standard Oil Trust at the time of the change have control of all the tank cars? A. Well, principally; oh, yes, almost. Q. Principally? A. Yes. sir; of course there are more or less outside refiners that have a moderate amount of cars, yon know, but not very many; *oh, there is no question in my mind but that that was done at the instiga- tion or collusion of the Standard Oil Trust with the railroads. Q. You believe then, to make it plain, that the reduced rate on ship- ments in tank cars is not due to the advantage that results to the company from the transportation of oil in tank cars, but rather as a favor to those who control the tank cars? A. Yes, sir. Q. Is that it? A. Yes, sir. Q. (By Mr. FARQUHAR.) But is not the tank car really an advantage in handling oil? The WITNESS. To whom? Mr. FARQUHAR. Of advantage to the railroad company and all in handling oil. The WITNESS. No. sir; I have got the very best and choicest evidence to show right here from the general freight agent of the Pennsylvania Rail- road Company. *Now, I want to show you this; it is something very valu- able; I am very glad you asked that question. .lohn S. Wilson, the general freight agent of the Pennsylvania Railroad Company, the highest authority we have, testified before the Interstate Commerce Commission on January 23, 1888, that he would rather carry powder than oil in tank cars, and that the shioment in barrels is preferable. (Quoting Mr. Wilson) : "I think altogether it is the most undesirable business ^-e do. the car- riage of oil in tank cars. There is no stopping it when it starts. We had a smash up at New Brunswick. We came in collision tliere with a line of tank cars; the oil got on fire, and T think it ran two squares, got into a sewer, ran burning a square or two more, ran on the canal, which was then frozen over, followed the ice a square or two beyond, and beside our own direct •niack facod type indicates matter umittetl, in the courne of editing, from tlie official report. GEORGE RICE. 44(7 losses we have already paid nearly $500,000 for the destruction there. I regard it as worse than powder to carry. The bridge at New Brunswick was burnt down, which cost us two or three hundred thousand dollars, be- sides nearly half a million paid out for outside destruction. "We might run for 10 years and by good luck have no serious accident. Whereas, on the other hand, we might strike another case like that at New Brunswick and lose more money than we would make on carrying oil for 10 years. I would rather carry anything else than oil in tanks. "The movement in barrels I have always considered preferable for two reasons. First, we load barrels in a car that will carry a return cargo. There are no back loads for a tank car. For stock and box cars we can load back and get an increased earning for the round trip. Secondly, if there comes a collision or fire, the packages being separate, we are enabled to save some of the tonnage. There is no hope of saving the contents of a tank car if it once gets on fire. Barrels you can sometimes scatter and roll off and break them up." Now, this gentleman didn't stay with this railroad long after this evi- dence was given. Q. (By Mr. FARQUHAR.) Evidently, independent of that gentleman's opinion, the railroads have adopted the tank cars at large for the shippers? A. Yes, sir; they have adopted it in favor of the Standard Oil Trust prin- cipally. Q. And independent therefore of the barrel transportation and tank transportation, they put the tank car in the sixth class and the barrels in the fifth class; how do you account for that? A. I suppose that tariff is made up by the Standard Oil Trust; I think they make up the petroleum tariff in the United States; they make them up at 26 Broadway and give them to the railroads to carry out as they say or they don't get any freight; *l haven't any doubt about that. Q. (By Mr. RATCHFORD.) Isn't there an advantage in loading and unloading the tank as compared with the barrels? A. Yes, sir; if your tank cars arrive at a point where you can gravitate the oil out of them or if you had a hose attached to them, a short hose into a pipe, to which you could put a pump and suck it out, and of course the tanks carry more oil because they save the weight of the barrel, you know; they carry a larger weight. Q. In every case, it is either taken out by gravity or pumped out? A. Yes, sir. Q. (By Mr. FARQUHAR.) Nearly all cases it is gravity, is it not? A. I don't know about that, either, no; I don't know that it is. I think the refinery over at Bayonne, owned by the Columbia Oil Company, I think they take all their oil out by the pump. I am quite sure they do, because their works, 1 know, are on almost level ground, and they could not take it out by gravity; I am quite sure they do. Q. Does the railroad company load the oil, or the producer? A. The producer loads the oil. Q. And the railroad, the shipping company, unloads it? A. The receiver unloads it. The receiver of the oil unloads the oil and the producer or owner of the oil loads it; so that the road has nothing to do; but it is the same with barreled oil, you know. The refiner loads these barrels into a car and puts it in there, and the road has nothing to do with It; and so with unloadin'?; there is no difference in that respect whatever in regard to that. (Reading.) "I proved that the intermediate rates on petroleum Via the transcon- tinental lines, in 1889, was $1.90 per 100 pounds; the wooden barrel shipper was required to pay 85 pounds additional weight, which would amount to $1.61 per barrel more, in gross violation of Sections 3 and 4 of this act. The average market price of crude oil in 1889 was 94 cents. "I proved that there was a charge of $95 per tank car by transconti- nental lines, to return empties from Pacific coast to Missouri river." Now, that is also since the interstate commerce act. (Reading.) *Black factd type indicates matter omitted, in the course of editing, from the official report. 448 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Thomas M. Kimball, general traffic manager of the Union Pacific, tes- tified on June 27, 1887, before the Pacific Railroad Commission, page 1,134, that his road carried the empty tank cars of the Standard Oil Company free, the same as the other roads. "What was the rate allowed to the Standard Oil Company? A. All sorts of rates, according to point of delivery and the liveliness of competi- tion at that point; 5 per cent., 10 per cent., 15 per cent, and up to 30 per cent. "So this great line, and a government road, enters the arena to assist the Standard Oil Trust to throttle competition as against the rights of the people who have built the road. "I proved that refined oils in bulk were being carried at 6 per cent, less than actual weight, or 6 per cent, of refined oil carried free for the Standard Oil Trust. Their various lubricants, residuum and so forth, carried at 10 to 15 per cent, less weight, according to gravity. "I also proved that the several associated lines of railway constituting the Southern Railway and Steamship Association pool, the Southwestern Traffic pool and the Transcontinental Association pool, were grossly violat- ing the third and fourth sections of the act, long and short haul, to the extent of 56 to 225 per cent., which inured to this extent in favor of the Standard Oil Trust by prepayment of its freight at the low car lot terminal rate, with privilege to stop all such cars at high rate intermediate points. "I paid out over $1,200 in subpoenas in those cases by an imperative rule adopted by the commission which was not required in my first cases. "It is fair to assume that the same discriminations not only have con- tinued, but they have gotten worse, for on May 2. 1890 (B-I6I), the St. Louis, Arkansas & Texas Railway (applicable to all Southwestern lines) issued a special oil tariff sheet for the exclusive benefit of the Standard Oil Trust " That I know, because I couldn't get it. "— — by which this trust could stop off full loaded tank cars at high rate intermediate points, and divide same up into less than car lots, to be dis- tributed at several stations, by canning same, which should have paid three times the terminal rate. This was an exclusive tank car tariff sheet, not applicable to barreled oils in box cars, for the independent refiner who could not afford to purchase rolling stock tank cars. "Per letter of the commission, July 12, 1897, these special and most extraordinary of freight discriminations yet continue and are exclusively in favor of the Standard Oil Trust on petroleum shipments." Now, the quotation. Q. (By Professor JENKS.) The quotation from the Interstate Com- merce Commission? A. Yes, sir. " 'As to what lines allow stop-over privileges, it is understood that all the lines named on the Southwestern Traffic Association tariffs, as parties thereto participate in the stop-over privileges provided for therein.' "The railroads won't furnish tank cars, and if an independent refiner is able to buy a few, thus decreasing his working capital, he is confronted by these present special railroad instructions, inserted in the tariff sheets." To show how the railroads put every possible obstacle in the way to freeze out and keep out competitors, here is what they put in: (Reading.) "The Southwestern Bureau, of which the Missouri, Kansas & Texas Pacific is a member, owned by the Standard Oil Trust, has this to say at the present time: "'Oil Tanks: Carload petroleum storage tanks used for petroleum and its products intended for permanent oil stations, shall be transported at actual weight at the oil rate when filled with oil that pays the bureau lines' oil rate.' " That is as much as to say that the railroads have the right to say whether a station that I might put up is going to be a permanent one. but if I wanted to put up one it would be *the devil's own jobt to get the right of ♦Black faced type indicates matter omitted, In the course of editing, from the oflRrial re.-)ort. i"P^r;ictinally impossible" is substituted for "the devil's own job" in official re- port. GEORGE RICE. 449 way or to get a place in which to put it up. I was two years waiting and trying to get that. If you do get your plant up it is in the discretion of the railroad to say whether it is going to be permanent or not. Anybody knows it would not be permanent, because you could not live. They would make discriminating rates and you couldn't live, and your permanent station would be no good. Even if you put it up in good faith, it would do you no good whatever. I have got another one here. (Reading.) "Central Freight Association. Tank Gauge Hand Book No. 4 says ap- plicable to all roads in the United States at the present time: " 'Petroleum and its products in tank cars delivered only when con- signed to parties at points at which they have proper' " — just think of it — " 'unloading and storage facilities, and when shipments in tank cars are sent to parties who have not such facilities, the shipments will be returned to shippers at their risk and expense.' " It is all left with the railroad to say whether you can have any show or not, and they don't give you any show and don't propose to do it either. (Reading.) "On May 6, 1891, the Southern Pacific Company issued a special oil tariff with these exclusive advantages in favor of the Standard Oil Trust, being the exclusive owner of a peculiar box tank car combination, patented, of two upright iron tanks set inside a box car; that thus avoids paying $105 a tank car for return of empty cylinder from Pacific coast to Missouri river. This special oil tariff governing all transcontinental lines, allowed this trust 27 cents per hundred pounds lower rates for petroleum transported in these special patent cars, as against the regular rates. This is discriminatory against the independent tank and barrel shipper of $105 a tank car and $1.08 per barrel when shipped in barrels. (B-164.) "The present highest intermediate rate on petroleum in less than car lots, Chicago to Pacific coast, over transcontinental lines, is $2.70 per 100 pounds, or $10.80 per barrel of 400 pounds, to the independent barrel ship- per; while the Standard Oil Trust, by prepayment of its freight at the car lot terminal rate of 78% cents per 100 pounds on 320 pounds, or $2.51 per barrel, gets an advantage of 330 per cent, over its competitors, in freight dis- crimination. "Another method of freight discrimination in favor of the Standard Oil Trust on the transcontinental lines, per tariff of 1888, was to reduce rates temporarily one-half and then raise them again 50 per cent., so the trust, on exclusive secret information, could stock up on the low prices, while its competitor always had to pay the high tariff rates." (B-191.) Now. I will read some telegrams that passed between Mr. Stubbs, of the Southern Pacific Railroad Company, in which he agrees to let the Standard Oil Trust pay a low price. Here is the evidence right here in telegrams that I have. I think I had better read them, because it is very important. *lt is a most despicable thing, gentlemen — they show you to what extent they will go. This is from the Paint, Oil and Drug Review of January 25. 1893. I know all about it, because one of the men interested in it came to see me about it and showed me some of these. How completely the Stand- ard Oil Company has its grip on the railroads is best evidenced by produc- ing copies of telegrams that passed between freight agents of the trans- continental lines. Mr. Rice read a large number of telegrams that he said had passed between J. C. Stubbs, general traffic manager of the Southern Pacific Com- pany, located at St. Louis, and W. Sproule, assistant general freight agent of the Southern Pacific Company, located at San Francisco; between W. A. Bissell, of St. Louis, and Mr. Sproule; between W. H. Tilford, trustee. Standard Oil Trust, New York, and E. A. Tilford, all covering arrangements for fixing freight rates over the Southern Pacific, his purpose being to show that an effort was being made to have rates lowered when the Standard Oil Company wanted to stock up, and increased when they had sufficient stock •Black faced type indicates matter omitted, in the course of editing, from the official report. 29 450 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. on hand, to the detriment of competitors. These telegrams were dated on various days in November, 1888. He said they were taken from the Paint, Oil and Drug Review of January 25, 1893. The witness said that W. A. Bissell, of St. Louis, who was the general freight agent of the Atlantic & Pacific Railroad, was the one who made public the telegrams he quoted in relation to this subject. He said he thought Bissell was discharged and became an employe of the Standard Oil Company afterwards, but he was not positive about that. He thought he was discharged from either the railroad company or the Standard Oil Com- pany or he left the company with which he was connected, and that was the way the telegrams were made public. The latest move by the railroads and the trusts, he said, is to ignore and deny all rebates and freight discriminations and to pay a "commission," which the roads claim they can do whenever they please. The railroads, he said, claim that they can pay 10, 25 or 50 per cent, on shipments in the form of a commission. That was simply whipping the devil around the stump. When a certain quantity of freight is shipped in a given time, he claimed, the railroads deduct whatever percentage they agree upon. In order to make this arrangement, the large shipper sends to a railroad an agent, who agrees to secure for the road certain business if allowed a stipu- lated commission on it. Q. (By Mr. CLARKE.) Have you any correspondence or documents of any kind to prove this use of the word "commissions?" A. I don't know that I have. I haven't any here. Q. How do you know, then, that is their present method? A. Oh, I know that from general information I have had on the subject. Q. (By Mr. SMYTH.) Have you ever asked for a "commission?" A. No, sir. Q. It has never been refused you? A. Well, I have never asked, and of course it would not be refused. Q. You think it would be refused? A. Certainly; they would say at once: "We are not giving any rebates, not making any commissions or dis- criminations to anybody." Q. Do you think that is done in other lines of business besides the oil business? A. Yes, sir; only I think in the oil business it is much greater. I think the discriminations in oil are far greater. I think to-day that almost all of these trusts and combinations are being formed and re-formed on these lines and concentrated throughout. They go to a railroad, you know, and dictate to the road by saying: "We have got so much freight to carry; what will you take it for? If you don't want it, we will give it to some other road." They will fix up a rate and say: "We will give you so much freight, don't you know, within a certain length of time, and if you want to accept it, all right." These large shippers, *and especially the Standard Oil Trust, figure this out to a hair's breadth. They know just what the road can take in order to make a small margin, *and if they don't want to take it — they know very well the road does on general principles — but they can get other roads to take it, don't you know. Q. You have no proof of that? A. No, sir; I have no proof of that. Q. But you think that is so? A. I do. I should think that all these gross freight discriminations that I have exposed here show they would do almost anything under the light of the sun to accomplish their ends. It is against the law, but what does this $5,000 fine and two years in the peni- tentiary, for each and every offense of freight discriminations, amount to? It don't amount to anything. It don't deter any of these men from freight discriminations; not a bit. Q. Do you mean that owing to the hostility of the Standard Oil Com- pany toward you, these discriminations arc not granted to you? Do you think they are granted in other lines of business. A. Certainly they are. The letter of the receivers, Cowen and Murray, is the best evidence of that I know of. *Up to a late day, they say that in ail the territory north of the *Black faced type indicates matter omitted, In the course of editing, from the official report. GEORGE RICE. 451 Ohio, and east of the Mississippi river, they have rebates and drawbacks and other devices. I have no doubt they are granted by all of the lines within that territory to-day. They admit that in their letter to the Inter- state Commerce Commission, but they say that after the 1st of January, 1899, "we are going to observe the interstate commerce law, and if we find any of our neighbors violating the law, we will complain to you, and we hope you will use your best efforts to compel them to come to time." The witness said the Sherman anti-trust act was not enforced "because the Attorney-General does not enforce it as he ought to enforce it." He had had correspondence with the Attorney-General of the United States in regard to proceeding against the Standard Oil Company, but the Attorney- General did not act. When asked by Representative Livingston whether he had copies of such correspondence, he said he did not have it with him. Q. (By Professor JENKS.) Did I understand you to say that in your correspondence with the Attorney-General, he declined to enforce the law? A. He made excuses of one kind or another; that he had not had time to look into it, and the Assistant Attorney had gone to Europe, and hadn't got back, *and all this and that and the other. Q. (By Senator KYLE.) I think it would be better to have a copy of all that correspondence in the evidence, if you can furnish it, Mr. Rice. A. I suppose I can.f Q. Inasmuch as the implication has been made that he, in a sense, put you off? A. Yes, sir. Q. (By Professor JENKS.) Will you be kind enough to furnish the commission with a copy of your correspondence with the Attorney-General; your letters to him and his letters to you? A. Yes, sir; I can. Q. (By Representative LIVINGSTON.) You said a while ago that these discriminations on these transcontinental lines were prevalent and coilstant. Have you made any effort with the Interstate Commerce Commission to have them stopped? A. I have in two of my cases eight or ten years ago. I made complaints and the cases have all been held up and have never been decided. They have been partially decided, but it didn't amount to any- thing. I brought suits against the transcontinental lines, the whole business, you know, with notifications to 151 lines, so they could appear and answer, and I proved all these gross freight discriminations, you know, and I believe they are going on just as much to-day as ever, you know. Q. What does the Interstate Commerce Commission say about it? A. They didn't decide my cases. They didn't decide these gross freight dis- criminations. Q. Did they give you any reason why they did not decide them? A. Well, let me see — — Q. (Interrupting.) Have you the correspondence here that will show that? A. Yes, sir; I have the decision here. Q. (By Vice-Chairman PHILLIPS.) When was that decision rendered? A. On Saturday, April 9, 1892. They were brought in March, 1899. *Q. (By Professor JENKS.) 1889, you mean? A. Yes, sir. Q. Both of them in 1889? A. *Yes, sir; and they didn't decide them until April, 1892, and then they only partially decided them, and left them all open for additional evidence, you know. Q. Additional evidence on which side? A. And of course that so dis- gusted me that I wouldn't have anything further to do with it; I wouldn't take any more evidence, because I had spent a lot of money, and had a first- class lawyer, one of the finest in the United States — and a railroad man — to sue on the cases, you know, and I proved all that I charged. Then they hung them up, you know. The witness said he had been forced to discontinue his refining business owing to freight discriminations, not having run his refinery since May, *B!ack faced type indicates matter omitted, In the course of editing, from the ofRrial report. tThis correspondence was filed with the commission, according to the official report, but it was not published as a part of Mr. Rice's testimony. 452 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. 1896. As a pi'oducer of oil he was not discriminated against. He said his refinery was rotting down. Q. (By Mr. SMYTH.) Does this persecution on the part of the Standard Oil Company apply to your business as a producer of oil? A. No, I don't suppose it does; because I get the same price per barrel as anybody else; *they pay the same to everybody. Q. 'i'hey buy your crude oil? A. Yes, sir; *just the same as anybody else. Q. And it is only in your business as a refiner that you meet with this opposition? A. Yes, sir; *that is where the trouble has occurred. Q. And have you been forced to discontinue that business? A. Yes, sir; I have been forced to discontinue my refining business owing to freight dis- criminations. Q. And your refinery is idle? A. Yes, sir; idle and rotting down; I haven't lun it since May, 1896; there is no use at all of trying; no use of anybody trying to build a new refinery as against this Trust; it would be sui- cidal. 1 would not any more think of going in and putting any money in it, even if 1 had $1,000,000 or $5,000,000 I wouldn't go in and buck against that combination. Q. Did they offer to buy you out — to buy it from you? A. On one occa- sion, years ago, we had some negotiations, but not lately. Q. Why didn't you sell to them? A. They didn't want to pay me what! it w as worth, and I didn't sell to them. Q. You either had to take what they offered, or quit? A. Yes, sir; you would have to take whatever they thought it was worth, and since that time they have been charging me with blackmailing, and all that kind of thing, because I didn't take what they thought it was worth, you know. Q. But there is no obstacle thrown in your way as a producer of oil? A. Oh, no, sir; *but I am not producing much, anyhow. Q. (By Mr. KENNEDY.) Are there any refineries in Ohio independent of the Standard Oil Company? A. Yes, sir; Scofield, Shurmer & Teagle has one in Cleveland. Q. There is one in Cleveland? A. Yes, sir; Scofield, Shurmer & Teagle have one in Cleveland. Q. Do they refine the Lima oil? A. I don't know that; I am not sure about that. Q. Do you know whether they are doing business at a profit or not? A. I don't know that. Q. How long have they been running? A. They have been in business a good many years; I don't know whether they are doing business at a profit, but on general principles I don't think there is hardly an independent refiner that is making money; *there may be at the present moment but I am not sure of that; but I mean generally speaking. Q. Have they a large refinery? A. Yes, sir; a pretty good size. *Now, Mr. Emery here says, I thought I put it in my book here, that in writing to correspond — you know he is a large refiner, about 1,000 barrels a day, and he said he markets about 70 per cent, of his oil in Europe, because of freight discriminations in this country. That is true, no doubt. Q. (By Mr. A. L. HARRIS.) Are you conversant with the first and sec- ond sections of the law, in what is known as the Knight case? A. No, I think I have seen it; but I am not conversant with it. Q. The first section is in regard to what is a conspiracy in restraint of trade. In the second section they define the word "monopoly" to be the exclusive privilege granted by a power able to give the privilege granted, and that there was in the Knight case (that was the sugar case) nothing of that kind; because there was nothing to prevent other capital from coming in and occupying the same ground that was already occupied by the Ameri- can Sugar Refining Company, and therefore it was not a monopoly within the meaning of the statute. In the same case you will find that it was not ♦Black faced type indicates matter omitted, in the course of editing-, from the official report. tin the official report, the words "I thought" are inserted between "what" and "it." GEORGE RICE. 453 *in restraint of trade, for the reason that it was not commerce in fact until it flowed into the channel of commerce. It was not under the operation of this act until it got into the stream of commerce and from that time until it was landed at the place of destination, it was commerce. It was not commerce at the place of destination nor at the place of manufacturing. In order to make the Sherman anti-trust act effective, there should be some amendments that are, I think, very clearly indicated by the decision of the Supreme Court. Therefore the Attorneys-General have hesitated to bring suits that were on all fours with the suits already brought, and were not disposed of, making costs against the United States, without compelling a remedy? A. I don't think that extra costs should have any weight in regard to prosecuting a thing that shows any kind of monopoly or is in restraint of trade. I suppose a combination in restraint of trade might not be a monop- oly and it might be. Q. I am only calling attention to the reason for the failure of those cases in the Supreme Court. Of course, until the Supreme Court reverses its own decision, that is the law of the land and is as binding as a statute passed by Congress? A. Oh, certainly; of course. Q. Well, how do you reconcile this position with that other? A. This is one of these joint traffic agreements. Q. This is one of these joint traffic agreements? A. I understand that; it is in the Federal anti-trust law, though. Q. But remember these cases were of this character; there was a regu- lar contract made in restraint of trade and in restraint of commerce, and a forfeiture of $5,000 was provided for each company, I believe, that violated the contract. A. You know that my experience is with most of these offi- cials, that they are always complaining that they haven't got enough power. I don't think they exercise all the power they have, and of course those that are violating it, do so in a nice manner, you know; so as to extend the time and delay; everything is put for delay; to keep anybody from interfering with their unlawful acts. Q. (By Repi-esentative LIVINGSTON.) What is your opinion, and the opinion of others similarly situated with yourself, as to the real reason why these things are not attended to? A. Well, the real reason of it is this Q. You seem to think the authority is broad enough? A. Yes. sir; I do. Q. What is the real reason, then? A. The whole trouble is because the oIRcials whose duty it is to execute the law, don't do it. Q. Why don't they do it? A. Well, that is what is the matter. Why don't they do it? That I cannot answer. *Q. I supposed you had studied it closely? A. It is pretty hard for a person to say why they do not do it. Q. It has been suggested by one of the commissioners that a decision of the Supreme Court stood in the way. You did not seem to agree with that? A. No, sir; I don't think so. I don't see how it does. Q. If you do not agree that that Supreme Court decision stands in the way of the enforcement of these laws by the authorities that are in power, you must have some idea why they do not enforce them? A. Why the officials don't execute the law? Q. Yes, sir. A. Well (Laughing.) Q. Is it political, pecuniary, or what is the trouble? Just thrash it out, if you know? A. I think the power of the trusts and combinations have their influence. Q. In a pecuniary or political way, or both? A. I think they have it politically. Mr. Rice said his cases were under the interstate commerce act and not under the Sherman anti-trust act. When asked by Representative Livingston if he could suggest any amendments to the law by which trusts and combines could be con- trolled, he said he believed there was no other way to cure that trouble except by government ownership of the railroads. He recommended taking the protective tariff off products of trusts and industrial combinations. ♦Black faced lype indicates matter omitted, in the course of editing, from tlie official report. 454 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Representative LIVINGSTON.) Do you mean to say that you have no new suggestions or recommendations to give to the commission by which we can amend that law, or bring into life a new law, by which these trusts and combines can be controlled? *Have you anything practical that you can give the commission. A. I don't believe in any amendments of that kind to any law you have got, I believe in government ownership of rail- roads; I don't believe there is any other way that you can get out of that trouble. We have had 12 years of the interstate commerce act and nine years of the Federal anti-trust act, and they haven't reached it. Q. Suppose the government owned all the railroads and broke up the protective tariff, then what would you do? A. I don't believe there is any- thing else that would break it up in any manner, shape or form. Q. Then, you mean that your remedy would be to draw off all the pro- tection, and own the railroads; is that your suggestion? A. Yes, sir; take off all protection on any trust or combination. Q. And then own the railroads? A. Yes, sir; I do; and you can get rid of this political bugbear that they may say may make centralization, and all of this and that. Why, just disfranchise the employes of the railroads, and what does that amount to? There are only about 800,000 employes and there are 1,000,000 men to-day that don't vote; if you would disfranchise them then you would get rid of all the political end of it. Q. (By Vice-Chairman PHILLIPS.) Provided the government did own the railroads and there was absolutely no discrimination in freights, could you refine and market oil in this country? A. I think I can. Of course I cannot do it now so well as I could before this condition of things had come on several years ago, before this epidemic of combines got up; but now, don't you know, they can come in and cut your prices right where you sell and freeze you out; *they can do it now because they have accumulated so much of these ill-gotten gains; they can cut your throat anywhere, don't you see? Q. (By Vice-Chairman PHILLIPS.) Then any large combine can follow up the small operator and cut the market? A. Yes, sir. 0. And absolutely destroy him? A. Yes, sir. Q. If there was absolutely no discrimination? A. Yes, sir; they could do that even without any discrimination, by the aid of these ill-gotten gains they have secured in the past, you know. Q. (By Representative LIVINGSTON.) Then the ownership of the rail- roads would do us no good unless the other remedy came with it — *the destruction of the combines? The WITNESS. Which? Representative LIVINGSTON. The destruction of the combines. The WITNESS. Yes, sir. *Q. (By Representative LIVINGSTON.) The dismantling of these com- bines? A. Yes, sir; that would help, you know to destroy them. I don't say that that would, but I don't see any other way of destroying these com- binations, except that the Attorneys-General of the various States go after them and forfeit their charters. Q. (By Mr. CLARKE.) Could we have any power against the combines of foreign countries? A. I don't see why we would not. *Q. rBy Representative LIVINGSTON.) Haven't we got it now? Q. (By Mr. CLARKE.) I want you to answer that question. A. I don't understand his question. What was the question? Q. Would we have, under the arrangement you propose, any power against the combines of foreign countries? A. I don't see why we would not, Q. You say yon would repeal the protective tariff? A. I would repeal the protective tariff wherever it affected any trust or combination. Q. Suppose the trust or combination was formed in a foreign country upon some article or line of merchandise *Mr. FARQUHAR. Analine dyes, say, and then you will have it. *niack faced type Indicates matter omitted, In the course of editing, from the official report. GEORGE RICE. 455 *Mr. CLARKE. I won't specify anything; I will make my statement general. That would give them an opportunity to operate against similar productions of this country as strongly as any combine does here. Now, wouldn't you need a protective tariff to protect you against that? A. I be- lieve in a protective tariff, to a certain extent; that is in the protection of home industries. Q. (By Representative LIVINGSTON.) Provided it is an individual industry? A. Yes, sir; I say it should protect the individual more than the trust; the trouble is that the trusts and the combinations are getting all the protection and the people in the smaller operations, the little fellows, don't seem to get it. *Q. (By Mr. CLARKE.) Well, are you sure about that? A. Well, you don't get it on the railroads all the same; I know that. Q. You believe, then, in a protective tariff if it could be fairly adminis- tered for the benefit of the people generally? A. Of the masses; benefit of the masses. I believe in taking care of home industries, you know. Q. Can you do it in any other way than by a protective tariff? A. Oh, well, of course not; you have got to have a certain amount of protective tariff, of course; but I don't believe in a tariff that will protect trusts and combinations. Q. Well, you would not repeal the tariff merely because some trust or combination has some benefit from it, when it is clear to you that the people generally have a benefit from it, too? A. No, if the people generally get the advantage of it, it is all right; I believe in that; I believe in a protective tariff where the masses of the people get protection; certainly I do; I believe in protecting the masses against the classes. Q. Then your principal warfare is against trusts and combines, and their abuses of privileges, rather than against the law which we now have, which is designed for the protection of the people all alike? A. I haven't got anything against the law; I bow to the laws of our land. The great com- plaint that I have is that they are not properly executed; they are not enforced. Q. You do not care to have them repealed, then? A. No, sir; I don't think it is necessary to amend them, or anything of the kind; I think it is no harm to amend them if we can make them any better, but the main -trouble is that they are not enforced. Mr. Rice said he could not suggest off hand any amendment to the Sherman anti-trust law, as that was a legal question and he had not looked into it. *Q. (By Representative LIVINGSTON.) What do you think about Gov- ernor Harris' objection, or the point that he raised as to what the Supreme Court decided on that word monopoly? Ought not that to be amended in some way so that the Supreme Court should allow the Attorney-General to enforce the law? What amendment would you suggest there? It seems to me that we are hung up on that Supreme Court decision. A. I cannot say right off what amendment would probably be necessary, because that is a legal question that I don't understand, you know; I haven't looked into it, you know; I haven't formed an opinion about that at all. Senator KYLE. Now, we will proceed where we left off. We are get- ting side tracked here a little on politics. Representative LIVINGSTON. There is no politics in this, you know; Ihis is business. The WITNESS. Where did I leave off? Senator KYLE. At the bottom of page 44. The WITNESS. I think I read the paragraph under B-191; I think I did. Vice-Chairman PHILLIPS. Yes, sir; that paragraph was the last one you read, Mr. Rice. The WITNESS. (Resuming.) That is my recollection. (Reading.) "The Chicago. Rock Island &: Pacific Railway, in which two trustees of the Standard Oil Trust, Henry M. Flagler and Benjamin Brewster, were •Black faced type indicates matter omitted, in the course of editing-, from tiie ■official report. 456 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. directors, issued, on June 13, 1891, a 'special tariff,' including all connecting lines, in which petroleum and its products from Whiting, Ind., are made at Chicago rates as follows: "Current Chicago rates as published in various issues of this company." (No doubt practically in effect to-day without a published tariff.) "The Standard Oil Trust have at Whiting, Ind., suburb of Chicago, on the lake shore, the largest petroleum refining plant in the world. "Freight discrimination of 110 per cent, in 1897 in favor of the Standard Oil Trust." Now, here is something in 1897; that is pretty late; a discrimination. Mr. Archbold says you haven't had any since 1887; this is up to 1897: (Read- ing.) "In 1897, the New York, New Haven & Hartford Railroad Company, in which Mr. William Rockefeller is a director, discriminated in freight rates in favor of the Standard Oil Trust to the extent of 110 per cent., by which two cars of naphtha, containing 100,986 pounds were carried at 48,000 pounds, or two carloads for one, applicable to all Standard shipmentts, this being accidentally discovered." The witness said the above condition was brought out in a case that was before the Interstate Commerce Commission, and which had not yet been decided, but he said it was all correct. Mr. Rice also read a letter in reference to the above, dated December 15, 1897, and addressed to him by the Liberty Oil Company, C. M. Coburn, manager, in which the latter said his company expected to be able to procure a criminal indictment against the Standard Oil Company in this case. On December 14, 1882, the Produce Exchange, of New York, established by resolution, which the witness said had not been changed, a gravity weight in the sale of refined oil of 44°, which he said actually weighs six and seven-tenths pounds per gallon. The railroads had established a weight of six and four-tenths pounds per gallon, by which the refined oil of the Standard Oil Company is now carried free to the extent of four and sixty- eight-hnndredths per cent, through under weight. This regulation applies equally to all oil shipped by competitors of the Standard Oil Company. Q. (By Mr. SMYTH.) That statement you make at the top of the page about the two cars of naphtha; was it proven that that was a custom; was there more than one case, or was there only one case proved? A. You wouldn't be apt to prove more than one case; that was the only case that came up. There was not, as I understand, any further proof of any other cases; this one only got out accidentally, you know; you never can find anything of this kind, only when we get it accidentally; but it is fair to presume that all the shipments over this line were on that same basis. No question about it whatever. Q. (By Professor JENKS.) Do you remember what defence they put in? *A. No, I do not. Q. Did they say it was an accident, a clerical error? A. Yes; Mr. How- ard Page, the agent of the Standard Oil Company. Avent over to Boston, and said it was a clerical error, and it was corrected. Of course they will do that. They are very nice men and do it every time, because they soon had paid it on a coTiple of cars, and they probably do this thing right straight along. t (Reading.) "This also applied to paraflfine and lubricating oils, fuel oil and resi- duum, which are carried at 17 per cent, less than actual weight. The Stand- ard Oil Trust own over 8,000 tank cars, which are paid for every three years through the allowed milea°:e rate of three-fourths of a cent a mile each way — another form of freight discrimination, for the railroads pay to them three fourths of a cent a mile to haul back a dead weight empty tank car that is not applicable to s:eneral freight, like a box car." Mr. Rice said that rate applied to all classes of tank cars and presumed that the same rule applied to the refrigerator cars of the meat packing companies. *Dlack fuccd type indicates matter omitted, in the course nf editing, from the ofTicial report. ■;Th(' fnllowinp is in the answer in the nflicial ri'pnrt: "Tliey iirol);ibly curried a. thousand cars there that same way." GEORGE RICE. 457 He again referred to the letter of Receivers Cowen and Murray, of the Baltimore & Ohio Railroad Company, of December 20, 1898, in regard to freight rate discriminations. The witness said: (Reading.) "Section 6 of the interstate commerce act provides that all original tariff sheets 'shall also state separately, the terminal charges and any rules or regulations which in anywise change, affect or determine any part or the aggregate of such aforesaid rates and fares and charges.' " He said the railroads violate this section by issuing and filing with the commission general tariff sheets for public use, and then side-track these tariff sheets by the issuance of innumerable supplements, special oil tariffs, special circulars, commodity sheets and so forth. He said the interstate commerce act provides that the general tariff shall state upon its face every thing that affects the rate and yet the commission does not enforce it. Senator Kyle inquired whether the Interstate Commerce Commission did not say it had no power to enforce anything. Mr. Rice replied that they could enforce that regulation and he thought the excuse that they had no power was a very flimsy one. He thought they had plenty of power to do a great deal more than they do. "What is the reason they do not do it, I would like to know?" he said. "Because we have not got any kind of a country here that enforces law." (Reading.) "In 1894 an expert accountant discovered that $7,000,000 in rebates had been paid by the Atchison, Topeka & Santa Fe Railroad Com- pany, of which no doubt the Standard Oil Trust got the lion's share." Q. (By Professor JENKS.) The rest you have already explained to us. A. Yes, sir. (Reading.) "These discriminations are not now confined to oil, but extend to and cover nine-tenths of the commerce of the country, meat and manufactured products, as well as the products of the soil and mines, which articles to-day are controlled by the great trusts and com- bines and this control has been secured only through unlawful re- bates. * * * "Our laws are over-ridden; our courts are condemned, and our whole social structure is debauched." H: :{: ^ ^ :{: :j: :{: The witness said that it was absurd to say that the Standard Oil Trust had made oil cheap, and he declared petroleum products are to-day higher than they should be. He said producers of oil are charged 20 cents a barrel for local pipage, which does not cost five cents, and that the rail rate from the oil region to the seaboard is equal to 52 8-10 cents per barrel. Mr. Rice criticised the statement of Mr. F. B. Thurber, of New York, that the Standard Oil Company had made oil cheap, reducing the average price for refined oil for export from 25.7 cents per gallon in 1871 to an average of 5.7 cents per gallon in 1898. Q. (By Mr. CLARKE.) Do you dispute his statement that it was only attainable through the aggregation of capital in this industry? A. Yes, sir, I do dispute it. ^ zi: ^ :i: ^ ^ ijp The witness said that up to August 28. 1898, the Pennsylvania Railroad Company carried 50 gallons of oil. including the wooden package, at the same price per barrel as 50 gallons in bulk in a tank car. (Reading.) "On September 15, 1895, the Produce Exchange, of New York, through the power of the Standard Oil Trust, passed a resolution making the manu- factured products from inferior Lima crude petroleum, known as sulphur oil, a good delivery, on a parity with the manufactured products from best grade crude. The average annual market price of this inferior grade crude for past five years, 1894 to 1898 inclusive, was 59 cents per barrel, as against $1.01% for the best erade. or the latter 72 per cent, higher. Thus it is that the Standard Oil Trust receives 72 per cent, more profit in the sale of manufactured Lima crude products than from those of the higher priced crude, which could not be done except through the power of this monopoly to enforce and exact equal price for both classes of goods, and this is an- other instance of this great trust making petroleum products from inferior 458 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. grade crude so cheap to the consumer. For past five years, 1894 to 1898 inclusive, the total production of petroleum was 279,129,467 barrels, of which Ohio produced 85,306,684 barrels and Indiana 20,608,793 of this inferior grade of crude petroleum, or 38 per cent. "The last government report for 1898 has this to say about this inferior grade of crude: " 'The product is characterized by the presence of sulphur compounds, which makes it of less value for refining purposes than the Eastern Penn- sylvania product.' "The refined product from this poor grade crude is adulterated with the products made from the best grade crude, and the results are easily seen by a white film on the lamp chimney that obstructs the light, requires constant attention to turn up the wick to get more light, smokes the lamp and has an offensive smell. In view of Archbold's laudatory remarks on this particular oil it will be quite refreshing to refer to a caution circular, issued in 1890 by one of the trust corporations, denouncing said oil. ('B-166)" This is a very interesting circular, giving what they think about that oil; it states what the Standard thought of this oil. Q. (By Mr. FARQUHAR.) Haven't they through two processes elimi- nated the sulphur and a great many other deleterious substances from the Lima oil? A. Precisely; but the product from the Lima oil is not near as good as the other. Q. But there has been a great improvement since 1890. when they issued this circular? A. Yes, sir; they have improved the manufacture of it; yes, sir, to some extent. I will put in an exhibit to show violations of the interstate commerce law. The witness read the following head lines of exhibits presented, but not read by him: (Reading.) "Non-compliance and non-enforcement of the interstate commerce act produces existing gross discriminating freight rates as to persons and places, and to the extent of 211 per cent., in violation of sections 3 and 4 of the act." "The long and short haul clause of the act not violated in the shipment of general commodities in five different classes." "Clement A. Griscom. president of the National Transit Company (Stand- ard Oil Trust) and as a director in the Pennsylvania Railroad Company, makes conspiracy agreement for and on behalf of all trunk lines to the sea- hoard, and of the Tidewater Pipe Company, supposed competing pipe line, for maintenance of pipe with rail rates, ten times above pipage cost exist- ing to-day." "Railroads allow Standard Oil Trust to lay its pipes in the road's right- of-way, in consideration of the road having only the pipe to transport, thereby losing all its former oil freight." "The United States Pipe Line Company has been trying for seven years to get its two pipe lines, crude and refined, from the oil regions to New York bay, through the State of New Jersey, and must now abandon it because of joint opposition of railroads and of the Standard Oil Trust." "On August 1, 1899, 50 per cent, more is charged by the railroads to carry grain from Chicago to New York for domestic use than export for foreign consumption. Within three months, by November 1, 1899, domestic rates have been raised 30 per cent, and export 80 per cent, with rebate on export quantity shipped." (Reading.) "The Standard Oil monopoly is the originator of the system for devices for rebates in the form of commissions, arbitraries, billing under weight, blind-billing, dockage, lighterage, terminal charges, special style tank cars, over-loading, billing to intermediate points at the low terminal rate, stopping cars in transit and delivering small lots at carload rates, 'ghost trains' on which no freight is paid, commissions or rebates on all com- petitive shipments, shipping out from its agencies to surrounding territories and paying no freight thereon that to-day permeates all the arteries of com- merce, exclusively in favor of the trusts, effectually wiping out and closing tip all competitive industries." GEORGE RICE. 459 Mr. Rice complained that there was a species of freight discrimination, practiced by the railroad by what were known as "ghost trains." He quoted Mr. Gowen, president of the Philadelphia & Reading Railroad Company, that a "ghost train" "is a long train of loaded cars which, though visible to the sight and susceptible of identification by all the other senses, makes no impression upon the manifest of the corporation, and leaves no trace upon the treasury of the company." The witness also read the following head lines of exhibits presented to the commission, but not read by him: "Since the Federal anti-trust law took effect, 1890, there has been con- solidated 946 railroads, aggregating 63,000 miles, or one-third of total." "The railroads and industrial trusts are capitalized at $18,818,554,031." "There are to-day at least 44 unlawful railroad traffic associations and water lines combined acting in entire unison to increase and maintain freight charges and discriminate in favor of the trusts on all rail and water transportation rates in violation of the interstate commerce act, and of the Federal anti-trust act." He renewed his advocacy of government ownership of railroads as the only means by which freight discriminations could be avoided. Q. (By Mr. KENNEDY.) I was out of the room when you said it, but I understand you said you were in favor of disfranchising the 800,000 em- ployes of railroads of the country? A. Yes, sir; in order to take the ques- tion out of political power or influence. Q. You would be in favor of disfranchising these 800,000 working men? A. Certainly I would, and there are plenty of voters left. Q. (By Senator KYLE.) Do you not think that proposed remedy would be absolutely impracticable? *Mr. FARQUHAR. But it don't matter about that with him. The WITNESS. If that is the best remedy, you could get plenty of men to take the positions and take them out of politics. Q. (By Mr. KENNEDY.) Do you think you could get plenty of men to take those positions? A. Yes, sir; and I should be in favor of it right quick. Q. Do you know anybody else in the United States that would be in favor of it? A. I should suppose there would be any quantity; certainly; why not? The greatest good for the greatest number. What harm is there in it? Mr. KENNED if. But they are citizens of this country. The WITNESS. The residents of this town can't vote; all citizens of this district can't vote. *Mr. FARQUHAR. They go home to vote. Senator KYLE. You mean those born here. Mr. A. L. HARRIS. We ran one for Governor. The WITNESS. We gain 350,000 to 400,000 voters every year; we have more voters now than we need. :}: ^ 4: ^ 4: 4= ^ "If the people cannot get justice and are not soon relieved of the bur- dens and conspiracy oppressions imposed by the railroads and of the trusts, in gross violation of the laws of the land, matters may assume an ugly shape. "A century ago the American colonies, goaded to despair by long con- tinued injuries, insults and exactions, broke the fetters that had bound them for many years, and appealing to the Supreme .Judge of the world for the rectitude of their intentions 'assumed amongst the powers of the earth, the separate and equal station to which the laws of nature and of nature's God entitled them.' In that renowned Declaration of Independence our fore- fathers asserted 'that when a long train of abuses and usurpations, pursuing invariably the same object, evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off their oppressors and provide new guards for future security.' "The last resort is for the people to retake into their own hands the power that has been delegated and abused. Vigilance committees have •Black faced type Indicates matter omitted, 1 i the course of editing, from \.he offlclal report. 460 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. more than once had a purifying influence. There may be conditions which will again render them a necessity. There is a limit to human forbearance. Has that limit yet been reached? "I am free to assert that unless some drastic measures are soon taken to do justice for the people, the end will come in an ugly shape. The colossal fortunes that have been piled up as a result of the advantages, enjoyed by the few and denied to the many, represent just that much money coined fi'om the blood sweat of the masses. I do not believe any system will be permitted to exist which allows one man to accumulate a fortune of four to five hundred millions of dollars while millions of his fellow creatures are suffering for the bare necessities of life." The witness referred to the letter written by J. M. Gulp, traffic manager of the Southern Railway Company, in which he emphatically denied that the Southern Railway Company had at any time given to the Standard Oil Com- pany or any of its representatives "any lower rates of freight in the car- riage of shipments made by that company over our rails, either by direct tariff, refund or otherwise, than to any other shippers of similar com- modities." He was unable to give a specific case of a freight discrimination over the Southern Railway in favor of the Standard Oil Trust, but said the former company was connected with a number of "unlawful freight associations." The company was also pooled with railroads in the territory north of the Ohio and east of the Mississippi, in which Receivers Cowen and Murray, of the Baltimore & Ohio Railroad, had said that "illegal concessions through secret rates, drawbacks and other devices" were made. Because of these circumstances, he inferred that the Southern Railway also granted secret rates, drawbacks, rebates, etc., adding: "If any kind of I'ebates in any shape are given, you may rest assured that the Standard Oil Trust gets the lion's share, as fully exposed by me." The attention of the witness was called to the explanation made by Mr. Culp, of the Chess. Carley Company letter containing the phrase "Please turn another screw," this explanation having been made before the Bacon Committee in 1888, Mr. Culp having declared that there was no discrimina- tion against Mr. Rice at the time that letter was written. Mr. Rice, referring to this statement, said: "It is for the people to believe Mr. Culp against me, if they want to." Q. (By Mr. FARQUHAR.) Mr. Carley, in this investigation, testified that he had never gotten any rebate at that time discriminating in any rate whatever, which is also the sworn testimony of a reputable witness outside of A. Who is reputable? You call Carley a reputable witness? Q. No one could call him otherwise. The Congressional Committee took it in that way. A. They can take it as much as they are amind to. I don't believe him. Q. It is in the Bacon report. A. I wouldn't believe either one of these men. That is my experience, you know. I wouldn't believe either one of them. Q. I merely desired to call your attention to it. A. Because many of these exhibits are in this testimony to prove otherwise, and people can take and believe what they please, or what they are amind to. I am telling the truth absolutely, without a doubt, by solid experience. There is no question in regard to it whatever, that they raised the rates on me 50 per cent, within five days under that letter. What have you to say to that? *That man ought to be shot. Do you know that? I have had men tell me that they would shoot such a man as that. *He is an arrant scoundrel. Of course I don't like to use epithets, but any man that will do that will do most any- thing under the light of the sun. By God, it is awful! Think of it! Any railroad man ought to be shot that would do such a thing as that. It is out- rageous to violate the laws of this country i-i this way. You know there isn't lan°:ua?e strong enou-^h to express a man's disgust at the execution of *Black faced type indicates m:ilter iiinitUnl, in the ccurso (if cditins'. finm the official report. GEORGE RICE. 461 our laws. How anybody can excuse such men or have any belief in them I cannot understand — any men that will do such outrageous things. *They ought to be wiped off the face of the earth. Q. (By Mr. CLARKE.) Do you recommend shooting as a remedy? A. Oh, God, I think it will come to something of that kind, Mr. Clarke, if we cannot get relief. What did our colonists do over in Boston? They threw the tea overboard because of oppression, didn't they? We are just as much oppressed to-day as they were, and more so. *Hundreds of millions of dol- lars are involved and there was only a few thousand there. That is what they did over there. They put on masks and went aboard like Indians and threv/ the tea overboard because of a little extra tax — threw it overboard. Don't you think that some of these railroad men ought to be thrown over- board? I do. I will tell you what it is, people are getting tired of this thing, I think. The witness said that Mr. Archbold "falsely asserts, when he states that pipage rates were included in the rail rates on the Cleveland & Marietta Railroad." He said he paid 35 cents a barrel on his petroleum ship- ments, while the Standard Oil Trust paid 10 cents a barrel. He said that Phineas Pease, the receiver of this railroad, allowed the Standard Oil Trust to lay its pipe line not only in the roadbed right-of-way, but also across passenger bridges to assist it to convey crude oil from the Macksburg oil fields to Parkersburg, West Virginia, 12 miles from Marietta, where the Standard Oil Company had a large refining plant, though by that means the road was deprived of Standard Oil freight. In 1885, Mr. Rice said, when he wanted to go under the tracks of this road with his pipe lines, to reach the Muskingum river, thence to barge his oil to Marietta to avoid excessive rates, Mr. Pease telegraphed him to desist from laying his pipes under the road, which he did not obey. In November, 1887, seven or eight months after the interstate commerce act took effect, he "proved before the Inter- state Commerce Commission" that he was paying four times as much freight as the Standard Oil Trust on shipments of oil to Bii'mingham. Alabama. He paid 59 cents a 100 pounds, witli 400 pounds to the barrel, while the Stand- ard Oil Company paid only 16.8 cents per 100 on 315 pounds of bulk oil, the discrimination being 346 per cent. The witness denied tliat anyone in this country ever put up a dollar to aid him in any fight tliat he had made against the Standard Oil Trust. Q. (By Mr. A. L. HARRIS.) Did you ever offer to sell out for .$500,000? A. Yes, sir: I did offer it: they offered me $250,000 in 1882 and in 1886 or 1887, about the time that I was trying to get transferred some shares that I had in my name — which they refused to do — the Standard Oil Trust certifi- cates — they were considerably exercised to prevent it, and a negotiation was started along in there. The witness read a portion of his re-direct examination by Attorney- General Monnett, March 21, 1899, during the Ohio investigation, in which he said, in part: (Reading.) "A. The charge that Mr. Archbold has made against me as being a blackmailer because of any interest that I may have taken in the proceed- ings against the Standard Oil Company of Ohio or in these proceedings, is a malicious statement and false. There is not a word of truth in it what- soever in that regard, in that respect. In 1882 Mr. F. B. Squires, the present secretary of the Standard Oil Company of Ohio, came to me at Asbury Park, where I was stopping with my wife, and offered me $250,000 for my oil properties, including the producing properties and the refining plant. This I testified to before Judge O'Brien, of this city, in 1888, in proceedings that I brought against the trustees of the Standard Oil Company to get trans- ferred an original trust certificate, standing in another man's name, into my name. Mr. Archbold was present at the proceedings and heard what I testified to and made no objections, nor was it denied. He at the same time went on to the stand and testified that my plant was not worth to exceed $25,000 or $30,000 (or five years later that it was worth only one-tenth of the previous offer: if so the Standard Oil Trust was wholly the cause of it). He •Black faced type indicates matter omitted, in the course of editing, from the offlcial report. 462 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. also produced an expert to say that it was not worth over $25,000. At this time that I testified, and at which Mr. Archboid was present, in the early spring of 1887, some four or five months previous to the proposition to which he alluded and which I will subsequently allude to, I offered my plant to him through Mr. Orvis to Mr. Archboid for the sum of $125,000 and $25,000 a year for five years. In 1886 it is true that I did submit a proposition to him to take, for producing properties and refining plant, the whole oil busi- ness that I had, the sum of $250,000 and $50,000 a year for five years. He considered the proposition and wrote me two letters of which I would like to submit here the copies of them, because they were very short." Mr. Rice read the following copies of letters which he had submitted ia the above testimony: 26 Broadway, New York, November 17. 1S86. George Kice, Marietta, Ohio: Dear Sir— I write to advise you that I have not lost sight of our recent inter- view, but there has been unavoidable delay in gathering information which we de- sire on tiie subject. We now expect to have this information in a week or so, and will then again communicate with you. Believe me, Very truly yours, JOHN D. ARCHBOLD. Standard Oil Trust, 26 Broadway, New York, December 13, 1886. George Rice, Marietta, Ohio: Dear Sir— We have given further consideration to the subject of our recent in- terview and are prepared, if you so desire, to discuss it further with you. Awaiting your advice as to your wish in the matter, and, if favorable, the designation of a time when you will meet with us here, 1 remain, Truly yours, JOHN D. ARCHBOLD. Mr. Rice said he never replied to them and never called on them. The witness quoted at considerable length from testimony taken during the Ohio investigation concerning his attempted sale of his refining plant and producing properties to the Standard Oil Company. Q. (By Vice-Chairman PHILLIPS.) What was the price fixed or talked of at that time, Mr. Rice? A. $250,000 and $50,000 a year for five years, as I read from the testimony. Now, there in the records it shows that the plant and the good will of the business, the mercantile agency of R. G. Dun & Company, for several years made a rating of a million dollars on this same property. It seems ridiculous, you know. How silly and ridiculous it is for these hundred million millionaires to charge me with blackmail when they have robbed the stockholders of the railroads through dishonest and unlawful means, through freight discriminations, out of hundreds of millions of dollars and which has been paid by the public in higher priced oils and of a poorer quality. When people get hurt by the exposure of their infamies they generally cry blackmail. It seems ridiculous, you know, for me to have to answer this, but inasmuch as the charges have been made, you know, and under all the circumstances, I have, though it didn't seem hardly worth while. Mr. Rice read from his testimony given during the Ohio investigation at some length. The witness read letters written by Edgar P. Hill, attorney and coun- sellor-at-law, New York, to Mr. Cuthbert, an official of the Standard Oil Trust, November 13, 1899, making propositions to sell the oil property of the witness, and denied any responsibility for, or connection with, that offer. These letters follow: Ex. No. 1. Edgar P. Hill, Admitted in evidence. Attorney and Counsellor-at-Law, November 13, '89. 93 Nassau Street, New York. March 20, 1888. My Dear Cuthbert— I am going to write you a very plain letter in regard tn the matter of Rice and the Standard Oil Company. In my judgment the company is making a great mistake in not getting Rice out of their way. I KNOW what I am writing about, and the necessity of Mr. Brewster's being put in possession of such facts as I shall give you some account fs URGENT. Can you consistently and prop- erly through Mr. Bushnell have them reach Mr. Brewster. If you can without GEORGE RICE. 46* prejudice to your interests, I hope you will do so. If you cannot, say so plainly, and reply to this letter as soon as you possibly can. 1 shall not call on Mr. Dodd again unless he sends for me. I don't think he appreciates the situation. But to. the facts, of which you will see something in the papers before you are many days- older. First— Mr. Rice owns certain shares of the Standard Oil Company stock. An alternative mandamus has, or will be soon ibsued commanding the company to transfer that stock to George Rice, or show cause why it is not done. If the com- pany transfers the stock, Mr. Rice will prove to be a more troublesome customer than he is now, unless he IS SETTLED WITH AT ONCE. If the company refuse to transfer the stock they will be COMPELLED to, and then its troubles will be greater. The company cannot RESIST the Court if it refuses. Second— Mr. Rice has been summuned before the Interstate Commerce Com- mission and will be before that commissiuii to-morrow;, or very soon to answer interrogatories already framed, the answers to which will be TROUBLESOME to the compaiiv, to speak within bounds. Those interrogatories had best remain UNANSWERED. Third— Legal proceedings are about to be commenced against two of the rail- roads having large contracts in the past and at present with the Standard Oil Com- pany in violation of the interstate commerce law, for a forfeiture of their charters. Fourth- A law has been framed and will soon be introduced in Congress giving Mr. Rice the authority to bring suits in any State against railroads that have made contracts with the Standard Oil Company discriminating against Rice and to his prejudice. Fifth— It is useless for the company to try to make a settlement with Rice through OTHER PARTIES. It must be done with ME or not at all. There are other matters I could call attention to but this is sufHcient for the present. I write as I have to you for the sole purpose of having these facts brought to the notice of Mr. Brewster and for NO OTHER PURPOSE. Could I have an interview with him, I am sure it would be to the advantage of the company. Again let me say that I do not want you to be prejudiced in the least in this matter, and unless you can see your way clearly TO DO THIS, DON'T DO IT, but return this letter to me and that will be the end of it so far as you are concerned. Please do not delay your snswer. Sincerely yours, (Signed) EDGAR P. HILL. Now, here is another from him dated March 29, 1888: Edgar P. Hill, Ex. 2. Attorney and Counsellor-at-Law, Nov. 13, 18S9. 93 Nassau Street, New York. I March 29, 1888. My Dear Cuthbert— I have your letter of the 26th inst. for which you have my thanks. I am very glad indeed that you sent my letter to Mr. B. and 1 infer that he or Mr. Brewster has it now, as you do not mention its having been returned to you. I shall be fully engaged to-day and to-morrow in another matter and as soon as that is off my hands, I shall ask Mr. Brewster for an interview and I am confident that good will come to the company from it. I desire to have you under- stand that I am not acting and will not act in this matter in any spirit of hostility to the company, but on the contrary I desire to bring about a settlement between the company and Rice, and nothing else. I am the only person who has the handling of this matter and the Standard Oil Company is simply wasting valuable time in try- ing to reach Rice through someone else. That this has been done I am SURE, but it has had and will not have the least encouragement. I shall endeavor to make my- self understood by Mr. Brewster, and am not without hope of causing him to see matters as they ARE and not as they are represented to be by others in whom he places confidence. Mr. Dodd hinted at blackmail on the part of Rice, but that is absurd on its face, as I only ask to be heard fairly in an endeavor to settle the matter between these parties NOW, and which will be more difficult the longer it is delayed. I can settle the matter in less time than a week if a fair and accommodat- ing spirit is shown on the other side. I am well pleased with the situation, and again thank you for the kind assistance you have rendered me. Sincerely yours, (Signed) EDGAR P. HILL. Mr. Rice said these letters were throv/n out by the court in the case of the State of Ohio vs. the Standard Oil Company of Ohio. Yet he said Mr. Dodd had sent this correspondence to the chairman of the Committee on Manufactures of the House of Representatives to show that he (Rice) had threatened to give troublesome evidence before that committee unless set- tlement was made with him and parole evidence to show that the price for such settlement was $550,000. 464 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-chairman PHILLIPS.) Did Mr. Dodd know that it had been thrown out? A. Certainly, he knew about it; of course he knew it; there wasn't any question about it; you know, it is ridiculous and outrage- ous to have to answer all these things, you know, but the charge has been made against me, and I thought I ought to answer it here. Q. (By Professor JENKS.) You never yourself had any communication with Mr. Hill at all? A. Not a particle; not at all; not a bit, and all these letters are gotten up for the purpose — for some reason or other. Q. (By Mr. FARQUHAR.) Was Hill a broker in New York? A. No, sir; a lawyer. * * * Mr. Rice also referred to a pamphlet he had issued called "Black Death," being devoted to the Standard Oil Trust, and said that the latter issued a duplicate of his pamphlet with various critical marginal notes. He read these marginal notes to show, as he said. "What kind of people the are." Q. (By Senator KYLE.) You had attacked them in your pamphlet, had you? A. Yes, sir; I had attacked them, certainly. This was showing up bugaboos. Q. And this is in the shape of rebuttal, as it were? A. Yes, sir; I sup- pose so. Now, they have admitted this, you know, in the suit. *l think they have admitted this pamphlet with all this stuff. Now, I have alluded here to where they attack me. They say: "If the Standard Oil Company pays George Rice $250,000 for his refinery, worth $50,000, can they sell oil any cheaper or serve the public any better than they do now?" But on the front part they say: "Common sense pricks this hullabaloo; such missionaries as George Rice work mostly for — George Rice. Buy the best and cheapest goods of the agent of the Standard Oil Company." "The black border on the first page means blackmail by George Rice." This is issued by the great Standard Oil Trust, the great philanthropic institution, which is worth several hundred million dollars, you know, and they say at the bottom, "Buy Standard goods of the Standard agents." "If George Rice's goods are no better than his pamphlet, you don't want them. His pamphlet, boiled down, simply means 'Sour grapes.' " *"After a protracted game of bluff and brag, George Rice plays baby." "Mrs. Winslow's Soothing Syrup quiets fretful babies; will not the nurse try it on Georgie?" Q. (By Senator KYLE.) Do you want that to go into your testimony? A. I don't believe I would; probably it better not go in. * * * Mr. Rice said the Standard Oil Company acknowledged that they pub- lished this pamphlet and said he had evidence to show that they did acknowledge it. Mr. Rice, in reply to a question by Mr. Phillips, said the Oil City Der- rick had attacked independent oil producers and had called him a black- mailer. PTe had not known it to attack anybody in the Standard Oil Trust and he claimed it was known as the organ of the Standard Oil Trust throughout the oil regions. The witness was told that the Oil City Derrick was not on trial before the commission. The witness said that he had no suggestion of a remedy for the freight discriminations he had complained of, except government ownership of the railroads. *The WITNESS. I think it is ridiculous and foolish, all this thing; the idea of a great institution like the Standard Oil Trust charging an individ- ual with being a blackmailer; why, it is so ridiculous, you know, on the face of it, when they are getting these extraordinary, outrageous freight discrim- inations from the railroads, robbing the stockholders of the roads out of hundreds of millions of dollars, and because somebody has asked more for their property than they think it is worth, he is a blackmailer, and they get their organs to publish it all over the country, you know; that is what they do. ********* Q. (By Vice-Chairman PHILLIPS.) Do you know what the dividends of the Standard Oil Company have been since its organization? A. Well, I ♦Black faced tyre indicates matter omitted, In the course of editing, from the official report. GEORGE RICE. 465 see $170,000,000 since 1892, and the ten years previous would be another $100,000,000 or $270,000,000 or something. Q. (By Vice-chairman PHILLIPS). What has their capital stock sold at; about the highest price? A. It sold at $500 in May last. Q. (By Vice-chairman PHILLIPS.) What would that make the total sum? A. Half a billion. Q. (By Vice-chairman PHILLIPS.) Half a billion of dollars? A. Yes. sir. Q. (By Vice-Chairman PHILLIPS.) Do you know anything about the surplus? A. No, sir; I do not. I cannot get any statement; they don't make any statements to anybody, *it don't make any difference who; they are too high-toned for that. Q. (By Mr. CLARKE.) I would like to ask Mr. Rice if he has any other remedy to recommend to this commission and Congress than the govern- ment ownership of the railroads? A. I don't believe I have, Mr. Clarke, for the reason that I think that with the experience of the past 12 years of the Interstate commerce act, with the penalty clause attached of $5,000 and two years in the penitentiary for each and every offense, I think more drastic measures must be used; and I do not see how it could be remedied, except by governmental ownership of railroads to stop freight discriminations. *lf these men have robbed in the past by means of these discriminations, as I have shown here, and they go on, I don't know what they won't do, and unless you can get these men behind the bars in the penitentiary they will never stop freight discriminations. Q. In your pamphlet you make some allusions to the ease with which certain people can control legislation, especially in the State of New Jersey. A. Yes, sir; I think by the centering of trusts and combinations in one State, it is much easier to control them, I said, in the way of legislation. Q. Do you not recognize that there would be great danger if railways were owned and controlled by the government, of great abuses and political evils, and so forth, incident to it? A. No, sir; I do not, for this reason: I do not know of any instance of any particular account, in which any depart- ment of the government is run dishonestly. That is to say, every man is getting his equal, just deserts, the way I understand it. You don't hear any complaints that the government is being robbed, excepting, of course, occa- sionally, now and then. I suppose the Carter case is an exception, but I mean to say, in a general way, the departments of the government are run honestly and fairly and squarely. Q. We have heard from you several times to-day that you do not think the government officials perform their duty. A. I don't think they do per- form their duty. Q. AVould they be any more likely to do it if they had control of the railroads? A. Yes, sir; I think so. But if they didn't do their duty quite so well and there was not freight discrimination, it would be a great advan- tage. I can tell you, to the people of the country. As I understand it the government employes do their duty generally, don't they? Q. Do you not think freight discriminations can be provided against effectively without government ownership of the railroads? A. No, I don't know how; I don't know how it could be done, because in the experience we have had for the past 12 years with this severe penalty clause which they put in for the violation of the law, everything shows the discriminations are about as bad to-day as ever. Of course, they are more covered up, and you don't get at the worst of it to-day. A friend of mine told me lately — he was the expert on the books of the Atchison, Topeka & Santa Fe Company in which that $7,000,000 of rebates was discovered three or four years ago — - and that expert told a friend of mine within a few davs — this railroad expert who was put on the books — that he was just getting into the "meat" of it, and had discovered these discriminations, and had got on to it through an entry of a pencil mark which is put on the books. This pencil mark turned out to be a secret mark which he finally demonstrated to be the key which led him up to get into where he could find out where the rebates were. He was just getting into it when he was shut off, after he had discov- *Black faced type indicates matter omitted, in the course of editing, from the official report. 30 466 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. erod rebates to the extent of $7,000,000, and he said he thought there were some $20,000,000 or $30,000,000 of rebates which could have been discov- ered* if he had had more time to worlt it out. A friend of mine told me that the expert told him this, and I have no doubt it is so. Mr. Rice concluded his testimony with the following statement: "I pretend to say that the Standard Oil Trust is growing stronger all the time, and that that trust is not dissolved by any means; simply passing a resolution to dissolve it does not dissolve it, by any means; I don't know whether I made that plain enough, but that is the end of it." At this point the commission adjourned until the following morning. CHAPTER XX. TESTIMONY OF MR. HOWARD PAGE, OF NEW YORK, VICE-PRESIDENT OF THE UNION TANK LINE CO. Mr. Howard Page, of New York City, vice-president of the Union Tank Line Company, appeared before the commission on December 13, 1899. He stated that the Union Tank Line is the company that owns the cars in which the Standard Oil Company makes its shipments over the various rail- roads of the United States. The witness began business with Chess, Carley & Co. in 1878, and con- tinued with that firm until 1881, when it became a corporation under the name of the Chess-Carley Company. The Chess-Carley Company was suc- ceeded by the Standard Oil Company of Kentucky about 1886. Chess, Carley & Co. and the Chess-Carley Company were under the direct control and management of F. D. Carley, who was the I'esident partner and the manager at Louisville. Mr. Page remained with the Standard Oil Company of Kentucky until 1889, when he went to New York with the Standard Oil Company of New York, since which time he has been with that company and with the Union Tank Line Company, having been vice-president of the Union Tank Line Company since it was formed in 1891. While with the Chess-Carley Company in Louisville and with the Standard Oil Company of Kentucky, he was in charge of their traffic business. He desired to reply to some charges made by Mr. George Rice, of Mari- etta, Ohio, when before the commission, saying that some of these charges had been made and reiterated and advertised so frequently that they had come to be believed. Continuing his testimony, he said: "Mr. Rice charges that the Cottonseed Oil Trust paid the Standard Oil Company $2.50,000 for a copy of its trust agreement and this we deny as to that or any other sum. "In Mr. Rice's testimony he claims that the railroads paid the Galena Oil Company very high prices for its oil, and this forms a kind of freight discrimination in favor of the Standard Oil Company. Mr. Archbold denied it and I deny it again. The facts are that the trade secured by the Galena Oil Company is because of the superior and uniform quality as compared with the ordinary oils on the market. As to the prices paid for the Galena oils as compared with others, the Galena Oil Company sells its oils to railroads un- der an agreement with the railroad by which the Galena Oil Company always guarantees that the cost shall not exceed the cost of oils that the railroad has used before, and generally guarantees a reduction in the cost. This guarantee Is in the form of a certain cost per train mile for the different equipments which the railroad runs over its rails. That is. the cost per train mile of engines, freight cars and passenger cars that the road trans- *Tn tho ofncial report the statement "he thought more could have been discov- ♦^red" apprars in place of "he thought there were $20,000,000 or $,'^0,000,000 of rebates which could have been discovered." HOWARD PAGE. 467 ports over its rails is found from the railroad's own books, and then the Galena Oil Company guarantees that railroad, after finding the cost of the use of the other oils, the cost of using Galena oils will be less, and never more, than by using the other oils." Q. (By Mr. CLARKE.) Do you refer to lubricating oils entirely? A. Lubricating oils entirely and signal oils. The result of this has been great saving in the cost of the lubrication of railroads and a growing trade to the Galena Oil Company. This saving is produced by the fact that the Galena oil will do more work for the same money than any other oil. Experience has shown that that result has been obtained and the guarantee is made good. The amount of money that the railroads pay to the Galena Oil Com- pany for the use of its oils, compared with the ordinary oils on the market, is shown to be less. Q. (By Mr. FARQUHAR.) I would like to ask Mr. Page, has it not been customary in selling oils for the last 30 years, for the railroads to demand these tests of all persons that present oils to them for use; *and to make the 30-day or other test as to the economy, the lack of friction and the gen- eral economy In the use of oil? Has it not been the custom of the oil trade for 30 years to do that as the Galena does? A. I do not think any other company has gone into it as a science, as the Galena Company has done. Q. Not as to uniformity? A. Nor do I know that they have ever guar- anteed the cost per train mile for a year or a series of years as the Galena Company does. It is immaterial to a railroad whether a gallon of oil costs 10 cents or five cents, if the 10 cent oil will do work for three miles that the five cent oil will only do for one mile. That is simply the result of the use of the Galena oils. The Galena oils, although they have but one price, and a uniform price, and are higher than the cheaper grades of oil, will do more W'ork and the railroad will pay less money at the end of a year by the use of those oils than they pay by the use of the cheaper oils, and they are so guaranteed. Q. (By Mr. SMYTH.) Has that fact ever been demonstrated? A. Ab- solutely. The demonstration is proved by what l\Ir. Rice claims — that the result has been that 9.5 per cent. — I do not say it is 95 per cent., but I do say the Galena Oil Company has secured a large and growing trade with the railroads, and it could not have done so had not their oils been superior and the results been obtained that they have shown. Q. You claim that this large trade with the railroads Is due to the superiority of that oil and not to any influence brought to bear by the Stand- ard Oil Company? A. Absolutely; the superiority of the oils and the econ- omy that they have given to the railroads themselves. * >;: J}: % :J; ^ * * sj: % * Mr. Page said the price of the Galena Oil Company for its oils is the same to every railroad in the United States. The price per gallon is the same to all roads, regardless of the quantity they use. Q. (By Vice-Chairman PHILLIPS.) Do you claim that there is no refiner or person engaged in the manufacturing of lubricating oil that can make oil equal to the Galena oil? *That there is no outsider or independent refining concern that can make just as good oil as the Galena Company? A. I cannot answer that. I can only say what the result of the Galena Company's oil and its business has been. Q. (By Vice-Chairman PHILLIPS.) But you spoke of their guarantee- ing a superior quality of oil? A. I did not say guaranteeing a superior qual- ity. I said they guaranteed their cost. Q. (By Vice-Chairman PHILLIPS.) And above the cheaper oil. The inference to the commission probably would be that all oth^-rs made inferior or cheaper oils than the Galena Company? A. I did not say that, sir. Q. (By Vice-Chairman PHILLIPS.) You did not say it in so many words? A. I said that the result of the use of the Galena oils had been a saving to the railroads in the cost, and that they were justified in guaran- *Black faced type indicates matter omitted, in the course of editing, from the official report. 468 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. teeing that cost by the fact that the Galena oils did better work for the same money than the cheaper grades of oil that were offered on the market. Q. (By Vice-Chairman PHILLIPS.) Did, or did not, the monopoly of the lubricating oil business, so far as the railroads are concerned, grow up during the time when the rebate system was in vogue everywhere? A. Absolutely not. For ten years back, during which time the Standard Oil Company has not received a dollar in rebates, the trade of the Galena Oil Company has grown tremendously and I would say is probably ten times to-day what it was on the date of the passage of the interstate commerce law. Q. (By Vice-Chairman PHILLIPS.) Did they not get this monopoly of the lubricating business of the country prior to the interstate commerce act, though it has grown largely since? The railroads have increased by thousands and tens of thousands of miles since that day. A. I think I have already answered that by saying that to-day the trade of the Galena Oil Company is ten times what it was 10 years ago, and in the last 10 years we have not received a dollar of rebates, therefore, prior to the interstate com- merce law, when we did receive lower rates of freight than the tariff, as all other shippers did. the trade of the Galena Oil Company was only one- tenth of what it is to-day. Q. (By Vice-Chairman PHILLIPS.) But still it was practically a monopoly of that business at that date? A. It was not, sir. If they only had one-tenth of the business they have to-day, they could not have had a monopoly at that time. Q. (By Vice-Chairman PHILLIPS.) Did they use your oil and other oils? Has not the use of lubricating oil *made from petroleum been grow- ing right along? Was there or was there not any considerable amount of oil furnished by independent or outside people to the railroads prior to the interstate commerce act? A. They sold the railroads then and they sell them now. Q. (By Vice-Chairman PHILLIPS.) No considerable amount to the railroads prior to that? A. Oh, yes, sir; as far as my knowledge goes, they did, and they try to now and they do now. Q. (By Mr. FARQUHAR.) Is it not a fact that the Galena Company, before it ever cam.e into the Standard, had established a lubricating busi- ness? A. Yes, it had. Q. Is it not generally known in the oil trade of this country that the Galena is the best lubricant ever made in this country? Is not that its gen- eral reputation among railroad men and all others? A. Its success has cer- tainly proved that. In reply to questions, the witness said the Galena Oil Company had made a specialty of the railroad and steamship trade, and does not make a special effort to sell to mills and the machine trade, although it does so, and in addition has a large and growing trade abroad. The Galena oil is made especially for the requirements of railroads. When the oil is sold to mills, they pay the same piices as are paid by the railroads. Q. (By Professor .JENKS.) Does the fact that the Galena oils are sold to the railroads mostly on contract for a year explain the statement that has been made here at different times that when independent dealers attempt to sell oil to local railroad officials they are invariably referred to the higher officers of the railroad company? Your own officials also, I believe, have testified that they have no knowledge of the price of lubricating oils, because they themselves, the local managers, did not deal with the local officers. A. That is true, and is generally true, I believe, in regard to sup- plies used to any large extent on railroads. In other words, the local pur- chasing acent, or local division agent of a railroad is not the man that buys for a lar^^e system of roads any article that is used to a large extent, and naturally the local men would not know the price of a contract that would probably be made by the general manager for a series of years covering the entire lubrication of a railroad. *Rlack faced type indicates matter omitted, in the course of editing, from the official report. HOWARD PAGE. 469 Q. (By Mr. SMYTH.) All those articles are generally bought by the year by contract with the railroad? A. The contracts are generally for three or five years, simply because the results of the economies cannot always be demonstrated in one year. Q. (By Senator KYLE.) They have no schedule prices whatever on those? A. They have an absolute schedule price per gallon. Q. For from three to five years? A. From three to five years, and they guarantee the cost per train mile of the various equipments run, based on the cost that has been shown before by that same railroad, *over the same railroad, in the use of the ordinary oil. So far as the witness knew, the Galena Oil Company made the same prices for a railroad for a five-year contract that they made for a barrel of oil to a private consumer. Mr. PAGE. (Continuing.) In regard to Mr. Newlin's letter to George Rice, alleging freight discriminations by the Pennsylvania Railroad in favor of the Standard Oil Company, as compared with other shippers, I beg to hand you a letter from Solicitor Dodd addressed to the commission, attached to which are some letters from the attorneys of the railroad in reference to that matter. I will say briefly that Mr. Newlin's deductions, as presented in his letter to Mr. Rice were the same as argued by him before the United States Court at Philadelphia, and the court dismissed the case. The facts in the case, boiled down, are simply that the Standard Oil Company paid exactly the same rate of freight as all other shippers over the Pennsylvania Railroad from and to the various points named in Mr. Newlin's letter, but on such oil as w-as carried partly by pipe line and partly by railroad, the pipe line was allowed a share of the through rate, the same as the railroad would allow any other connection. The pipe line is a common carrier under the laws of Pennsylvania, and on all oil that is gathered in the oil fields and piped tov/ard the seaboard and delivered to the Pennsylvania Railroad, as it was at Hamilton, the rate was the same as the through railroad rate, and the pipe line got a share of that rate for its haul as the Pennsylvania Rail- road got a share for its haul. The legal and the full explanation is in the letter from Mr. Dodd and the attorneys of the Pennsylvania Railroad, which I shall present as an exhibit: (Following are copies of the exhibits referred to by the witness) : New York. December 7, 1S99. To the United States Industrial Commission: Dear Sirs — James W. M. Newlin, in his letter to George Rice, which was given in €viclen:e before the United States Industrial Commission, made two specific alle- gations: First— That during the years ISSl, 18S2 and 1SS3, Fenaille & Despeaux paid the Pennsylvania Railroad Company 48 cents per barrel for carriage of oil. all rail, from Foxburg to Communipaw, and at the same time, between the same points, the railroad company carried oil for the Standard Oil Company at a reduction of 2214 cents per barrel. Second — That the Pennsylvania Railrrad Company carried oil from McCahnont and other points to Communipaw, charging Fenaill? & Despeaux 33 cents per barrel. and at the same time between the same points carried oil for the Standard Oil Com- pany of New Yoik for 19.875 cents per barrel. He further claims that these facts were proven in the case of Fenaille & Det- peau.K vs. the Pennsylvania Railroad Company. We desire to make the most specific denial of these statements. First— That it is not true that oil was sn carried for the Standard Oil Com- pany, and Second- It is not true that any evidence of such fact was given in the case of Fenaille & Despeaux vs. the Pennsylvania Railroad Company, or any other case. nor was any evidence given, written or oral, from which any sane man could infer such a state of facts. On the contrary, the evidence given was positive that at dates mentioned, the Standard Oil Company paid the same rates on freight as other shippers and received no drawbacks or preferences. Mr. Newlin, after stating these facts were proven in said case, refers to ihe specific evidence, which was an agreement between the Pennsylvania Railroad Com- pany and the National Transit Company, dated May 6, 18,81. I presume a copy of this agreement was handed to the commission and it is only necessary to say that the most astute and suspicious mind could not distort the languaee of that agree- ment into a support of the allegations which Mr. Newlin bases upon it. and Mr. Newlin should have been more cautious in making, such allegation, as he had already 470 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. been heard, in the United States Court at Philadelphia on his construction of this agreemeiJt, and after argument, the case was dismissed by the court for want of auy proof of discrimination. Mr. Ntwlin claims the discrimination lurks in Sections 4 and 8 of said agree- ment. The agreement was a joint trafflic agreement in regard to oil carried partly by pipe and partly by rail, the through pipe line at that time having been com- pleted to a point near Milton, Pa. The fourth section is as follows: "The through rates from the discharging points of the gathering pipes in the region to the destination of the oil, whether the same shall be shipped entirely by rail or by trunk, pipe and rail, shall be fixed by the trunk line railroad companies, provided that they can agree upon the same, and the Transit company agrees to accept thereof as the share due to its through pipes, the proportions hereinafter fixed, through pipe lines include only such lines as receive oil from the local or gathering pipes, and Co not include any part of said local or gathering pipes." By this section, the railroad companies were authorized to make the through rate, and a distinction was drawn which has always been maintained between the local and gathering lines and the through pipe lines. With the local or gathering pipe lines, and their charges for gathering oil, the railroad had no connection, ex- cept in the single event provided for in Section 8. Charges for oil carried by the through lines to Milton and thence by rail were prorated between the pipe lines and railway as provided in Section 7. Section 8 is as follows: "Whenever the through rate from the exit point of gathering pipe shall be less than forty (40) cents per barrel, the local or gathering pipe shall be considered as entitled to a rate equivalent to only one- fourth (Vi) of the rate which shall be_ formed by the addition of the said through rate to the public rate which the local' pipe charges, and one-half (Va) of the difference between this one-fourth (14) and the said public rate shall be considered as due and to be paid to the railroad company, but this difference shall never be such as to make the local pipe receive less than ten (10) cents per barrel." The obvious intention of this so-called dangerous section is to take from the pipe line a certain portion of its charges and give it to the railroad when :he through rate is less than 40 cents. Referring to Mr. Newlin's figures, the first relates to a rate in excess of 40 cents and he certainly could see, if he has eyes, that Sectioi' 8 has no reference to such a case. The second table of Mr. Newlin's figures relates to a rate less than 40 cents, and if it referred to carrying oil by pipe line to Milton, or any point on the through lines and thence by rail to the seaboard, it would come within Section 8, but it does not so refer. If the Standard had oil carried by rail from Foxburg or Mc- Calmont, it was not affected by this agreement; if it had oil carried by pipe line to Milton and thence by rail to seaboard and the total tlirough rate was 3o cents, it paid the railroad 3:5 cents and the railroad adjusted the charges with the pipe line company under Section 8. Further. Mr. Newlin's figures are based on a total misreading of Section 8. This misreading consists in confounding "through rate from exit point of gathering pipe" and the "public rate which the local pipe line charges." In Mr. Newlin's first figures the throigh rate from exit point of gathering pipe is 48 cents. Tiie public rate which the local pipe line charges is 20 cents. One-fourth of the sum of these rates is 17 cents. Mr. Newlin says one-half of the difference between this 17 cents and 68 cents is the amount the Standard Oil Company paid to the railway company for freight. The contract does not say so. It says one-half of the difference between this 17 cents and the "said public rate" shall be paid to tlie railroad. Referring back to see what "public rate" has been mentioned, we find it is "the public rate which the local pipe line charges." There is no other reference to "public rate" in the section. The figures which Mr. Newlin injects instead of the "said public rate" are made up of tlie through rate from exit point of gathering pipe and the public rate which the local pipe line charges, or 68 cents, while "said public rate" is 20 cents, and one- half of the the difference between 17 and 20 is one and a half. Therefore, if he had made his figures correctly, he would have shown that the Standard only paid one and a half cents per barrel freight, while others were paying 48 cents. But such a reductio ad absurdum would have defeated his purpose. Pursuing the investigation further, it will be found on Mr. Newlin's theory that "one-half of the difference between this one-fourth and the said public rate" fixed the amount the Standard paid for its freight. If the railroad charged others 60 cents per barrel, the Standard would pay nothing. But if others paid 33 cents per barrel, the Standard would pay 3.37V2. and the lower the rate to the others, the higher to the Standard. All this is absurd, and the absuridty consists in the mireading and misapplica- tion of the section. It has no reference whatever to the freight rates the Standard shall pay. They were fixed by the railroad without discrimination. When others paid 48 cents, the Standard paid 48 cents, and when others paid .33 cents, the Standard paid 33 cents, but If the oil went part of the way to seaboard by pipe line, under this HOWARD PAGE. 471 agrtenient, the pipe line was paid a pro rata proportion of its share of the transpor- tation. To compensate the railroad for a lew rate of freight, the pipe line company agrtud to take someihing from the pipe rate which the local pipe line charged and pay it to the railroad. This only applied when the rate was less than 40 cents and would increase as the railroad rate diminished below this point, but was "never to be such as to make the local pipe receive less than 10 cents per barrel." Admit, for argument, that the Standard and the pipe line are essentially the same, and what is the result? The Standard received from the railroad company a pro rata amount for its share of the transportation by pipe line, and to recompense the railway company for an exceedingly low rate for through freight, agreed to pay to the railroad company a portion of its local pipe line earnings. It may have been a rebate to the railroad; it certainly was not a rebate to the Standard. Coming next to the agreement of August 22, 1SS4, which superseded the agree- ment of May 6, ISSl, a case of payment to the railroad company is much more clearly shown. The pipe line was then completed to seaboard. It could not have reached that point without the consent of the railway company, as no free pipe line law then existed in the State of New Jersey. It was still necessary to have a tratflc contract with the railroad and to deliver oil to the railroad at different points on the through line, that point being Milton, as before, for oil destined for Philadelphia. In addi- tion to agreeing to pro rata rates for oil carried partly by pipe and partly by rail, it was further agreed that if the railroad company did not move 26 per centum of ihe oil, the Transit Company should pay it the deficiency. Settlements were made with the railroad company and one of the settlements is referred to in Mr. Newlin's letter, that of September 30, 1884, which shows a pay- ment to the railroad company for such a deficiency amounting to $10,772.22. Many such settlements were put in evidence, all of them showing monthly pay- ments of large amounts to the railroad company. None of these were payments for freight, but payments to the railroad company for the deficiency in the amount it carried as specilied in the agreement. Attempting to distort a payment of this kind to the railroad company as a dis- crimination in favor of the Standard Oil Company ceases to be absurd— it is mali- cious. S. C. T. DODD. Law Offices of George Tucker Bispham, A. H. Winterstein, John Hampton Barnes, Sharswood Brinton. Girard Building, Broad and Chestnut Streets, Philadelphia. Despeaux vs. P. R. R. November 29, 1899. S. C. T. Dodd, Esq., Standard Oil Company, 26 Broadway, New York: Dear Sir— I did not find Mr. Sellers in when I called to-day and am now writing without consultation with him. I will, however, supplement this letter by any sug- gestion which Mr. Sellers may have to make. Mr. Newlin's claim, to which you refer, is based not upon any oral testimony given at the trial, but entirely upon his construction of the fourth and eighth para- graphs of the agreement of May 6, 1881. This agreement was between the National Transit Company and the railroad company and it was, in our view of the matter, simply a trafTic agreement between two transporting companies. Mr. Newlin's posi- tion, however, was that the National Transit Company was in reality the Standard Oil Company, which owned a large controlling interest in its stock, and his argument is based upon that assumption, and his contention is that any diminution or abate- ment of the charges of the railroad company under this contract inured to the advan- tage of the Standard Oil Company, and was to be treated as if it were an allowance or rebate to the latter company. He arrives at the figures which you give in j-our letter, in this manner: He considers the fourth and eighth paragraphs in the agreement together, and he contends that the provisions as to through rate contained in the latter para- graph, when read in connection with the former, are applicable to through rates, whether the same are greater or less than 40 cents per barrel from Foxburg to Com- munipaw. Assuming this to be so, Mr. Newlin's calculation is as follows: The eighth paragraph provides: "Whenever the through rate from the exit point of gathering pipe shall be less than 40 cents per barrel the local or gathering pipe shall be considered as entitled to a rate equivalent to only one-fourth of the rate which shall be formed by the addition of the said through rate to the public rate which the local pipe charges and one-half of the difference between this one-fourth and the said public rate shall be considered as due and to be paid to the railroad company, btit this difference shall never be such as to make the local pipe receive less than 10 cents per barrel." The through rate by rail was 48 cents. The public rate of the local or gathering pipe was 20 cents. 472 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The calculaiion, therefore, would be thus: 48 plus 20 equals 68 ia uf tJS equals 17 1/2 of 51 equals 251/2 48 minus 251/2 equals 22i/^ The above calculation is the basis on which Mr. Nt-wlin's allegation in his letter to Mr. Rice, to which you refer is based. The 19.875 cents per barrel is arrived at by Mr. Newlin in this way: The calcula- tion being at tht rate of 33 cents per barrel from McCalniont to Communipavv on the same principle as above. Thus: 33 plus 20 equals 53.00 1/4 of 53 equals 13.25 y2 of 39.75 equals 19.875 This is the way in which he gets his figures showing, as he says, that the Stand- ard Oil Company was charged that amount only for transportation. In addition to the obvious replies that the arrangement was a traffic arrange- ment and that such an agreement cannot be construed as a rebate to a shipper simply because that shipper happens to be a stockholder and even a controlling stockholder in one of the transportation companies, there are other answers based upon the language itself of Paragraphs 4 and 8. The assumption that the provision in Paragraph 8 when the rate is less than 40 cents shall be applicable to Paragraph 4, which refers to a rate above 40 cents, would seem to be without warrant. More- over, the "one-half of the difference between this one-fourth and the said public rate" refers to the difference between tlie said one-fourth (made up of the through late by rail to the public rate by local pipe charges) and the rate of local pipe charge, that is 20 cents. In other words, instead of taking one-half of 51 (see above calculation) there should be taken one-half of three, being 20 less 17, or one and a half. Whether I am right in this last calculation or i:ot. it is nevertheless true, as 1 have stated above, that there was no evidence whatever, oral or written, which was introduced at tlie trial, which justified Mr. Newlin's assertion; but that assertion rests altogether upon his forced construction of the fourth and eighth paragraphs of the agreement of ISSl, which I have endeavored to explain. If the foregoing is not sufficiently clear to you, let me know, and I will endeavor to make it plain. i^ Yours truly, (Signed) GEORGE TUCKER BISPHAM, 1 Attached thereto is the following: Law OlHces of George Tucker Bispham, A. H. Winterstein, John Hampton Barnes,. Sharswood Brinton. Girard Building, Broad and Chestnut Streets, Philadelphia. Despeaux vs. P. R. R. December 6, 1899. 5. C. T. Dodd, Esq., 26 Broadway, New York: Dear Sir— I have your favor of the 5th instant. After the plaintiff closed his evidence, a motion for a non-suit was made and fully argued by Mr. Sellers and myself on the part of the defendant, and by Mr. Newlin for the plaintiff. The motion for a non-suit was granted. Mr. Newlin made a motion to take it off, and this was subsequently argued and the motion denied. The non-suit therefore stands. Mr. Newlin has taken an appeal to the Circuit Court of Appeals; but there has been some difficulty about settling a bill of exceptions. When this is finally adjusted, I will advise you. Meanwhile the above will give you the present condition of affairs. Yours truly, (Signed) GEORGE TUCKER BISPHAM. Q. (By Professor JENKS.) Have these pipe line and railway compau- ies changed their rates on oil since 1884 — *since the time the Pennsylvania Railroad Company made the contract with the National Transit Company as regards the price of oil? A. You go back too far for me. professor. I can say that the rate for oil of the Pennsylvania Railroad Company, both for pipe and rail, is the same as it was when I came to New York nearly 10 years ago. Q. The reason I asked the question was that a copy of the contract was furnished by Mr. Archbold and fixed the dates pretty definitely, but you say the rates have not changed for 10 years? A. For 10 years. *P>lack faced type indicates matter omitted, in the ro>;rse of editing, from the official report. HOWARD PAGE. 473- Regarding letter from Chess, Carley & Co. to J. M. Culp, general freight agent of the Louisville & Nashville, Railroad, June 16, 1881, in which tne expression was used, "Please turn another screw." The firm of Chess. Carley & Co., was a partnership in which the Standard Oil Company of Cleveland had an interest. This was before the formation of the Standard Oil Trust, which was formed in 1882, and the firm of Chess, Carley & Co., as 1 have testified, was a partnership in which Mr. F. B. Carley was resident partner and manager. The Standard Oil Company of Ohio had an interest in the Chess, Carley & Co. business, but absolutely no control or direciion of that company's affairs. I know, because I was in the office, and the only boss we knew was Mr. F. B. Carley. I would like to refer, in regard to Mr. Carley's control of that business, to his testimony taken before the Bacon Committee, in 1888. On page 526 of that committee's report Mr. Carley testified as follows: (Reading.) '•Q. Were you a member of the firm of Chess, Carley & Co.? A. Yes, sir. "Q. At what time? A. Through its whole history. "Q. Over what years does that extend? A. I do not remember exactlj', but I think somewhere about 1869 or 1870, we formed that firm. "Q. When did you terminate it? A. When we formed the Chess-Carley Company. "Q. When was that? A. Four or five years ago. I was president of it until its dissolution. "Q. State whether or not it was dissolved when it sold its property to the Standard Oil Company? A. Yes, sir. "Q. Are you connected with the Standard Oil Company? A. No. sir. "Q. You occupy no position under it? A. No, sir. "Q. Where did you reside during the time you were a member of the firm of Chess, Carley & Co. and the Chess-Carley Company? A. Louisville, Kentucky. "Q. Had you charge of that business? A. Yes. sir; I was sole and ex- clusive manager of the Chess, Carley & Co. and of the Chess-Carley Company." The party who wrote this letter (and without the knowledge of Mr. Carley) was a Mr. Hathaway, who had formerly been in the Loiiisville & Nashville Railroad employ. His explanation of this letter was that when errors occurred in the Louisville & Nashville Railroad office there was an expression used "that the machinery of the office was loose," and it should be corrected or tightened up by turning a screw. In the case referred to, the shipment of a car of oil by Rice to Nashville was billed at less than the regular tariff rate which other shippers were paying, and Hathaway simply called their attention to the error and used the expression referred to. By referring to page 530 in the book of testimony taken before the Committee on Manufactures in 1888, it will be seen that Mr. F. B. Carley testified as follows: (Reading.) "This much I know about this letter that Hathaway wrote: He would say to me, Mr. Carley, there is another carload gone through to Wilkinson, or to whoever it might be. I said: I do not think it is right on the part of the road. Can you not get them to stop it? I mentioned it to them before. They said it was the fault of the clerk; that it was clerical." Now, on page 524 of the same book, Mr. .1. M. Culp. who is the gentle- man to whom the letter is addressed, and who was general freight agent of the Louisville & Nashville road, and who is now traffic manager of the Southern Railway here, testified as follows: (Reading.) "I desire to say, with regard to that letter, or rather with regard to the rate charged on the shipment referred to in that letter, that it was less than the proper rate. It was less than any rate that we had with Chess. Carley & Co., or 1 believe ever have had. It was a fifth-class rate. Our rate on oil from Louisville to Nashville was higher than fifth class, and I presume the desire of Chess, Carley & Co. was to have at least as high a rate as was charged on their shipments charged on this. Had that letter come to me — had I even seen the letter — I would have simply understood it that it meant that we should require our agents to charge at least as high a rate as was charged on the shipments of Chess, Carley & Co." 474 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. That is the explanation of it, and in my opinion, a very reasonable one. The tacLs are as Mr. Gulp has testified and as I recollect the occurrence, that the rate charged on that shipment was less than we were paying at that time and was less than we have ever paid even prior to the interstate commerce law. Mr. Rice alleges that the Standard Oil Company established grocery stores in the south. This was before the Standard Oil Company had any control or direction in the Chess, Carley & Co.'s business, as that business was entirely under the control of Mr. F. B. Carley. And the establishment of that grocery store, referred to by Mr. Rice, was during the time of Chess, Carley & Co. Q. (By Professor JENKS.) Such a grocery store was established by Chess, Carley & Co. for the purpose alleged by Mr. Rice? A. There was such a store. Q. (By Mr. SMYTH.) Was there only one? A. Only one. Q. (By Professor JENKS.) Was it established for the purpose of driv- ing out a competitor in the oil business? A. I did not say that. I say that Chess, Carley & Co. established that store to sell groceries and oil, the same as there were stores established selling oil and groceries. Q. Did Chess, Carley & Co. have stores elsewhere for the purpose of selling groceries and oil? A. No; it only had that grocery store, but prob- ably the profits of that were not sufficient to justify any extension. Q. (By Mr. SMYTH.) Where was that store? A. Columbus, Mississippi, but the Standard Oil Company had no more to do with it than that stenog- raphei'. Q. (By Senator KYLE.) Has the Standard Oil Company ever indulged in such an enterprise? A. It has not, to my knowledge, in any way or at any place. Q. Prior to the interstate commerce act or since? A. Not to my knowl- edge. Q. Have they ever made any threats in that direction through their agents? A. Not to my knowledge. Q. You do not know then? A. I do not. Regarding Murray, Dougal & Co.*. declining to build tank cars for Rice on credit, the Standard Oil Company never directly or indirectly had any- thing to do with it and never had any knowledge of it until it was seen in Mr. Rice's testimony. The charge that the Standard Oil Company bought up tank cars from railroads in order to keep them from other shippers is positively denied. As to railroads owning tank cars, I wotild say that the tank car is a special car used for the transportation principally of petroleum, and it would be a burden upon the railroads if they were required to invest their capital in tank cars, as the ownership of the car would not insure transportation of oil, and if all railroads were required to have a sufficient tank car equip- ment to do the oil business that at times moves over its rails, it would mean the building of many more tank cars than the business would require. For instance, say it would require 200 tank cars, costing $150,000 to trans- port oil between Chicago and St. Paul and Minneapolis. There are five lines competing for this business, and if each railroad was required to own 200 cars, there would be four times as many tank cars as the business would require. Take as another example, the McDonald field, which was a pro- ducing field, and is now. At one time it produced oil to the extent of 60,000 to 80,000 barrels a day. It has run down now to 5,000 barrels. If the Penn- sylvania road and the Lake Erie & Western, which are the two railroads which touch that field, had been required to furnish tank cars to move the oil produced in the McDonald field when it was producing 60,000 to 80,000 barrels a day, these roads would be in rather bad shape with their tank cars now when there is only 5,000 barrels to move from there. A tank car is just like a Pullman car. You might just as well require a railroad to own all the Pullman cars that are necessary to go over its road as to require the •In the official report the firm Murray, Dougal & Co. Is referred to as "Mc- Dougall." HOWARD PAGE. 475 railroad company to own all the tank cars that may at times go over its rails. Q. (By Mr. KENNEDY.) Which is the cheaper system for the rail- roads to employ in the transporting of oil, the tank car or barrel? A. The tank car by all means. Mr. Rice referred especially to that in his evidence, and I will touch that later on. If you will allow me to proceed in the regular order of his testimony, I think it is better to go right through it. Mr. Rice alleged great discriminations in favor of the Standard Oil Com- pany as against himself for a year or so after the passage of the law. I would say that he refers to the published tariffs of various railroads, that were published and printed and open for all on the Louisville & Nashville Railroad and other railroads, which at that time made lower rates on oil In tank cars than on oils in barrels in carloads. These were published tariffs and open to everybody, and Mr. Rice and other shippers shipped in tank cars as well as the Standard Oil Company, and the Standard Oil Company shipped oil in barrels in carloads the same as Mr. Rice and other shippers. it was simply a tariff rate in which the railroads made a difference between the tank car rate and the barrel box car rate, and it was open to all. There was no discrimination between parties at all. It was a discrimination or difference rather between two modes of shipment. Q. (By Professor JENKS.) At that time had there been any ruling upon the relative rates for tank cars and barrel shipments by the Interstate Com- merce Commission? A. There had not been. But in 1888 Judge Cooley, of the Interstate Commerce Commission, ordered that the rates per 100 pounds on oil in the tank cars as well as on oil in barrels in carloads, including the weight of the barrels, should be made the same, and the railroads adjusted their tariffs according to that, and the tariffs remain on that basis to-day. Q. At the time Mr. Rice claims he was discriminated against in this way. was he, as a matter of fact, shipping oil in tank cars? A. He had a few tank cars and the other oil shippers had tank cars, and as far as the higher rates on oil in barrels are concerned, the Standard Oil Company was shipping; more in barrels than all the others put together. Q. How about the relative amounts in barrels and in tank cars shipped at the same time over these roads? A. As I recall the evidence which was given at that time and which is in this book, our carload shipments were in excess of our tank car shipments. Q. Your barrel shipments? A. Our barrel shipments were in excess of our tank car shipments. Q. Over these roads on which you said the discriminations were made? A. Prior to the interstate commerce law the charges were made on oil in tank cars and on oil in barrels, and when the interstate commerce law went into effect, and the tariffs had to be published, they simply pursued the same system in making rates, and it was free to everybody to ship. Q. And other shippers beside the Standard Oil Company had both modes of shipment which they were using? A. Absolutely. Mr. Rice refers to outage of 62 gallons and then 42 gallons which was made on all tank car shipments *to allow for the loss. This was an allow- ance for the average loss between the full shell capacity of the tank car. which tank car was loaded at the loading point, and the amount that was taken by actual measurement to be received in the tank car at destination. This allowance was made to all tank car shippers alike and was reasonable, as the actual loss was in excess of the allowance. The allowance, however, was discontinued in the summer of 1892, and has never been reinstated. The principle of that allowance was simply that the railroad ought not to charge on a quantity greater than it delivered, and as the actual result and experi- ence had shown that there was a loss between the amount of oil put into the tank car at the refinery and the amount delivered at the point of desti- nation, an allowance was made, which was very small, at that time 62 gal- lons, and at another time 42 gallons; but since 1892 this has been done away with completely. ♦Black faced type Indicates matter omitted, in the crurse of editing-, from the official report. 476 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. Rice refers to the relative charge made by railroads between oil ia tank cars and oil in barrels in carloads. The railroads receive a very mucli larger percentage of live weight on oil in tank cars than on oil in barrels. Railroads charge and collect freight on tank car shipments at full shell capacity of the tank car, no matter whether that tank car is loaded to its full capacity or not. The average capacity of the Union Tank Line Com- pany's cars to-day is 140 barrels, and it is on that basis that the railroads charge and collect their freight. Q. (By Mr. SMYTH.) They do not weigh the cars? A. The weight of the petroleum in tank cars is taken on the basis of the full shell capacity of the tank, based on an average weight of 6 4-10 pounds to the gallon. The reason for that is that some products of petroleum, such as naphtha, weigh from 51/4 to 5% pounds to the gallon; refined oil weighs 6% pounds per gal- lon; lubricating oil from 7% to TY2 pounds to the gallon, and the average weight of 6 4-10 pounds represents the actual average weight of the various products of petroleum as they are manufactured and as they are shipped throughout the United States. The reason the railroads have made such a rule is to prevent misrepresentation and the cost that would be involved in weighing every tank car. You can see that it would be a very difficult matter for a railroad to get the actual weight of tank car shipments, because those tank cars are first loaded at the refinery and not in the railroad yard, as ordinary freight is, and then pulled out by the railroad. They could only weigh, therefore, the full tank car with the weight of the car added to it, and that car is probably destined to some point away beyond the railroad that receives it on its rails. So the custom has been, ever since I have had any knowledge of the business, to have one average weight which applies to all products and to all shipments alike. Q. The average is both as to weight and capacity? A. No, the average is as to weight. The capacity of the tank car varies, and the capacity is shown by the various tank car owners to the railroads and they publish it at large to the world in the form of this tank gauge handbook, which shows the actual number, owner and capacity of every tank car that is in use over the various lines in the United States to-day. Q. (By Senator KYLE.) And the average charge is, as you state, 6 4-10 pounds to the gallon? A. To the gallon. Q. For the full tank capacity? A. Full shell capacity of the car. Q. (By Mr. SMYTH.) Do all the large refining concerns own tank cars? A. Very largely. I will show you the tank car ownership in the United States, in a few minutes. The same rule applies, I might say, to oil shipped in barrels. There is an average weight of 400 pounds applied to the various products of petroleum *when shipped in barrels. Some weigh less and some more, but 400 pounds is the accepted weight on railroads all over the United States on all petroleum products. Q. (By Mr. CLARKE.) The charges which you have referred to are for freight one way, I suppose? A. The freight rate is charged, of course, only on the freight that is hauled. Q. (By Mr. SMYTH.) Does the car come back empty? A. The car comes back empty, the tank car as well as the box car very largely, simply because the box cars when loaded with oil are imfit for use for sundry mer- chandise, and you will find that every large oil carrying railroad in the United States has its box cars marked "oil," meaning that they can be used only for oil. I do not mean to say that they are never used for any other freight, but they are set aside for that purpose. Q. (By Senator KYLE.) Is there any charge for these return tanks? A. No charge; no, sir. Q. Has there ever been a charge for return tanks? A. No, sir; not in my recollection. Q. Have they ever charged the independent companies outside of the Standard Oil Company for the return of these tanks? A. No. sir; unless they charged the Standard Oil Company at the same time. *l am answering as far as I know. I mean to say that since the passage of the interstate ♦Black facerl type indicates matter omitted, In the course of editing, from tlie cfflcial report. HOWARD PAGE. 477 commerce law there has been no charge on the return of what is known as the regular tank car, the cylinder tank car within the United States, ex- cepting to one section. Q. (By Mr. SMYTH.) There is no freight charged on empty coal cars, is there? A. No, sir. I digress some from this question as to the relative charge. I have stated that the average capacity of the Union Tank Line car to-day is 140 barrels. The minimum weight required by railroads in the shipment of oil in barrels is 60 barrels, and not 1 per cent, of the carloads of oil in barrels in the United States, are loaded with over 60 barrels, from the fact that even loading 60 barrels in an ordinary box car requires putting them on top of the lower tier. This is an expense to the owner and to the railroad, and it also causes leakage from the rolling of the barrels on top. The result is that oil shipped in barrels in box cars average 60 barrels as against the average capacity of tank cars of 140 barrels. Therefore, one tank car holds twice as much as a box car when loaded with oil, and the rail- roads receive their pay accordingly. *So naturally they prefer the tank cars. Q. It takes less cars? A. Necessarily. It means one car instead of two for the same freight. It means carrying two cars for one; all expenses at- tending the handling, and the cost of two cars, *as compared to one to get the same volume. Q. (By Senator KYLE.) And the expense of unloading is less? A. Yes; less in the tank car. It is universally loaded by the shipper and unloaded by the consignee. In the box car it is generally loaded by the shipper and very often unloaded by the railroad in their depot. The tank car never is. Q. (By Professor JENKS.) Is the freight rate the same per barrel whether in barrels or in tank cars? A. It is the same rate per 100 pounds. In the barrel the weight of the barrel is charged for. Q. So when shipped in barrels freight is charged on 400 pounds? A. Yes, sir. Q. When it is shipped in tank cars it is 320t pounds for the same amount of oil? A. Yes, sir. Q. That makes the shipment of oil cheaper by tank than by barrel? A. Absolutely, but the barrel is an article of merchandise. When the oil is sold in liarrels, the value of that barrel is added to it. There is no ground why the railroad should receive no pay for an article of merchandise, which the barrel is, especially admitting the pay on the weight of the barrel the rail- road then only gets half as much revenue on the oil in barrels as it does on tank cars of oil. I\Ir. Rice charges that railroad tariffs were issued from No. 26 Broad- way. I deny positively that we have ever made or promulgated any railroad tariff by any Standard Oil Company interests, and I deny positively that any railroad tariff has ever been made or promulgated by any Standard Oil Com- pany interest. Vice-Chairman PHILLIPS. I will ask Colonel Clarke to take the chair, as I expect to a=k some questions in a short time. I will be very much obli^-pd to von. Cnionel, if you will take the chair. *IVIr. CLARKE. I do not see anything inconsistent, Mr. Chairman, with your ccciinying the chair and interrogating the witness. Vice-Chairman PHILLIPS. I know, but there might be some question of order come up and in that case I would rather have some other person to rule on it than myself. Q. (By Professor .TENKS.) You say that no oil tariff has been made or promulsated by any of the Standard Oil Companies. I suppose when that statement was made it was not intended to be taken literally. Would you go so far as to say that the Standard Oil Company or the Standard Oil offi- cials did not reason with railroad officials in order to get them to agree upon what they considered to be a fair and just rate of freight on oil? A. I certainly do not wish to be understood that I, or possiblv others of our representatives, have not seen railroads in resrard to tariffs on the ship- ments. We do have intercourse with railroad officials, as every large ship- *Biack faced type indicatep matter omitted, in the course of editing, from the official report. i"300" in official report. 478 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. per probably does, but that we have ever issued — Mr. Rice's intent certainly was to give the idea that we simply named a rate and sent it to the rail- roads to accept. It is not true. Q. Is it a fact, as has been frequently stated, that over lines of rail- roads where the Standard Oil Company has very large shipments, the rates on oil are frequently made, relatively speaking, lower than over other roads where the business rivals of the Standard Oil Company have very large shipments, and where the Standard Oil Company's interests are relatively small, and that this difference in rates * (perfectly legal of course) to the favor of the Standard Oil Company is brought about by the influence of the Standard Oil Company officials? A. That is absolutely not true, sir. In the first place I do not know of any railroad on which competitors of the Standard Oil Company ship that we do not ship on ourselves, and the oil rates of the United States from the various oil shipping points are on a basis. In other words, the same rates apply from all of the Pennsylvania oil fields, both east and west, and the same is true of the Lima fields; and while we may not be located at the very point some competitor is, he has the same rate from his shipping point in that field that we have from our shipping point in the same field. Q. Your main distributing points are, I suppose, ordinarily different from those of your chief competitors. Would you be able to secure *any favorable rates from your main distributing points, which would affect your business very favorably and not affect your rivals in the same way? Is that frequently true? A. I do not think it is, sir. I can only say that we pay exactly the same rate from the same point and to the same point that every other shipper pays from and to that point. Q. (By Mr. KENNEDY.) Are the Standard Oil Company officials or stockholders ever in a position, as railroad officials, in which they can give favors to the Standard Oil Company in its shipments? A. I am glad you asked that question, sir. I do not think, but I know. Mr. Rice wishes to give that impression, and I can say in reply that since I have had any knowledge of the railroad rates of the Standard Oil Company's business no official of the Standard Oil Company who is connected with railroads has ever made a rate or arrangement for the Standard Oil Company; nor have any of those gentlemen who are connected and have interests with rail- roads ever asked me to give any undue or unreasonable, or, in fact, any share of the Standard Oil Company business over such a railroad. In other words, the Standard Oil Company's business stands on its own merits, and as I said before, none of these gentlemen who may or may not have in- terests in these various railroads have ever made a rate or made an ar- rangement for Standard Oil Company business. That business is done by me or by the proper party in whose territory or district the question may arise. Q. Would you be sure to know whether that was so or not? A. I would know. If any of the gentlemen who have large railroad interests, as alleged, made a tariff or arrangement with a railroad for our business I certainly would know it. I would be advised of it, as I am the proper department that has a record of those rates, and I would have to know necessarily. Q. (By Mr. SMYTH.) Do we understand that shipments of the Stand- ard Oil Company have not been influenced toward certain lines by the fact that the officers of the Standard Oil Company were reputed to be large owners of the stock in those lines? A. In no way, sir. You can readily see that if the Standard Oil Company's business was run on the basis of favor- ing the individual interests of the different stockholders of the Standard Oil Company, the company's business itself would necessarily suffer. Q. (By Mr. A. L. HARRIS.) Is it true that officers of the Stnndard Oil Company have offices in different railroads? A. It is true that Mr. William Rockefeller, for instance, is a director in some of the railroads. He prob- ably alFO is a bondholder in the United States, but there is no connection between such interests and the interests of the Standard Oil Company, or the business of the Standard Oil Company. *Black faced typo indicates matter nniitted. in the course of cditinp, frum the offlclal report. HOWARD PAGE. 479 Mr. CLARKE. We will proceed, Mr. Page. The WITNESS. Mr. Rice refers to a rule of the Southwestern Bureau In regard to charging on the weight of the tank, when that tank is intended for storage, at the same rate as on the oil contained in that tank. *The rule referred to charges the same rate on the weight of a tank when intended for storage as on the oil contained in the said storage tank. If. as Rice alleges, the Standard Oil Company owns nearly all the sub-stations of the country, this rule is hard upon the Standard Oil Company, for, if the rail- roads wish to discriminate in favor of the Standard Oil Company, they would carry the weight of the tank free, as they do the regular tank cars. Do you understand? Here is a tank that is intended to be used as a storage tank at some sub-station. It is loaded with oil and sent to that station. The railroad rule referred to charges the same rate per 100 pounds on the weight of the tank as it does on_the oil contained in the tank. Now, ordi- narily, on the tank car there is no charge for the weight of the tank. If they wanted to favor us, all they would have to do would be to treat that tank containing the oil. *the tank being intended for storage, the same as they do the ordinary tank car. Q. (By Vice-Chairman PHILLIPS.) There is one question I desire to ask you. and I will ask it now, Mr. Chairman, if there is no ob.iection. and that is in regard to shipping oil by barrel and by tank car. Has it not been testified that it is much more dangerous to ship oil in tank cars than in barrels in case of collision and fire? A. It may have been so testified, sir. Different men have their different opinions, but. the answer to that is that the tank car is growing in favor, not only in the shipping of petroleum, but in shipping all other liquid products, which are open to the same ob.iection. I think the economy in shipping in tank cars over shipping liquid in Ijarrels, which is being shown by the enormous growth in the use of tank cars for the shipment of a great many liquids, proves that the tank car is the better method for shipping *in bulk as compared with barrels. The General Freight Association rule to which he refers is entirely proper, as it is intended to prevent the unloading of bulk petroleum in railroad yards or depots without proper facilities, as such unloading would increase the danger of loss by fire. The rule simply means that they will not allow a tank car to be held in the depot or in the yard of a railroad to be unloaded by improper means into a tank wagon or into barrels, as leakage or accident might result in a large loss to the surrounding property, and they simply require that proper facilities should be at the point where the tank car is shipped to. The Southern Pacific tariff: The rule referred to was submitted to the Interstate Commerce Commission, which did not order it stopped when they decided the trans-continental case of 1890. Q. (By Professor JENKS.) Will you be kind enough to state the rule? A. That rule was simply the rule by which the trans-continental lines charged for returning the cylinder car, and did not charge for returning what is known as the box tank car. The box tank car is a car which has a tank in each end and loading space between. There are other shippers be- sides the Standard Oil Company that ship and own these cars, and the Standard Oil Company ship both these cars and cylinder cars to the trans- continental points, and they pay exactly the same rates on cylinder cars as other shippers and get their box cars returned free the same as other shippers. Regarding alleged correspondence from the Standard Oil Company's San Francisco ofllce, I would say I know nothing about that correspondence and cannot verify it. I would further say, however, that I have full knowl- eds-e of all shipments to California, and I can say positively we paid the tariff rates in force at the time of shipments, whenever made. Mr. Rice's charge was that the rates were put up at one season and put down at an- other from Chicasro and oth^r eastern points to trans-contin(>ntnl points. I can say. and the Interstate Commerce Commission can affirm, that the rates on petroleum and its products from Chicago and other eastern points to Cali- fornia and other trans-continental points have not been changed since *F.Iack facpd type indicate.s matter omitted, in the course of editing, from the official report. 480 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. March 2, 1891. The rates have been absolutely the same for nearly nine years. Regarding commissions on freight business, and charges that the Stand- ard Oil Company make their own commission: It is absolutely false, and I state unqualifiedly that the Standard Oil Company has never received either directly or indirectly a commission from any railroad in any form since the passage of the interstate commerce law. Q. (By Vice-Chairman PHILLIPS.) Would you be in position to know that they had absolutely not received any? A. I would, sir. Q. (By Vice-Chairman PHILLIPS.) In regard to all the railroads and all the transportation? A. I would, sir. Q. (By Vice-Chairman PHILLIPS.) Would local freights in certain sections bar others than the Standard Oil Company from entering those sections? Would you be in a position to know, either directly or indirectly, that they received them? A. I would know if the Standard Oil Company received any benefits throughout the United States, and I would unquali- fiedly say they have not. Q. (By Vice-Chairman PHILLIPS.) I think it has been testified before this commission that in certain sections of the country, while they may have a through rate of freight^ up to a certain division of the United States, local rates are made so that independent refiners cannot enter those por- tions, and in that way indirectly the Standard Oil Company has an advant- age which would be similar, and perhaps superior, to a rebate or drawback? A. If you mean by that, because we have refineries at the Atlantic sea- board to supply New England and at Chicago to supply the West, *we have advantages as compared with the man who has his refinery in the oil re- gions and tries to supply both the West and New England, I admit we have advantages, but I say we pay the same rate of freight from the same ship- ping point to the same destination as every other shipper does. Q. (By Vice-Chairman PHILLIPS.) And there are no local rates, as far as your knowledge goes, that would interfere with the independent en- tering that sub-division? A. Whatever the local rate is from ony point to any point we pay the same as any other shipper pays from that point to that point. Mr. CLARKE. You may proceed. The WITNESS. In regard to the letter from Receivers Cowen and Murray, of the Baltimore & Ohio Railroad Company, to the Interstate Com- merce Commission, in which they admit paying rebates since the passage of the interstate commerce law, and which Mr. Rice assumed meant paying us large rebates, I would say positively that since the passage of the inter- state commerce law the Baltimore & Ohio Railroad has not paid us one dollar in rebates, or in any way made any concessions from their tariff rates, and Mr. Archbold filed with this commission a letter from the Baltimore & Ohio Railroad, dated Ausjust 21, 1899, confirming this statement. Q. (By Mr. KENNEDY.) Would you say that an inspection of the books of the Baltimore & Ohio Railroad Company would not show that rebates, or discriminations, or commissions or anything of the kind, have been paid to the Standard Oil Company since the passage of the interstate commerce law? A. I would, absolutely, sir. Q. (By Mr. SMYTH.) You know Mr. Rice stated that rebates were not paid, but that commissions were given to persons to secure the business of the Standard Oil Company and others? You deny that? A. Previously I denied that we received commissions in any form from any railroads. That applies particularly to the Baltimore & Ohio and any other railroad you wish to point out. Regarding alleged under-weighing of tank car shipments from Boston to Newport. Rhode Island: For most of the years 1896 and 1897 we were making occasional shipments of naphtha in tank cars from Boston to the Newport Gas Company. The shipments altogether amounted to some 15 or 20 tank cars during the pntire period. On three or four of the cars the New York. New Haven & Hartford Railroad, through clerical error, billed ♦Blark faced type Indicates matter omitted, in the course of editing, from the official report. HOWARD PAGE. 481 these cars at less than their actual weight. This resulted in an under charge. As soon as it was discovered the balance due was paid. 'ihe railroads transporting thcbc shipments, as well as all railroads of the United States, had the actual capacity of all these cars, and the error occurred through no fault of the Standard Oil Company. I shall hand as an exhibit Tank Gauge Book No. 4, which is the fourth book which has been published by the Central Freight Association, giving ihe capacity of all tank cars of the Union Tank Line Company. A similar publication has been in the hands of the railroads for the past 10 or 15 years. This book contains the number and capacity of the tank cars referred to by Mr. Rice. We furnished this information to the railroads and we sub- mit that it is not likely that, having furnished the actual capacity of the cars lo the railroads, we would go to these same railroads on interstate ship- ments and show a less rate, because it would simply mean that we would know we were violating the law and furnishing evidence to prove that we had. The Interstate Commerce Commission, through Commissioner Prouty, investigated this charge at Boston, March 12, 1898, and after the investiga- tion dropped it, as it was clearly shown by testimony taken there that the mistakes were simply clerical errors *of the railroads. I wish to offer a sworn statement of Vice-President Hall (now president), of the New York, New Haven & Hartford Railroad, which was given in answer to the request of the Interstate Commerce Commission in regard to this very matter, in which he gives the detail of the shipments for the two years. I read from his answer (I refer now particularly to the two cases which Mr. Rice refers to. He refers to two cars containing 100,986 pounds which were carried at 48,000 pounds), that the mistakes occurred "through error of this (railroad") company's agent and without misrepresentation or fault on the part of the shipper." Q. (By Professor JENKS.) Was this the same case investigated by Mr. Prouty? A. Yes; Vice-President Hall, who is now president of the New Haven road, says this is his sworn answer: "On the 19th day of May, 1897, this company received from the Boston & Albany Railroad Company at Boston two U. T. L. cars, Nos. 7,915 and 1,286, consigned to the Newport Gas Light Company, containing naphtha, weight 48,000 pounds, which this com^pany rebilled from Boston to Newport at its rate of 10 cents per 100 pounds: total charges, $48.00. Said weight was that given in the way- bill of the Boston & Albany Railroad Company as delivered to this com- pany and accepted through error of this company's agent, and without any misrepresentation or fault on the part of the shipper. It was subsequently found that the weight should have been 100,986 pounds and correction thereof was made. Its charge of 10 cents per 100 pounds on the difference, amount- ing to $52.98 was collected." I also offer in connection with that case the testimony taken before Commissioner Prouty at the hearing in Boston March 12, 1898, and I would like to read from Mr. Winlock's testimony at that time. Mr. Winlock was general agent of the New Haven road at Boston, and testified that he had full charge of rates from Boston to all points on the New Haven road. Mr. Winlock says: "I have nothing to say except what Mr. Page has said, so far as the relations between the New Haven road and the Standard Oil Company are concerned, is absolutely true. There is no arrangement of any kind between the Standard Oil Company and the New Haven road by which they can get any better rates, whether it is by a rebate, or by tinder- billing, or by anything of that kind, than what anybody else gets. Our rates are published and posted for everybody. These under-charges in weights were errors of our local agents in accepting them as such. They should have investigated the matter more than they did. Instead of blindly taking the weights given by the Boston & Albany Railroad vouchers, they should have taken some means, as they did in nearly every other case, to get at the proper weights. The tariffs to Newport were based on actual weight, and instead of taking this constructive tonnage of the Boston & Albany *BIack faced type indicates matter omitted, in the course of editing, from the official report. 31 482 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. road, which they used for purposes of their own, they should have taken, as I said, some means of ascertaining the weights in every case. The other cases were errors of theirs." Q. (By Professor JENKS.) I see in the testimony that the weights are taken from the Boston & Albany. I understand your shipping point is in East Boston? A. It is. Q. And the Boston & Albany road takes the oil from East Boston to Boston, where it delivers to the New York, New Haven & Hartford? A. Yes. Q. Is it true, as has been stated, that when oil is delivered to the Boston & Albany road by your people the billing is done by your people directly, and that you furnish the weights to the Boston & Albany? A. It is not true, sir; as was shown in this testimony. I will explain it. Our works are located at East Boston, on the Boston & Albany road. The Boston & Albany road have a switching charge per car from East Boston to Boston, where the cars are delivered to the New Haven road. That switching charge, as I recall it is $6 per car; either $4 or $6 per car. The Boston & Albany road, like many other roads, wishes to show tonnage, whether their rates are per car or per 100 pounds, and where the rate is per car. as in this instance, it probably uses 24,000 pounds, which is the usual carload weight; it is the minimum carload weight. They simply put in 24,000 pounds. The testi- mony shows, and I swear now, that we do not give the Boston & Albany road 24,000 pounds as the weight of those cars, nor did we give them any wei.ght. "We did notify, not only directly but through this book, the actual weight of all those cars, and it was simply an error of the New Haven road, as shown in the testimony and as offered by Vice-President Hall, that the New Haven road took in error the constructive weight of the Boston & Albany in their bill, instead of taking the actual weight which they had in their power to get and which they should have got. Q. It is usually the custom of the Boston & Albany in its switching charge to put in the minimum weight of 24.000 pounds? A. It seems to have been so in this case. I cannot say what the general custom is, but it is customary. There is nothing exceptional in the Boston & Albany having a switching rate for switching; it is no more than any other railroad does. Q. So far as the regular custom of the Boston & Albany is concerned, in charging that rate to any point in Massachusetts you would swear posi- tively that their shipping rates are based on the full car rates? I am not speaking of interstate traffic now? A. I say this: That as far as the Boston & Albany rates are concerned, whether within the State of Massachusetts or to points without the State, we pay exactly the same rates as anyone else pays from Boston to the same destination. I cannot recall and I do not know every local rate on every railroad in the United States, but I do know that we pay the same rate of freight from the same point to the same point as every other shipper. Q. Whether these rates be local within the State or interstate? A. Or interstate. Q. (By Mr. A. L. HARRIS.) Who determines the weight and contents of the tank car as listed in your book? A. The capacity of the tank car is first found in the case of the Union Tank Line Company by measurement, and that is confirmed by water gauge, and the Central Freight Association have a bureau of inspectors who go around and test the capacity of those cars. Q. Each car is numbered? A. Each car is numbered and each car's capacity is given in gallons and its equivalent capacity in pounds, based on the average weight of fi 4-10 pounds per gallon. Q. (By Mr. CLARKE.) What paper or voucher passes from the Boston & Albany Railroad Company to the New York. New Haven & Hartford Rail- road Comnany in that case? A. Simply a bill of lading that that car, which they received at East Boston and which they delivered to the New Haven road at Boston, was destined for the Newport Gas Light Company at Ne'«'- port. Q. Does the Boston & Albany haul this freight over its line from All)any to Boston at the lower measurement or at the higher measurement? A. This shipment originated at East Boston on the line of the Boston & Albany road. HOWARD PAGE. 483 Q. Then the only haul was over the Union Freight Railroad from East Boston to Boston? A. I do not know the name of the local road, but the switching charge is from Boston to East Boston. Mr. CLARKE. I will explain to the commission (this need not go down) that it is a railroad some four or five miles long. It is rather more than an ordinary switch. This used to pass around through Cambridge and connect with the main line of the Albany road, and then ran back into Boston to connect with the New York, New Haven & Hartford. Q. (By Professor JENKS.) You spoke of this shipment originating at East Boston. Do you have East Boston for the main distributing point for all New England? A. For a section of New England. Q. How much of New England is covered from your central distributing point? A. I cannot say. Of course it is from Boston proper, and I know we make shipments from there up to Portland, and I know we make shipments from there down into Massachusetts and Connecticut. Q. Down as far as New Haven? A. By all lines. I mean as far down as New Haven. It depends upon what we may have in the Boston tanks, and what the order may be for. You know there are many grades of petroleum, and we do not carry everything that is required at every shipping point. Q. Do you suppose your ordinary shipments of petroleum for lighting purposes, at New Haven for example, would come from East Boston? A. No, I do not think that we ship to New Haven from East Boston. Q. You would to Providence and Newport, probably? A. Newport. In these cases it depends upon the stock and depends upon the situation. I cannot answer as to the exact territory that may be supplied from that sta- tion, but it would supply the territory as far as its location and its stock would be able to do so. Q. How do you supply your shipping station at East Boston? A. We supply partly by rail shipments and partly by steamer shipments from New York and Philadelphia. Q. From your refineries at Bayonne? A. From the seaboard refineries, whatever one it ma3' be. Q. The statement has been made here by some of the independent refiners that in their attempts to ship oil into New England from the West, they had found that, although there were through rates on the regular tariff sheets for almost all kinds of goods, there were no through rates for petro- leum on the New York, New Haven & Hartford. It has been stated several times, for example that when they shipped corn or furniture, or almost anything else, to Newport or Providence, they would get through rates the same as the Boston rates; but on petroleum no such through rates were given at all. They had to get the local rate, and the consequence was when they got this local rate added to the regular rate from the West, they found, that the rate to New Haven would be very much higher than to Boston. The statement was made here that that applied not merely to New Haven, but in general to all New England; in consequence the shippers of petro- leum from the West were placed at a decided disadvantage on that account. Can you give any reasonable explanation why the railroads should make a special exception of petroleum as to the furnishing of through rates? A. Why, I can say this — I do not know anything about the corn rates at all. Q. As to what is the general rate? A. I mean to say that there are many commodities which the railroads make rates on, on the basis of through rates or local rates, whereas they may be applying through rates on other commodities. I do not know that there is anything exceptional in the matter of oil in New England, as compared with corn in the West. I do know that we ship from the oil regions to New England to some extent, and we pay exactly the same rates as the other fellow pays. Q. Can you mention some of the New England points you supply regu- larly from Cleveland or from other regions of the West? A. I cannot. I mean to say we do frequently make shipments from various points to Boston and New England. I know also wo have made shipments from Cleveland, and also as far as Lima, and wherever we have made those we pay the same rates as other people do. 484 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. Can you not recollect whether you have made shipments from Cleve- land, Lima or other western points to the territory of the New Haven road over the New Haven? A. Yes, sir; we have. Q. The general fact tha.t you have a distributing point at Boston from which you can supply this territory that is supplied by the New York & New Haven road, and that they do not furnish through tariffs from the West, would seem to some of your competitors, at any rate, to give you some decided advantage, although no illegal advantage, over them in furnishing the market? A. We do not deny that by having our refineries at the Atlan- tic seaboard and supplying New England from those refineries we have an advantage over the man who ships from Cleveland or the oil I'egions, but we claim no fair adjustment of rates can be made that will put that man on an equality with us in that situation. Q. Would you say further that the Standard Oil Company officials have not represented the matter to the New Haven road in such a way that they have succeeded in getting the New Haven road to refuse to make through rates on petroleum, while it does make through rates, and those equivalent to Boston rates, on a very large proportion of other goods that are shipped? A. I thing Commissioner Prouty answered that question by saying that the New Haven road, in charging arbitrary rates on oil from Boston, as well as from the Hudson river, were receiving more money themselves than they would if they applied the through rate, and for selfish reasons they got the most money they could out of the traffic. Q. (By Mr. SMYTH.) Is it not a fact that those rates apply to a great many other commodities besides oil; that a larger rate is charged for the shorter distance? A. As I say, I do not know much about other traffic. I can say specifically in regard to the difference in the rate on corn and oil that 1 do not know the reason for it. I can say in a general way that 1 do not know the reason for it. I can say in a general way that I do not believe the railroads make rates that prohibit business over their rails. The pros- perity of a road depends upon the prosperity of the patrons, and if the rail- road makes any arbitrary rates that are going to prevent shipping over their road, it seems to me they are doing what a reasonable man would not do. and my experience is that the railroads are represented by as high an order of intelligence in this country as any class that I know of. Q. You have no reason to believe that oil is the only commodity that is charged a higher rate for the shorter distance? A. Absolutely none. Q. I mean to that point? A. No, sir; 1 only know, however, about oil. Q. (By Professor JENKS.) The reason I put my question in the form I did was that it has been intimated by Mr. Rice and others that this special refusal to give through rates on petroleum by the New York, New Haven & Hartford Road was presumably brought about by the fact, as I believe you stated, that Mr. William Rockefeller was a director of the road, or by some other special influence brought to bear in favor of the Standard Oil Company to check these shippers of the West? A. I will say, as far as the New Haven Road is concerned, and Mr. William Rockefeller, that absolutely I do not know of any arrangement or any tariff or any change in tariff that Mr. William Rockefeller has ever suggested or influenced on the part of the New Haven Road or any other road. I do not believe that Mr. Rocke- feller knows who the traffic manager for the New Haven Road is to-day, and would not if he was in this room. Q. (By Mr. KENNEDY.) I see that your testimony relates principally or nearly altogether so far. in rebuttal of Mr. Rice. There was another witness before the commission who made a statement that I should like to hear you say something about, and he is the gentleman to whom you have just alluded, an interstate commerce commissioner. He made a statement before the commission which seemed to show that the Standard Oil Com- pany had an advantage in shipping from its Whiting works down the Missis- sippi Valley to New Orleans, over the independent shippers or refiners of Cleveland, Ohio. 1 do not know just what the figures were, but they struck me at the time, if true, as indicating that the Standard Oil Company did have an advantage in the rates that were made, a great advantage over the refiners of Cleveland. As traffic manager of this tank line association, do HOWARD PAGE. 485 you know anything about those rates? A. I know what the rates are from Cleveland and from Lima to New Orleans. They are based on the local rate to the Ohio river plus the rate from the Ohio river to New Orleans. The rate thus figures out, as I recall, less than half a cent a ton a mile. The haul from Cleveland to New Orleans is over a thousand miles and has a low rate. As to the rate from Whiting to New Orleans, we have an advantage. Whiting is some 400 or 500 miles nearer New Orleans than Cleveland. The rate from Whiting Q. (Interrupting.) Not that much nearer, is it? *Mr. FARQUHAR. Three hundred and fifty miles. The WITNESS. Well, I do not know that it is, l)ut it is appreciably nearer. And the rate from Cleveland to Whiting plus the rate from Whiting to New Orleans is higher than the rate from Cleveland to the Ohio river plus the rate from the Ohio river to New Orleans. In other words, I mean to say that we are paying a higher rate in proportion from Whiting to New Orleans, when you consider the haul from Cleveland to Whiting. Q. (By Professor JENKS.) The rate from Whiting, as you say, is con- siderably lower than it is from Cleveland. Do you know whether the rate from Whiting on other similar products like linseed oil, for example, is lower than the rate from Cleveland to New Orleans? A. I do not know what the rates are on linseed oil, either from Whiting or from Cleveland. Q. Stai ements have been made to this effect — I do not mean to say that those figures are absolutely exact, but approximately exact — that on linseed oil the rate from Cleveland to New Orleans would be possibly 28 cents, and from Chic ago it would be somewhat less, say 26. but on petroleum the differ- ence would be as great as from 31 to 23 cents, showing that there would be a decided advantage given petroleum as compared with a somewhat similar product, like linseed oil? A. I cannot testify on that: but I can testify that you cannot pick out any two commodities and say that, because there is a difference on one between two points the same relative difference should apply to other commodities. The reasons governing commodities are very often different in the matter of their manufacture, of the territory that they go over, and the cost in getting them up to that point, and various and sundry reasons, which are good reasons from the railroad standpoint; and as they have the authority, we accept them as good reasons. Q. (By Mr. CLARKE.) Are linseed oil shipments made in tank cars? A. Yes, sir. Q. (By Mr. FARQUHAR.) Is there a large shipment of linseed oil from Whiting? A. Without being an expert on linseed oil, let me call your attention to the difference. Linseed oil is grown very largely in the West. At Chicago linseed oil is nearer the point of production than it is at Cleve- land. Now, there may be very good reasons why the rate from Chicago to New Orleans on linseed oil might be higher than it is from Cleveland, sim- ply because the traffic could stand more from that point. Q. The natural distributing point for linseed oil is east of Cleveland, rather than west of it? A. The natural distributing point on linseed oil is weft of Cleveland, rather than east, because linseed oil is grown in the West. Q. Would not the same reason hold good in respect to linseed oil shipped from Buffalo. A. Yes, sir; I think it would. Q. Now. does this commission understand you to say that the position of the Standard Oil Company on the seaboard, having an inside line of dis- tribution, is an advantage that you get over all competitors, and that that one is just the one that you have? A. I do not understand what you mean by the inside advantage. Q. By the shorter line of distribution, geographical position? A. At the seaboard for the East and at Chicago for the West, as I have said, we have an advantage over the man who is shipping from some interior point and who tries to ship both east and west. Q. And the Standard would have a decided advantage over all other competitors on an even tariff? A. No. *Black faced type indicates matter omitted, In the course of editing, from the official report. 486 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. On an even tariff for all from the same point? A. *0n an even tariff for all from the same point. Yes. I say we are on an even tariff for all. We ship from Cleveland, where our competitor is, and we ship from the oil region, where our competitor is, and we have competitors on the Atlantic seaboard and we pay the same rates as they do. We endeavor to supply each point from our nearest refinery. Q. (By Mr. CLARKE.) Do you know why your company located their refinery at Whiting? A. Because it was nearer the great West, which is a large consumer of oil. Mr. Farquhar, I do not know whether you were here when I made the explanation in regard to the Newport case. Mr. P^ARQUHAR. 1 do not care to have it repeated; I will take the record as it came on that. The WITNESS. I will call your attention to the fact that the Standard Oil Company has shipped thousands of carloads of freight every year to all points in the United States over nearly every railroad line in the country, and the freight bills for its cars pass through the hands of numberless employes, both of the railroads and the shippers who have such large and divei-sified shipments scattered throughout the United States, *and within the knowledge of so many persons, it would have been impossible to keep such rebates secret had any such been granted, especially since Mr. Rice and others like him have been on the constant lookout for something tangi- ble by which to prove their oft repeated allegations that the Standard Oil Company has been violating the interstate commerce law. That law has been in effect for more than 12 years, and at the end of this period the best case that the opponents of the Standard Oil Company can produce is that involving a clerical error in the billing of three or four cars shipped from Boston to Newport; and I would like to see somebody else equal that record. Mr. Rice makes the statement that the mileage paid the Union Tank Line Company of three-fourths of a cent a mile pays back the investment every three years. I would say that since the formation of the Union Tank Line Company, August 1. 1891, that company has never paid a dividend, and that the earnings of that company for the eight years, 1891 to 1898 inclu- sive, have shown an average yearly return on the capital invested of 4^^ per cent, per annum. This return has been figured without charging any- thing off for depreciation, although according to master car builders' rules (on which railroads base their settlements between each other) a deprecia- tion of 6 per cent, per year is deducted in case one railroad destroys another railroad's cars. The three-fourths of a cent mileage paid the Union Tank Line Company is exactly the same as is paid all other tank car owners, and there are in the United States between 170 and 180 individuals and com- panies, entirely outside of the Standard Oil Company, owning an aggregate of 7,420 tank cars, while the Union Tank Line Company's equipment, No- vember 1, 1899, was 5,8.51 cars. I offer a statement, made up from the very best records we have, giving the names and owners of cars outside of the Union Tank Line Company, showing an aggregate ownership of nearly 2,000 cars more than the Union Tank Line Company has.T- Q. (By Mr. KENNEDY.) Do these tank line companies, outside of the tank line you are speaking for, carry oil for the Standard Oil Company? A. The Standard Oil Company ship, as far as they can, in Union Tank Line cars. They do use outside cars when they cannot get the LTnion tank cars, and need them. Q. The testimony is that the Standard Oil Company does pretty nearly 90 per cent of the business in the United States, and it would look a little curious that they could do that business with 40 per cent, of the tank line cars of the country, unless they are using the cars of some other company to a very large extent? A. The explanation of that is that the tank cars used by other individuals are not confined to the use of petroleum, but ♦Black faced type indicates matter omitted, in the course of editing, from the offleial report. iTliis statem pe indicates matter omitted, in the course of editing, from the official report. 512 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Values showed a downward tendency in 1870, and the market steadily declined from the prices established during 1869. The extreme range was from $4.90 per barrel in January to $2.75 in August. The year 1870 closed with petroleum at from $3 to $3.50 a barrel. That decline may be accounted for in a great measure by the breaking out of hostilities between Germany and France, and the closing of the ports in those countries against us, both being large consumers of our product. There were in 1870, 12 or 15 separate pipe lines. Three pipe lines were competing for 800 — not to exceed 1,000 — barrels of oil a day. By October, 1870, the total production of the oil region was nearly 20,000 barrels a day. The J. S. McCray farm had a daily production for October of 2,686 barrels and declined to 1,944 barrels in November, a falling off of 742 barrels a day. The important development of the year was at Armstrong run, eight miles southwest of Parkers Landing, in April, which had an initial production of 1,000 barrels a day. The production declined rapidly, but other wells equally productive, with better staying qualities, came in later on. In 1870 the refiners formed an association. In 1871, the Titusville Oil Exchange was organized, this being the first regularly organized exchange in the oil country, although the trade at Pitts- burg had been organized some years previously. Exchanges were also or- ganized in Oil City and in Franklin. The Titusville Herald places the daily production of the Pennsylvania fields on April 11, 1871, at 13,531 barrels. The WITNESS. A. D. White, reporter for the Petroleum Producers' Association for the lower district, issued the following report for July, in the Parkers Landing district: "There are 441 producing wells, of which 63 produce *one-half of all the oil, and average 10 1-10 barrels per day, while the daily average of all wells is five and one-half barrels. The average depth of the wells is 1,060 feet, and the average cost of completing a well $5,200." Hints of speculation by pipe lines in the production of oil increased; there were more than hints; there were rumors and in some instances ^verified, the result of that being that oil was not held the same by any two of the existing lines. There were scarcely any two of them that offered the same prices for oil. The price was dependent very largely upon the reputation of the line for integrity. Those lines having a reputation for integrity — that is to say, oil put in their custody would be found when wanted — got the highest price. Those lines which were sometimes consid- ered short, got a lower price. Q. (By Vice-Chairman PHILLIPS.) Did the producers ever lose any oil through these pipe lines to which you refer, to your knowledge? A. To my personal knowledge, no; except the difference in the valuation of their product; there was a difference in valuation, but I know of no loss. Q. (By Vice-Chairman PHILLIPS.) No embezzlement of oil that was left in the line? A. No embezzlement of oil; I have no personal knowledge of that. Rumors were circulated in the midsummer of 1871 that the various pipe line interests in Pennsylvania were about to merge their holdings into a single combination, the whole to be under one management. No merger ever took place, or at that time; no merger took place at that time. Operations this year took a very wide range. Bradford appeared for the first time in the oil reports. It is important here in this connection, as pointing out that the locality of the Bradford region, which was developed, say 10 years later, or less than 10 years later (the greatest field ever discovered) was known of long before actual developments took place there. The existence of oil. the presence of it, was known in that field for at least eight years, and wells were actually sunk even before the Butler and Clarion county fields were fully developed. The year 1872 was conspicuous for the remarkable progress of develop- ments in Butler and Clarion counties. In addition to a very large production of crude oil, there was an unquestioned over-capacity of pipe line and an •P.Iaok farod type indicates matter omitted, In the course of editing, from the official report. PATRICK C. BOYLE. 513 over-production of refining plant, to an extent that these two divisions of the business, transportation by pipe and refining, became unprofitable. The witness continued: "This (1872) is the year of the South Improvement Company, a move- ment which found few supporters in the region, was very generally exe- crated by the trade, and died, so to speak 'a-bornin'.' Of all the multifarious movements havin? for their object the betterment of trade conditions, this one is perhaps the least understood. The movement was a combination of the railroads and certain refining interests. It had its inception with cer- tain Philadelphia and Pittsburg refiners, with an agreement for co-operation on the part of certain Cleveland refiners. But philosophical minds, viewing the subject from this distance, are agreed that it had its origin, as a matter of fact, with the railroad interests, rather than with the oil interests. Refiners, ever satisfied with a fair profit, had been able and were willing to accept their chances with the trade, but with the railroads the case was slightly different. "The march of development southward from 1870 brought about condi- tions through which some of the important railroads of the country might be deprived of a share of the oil-carrying trade. The Pennsylvania Road, however, was not affected by the transfer of activities from the Venango region to that of Butler and Clarion counties. The Allegheny Valley Rail- road on the one hand serving as a feeder for rail shipments, and the Alle- gheny river serving the Pittsburg refiners, on the other, with barge ship- ments, the products ultimately coming to the Pennsylvania Railroad for export and interior shipments, gave them not only a fair, but the lion's share of the carrying trade. The northern railway lines, namely, the Erie and New York Central, were naturally affected by the transfer of operations to distant fields, which they could not reach with their existing con- nections. The first named road was materially aided by the gathering lines of the Pennsylvania Transportation Company, operated by Henry Harley, but the New York Central and its connecting lines were left without petro- leum feeders of any description. This resulted, some years later, and after the failure of the South Improvement Company to establish itself, in the creation of pipe lines by the New York Central interests. Therefore, at the close of 1873, all the principal railway lines touching the oil regions at any point were served by feeders or pipe lines, specially provided. From this period, developments were so rapid that no attempt will be made to trace the progress of the business chronologically, except by movements in the order in which they took place. "Now this leads us to the time of the South Improvement Company, v.hen there was an over-production of pipe lines and the competition of the railroads was so very sharp, and it sought to correct all the difficulties that the region had ever been troubled with in the way of discriminations in freights." Mr. Boyle, in a further reference to the South Improvement Company, and the opposition that developed to it, said the producers combined, taking in all the oil interests of every shape, refineries as well as others, together with the local railroads. These interests were combined in opposition to the South Improvement Company. He said the suggestion for the organi- zation of the South Improvement Company came from the railroads, that the railroads suggested to the refiners that they form an association to be called the South Improvement Company. The movement started in Phila- delphia, extended to Pittsburg and then to Cleveland. He said the Standard Oil Company had been very much maligned in connection with the South Improvement Company. While it was proposed that the railroads give the South Improvement Company a special preferential rate, this agreement was never carried out. The protest in the oil region was so great that it failed and the South Improvement Company was never revived. He was not aware of any advantages now given by the railroads to any of the oil producers or refiners. The South Improvement Company operated under an incorporation by the State of Pennsylvania, which it purchased, this incorporation being one of the numerous omnibus charters maile by the Legislature of Pennsyl- 33 514 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. vania, under its old constitution and prior to or about 1870. This consti- tution allowed the company to do anything, as he understood it. When asked what interest the Pennsylvania Railroad Company had in the South Improvement Company, the witness said the conviction was well settled in the oil region, that that company was really behind it. That was a mere suspicion and there was no proof of it. The whole project of the South Improvement Company arose and fell in six months. There was no attempt to carry out the contract between the South Improvement Com- pany and the railroads. The commission took a recess, after which it was called to order by Vice-Chairman Phillips. Q. (By Mr. FARQUHAR.) Is it a fact or not, that every one of the pipe lines up to the time of the establishment of the South Improvement Com- pany gave rebates and drawbacks? A. I think it is; they gave special rates- to favored customers. Q. Shippers? A. Yes, sir. Q. Without exception? A. I cannot testify so broadly as that, but I have at various times heard it stated that such was the case, and I know of one particular instance. Q. (By Vice-Chairman PHILLIPS.) You know^ *of only one particular instance? A. I know of one; *but I have heard of a great many; that one came to my knowledge in a way that Q. (By Vice-Chairman PHILLIPS.) (Interrupting.) But you have no personal knowledge that there were rebates given? A. Oh, yes. sir; I have knowledge of that; the knowledge of the contracts. Q. (By Vice-Chairman PHILLIPS.) The different pipe lines? A. In addition I say it is variously stated that there were others, but I know of one particular case. Q. (By Vice-Chairman PHILLIPS.) You only know of one particular case in which rebates were given? A. Yes, sir. *Q. (By Vice-Chairman PHILLIPS.) Now, Mr. Boyle will take his own course in making his presentation of his testimony to the commission. A. Well, we will take up the question of pipe lines now to get it clear in the minds of the commission. There has been stated, in a general way, the fact of the existence of several small pipe lines, but to get the location of these lines and their length, and the magnitude of their operations somewhat in the minds of the commission, I will now take up the subject of pipe lines. The first line, as I stated this morning, was the line known as the Van Sickle line, five miles in length, extending from Pithole to Miller farm. Q. (By Vice-Chairman PHILLIPS.) About what distance is that? A. Five miles. Simultaneously with the starting of that line, another line was begun from the same point; that is to say, Pithole, and extended to the Allegheny river, seven miles in length, called the Pennsylvania Tubing & Transportation Company. -Representative LIVINGSTON. May I ask what the purpose of this testimony is? Is it simply to give the history of this pipe line business? Vice-Chairman PHILLIPS. Well, the commission decided to let Mr. Boyle go on. Representative LIVINGSTON. I do not understand what you are going into. Do you simply intend to give a history of this pipe line industry? The WITNESS. No. sir; this is merely to lead on to other facts. Representative LIVINGSTON. What is it you want to show? Mr. BOYLE. We want to show the concentration of the business into one concern. Representative LIVINGSTON. Well, can you not do that without going into the history of the pipe lines, without going on and telling when this one was started and when that one was started? Mr. BOYLE. Certainly. Mr. SMYTH. I think we had better let the witness go on in his own v/ay and tell his own story, if we propose to hear him; and I would not attempt to curb the witness in giving his testimony. *Black faced type indicates matter omitted, in the course of editing, from the official report. PATRICK C. BOYLE. 515 *Representative LIVINGSTON. I think this commission had better con- trol the testimony, rather than the witness. Mr. SMYTH. It is not a question of controlling the witness; if he wants to tell his story let him tell it in his own way; if we do not want the history or the story, let us say so. Representative LIVINGSTON. I do not want to hear all this history; I am very candid about that. Vice-Chairman PHILLIPS. I want to ask Mr. Boyle if this will consume any considerable time. Mr. BOYLE. It is simply leading up to the course of my testimony. If I am to be shut off right at the beginning Representative LIVINGSTON. I don't want to shut you off. Mr. BOYLE. and told to answer yes or no Representative LIVINGSTON. I do not want to shut you off, but I ask what is the purpose of the testimony? Mr. BOYLE. The purpose is to lead up to the consolidation of the pipe lines. Representative LIVINGSTON. Why can't you discuss that, then, with- out leading up to it. Mr. BOYLE. I can; I can say it in a word. Representative LIVINGSTON. Why not say it that way, then? Mr. BOYLE. Well, I will give you just what you want. Mr. SMYTH. I would insist on my view of the witness being allowed to give his testimony in his own way. Representative LIVINGSTON. All right; go ahead. Vice-Chairman PHILLIPS. Well, Colonel Livingston withdraws his objection, and Mr. Boyle will proceed in his own way. Representative LIVINGSTON. I want to say this: If we are to have the history of every enterprise that we are going to investigate, it will take a dozen years to get through, and I only want to have a limit somewhere. Mr. BOYLE. The next enterprise in order was the Pickett & Sherman Pipe Line, extending from Pithole to Titusville, IOI/2 miles. About the same time, Abbott & Harley constructed a pipe line from Benninghoff run to the Shai^er farm, a distance of two miles. The next enterprise was Warren's Line from Pithole to Henry's Bend, and from this small lines of a mile and a half to five miles in length, but more generally two miles than five, were extended from year to year. Very few of them were five miles in length, but at various times they were all different concerns. Tidioute had its system of pipe lines, and the Empire Transportation Company, operating the Pickett & Sherman Line, owned at least two separate and distinct gathering lines in different parts of the field at the same time. In 1869 the first pipe lines were laid in what is called Parker's district — possibly with a small beginning in 1868. In 1869 the pipe lines began to be recognized as carriers. The first line there was the Parker, Thompson & Co., the next was the Karns. About the same time, however, Martin 8c Harms, of Petro- leum Center, constructed a line known as the Foxburg Line, subsequently named the Mutual Pipe Line. Then the Mutual Pipe Line system extended out to St. Petersburg, and ran into Clarion county, from time to time extending over the entire field of 10 or 12 miles. The Mutual Pipe Line became quite an extensive concern. The next in order was the Grant Pipe Line, at Parkers Landing, a small gathering line, getting its oil from Black and Milford farms at Parkers Landing, and terminating at the river and railroad. Previous to this time and during the Pithole development, and those immediately following it, around Fagundas, Vandergrift & Forman constructed a gathering system which was later extended to the Cranberry district, Pinegrove township and the Milton farm, and with the opening of the large wells in Bear Creek valley, to the river at Bradys Bend and throughout the producing district in Butler county, and subsequently to Concord township, in Butler county, on the development of what became the Grease City field. This line formed a nucleus of what is now known as the LTnited Pipe Line system. *Black faced type indicates matter omitted, in the course of editing, from the C'fflcial report. 516 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The next in order was the Relief Pipe Line Company, started at Millers- town and terminating at the Allegheny river. This pipe line development brings us down to the period of 1874 and 1875, and what I have named thus far have been constructed on the one side of the river, that is on the side of the Butler and Armstrong developments. On the other side there was equal activity. Marcus Hulings constructed the Antwerp Pipe Line, taking oil in opposition to the Mutual Pipe Line. Later on the American Transfer Company commenced to compete for business, and then came the Atlantic Pipe Line. All these lines would average about 10 miles in length — from 7 to 10 miles in length. The Atlantic possibly might exceed that for the reason that they had two termini — one on the river and one on the branch railroad. Two of these lines subsequently constructed trunk lines from the Clarion field to Oil City and delivered oil there, which was at that time a common point. What are known as common points were points of common shipment or junction points, where stated rates were given. *Between these junction points another rate was given. The aim of the pipe line, as far as possible, was to reach common points, to get the advantage of the freight rates. The original pipe lines were merely transporters of oil, but, through the exigencies of operation, they became buyers of oil; not in their corpo- rate capacity, but by some arrangement outside of their corporation. Each one of them had a purchasing department, and the price on all the lines varied to some extent. Very rarely the same price was stated at the same time on two lines. This condition existed up to 1877, and the result of this enormous competition and over-capacity of pipe lines was that no pipe line was able to earn, by its legitimate functions, sufficient to sustain itself. Therefore the purpose of the association you spoke of by the railroads was to establish a through freight rate. These pipe lines were in some manner connected with one or the other of the four leading railway lines, and the through rate of freight was established from the wells to the seaboard or to the refinery, or wherever it had termini. In 1874 Mr. Rutter, general freight agent of the New York Central Railroad Company, issued a new freight tariff in which it was expressly stated that all shippers receiving oil from pipe lines would have repaid to them 22 cents a barrel. This was the beginning of the rebate system. Considerable tumult was occasioned by this circular, and meetings were held, resolutions were adopt- ed and attempts were made to influence the railroads to abandon the rate. At all events that is where the rebate charge of 20 or 22 cents a barrel, about which testimony has been taken before other commissions, and which was given by railroads to pipe lines, started. Both the pipe lines and the railroads wanted the oil, and their backers, the railroads or others, were satisfied to divide the freight rate with the pipe lines, in order to get the oil freight for the railroads. Q. (By Professor JENKS.) Do I understand you to say that this was a general circular, and that anyone who shipped oil over these lines received this 22 cents rebate? Mr. FARQUHAR. Did this include all shippers? A. Yes. sir; all ship- pers who patronized the pipe lines within the pool. Not all pipe lines, either. I want to correct myself on that point, because through the active competi- tion about 1873 or 1874 a pooling arrangement was entered into by the pipe lines. This was an attempt on their own part to get the pipage. Failing in that, they failed to make a success of their organization, which was called the Pipe Line Association, and it was after that that the Rutter circular ap- peared, in which all the railroads concurred. If the circular is of any in- terest you will find it already published in the investigation before the Manufacturers' Committee of 1888. It would be loading down your records to quote it again. But we have it here if you desire it. This condition existed from 1874 until some time in 1877. when there was a consolidation of certain pipe line interests, and this consolidation grew until about all the pine lines in the region were members of one con- cern known as the United Pipe Line Company. The organization was effect- ed sometime in 1877 or 1878. The United Pipe TJne Company was organized ♦Black faced type indicates matter omitted, in tlie course of editing, from the ofHcial report. PATRICK C. BOYLE. 517 with a capital of $3,000,000, and acquired by purchase the property of the Columbia Conduit Company and the Empire Line, these two being the strongest, and a lot of smaller lines. Q. (By Professor JENKS.) You think the cause of Ihis combination among the pipe lines was the extraordinary competition that existed among them, that had practically made their business unprofitable? A. There is no question about that; there is no doubt about that whatever. It was the over-capacity of the pipe line enterprises and the greediness with which individuals rushed into it.- Every person within a mile of a railroad handled his own oil as far as it was possible, and by getting small lines in that way they formed a nucleus of other lines, by one and another going into it and a little capital taken here and there they branched into a pipe line. The pipe lines were not equal in strength, in capacity, nor in integrity. During this period the over-production of pipe lines resulted in a great deal of em- barrassment to the trade. It is a matter of public information that some of the lines were not able to make deliveries on demand. Suits were entered in the courts for false statements after the pipe line law of 1874 went into effect. That was the cause of the consolidation of the pipe lines. It was a necessity. The business would not have existed long had it not been done. Q. (By Vice-Chairman PHILLIPS.) Was there more than the one suit entered of the nature of which you spoke? A. I recall but one at this time. Q. (By Vice-chairman PHILLIPS.) Only one? A. I do not recall any more. Q. (By Vice-Chairman PHILLIPS.) And yet there was a multitude of pipe lines at that time and only one suit entered on account of false state- ments? A. Well, I say that from information, because I have the informa- tion here; I only speak of what I know. Mr. Boyle said that at the time when the consolidation of the pipe lines took place, about 1874 to 1876, the daily production was as follows: 1874, 29.937 barrels; 1876, 24.505 barrels; 1877, 35,988 barrels, and in 1878, 41,540 barrels. From that until the highest production of 96,357 barrels in 1897 there was an annual increase in the production. The witness had heard it stated that the United Pipe Line, which began business with a capital of $3,000,000, which was afterwards increased to $5,000,000, paid no dividend for three years after its organization, or until the opening of the Bradford field. He could not say who owned the United Pipe Line when it was organized, though it is now owned by the National Transit Company. The National Transit Company is now known as a part of the Standard pipe lines system. The refiners, or the Standard, took an immediate pecuniary interest in these pipe lines in 1877. He had heard it estimated that in 1877 the Standard had a little more than one-half inter- est in the pipe line system. What is known as the Standard Oil Company was an aggregation consisting of the strongest refining firms in this country. The same parties in interest in the Standard Oil Company at that time, with very few exceptions, are the same parties in interest yet in that company. Vandergrift & Forman came in the United Pipe Line, and Mr. Vandergrift was the first president of the line. Mr. Boyle had never heard that the Rockefellers were in the pipe line company as managers. Mr. Vandergrift left the service of the pipe line about 1885. He had never understood that Mr. Vandergrift was a director of the Standard Oil Company. 'ihe witness again referred to the movement to shut down oil production that occurred in 1862, immediately after the period of the flowing wells. In 1866 there was an agitation for a shut-down movement with the object of bettering the condition of the producers. The first practical shut-down oc- curred in 1872, and it was almost absolute, and included both the production and the drilling. It resulted in raising the profit on oil. There was an agree- ment between all the producers in all the fields. This shut-down lasted 30 days, and it was to advance the price of oil. The decline that took place in 1873 was due to the large wells in the neighborhood of Millerstown. In 1874 there was a very large increase in the output of oil near Karns City, which was caused by deepening the w-ells 65 to 85 feet, and through the fourth sand, which oftentimes quadrupled the output of the well. 518 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. In 1874 a local shut-in plan originated in Clarion county, where some flowing wells had lately been developed, and the prices were naturally "off" that year. In 1876 a plan was started for pooling the surplus oil, as a means of ad- vancing the market, but the conditions improved so rapidly about mid- summer of that year that such action became unnecessary. The advance in the price of crude oil to $4 a barrel, or more, in the fall of 1876 was re- sponsible for nearly all the ills that followed it for the next 10 years. It called the attention of persons not permanently engaged in the oil business to the great amount of money to be obtained through drilling wells. Prices went down and have hardly recovered yet. In 1877 and 1879 the Producers' Union was formed, it being started in a small way by a few producers at Elk City, Clarion county, who hoped to unite their neighbors in a suspension of operations to improve prices, and from it grew the Petroleum Producers' Union, which lasted two years. Up to 1879 no movement of this kind had continued for so long a period. Since then there have been similar movements that have lasted for a longer time. This m_ovement, which started as a protective concern, rapidly developed into an aggressive organization. They undertook to fight the transportation companies and the railroads. Suits were started in the Supreme Court of Pennsylvania to annul the charters of the pipe lines, and criminal actions were brought against some of the owners of the pipe lines and members of the Standard Oil Company. "If their aim was to improve their condition," said Mr. Boyle, "it failed of its purpose." Q. (By Vice-Chairman PHILLIPS.) Where was this suit brought against some members of the Standard Oil Company? A. In Clarion county. The suits against the members of the Standard Oil Company were instituted in Clarion county; the suits against the pipe lines were in Venango county. Q. (By Vice-Chairman PHILLIPS.) Well, was that suit tried in Clarion county or was it removed from Clarion county? A. It was not tried any- where, and was not removed from Clarion county. Q. (By Vice-Chairman PHILLIPS.) Did they not take an appeal to the Supreme Court of Pennsylvania? A. No doubt they did; but as I under- stand it the suit was settled outside of court. Q. (By Vice-Chairman PHILLIPS.) Yes; but after an appeal was taken? A. Well, I am not clear on that point, Mr. Chairman. Q. (By Vice-Chairman PHILLIPS.) It was a suit for conspiracy, was it not? A. It was called a suit for conspiracy, yes, sir; but that hardly proves the conspiracy, from the fact that it was never tried. Q. (By Vice-Chairman PHILLIPS.) Oh, no, certainly not; you have covered the ground very fully, Mr. Boyle; you have stated that there was a suit brought. I have nothing further to say. The witness said the condition of the producer was no better after the termination of that combination than it was before. The production con- tinued to increase and the prices to soften with the addition to stocks. In 1879 the daily production of oil was 54,206 barrels, and the price was 85% cents per barrel. When the movement was started, in 1877, the daily pro- duction was 35,988 barrels and the price $2.39%, which was the average foi the year. "These are the actual figures," said Mr. Boyle, referring to the prices quoted above, "and that is what makes me say the condition of the pro- ducers was no better at the end of the combination than it was at the be- ginning." The great increased drilling had not ceased to any extent. Stocks had accumulated and production increased. In 1881, during the development of the white sand pools in Warren county, the individual shut-down of the heavier operators in Cooper tract occurred. *Cooper tract was the district indicated, or section in whicli the oil was produced; the oil of that particular quality. Cooper tract was per- *Black faced type indicates matter omitted, in tlio course of editing, from the ofllcial report. PATRICK C. BOYLE. 519 *haps some one to two thousand acres in extent, under different ownerships; that was the name of the territory; this was successful so far as the opera- tions on that tract were concerned. In 1884 there was an attempted combination of the producers to restrict drilling. The movement, while more general, was only partially successful. This was the year of the Thorn Creek development; the period w^hen very large wells were found in a small area of territory. The persons engaged in engineering the shut-down of 1884, that is, the combination of 1884, or- ganized for the improvement of prices and the betterment of the condition of the producers, claimed and alleged that the failure was duo to the want of co-operation on the part of the Thorn Creek operators, but it was car- ried out very generally throughout other sections. The Associated Producers' Oil Company was formed shortly after 1884 as a result of the abortive attempt to limit production due to activities on Thorn Creek, and it is still in existence. The capital stock ($1,000,000) of this company w-as parcelled out to all the producing companies. As it be- came necessary to purchase property in order to curtail production, or stop the drilling, the purchasing was done by this company and all the share- holders were to participate in the profits that might accrue from it. It was considered a very wise arrangement, and the fact that it is still in exist- ence and doing business would seem to indicate that it is a .success in every way. The shut-down combine of 1887 consisted of an agreement or contract between the Producers' Protective Association and the Standard Oil Com- pany for their mutual benefit. On the one hand the producers were to shut in at least one-third of their production for one year, and on the other the Standard was to relinquish certain holdings in oil, which he thought amount- ed to 6,000,000 barrels, 5,000,000 barrels being turned over to ^he association (the producers) and 1,000,000 being set aside for the labor employed. The price at w^hich the oil was turned over by the Standard Oil Company was 62 cents a barrel, and when it was turned over the current irice was 10 cents more. His opinion was that the proposition for the contract that was made came from the Producers' Association. As a result of this contract crude oil advanced 29 cents a barrel. The price of refined oil was rot advanced to the consumer in proportion to what it was to the producer. It looked to him as if the Standard Oil Company had borne the loss resulting from this condi- tion in proportion to the quantity of oil they refined. He thought the Stand- ard Oil Company had entered this arrangement because it desired a better- ment of the trade as a whole and was concerned in the interest of the pro- ducer nothwithstanding all that has been said about that company. The witness said that 2,000,000 barrels of oil of the stock involved in the shut-down contract was set aside for the benefit of labor (1,000,000 by the Standard Oil Company and 1,000,000 by the Producers' Protective Asso- ciation), the profits on that amount of oil to assist labor, which was the loser by the shut-down. The profits were distributed among the workmen by their own organization. He believed the laborers got more from the sale of their oil, it being sold at a higher price, than the producers themselves did. The producers in the Washington field had declined to come into this agreement for restricting oil production because they had struck very pro- ductive wells and they made a great deal of money out of the advance in prices. Mr. Boyle said that prices of oil are often cut in order to find a market for surplus stock. If the oil is not sold it must go into tanks and be carried at great expense until it finds a remunerative price or inducements must be given to the foreign consumer to induce him to take the surplus stock. He thought that all companies refining oil at times found themselves in this condition. In order to show that the production of crude oil has been profitable, Mr. Boyle presented a statement showing the amount of oil produced, the average price and the valuation by years from 1860 to 1898, the total valua- tion by decades, the number and cost of wells drilled. t *Black faced type indicates matter omitted. In the course of editing, from the official report. tThis table is published on page 4.''.4 of the official report of the commission. 520 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The aggregate value of the oil produced from 1860 to 1898 inclusive was $778,771,847.03, which was obtained by drilling 100,881 wells at a total cost of $232,121,000. The above included the cost of 15,000 dry wells, which never produced any oil at all and which cost the producers about $30,000,000. "Allowing that one-fourth of all the oil produced went to the land in- terests," said Mr. Boyle, "those interests would receive $194,692,962, leav- ing $584,078,885 for the oil producers. Deducting the cost of drilling, there still remains $351,957,885. The cost of lifting the oil at an average of 25 cents a barrel would be $87,989,471.25, leaving $263,968,413.75 as the profits of the producing business for the last 39 years. This is an average of $6,768,420.86 per year." Q. (By Vice-Chairman PHILLIPS.) Now, in those figures I understand you do not include bonuses and rentals paid for holding ground. Are there not many instances where persons pay a very large bonus for prospective territory that did not prove valuable, and is not a very large per cent of money expended in holding ground, paying very near $5 per acre per annum, upon which to drill. Would not that run into a very great many million dollars; the cost of obtaining the ground to drill upon? A. It would. We have considered that question very fully, Mr. Chairman, and the view that we adopt on that point is that the bonus and lease rentals for speculation are not entitled to enter into the construction account or an estimate of this kind. While it is true that they appear as against the producer's profits, they defer his profits for a certain period, but the amount needed to produce a given amount of oil is what we state. We state the cost of the wells, we give the rental of the wells, and we give all the necessary expenses of lifting the oil. Now, any other expense is purely speculative, and made for the purpose of giving the individual producer an advantage. Q. (By Vice-Chairman PHILLIPS.) But is it not necessary, in order to pursue the business, to pay these bonuses and pay these rentals; could any firm or individual become a large operator without paying bonuses or without paying rentals, when the ground only has a prospective value? A. But it ought in that case to appear as a bonus, and not as a fixed charge against the cost of operating. Q. (By Vice-Chairman PHILLIPS.) But still the burden is a great many- million dollars; it almost equals the cost of drilling. A. It is not compulsory, but the cost of drilling is, and the cost of lifting oil is; the lease being speculative, does not enter into our figures. *Q. (By Vice-Chairman PHILLIPS.) But still it curtails his profits? A. But still it curtails his profits; where he sees proper to invest in that way, he takes the chances. *Black faced type Indicates matter omitted, in the course of editing, from the official report. PATRICK C. BOYLE. 521 EXHIBIT II.— TREND OF PRICES OP CRUDE AND REFINED OIL, 1870-1898. Year. Average daily pro- duction. Average price per Barrel. Reflned per Gallon. Stocks Increased. Stocks Decreased. Total Stocks. 1870 Barrels. 15,350 15,800 17,925 27, 106 29,937 24,075 24, .505 35,988 41 544 .54.206 71,114 75,004 82,338 63,365 65.129 56,921 70,679 ,58, ,846 45,058 58,869 82,376 98, 191 91,328 85,296 84,3;S4 84,820 92,815 96,3.57 85, 206 $ 3.90 4.40 3.75 1.80 1.15 1.24M 2.5751 2.39% .941^ .85H 1.05-^ .88% .71% ■T .94% .86^ .66% .gy. .83% i.;WM 1.19 .78% f 0.26% .24>4 .23% .I8V4 .13 .13 A9% Ab% .10% .O814 .091^ .08 .07% .083^ .07^ .06% .07^ .O71J .07% .06>^ .0607 .0524 .0519 .07.36 .0698 .0591 .0631 Barrels. 203,872 Barrels Barrels 544,626 1871 12,626 532, 000 1872 1873 552,223 .541, 134 2,080,462 1,084,423 1,625,157 1874 3, 705, 639 1875 155,439 725. 461 3,550,200 1876 2, 824, 739 1877 303,0i)8 1,487,463 3,936,956 8, .592, 848 8,615,947 8, .574, 093 1,380,421 1,1.57,327 3,127,837 1878 4, 615, 300 1879 8,552,2.56 1880 17, 145, 104 1881 25,761,051 1882 34, 3a5, 144 1883 35, 715, 565 1884 36, 872, 892 1886 3,333,8.54 171,140 5,011,786 9 752, 6;« 7, 699, 681 1,609,279 33, .539, 038 1886 33, 367, 898 1887 28, 3.57, 112 1888 18, 604, 474 1889 10,904,793 1890 9, 295, 514 1891 6, 047, 719 2,052,1.55 15,343,233 1892 17,39.5,-389 1893 5,284,206 5, 774, 406 1,174,872 12,111,183 1894 6,336,777 1895 5,161,905 1896 4,488,678 1,2:^9,069 752, 101 9,5.50,583 1897 10, 789, 652 11,. 541, 753 1898 Since 1870, to and including 1898, the daily production of oil has in- creased 450 per cent. The price of crude oil has declined 75 per cent., and the price of refined oil about 75% per cent., ^showing that the two oils have been parallel in their decline from the start until this time. These figures are from official tables, furnished by the government. In 1871 we exported petroleum and its products to the amount of 152,- 197,617 gallons, and of the value of $36,6.33,825. In 1897 our total exports were 994,297,757 gallons, valued at $59,057,547. In other words, our exports increased over 500 per cent, in 26 years, but the increase in valuation of the total product was but a little over 61 per cent. In 1871, 132.178,843 gallons of illuminating oil sent abroad brought $33,493,351, while in 1898 nearly six times as great an amount, or 771,350,626 gallons, brought but $49,343,916. The total exports of petroleum for the year 1898 amounted to 986,480,610 gallons valued at $52,551,048. The decline during the past year (1898) reached 7,817,147 gallons in amount and $6,506,499 in value. For 1896 our exports in petroleum and its products were 931,795.022 gallons, valued at $62,764,278, and for 1895, 853,126,130 gallons, valued at $56,224,425. In 1888, 680,000,000 gallons of petroleum were within $6,000,000 of the value of nearly a billion gallons exported in 1897; *showing a decline, and showing what the exporters were obliged to do in order to find the market. The witness referred to a notice to oil producers posted in the various offices of the Seep Purchasing Agency January 23, 1895, as follows: The small amount of dealing in certificate oil on tlie exclianges renders the transactions there no longer a reliable indication of the value of tlie product. This necessitates a change in my custom of bu>'ing credit balances. Hereafter in all such purchases the price paid will be as higl-. as the markets of the world will justify, but will not necessarily be the price bid on the exchange for certificate oil. Daily quotations will be furnished from this office. January 23, 1895. JOSEPH SEEP. *Black faced type indicates matter omitted, in the course of editing, from the official report. 522 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Mr. Boyle said he had in mind a case of a gentleman coming to Oil City and advancing the market two cents by his own bidding and then dumping half a million barrels of his own oil on it immediately. It was possible for anyone with the nerve and the oil to have done the same thing at any time. The WITNESS. (Referring to the Seep Agency.) This marked a radical departure in the methods of buying and selling oil, and in determining the price of crude petroleum. It tended to make the option between producer and refiner a direct one, and to eliminate the speculative broker as a factor in determining values. The price of speculative oil in the shape of certifi- cates hawked about on the floor of the Oil Exchange was no longer to rule the real market, as established directly between the man who had oil in the lines that he wished to sell and the agents of the refiners who desired to buy it. The change was rendered imperative by the gradually diminishing volume of business in the oil exchanges and the practice of some of the larger pro- ducers, who, by the purchase of a few thousand barrels of speculative oil on the floor of the Oil Exchanges, were able to manipulate the market a few cents in their favor and at the same time dispose of a large amount of credit balance oil at the advanced figures. This order put a sudden stop to the frequent practice of establishing a fictitious value for oil by interested parties who desired to effect sales or purchases of the commodity. It, however, did not eliminate the petroleum ^broker or put a check on speculative dealings in oil. This business is pur- sued as usual, but instead of the credit balance price being determined by the price of certificate oil, as in times past, all speculation is based upon the price paid from day to day for credit balances in the direct dealing between the producers and refiners. But the broker had ceased to be longer a factor in the business. The manifest absurdity of basing the price of the entire amount of daily production on the few thousand barrels of oil that changed hands occasionally on the fioor of the Oil Exchange is a thing of the past. In the following tables are shown the average price of a barrel of oil in the exchanges from month to month, as compared with the price of a gallon of refined oil in New York, for the four years immediately preceding the time when the new rule of the Seep Purchasing Agency went into effect: PATRICK C. BOYLE. 523 HEFINED PRICES ARE QUOTED IN CENTS AND DECIMAL PARTS OF A CENT. Date. 1891. January February March April May June July August September... October November.... Decem.ber Average. 1892. January February March , April May June July August September... October November... December.... Average Average i Average nricl P"ce r^ crSdeoil fl^^f,' P«^ Tipr harrpl gallon per barrel. ^^^ York Cents. 74% 71 69% 68^ 661^ 63% m% Cents. 7.42 -AS 7.31 7.18 7.20 7.13 7.02 6.70 6.42 6.45 6.40 6.44 Date. 1893. January February March April May June July August September... October November... December.... Average 1894. January February March April May June July August September... October November... December.... Average Cents. .531^ 68% eo% 57% 58% W% 70% 73% 78% 64 Average price re- fined, per gallon New York Cents. 5.33 5.30 5.34 5.52 5.20 5.21 5.15 5.18 5.15 5.15 5.15 5.15 5.25 60 57 '^ 57V 56% 54 54% 54378 51% 51% 53^ 5oK 6.45 6.42 6. 32 6.10 6.06 6.00 6.00 6.08 6.10 6.03 5.80 5.45 6.07 83% 80 5. 15 80% 81^ 5. 15 5.15 84% 5.15 86 5.15 88% 5.15 83% 80% 5.15 5.15 S3 5.15 82% 5.15 82% 5.15 91% 5.61 5.17 It must be remembered that the prices quoted above include the cost of the barrel. Refined oil in bulk is 2.50 cents less than the above figures. For example: In 1891 the producer realized an average of 66"^ cents per barrel for his crude product, or 1.59 per gallon, while the refiner, after paying cost of transportation, manufacturing, etc., delivered it on board the tank steamers for export abroad at 4.43 per gallon. In 1894 the producer re- ceived nearly two cents a gallon for his crude product, while the refiner realized but 2.67 cents per gallon. 524 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The following table shows the price paid for crude petroleum by the Seep Purchasing Agency since 1895, with the corresponding price of refined oil on the dates when changes in the price of crude were made: CHANGES IN PRICE OF CRUDE OIL BY SEEP PURCHASING AGENCY ANI> CORRESPONDING CHANGES IN PRICE OF REFINED OIL AT ABOUT THE SAME DATE. Date. Agency price for crude per barrel. 1S95. January 23 $0. January 24 1 February 9 1 March 8 1, Marcli 14 1 March 16 1 April 8 ..-. April 9 April 10 April 11 April 13 April 15 April 16 April 17 2. April 18 2. April 19 2. Apjil 20 2. April 22 2. April 30 2. May 1 1. May 2 1. May 3 1. May 4 1. May 6 1. May 7 1. May 9 1. May 10 1. May 13 1. May 20 1. May 24 1, May 27 1. May 28 1. May 29 1. May 31 I June 4 1, June 7 1. June 18 1. June 19 1. June 21 1. June 29 1. July 1 1. July 5 1. July 6 1. July 12 1, July 15 1 July 19 1, July 25 1. July 26 1 July 27 1 July 28 1 November 5 1 November 7 1 November 11 1 Novf mljer 12 1 November 13 1 November 14 1 November 15 1 99 00 03 05 071/2 10 20 27 35 50 75 00 25 50 60 40 25 10 00 90 80 70 60 55 50 55 60 65 671/2 ,65 60 571/2 ,55 ,50 471/2 45 50 55 60 55 50 471/2 45 471/2 ,50 521/2 45 371/2 .30 25 30 33 38 40 42 45 48 Refined per gallon. Cents. 5.90 5.90 6.05 6.60 6.85 6.85 7.50 8.00 8.00 9.00 9.00 11.00 11.50 11.50 11.50 10.75 10.75 10.00 9.15 8.25 8.25 8.25 8.25 7.75 7.75 7.75 7.75 7.75 8.50 8.50 8.50 8.00 8.00 8.00 7.85 7.65 7.65 7.80 8.10 8.10 7.95 7.80 7.80 7.65 7.65 7.65 7.65 7.65 7.65 ♦7.10 7.25 7.25 7.75 7.75 7.75 8.50 8.50 Date. Agency price for crude per barrel. November 16 $1.50 November 21 1.55 November 27 1.50 November 29 1.47 November 30 1.45 December 2 1.40 December 5 1.38 December 10 1.43 December 11 1.48 December 12 1.50 Deceinber 19 1.47 December 20 1.40 December 21 1.35 Dectmber 24 1.40 December 27 1.45 December 30 1.50 1S96. January 2 1.50 January 17 1.47 January IS 1.45 January 20 1.43 January 22 1.40 January 31 1.43 February 18 1.40 February 20 1.35 February 24 1.33 February 26 1.30 March 4 1.28 March 9 1.30 March 10 1.33 March 12 1.35 March 14 1.38 March 17 1.40 March 23 1.37 March 25 1.35 March 26 1.32 March 27 1.29 April 2 1.25 April 7 1.22 April 9 1.20 April 24 1.25 May 11 122 Mav 14 1.20 May 18 1.17 May 19 1.15 May 22 1.13 May 25 1.10 May 26 1.09 June 5 1.10 June 10 1.14 June 12 l.lf, June 15 I.IS June 16 1.20 June 23 I.IS June 24 1.16 June 25 1.15 Julv 13 1.13 Refined per gallon. Cents. 8.50 8.25 8.00 7.75 7.75 7.50 7.5u 8.00 s.oo 8.00- 8.00 7.75 S.OO 8.00 8.00 S.OO 8.00 *7.6& 7.60 7.35 7.10 7.10 7.10 7.10 7.10^ 7.25 7.25 7.25 7.50 7.50 7.35 7.35- 7.20 7.20 7.20 t6.90 6.95 6.80 6.80 6.7a 6.60 6.60 6.60 6.55 6.6S 6.90 6.90 7.00 7.00 6.90 6.90 6.90 6.80- ♦Remained at thij ber 6. fiKtirc until Ncivem- ♦Ranged from 7.50 to 7.65 cents. tApril 17, 6.S0 cents. PATRICK C. BOYLE. 525 CHANGES IN PRICE OF CRUDE OIL BY SEEP PURCHASING AGENCY AND CORRESPONDING CHANGES IN PRICE OF REFINED OIL AT ABOUT THE SAME DATE— CONTINUED. Date. Agency price for crude per barrel. July 14 $1.10 July 15 1.07 July 16 1.03 July 23 1.06 July 27 l.OS July 31 1.06 August 12 1.04 August 27 1.06 August 31 l.OS September 4 1.10 Stpttmber 10 1.12 September 23 1.15 September 25 I.IS October 1 1.16 October 13 1.14 October 27 1.17 November 10 1.20 November 18 1.17 November 19 1.15 November 23 1.13 November 24 1.10 November 27 1.08 November 30 1.05 December 7 1.03 December 9 1.01 December 14 99 December 16 97 December 17 95 December 23 93 December 28 90 1897. January 1 90 January IS 88 January 23 85 February 1 87 February 2 90 February 15 91 March 22 92 March 23 93 March 24 94 March 26 95 March 30 96 April 3 93 April 5 91 April 5 88 April 9 85 April 15 84 April 2S 83 April 30 81 May 3 83 May 5 86 May 18 89 May 28 87 June 24 85 June 28 83 June 29 82 July 2 80 July 13 79 July 14 77 July 19 75 Refined per gallon. Cents. 6.75 6.65 6.50 6.60 6.60 6.65 6.65 6.70 6.75 6.80 6.85 6.30 6.90 6.90 6.90 7.00 7.15 6.90 6.80 6.70 6.60 6.60 6.50 6.50 6.50 6.40 6.30 6.25 6.25 6.20 6.20 *6.10 6.00 6.05 6.15 t6.25 6.35 6.40 6.45 6.50 6.55 $6.55 6.20 6.20 6.05 6.05 6.05 6.05 6.15 6.25 6.35 6.15 6.15 6.10 6.05 6.00 5.95 5.85 5.75 Date Agency price for crude per barrel. July 26 $0.73 Augu.st 2 71 September 9 69 September 23 70 October 14 68 October 15 67 October 18 65 1898. January 1 65 February 16 67 February 17 68 February 23 70 February 25 73 February 26 76 February 28 80 March 1 82 March 8 80 March 9 79 March 14 78 March 17 77 April 2 75 April 21 74 April 22 72 April 23 71 May 5 75 May 6 80 May 7 85 May 11 83 May 12 82 May 19 84 May 20 86 June 7 87 June 11 86 June 15 85 June 21 86 June 22 87 June 24 89 June 27 90 June 28 92 July 11 94 July 19 95 July 20 93 July 21 92 July 22 90 July 25 92 July 26 94 July 27 96 August 15 97 August 18 98 August 22 1.00 September 16 1.02 September 23 1.04 September 27 1.-06 September 29 1.05 October 4 1.07 October 6 1.08 October 7 1.10 October 13 1.12 October 17 1.15 Refined per gallon. Cents. 5.75 5.75 5.70 5.80 5.50 5.50 *5.40 5.40 5.40 5.40 5.50 5.60 5.85 6.20 6.05 5.90 5.90 5.80 5.75 i'5.75 5.60 5.60 5.60 5.80 6.00 6.00 6.00 5.95 6.05 6.15 6.15 6.15 6.15 6.15 6.15 6.15 6.15 6.25 6.25 6.30 6.20 6.20 6.10 6.20 6.30 6.40 6.40 6.50 6.50 J6..50 6.75 6.85 6.85 6.95 7.00 7.10 7.20 7.30 *On January 20. tRanged from 6.25 to 6.30 cents. JRanged from 6.40 to 6.55 cents. *These figures prevailing until the close of the year. 'Ranged from 5.70 to 5.75 cents. JSeptember 19. 6.65 cents. 526 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. CHAxVGES IN PRICE OF CRUDE OIL, BY SEEP PURCHASING AGENCY AND- CORRESPONDING CHANGES IN PRICE OF REFINED OIL AT ABOUT THE SAME DATE— CONTINUED. Date Agency price for crude per barrel. June 28 $1.13 June 30 1.17 July 6 1.19 July 11 1.21 July 11 1.23 July 18 1.25 July 31 1.27 August 29 1.30 August 31 1.35 Reflned per gallon. Cents. 7.20 7.35 7.40 7.50 7.i;o 7.70 7.80 7.90 8.10 Agency price Refined Date for crude per per barrel. gallon. Cents. October 20 $1.18 7.40 November 15 1.16 7.30 November 16 1.15 7.30 December 9 1.17 7..30 December 19 1.19 7.50 1899 January 1 1.19 7.50 January 12 1.17 7.40 January 13 1.16 7.40 January 30 1.15 7.40 February 28 1.13 *7.35 *In April dropped to 6.95 cents. When there has been a large amount of surplus production seeking a foreign outlet, reduced prices have been the invariable result for both crude and refined. Increased consumption is always gained at the expense of price. Foreign competition has been keen and prices for refined, for the four years from 1891 to 1895 were hammered down to the lowest notch. When refined oil gets above a certain price per gallon, its use becomes almost prohibitive to millions of our foreign consumers. The result of higher prices is immediately shown in a falling-off in the foreign demand. A careful inspection of the above tables will show that the relative ratio between the prices of refined and crude oil has been better maintained during the years that the practice of basing prices upon the actual condi- tions of supply and demand has prevailed than during the years immediately preceding the adoption of the new order of things. The speculator devoted his efforts to bearing the market whenever there was any immediate pros- pect of a temporary increase in new productions, without any regard to the foreign demand for refined or the actual value of refined oil in the markets of the world. The producer was absolutely at his mercy. Taking the year 1899 for illustration, it will be observed that the price of refined oil has advanced from 7.50 cents a gallon at the beginning of the year to 8.10 cents at the present time, a gain of 60 points. During the same period the Seep Purchasing Agency price for crude oil advanced from $1.19 to $1.35 per barrel, or 16 cents. During March and April, when crude oil was $1.13 per barrel, refined dropped as low as 6.95 cents per gallon. On .June 28, when refined had advanced again to the 7.20- cent point, crude oil was marked up to $1.15, and a few days later, when refined had advanced to 7.50 cents, the crude oil price had been raised to $1.21 per barrel. ****** * Q. (By Vice-Chairman PHILLIPS.) Let me ask you a question just there. Is it fair to compare the price of crude oil with that of export oil in showing the profits without taking into consideration the by-products, such as lubricating oil, etc., that are made from them and sold in this country and other places? A. That question has occurred to my own mind a num- ber of times, and the conclusion that I have arrived at is that where we have an article of export in excess of consumption, the foreigner makes the price. Manchester gives us the price for cotton, and Liverpool for wheat. Q. (By Vice-chairman PHILLIPS.) Does the foreigner make the price of oil in Denver and in Minneapolis and in southern cities and towns? A. If oil could be transported by telephone I dare say it would sell as cheaply in Denver as it would in New York City. *lf it could be placed there by instantaneous force without labor — if it could be placed there without effort. - The oil used in Denver is produced in Denver, and the eastern oil hardly enters into competition with it. ♦Black faced type indicates matter omitted, in the course of editing, from the' ofTicial report. PATRICK C. BOYLE. 527 Q. (By Vice-chairman PHILLIPS.) Well, do you believe or not that the Standard Oil Company makes a very large profit out of the by-products. There are so many of them now, benzine and tar and lubricating oil, *all of which are very profitable, and then to compare the price simply of refined oil abroad, and the price they pay for crude, *does not seem to me to take in one-half of their profits. I may be misinformed or mistaken, but what would be your view in regard to that? A. Well, the way it has always appeared to me is this: The by-product is something of a gift of nature. In marketing this by-product, labor and capital have been employed. The producer has nothing to do with these by-products; he sells his product as a whole, and they are only created by labor in the process of manufacture, by chemical process, by work. In other words, they cost something; they possibly cost nearly as much as they produce in many instances, but that there is a profit is very complimentary to the refinery, to the industry, to the chemist that has made it possible. There was a time in the refining business when there were no by-products. The only by-product that I knew anything about when I came into the oil business, that had a ready market, was benzine. That was sold as a dissolvent for paraffine and went into the wells as benzine; it came out and went into the producers' tanks, and was sold back to the refiners as crude oil, at 400 and 500 per cent, over cost. Now, that is the only by-product that we had in the beginning. Chemistry has advanced the art of refining, and at every step labor and capital are employed in the preparation of the by-products and I dare say there is a profit; there should be a profit in them. Q. (By Vice-Chairman PHILLIPS.) Well, provided there is a profit in the by-products now, and you will admit that there is a large profit, *and also a large profit in selling water white oil in this country in a great many places. Now, the point that I come back to is this: Is it fair to take the price of the refined export oil and to compare with the crude. In your opinion are not the by-products the source of one-half of the profits of the Standard Oil Company or other people employed in shipping oil abroad? A. Well, Mr. Chairman, it occurs to me with the profits on oil at export prices, we would have no oil business, because with the production of the present volume no refinexy could undertake to carry on the business and run it for the profits on the burning oil alone. The oil would necessarily be so high as to render no profit to the manufacturer, as there would be no inducement for the consumer to buy it. It has been stated here in my presence by some person, I understand, that 10 cents was considered a fair profit on a barrel, but he was taking into consideration the profits realized on the by-products, but no refinery could take 10 cents profit, and that alone. Q. (By Mr. FARQUHAR.) Does not the Standard Oil Company dispose of the by-products to other manufacturers; for instance, the petroleum resi- diumi, which enters into the whole composition of the dyes that are sold in this country. Now, isn't that sold at a cheap rate to manufacturers who are dealing with their own capital outside of the Standard Oil Company? A. Certainly. Q. And in the long run it makes very little difference with the tables that you have presented here, in respect to the crude itself? A. That would be my view of it. Q. In other words, I want to know whether the Standard Oil Company itself enters into the manufacture of by-products, such as dyes, magenta dyes, and others of this character, or are they not separate concerns and different corporations and individuals that have taken up the whole of that by-product business. A. In separate concerns. *Q. (By Vice-Chairmar. PHILLIPS.) The whole of it? A. Nearly the whole of it. Q. (By Vice-Chairman PHILLIPS.) How about the paraffine or wax that enters into all candles now — sperm candles, as they used to be called. Don't they manufacture the paraffine wax and sell it? A. Oh, yes. sir; there is a certain percentage of wax, but they will sell wax to anyone; they will either sell or buy. *Black faced type indicates matter Omitted, in the course of editing, from the official report. 528 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. After the expiration of the 12 months' contract between the Producers' Protective Association and the Standard Oil Company bringing about a shut-in movement, the witness said, the former association proceeded to induce men to build refineries and to put oil in trade in competition with their benefactors, the Standard Oil Company. The Producers' Association stated that there was so much profit in the by-products that the refiners could afford to give the burning oil away for nothing, and on that proposi- tion a refinery was built by impractical men. There was no reason why the refinery, where it was built, should not have succeeded. There was one at the same place in successful operation at the time, Mr. Boyle testified. The witness referred to the formation of the Producers' Oil Company, liimited, with a capital of .$600,000. This company had, built a small pipe line in the oil fields and in all the association had influenced the investment of upwards of $3,000,000 in pipe lines, and the stockholders had never received one dollar except one 5 per cent, dividend paid by the United States Pipe Line at a time when it was paying nothing on its fixed indebtedness. This pipe line company was organized at the period of the greatest produc- tion that has ever occurred in the history of the business — the opening of the McDonald field. The WITNESS. The first company organized was the Producers' Oil Com- pany, Limited, with a capital of $600,000. No one questioned their right to do that. It was organized at a very opportune time, at the period of the greatest production that has ever occurred in the history of the business — the opening of the McDonald field. They entered the McDonald field, and the first oil they took was from that field; but they kept away from the production that was likely to be overwhelmingly large. They kept on the outskirts, and limited themselves to such wells as they could handle nicely without crowding their capacity. That was the first point in which they entered actively in competition with the United Pipe Lines, in the trans- portation of oil. At this time the McDonald field rose within three months from practi- cally nothing to a daily production of 80,000 barrels, limited to a territory six miles long by two miles wide; a very narrow strip for so large a produc- tion, and that only continued for a single day, perhaps, but the average was above 60,000 barrels a day for months. The Producers' Association, which had been formed for the betterment of the oil trade, did nothing to improve the condition of the McDonald producers. It gave them a competi- tion at once useless and expensive: expensive to the extent of $600,000 of the producers' money impractically put in it. and which has never paid a cent of interest from that day to this, *and useless because it was powerless to take oil from the other wells. But the one concern was obliged to shoulder the entire responsibility for carrying the oil in that district and it would have done so. regardless of the presence or the efforts of the Asso- ciated Producers. Q. (By Vice-chairman PHILLIPS.) Now, did or did not. the Standard Oil Company purchase a large per cent, a majority of the stock, at a very large price, in that concern — in the Producers' Protective Oil Company, Limited — with the capital of $600,000, of which you spoke? A. I have heard of some purchases of Colonel Carter. *Colonel Carter made some large purchases. Q. (By Vice-Chairman PHILLIPS.) Did not that finally find its way to the Standard Oil Company, and in a suit that was pending wasn't it proven that the Standard Oil Company furnished the money to purchase a majority of that stock? A. I did not so understand it; I did not know that. Q. (By Vice-Chairman PHILLIPS.) Did they not *pay as much as 100 per cent.; pay two for one, double the par value of the stock, in order to get control of it? A. I have no information on that; the only sales I know of were at par; I know there were some few sales at par. Q. (By Vice-Chairman PHILLIPS.) Was that a direct corporation, or what was the nature of that organization or company? What was it?' A. It was a limited concern. ■*Dlark faced type indicates matter omitted, In the course of editing, from the official report. PATRICK C. BOYLE. 529 *Q. (By Vice-chairman PHILLIPS.) A limited partnership? A. Yes, sir; a limited partnership. Q. (]]y Vue-Chaiiman PHILLIPS.) And Mr. Carter attempted to be elected a *stockholder in it, did lie or did he not, or a director? *A. Well, as I understand it, he was a stockholder in it. *Q. (By Vice-Chairman PHILLIPS.) Well, I mean a director? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) And the suit was begun in the court, and taken up, and was it or not ruled that he could not become a director or have the power to vote that stock, and that therefore he failed in the control of that $600,000 company? Is that a fact or is it not a fact? A. Well, *l know there was a suit; I know there was a suit, and litigation, and a decision. Q. (By Vice-Chairman PHILLIPS.) But you do not know that the suit was adverse to Mr. Carter or the persons who stood back of him? A. I assume that it was from the subsequent proceeding. Q. (By Vice-Chairman PHILLIPS.) Are they or not appraising the value of the stock? A. I understand they are now appraising the value of the stock. *Q. (By Vice-Chairman PHILLIPS.) That is sufficient on that one ques- tion. A. Yes, sir; on that one branch. Well, the Producers & Refiners' Oil Company, Limited, proving ineffectual for the purposes intended, obtained additional capital through a combination with the refiners, to the amount of $250,000, and built a connecting line to this one, to supply oil to the refineries, making a capital of $850,000, and that has never paid a cent of dividends. It has been in operation nine years and it has never paid a cent to the stockholders, though the market price of oil has varied from one to nine cents, if my recollection serves me, higher per barrel in that line as compared with the Seep Agency prices. The producers got the benefit of that, and yet the refineries to whom that oil was sold, paid the existing market price for stock oil, or a price less than the one paid to the producers. Q. (By Vice-Chairman PHILLIPS.) Now, was there any other line built after the second one to which you referred, or about that same time? A. The United States Pipe Line was built to the seaboard. Q. (By Vice-Chairman PHILLIPS.) By whom? A. By the same asso- ciation, ^through its influence; built to the seaboard. A million dollars was embarked in that, and other capital was added to that, probably $400,000 or $500,000, making upward of $3,000,000 invested in pipe lines and trans- portation as the result of that movement, the stockholders of which have never received one dollar except a 5 per cent, dividend paid by the United States Pipe Line at a time when it was paying nothing on its fixed indebt- edness. Q. (By Vice-Chairman PHILLIPS.) Do you or not believe that they would have reaped a large profit had it not been for the opposition of the Standard Oil Company *in all markets? A. Not at all. I believe that investment was useless, the capital wasted, and the producers wronged. Q. (By Vice-Chairman PHILLIPS.) When this company commenced to sell refined oil in New York City did not the Standard Oil Company imme- diately put the price of oil down in that great city to less than the cost of refining it? A. Whatever was done there was a matter of merchandising on both sides. They were merchants, and not oil producers or oil, refiners. It was a matter of merchandising. Q. (By Vice-chairman PHILLIPS.) Did they or not do the same thing in Philadelphia *when the producers entered that market? A. I believe that to be a common practice *among the trade everywhere. Wherever there are refiners they do that. Wherever there are sales, each person having a commodity for the market places it at the best possible advantage to himself. "The Pure Oil Company did not come until after all these were formed," ♦Black faced tj'pe Indicates matter omitted. In the course of editing, from tlie ■official report. 34 530 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. said Mr. Boyle, referring to the United States Pipe Line Company and the Producers' Protective Oil Company, Limited, "and it became necessary to complete a trust. "This thing was started out in a most untrustlike way, but ended up in a trust as complete as could be formed, and the creation of the Pure Oil Company was necessary *to that trust to control all of these other proper- ties. The Pure Oil Company, with a nominal capital of $1,000,000 and an actual capital of about $400,000, is trying to swing this $3,000,000 concern, and will eventually, if the voting trustees have the power." Q. (By Professor JENKS.) Will you explain a little more fully what you mean by its being a trust? A. It is a trust. Q. Explain what you mean by that? A. We have it all here in this pamphlet (exhibiting a pamphlet). Q. (By Vice-Chairman PHILLIPS.) Do you mean a trust or a combi- nation? *A. I mean a trust. Q. (By Mr. FARQUHAR.) With respect to the form of control you regard it as a trust? A. In the form of control I regard it as a trust. It is a combination, a series of combinations, and the properties are managed by voting trustees. *Q. (By Professor JENKS.) That is a point I want to bring out clearly. A. The property is in a trust; three-quarters of the property of the United States Pipe Line or the proportion which this organization controls, is in a trust. Q. (By Vice-Chairman PHILLIPS.) Do you know, or do you not know, the reason why a voting power was put there? Did the Standard Oil Com- pany, or did it not, buy several hundred thousand dollars' worth of the LTnited States Pipe Line stock, and propose to control that, *as they had bought the control of the limited partnership; and was it or not essential to the existence of the United States Pipe Line that the stock should be put in trust? *Was it or was it not? A. If we start by admitting that proposition, we must endorse all that lias been done before in the way of combination; that of itself is a virtual admission that the Standard Oil Company *in its trust relations was right. Q. (By Mr. FARQUHAR.) That vindicates the Standard Oil Company's actions? A. Entirely. *The action of this company has vindicated the Standard Oil Company. Q. (By Mr. SMYTH.) You consider that this company copied in a measure the plan of procedure of the Standard Oil Company? A. Not ex- actly; that was open, and this is secret. Q. (By Vice-chairman PHILLIPS.) Do you mean that the Standard Oil Trust is not one of the most secret organizations in existence in regard to making statements to their stockholders and in the management of their business? *Has there ever been any great corporation or trust managed with the same secrecy in regard to their business that the Standard Oil Trust is? A. In regard to their business, I suppose they have not opened their books to the public. Q. (By Vice-Chairman PHILLIPS.) Have they made any statements to their stockholders? A. Not being a stockholder, I cannot say. Q. (By Vice-Chairman PHILLIPS.) Well, you are a newspaper man? A. Well, they have never made any to me; I have never asked them for any. *Q. (By Mr. SMYTH.) You consider that there are two oil trusts, the Standard Oil and A. No, sir; there is but one oil trust, the Pure Oil Trust. Q. (By Vice-Chairman PHILLIPS.) Was there or not a suit brought by a stockholder in that trust to get knowledge of the business and, as a stock- holder, to have a statement made of how the funds were being handled? *Did or did not that suit fail? A. I think the suit failed and properly, be- cause the purpose of that suit was to work an injury to the company. *lt was intended to injure the concern. It was not brought in good faith. Q. (By Vice-Chairman PHILLIPS.) Then you think that a man holding stock in a company has no right to know anything about the amount that ♦Black faced type Indicates matter omitted, in the course of editing, from the cfRcial report. PATRICK C. BOYLE. 531 company earns, or whether its means are being squandered or not? It is not the rule of other corporations to exist without making statements to their stockholders, is it? A. If the chairman can justify the act of his own company in excluding Colonel Carter, I do not see how he can censure the other concern for what it has done.* tMr. FARQUHAR. That is fair. Q. (By Vice-Chairman PHILLIPS.) There are some times when it is absolutely essential to defend yourself, and there is an old adage that the way to fight the devil is with fire. These gentlemen pursued the business themselves, but the others had better weapons and secured better means. The opposition in that case is very liable to take that same course to defend themselves and are impelled to do so, or they would be absorbed as one company was and as the other was attempted to be. Q. (By Professor JENKS.) What has been the effect of this independ- ent oil movement upon the prices of refined petroleum to the consumers? You said that these various independent organizations fthat had come back into the trust, as you call it, J had not made any profits, had declared no div- idends, and that you considered that in consequence the investment of that money was a practical waste, because they had been of no service to the oil producers in the region. That is what I understood? A. Yes, sir. Q. What has been the effect of these independent oil movements upon the price of refined petroleum? A. None whatever. Q. You do not think they succeeded in reducing the price of refined petroleum at all? A. No, sir. It only gave members of this company and the independent refiners in the Creek region an opportunity to get im- mensely wealthy. They are making money faster than they ever made it before. The producers are making a little more money than they did previously, to the extent of the premium which the Producers' Line pays them, but the stockholders of that line will receive nothing for their invest- ment. Q. Do you know how far the stockholders in these combinations are themselves producers? A. To a very large extent, fbut that would not justify it. Q. Do you know what proportion of the producers whose oil they are buying are stockholders in this combination? A. I do not. Q. Then you would say that the general result of this independent movement is to increase the price of crude oil? A. Only to a very few — to persons interested in that line and connected with its service. Q. And to others, too? A. To others, no; its effect has not been felt to any extent anywhere. Q. Does it benefit all of those whom it reaches? A. To that extent and by those means. It is a method of "Robbing Peter to pay Paul." It is taking money out of the pipe line to pay the producer in the way of an advanced price for his oil. That is the way it performs its service, by piping oil for less than the published rates, or established rates, whatever they may be. Q. iWill you tell what you mean by that? What is the rate for 'jipiug oil? A. The pipage rate is understood to be 15 cents a barrel. When the premium has been as high as nine cents a barrel on that oil that would mean as much as nine taken from 1.5, leaving the pipage charge six cents. Q. I understood you to say further that this independent movement had resulted in making the refiners in that region rich? A. Yes, sir. Q. Will you explain how that has been brought about? A. Well, if I could, I W'ould be in the refining business myself. Q. You think that it his not resulted in the lowering of the price of refined oil? A. No; tthey claim they are making money in the region. § *This answer appears in the nffirial report nf the cnmmisRion in the fnllowins? form: "A. If the act of the Pure Oil (^ompany in excluding Colonel Carter is justi- fied, I do not see how other concerns can be censured for what they have done.'" tBlack faced type indicates matter omitted, in the course of editing, from the official report Jin the official report of the commis.-;ion the statement ''that had come back Into the tru?t, as you call it," does not appear, and in its place is the fnllowing: "that were compelled to go into a trust." §In the official report the following appears in the place of this sentence: "No, they claim that their success has not resulted in lowering the price of refined oil, not In the region, at least, where we are." 532 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *There is nc perceptible worry there, and the oil they send abroad they couldn't sell at home anyway; that oil that goes abroad is restricted in every State in the Union. *Export oil cannot be sold in this country. Q. (By Vice-chairman PHILLIPS.) That is both as to the Standard and the others? A. That is both as to the Standard and the others. *AII export oil that is sent abroad could not be sold in this country by reason of the laws of this country. f Q. (By Vice-Chairman PHILLIPS.) Are not these companies now mak- ing money? The WITNESS. The refining companies? *Vice-Chairman PHILLIPS. No, I mean these various pipe lines. Professor .JENKS. The independent companies. Vice-Chairman PHILLIPS. And would their stock not be more desirable at the present time The WITNESS. Refining stock? Vice-Chairman PHILLIPS. No, I mean the stock of these various inde- pendent companies, *the pipe line companies. A. Why, they would be if run and managed on business principles; *they certainly would be. I believe there is money in piping oil, and if run for the benefit of the line, it is a good investment; there must be money in it; *but if run for outside interests, well Q. (By Vice-Chairman PHILLIPS.) Didn't they establish the first pipe line to the seaboard to handle refined oil? A. Oh, but that cuts no figure, gentlemen. Warren, as we have shown here, piped refined oil a distance of three miles in 186.5, and in tank cars, they have taken refined oil from one point to the o'her, and what is a tank car but a pipe line on a limited scale? If you confine oil in an iron vessel, it makes no difference whether it is a continuous pipe, or in a closed tank, and agitated, the result is the same. Q. (By Vice-Chairman PHILLIPS.) Would or would not these com- panies have paid a great deal more if they could have gotten throui^h to New York, and not have been opposed by combinations in Nev.- Jersey, *and prevented from getting to the seaboard; would not their profits have been much larger if they had free pipage to New York, as the Standard has to-day? A. *The only way I can answer that is this (there are so many provisos in it): If Booties had a baby, and the baby grew up to be a young woman, and she fell in the fire, it would be a terrible affliction. If there was only one proposition, a person might answer that. Q. (By Vice-Chairman PHILLIPS.) I have naturally the same right, and they have the same right, to go through to New York City, if possilDle, free from the Standard Oil Cornpany: from any possible combination with the Standard Oil Company. A. Undoubtedly you have that right. Q. (By Vice-chairman PHILLIPS.) And is it fair that I should be pro- hibited from exercising that privilege of equality and justice?! A. Let me answer that by comparison in this way: If it is fair and right for one pro- ducer to take land from any other producer; if there are two bidding for *BIack faced type indicates matter omitted, in the course of editing, from the official report. Tit is odd that the three separate and distinct statements of Mr. Boyle to the effect that export oil cannot be sold in this country, do not appear in the official report, in which he is only quoted as saying on this subject that oil that goes abroad "is restricted in every State of the Union." Restricting the sale of oil might or miglit not mean forbidding Its sale. This discrepancy hotween the stenographic re- port and the official report is perhaps not of much consequence, but it is very curious. Jit will be seen that the vice-chairman of the commission was making a per- sonal argument relating to his own interests. The form of these questions would indicate that the vice-chairman was .acting in the combined capacity of witness and attorney. His "question" is really only an argument in the form of a positive state- ment. These features of the testimony do not appear in the official report where the questions are given as follows: "Q. Have others the same rignt to go through to New York that the Standard Oil Company has? A. TTndouhtedly they have that right. "Q. And is it fair or just that they should l)e iirnhiLited from exercising that priv- ilege of equality?" PATRICK C. BOYLE. 533 that land and one outbids the other and takes the land from him, I think that would be just as fair as the other. If it is unfair to prevent a pipe line from going into a market already occupied, it is unfair for one producer to compete with his neighbor and take the land from his giasp, if he has the superior ability and wealth to control it. Q. (By Vice-chairman PHILLIPS.) One is exercising the right of emi- nent domain.* A. He is performing, for that right, an adequate service to the people. Q. (By Vice-chairman PHILLIPS.) You would say if one railroad could supply the whole market of the City of New York, that all other railroads should be prohibited from going there; jbecause it could supply that market and carry the passengers, no other person or company should have any such right? A. I should say this: If the money to construct that road was to come from the pockets of the passengers who are expected to patronize it, and they had to pay their fare, too. I would say, yes; that is the answer. Q. (By Vice-Chairman PHILLIPS.) Do you undertake to say that these companies are robbing people; that these independent companies that the Standard Oil Company is so desirous to control, and in which it has purchased stock which it could sell to-day at a very large profit, are robbing any person or doing any injustice? A. jThe fact remains, Mr. Chairman. Robbing is a hard word and I do not care to use it in any way; the fact remains that the money embarked in the enterprise is unremunera- tive. Q. (By Vice-Chairman PHILLIPS.) Allow me, Mr. Boyle. You stated that they were taking money from some persons and giving it to others. J A. Well, that was only a comparison; just a remark. It is a very common expression — "Robbing Peter to pay Paul." tl do not mean that there was any robbery in the case. Mr. KENNEDY. We have had a long, sultry day, and I think we are pretty well tired out, and it is evident that we will not be able to finish Mr. Boyle's examination at this sitting, and I therefore move that we adjourn until to-morrow morning at 10 o'clock. Vice-Chairman PHILLIPS. *Just one question before your motion is put. Well, in regard to the right of persons to enter a market, that is all right, and whether he would call that, as he used the expression, "Robbing Peter to pay Paul." I want to ask whether they would not have the same right either a railroad or a pipe line. You have no direct knowledge of these people having done any injustice to any of their stockholders, ha.ve you? A. I have no knowledge that they have done full justice to their stockholders in returning them interest on their investment in pipe lines. I have no knowledge of that myself. There are $3,000,000 invested in that. Q. (By Vice-Chairman PHILLIPS.) You have knowledge that they have been employing every honorable means to get through to the City of New York, and that they have lessened their freight rate a very great deal by getting into New Jersey? You have knowledge of that, haven't you? A. Yes, sir. Q. (By Professor JENKS.) You said that you did not think the effect of the independent movement had been to reduce the price of refined oil. What has been the price of water white refined oil for the last few years, since the organization of these companies, as compared with what it was before? A. I have no means of knowing; Ave haven't water white in export. tit is export entirely that makes the price; water white is a special con- tract. Any sale of water white, or any other class of oil, is a special con- tract, according to the location. Q. And you have not any record at all of the price of water white since 1874? A. No, sir. *This "question" is one of many arguments made by the vice-chairman which have nothing' about them to indicate that they are questions except an interroga- tion mark which is inserted in the official report. But the interrogation mark cannot make a qM-=stion of a positive statement: its use Is proper only after actual questions. tBlack faced type indicates matter omitted, in the course of editing, from the official report JThis is another of the vice-chairman's numerous arguments that are turned into questions in the ofRcial report by the addition of an interrogation mark. 534 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Professor JENKS. I think that is all. Mr. Boyle's testimony was continued on September 7. Mr. Bojie thought that through Mr. Seep, the general purchasing agent of the Standard Oil Company, and his sub-agents, 80 per cent, of the crude oil produced in Pennsylvania and Ohio is purchased. He thought there were 20 or 30 sub-agents under Mr. Seep in the oil region. Q. (By Professor JENKS.) In posting the prices that he would pay for crude oil from day to day, are the fluctuations by barrels very large or are they sometimes only a cent or two? A. Well, I don't know as to that. I pay but very little attention to the oil market. The fluctuations are usually over a full cent, though, at a time; sometimes a fraction of a cent. Q. That is, a barrel, you mean? A. A cent a barrel, yes, sir; and it has been two cents; it may have been higher than that at times. Q. Do you see any special reason why, on a barrel of oil, the fluctua- tions would be so small as this; any special reasons that would affect the market in such a delicate way? A. Now, that question has occurred to me, and I think I have spoken to one or two persons about it, and the reason I rave heard assigned is this: They have adopted the point system on refined oil and the point is a very delicate fluctuation. For example, 10 points in oil might represent a fraction of a cent or a full cent, and that would account for the margin or the amount that you said. It is controlled in some way by the movements of refined, and the fluctuations of refined are by points. A hundred points representing a cent, it is the fraction of a hundred that controls the prices of the crude. Q. So, in your judgment, these minor fluctuations that Mr. Seep makes are really controlled by the fluctuations of refined? A. Controlled by the fluctuations of refined. Q. The prices of refined are presumably fixed by the Standard Oil Com- pany in New York, you think? A. As I understand it, they are fixed by the demand in Europe. Q. *Well, in one sense. There must be somebody who has oil to sell who determines what price he will sell it for. A. The parties holding the oil would have the option of relinquishing their holdings at the existing prices there, but to make the price, as you put the question, would imply that the Standard Oil Com.pany chalked the price up, and said to Europe: "You must take it so. or not at all." Well, that is not the situation, as I understand it. The pulse of the market is carefully felt in Europe con- stantly, and the market is made to suit the demand there. Q. The point that I had in mind was this: Is it some official of the Standard Oil Company who determines what prices should be accepted for the oil? A. There is undoubtedly some salesman connected with their establishment who is in direct connection with the prices at some point. The condition of the market is known to that person, and if he wants to relinquish his oil at that figure, it goes. Q. Then, if the price of the crude oil which is offered by Mr. Seep varies with the price of refined oil, would there be a presumption that the two aro connected, so that the price would presumably be fixed by Mr. Seep *from the same parties who fixed the price of refined? A. The price of crude oil is invariably controlled by the price of refined. When there is a movement in the refined, amounting to points enough to make a full cent, it appears in the crude. Q. (By Vice-chairman PHILLIPS.) Is it not the case frequently, Mr. Boyle, that they advance crude before they advance refined; or the same day that the one is advanced, the other is. Was that not the case with these recent advances, that crude was first advanced, and then the points were named on refined? A. I am not clear as to that, Mr. Chairman: and I can say furthermore that I am not familiar with the movements of refined *in the sense that you speak of. * * *■ * * ilf !ti Mr. Boyle presented a series of reports of the Chamber of Commerce, of Cincinnati, Ohio, from 1865 to 1870 inclusive, and for 1876 and 1877, giving ♦Black faced type indicates matter omitted, In the course of editing, from the offlcial report. PATRICK C. BOYLE. 535 the local market price of oil in that city. An idea of the condition of the trade at the beginning of the period covered by these reports can be had from the following extracts: *For the year ending August 31, 1865: The price of this article (petroleum) owing to the decline in the price of gold was much lower at the close than it vvas a year ago, though the average price is higher for the year than that of the previous season. There has been a marked falling off in the production of the article, according to the statistics of the commerce of the country; from New York alone the exports since January were but 6,000,000 gallons against over 11,000,000 gallons the corresponding time in 1S64; and this being the chief exporting point furnishes a correct basis upon which to estimate the decline in the oil business. Hundreds of the wells have ceased to yield oil, and though new ones are being sunk, but few fresh discoveries have been made during the year. Notwithstanding this falling off there has been a slight increase in the receipts at this place, and a fair consumptive demand during the summer. The following was the price of the refined petroleum per gallon, duty paid (10 cents per gallon), at the close of each month the past year (1865): Cents. Cents. Septembtr 28 So March 29 83 October 26 85 April 26 73 November 30 88 May 31 70 December 28 93 June 28 *0 JunuLit y 25 92 July 26 70 February' 22 93 August 30 <'J *For the year ending August 31, 1866: The production of pe- troleum has increased quite largely during the past year and prices have been greatly depressed, refined in bond having sold as low as 35 cents in New York in July, against 55 cents a year ago. The receipts at this place have increased largely, but the trade has not been satisfactory. Either through the ignorance or dishonesty of refiners, doubtless the latter, the legal standard of gravity has been disregarded to a great extent, and a vast amount of burning oil vended, which is as dangerous to use as gun-powder, especially in hot weather; and explosions occurring created a prejudice against its use; and the board of underwriters prohibited its use upon steamers on the west- ern waters. It will be seen that prices have ruled much lower than those of the previous season, and that the receipts have been more abundant. For the year ending August 31, 1867: Not so much because of the increase in the production of this article (petroleum) as the decrease in its consumption, probably, the prices of it have been so low the past year that it has, at times, not paid for the expenses of bringing it to market. For illuminating purposes a strong and growing prejudice exists against it, because of its being made of too light a gravity, leading to explosions and loss of life. As fuel, for making steam, and for culinary purposes, various experiments have been made, but it is doubtful that it will come into general use at present. Only the most productive wells are being worked. All others have been abandoned because it costs more to lake the production from them and bring it to market than the prices would justify. ****** * Q. (By Mr. FARQUHAR.) I would like to ask the witness when the first oil exchange was established in this country? A. Well, from the earliest records that we have, it would be about 1871 — the oil exchange for handling business as we now understand it. Q. (By Professor JENKS.) That was at Titusville? A. At Titusville in 1871. Q. (By Mr. FARQUHAR.) There were exchanges before that?t A. Yes, sir. Q. (By Professor JENKS.) What was the character of the exchanges before 1871? A. Well, the character of the exchange then was something *Black faced type indicates matter omitted, in the course of editing, from the official report. tin the official report this question is embodied as a pait of Mr. Boyle's answer. 536 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. like a chamber of commerce, where persons engaged in the same business would collect and exchange views. Q. (By Mr. FARQUHAR.) How many exchanges were established in the country? A. Oh, at one time I think there were no fewer than 20. *Q. Twenty of them? A. Yes, sir. Q. When was the New York Exchange established? A. My impression is about 1880, but I think we can get that exactly. *Vice-Chairman PHILLIPS. Have you any other questions? Mr. FARQUHAR. I intend to follow this up and find out who are the speculators that fleeced the public at large on oil; *that is what I am de- termined to get at, and I do not care which side looses. t Mr. KENNEDY. That is, assuming that the public has been fleeced. iVIr. FARQUHAR. Oh, they have been; we don't need to get a witness for that. Well, Mr. Boyle, you can supply that information at another time. A. *We have the matter here now, Mr. Farquhar. On May 2, 1877, we have a record of the Petroleum Exchange being opened in New York; page 280 of the Derrick Handbook. Q. How long did that exchange exist? A. That or its successor is in existence to-day; it is still going on. *Q. Up to the present time? A. Up to the present time. Q. What is the character of the exchanges in New York now in respect to oil? A. Well, they deal in futures now; they deal in futures, or they speculate on the value of oil a month or a year ahead, *or whatever period they fix upon. Q. The same as in the cereals? A. *The same as in the cereals, pre- cisely; this is the method of speculation now, but it has only been of recent occurrence; it is only a few years since they started dealing in futures. Q. (By Vice-Chairman PHILLIPS.) Is there to-day any considerable amount of speculation of the kind you have referred to compared with what there Avas 15 or 20 years ago? A. It is very small in comparison. Q. (By Mr. FARQUHAR.) What was the character of the business done in the exchanges that were started in the oil country — in Oil City? Will you explain that a little more fully? A. There were two elements in the trade, one interested in high prices and one interested in low; and the bears had a very decided advantage through the existence of a very large stock of oil on hand and it was possible to sell in the later seventies and early eighties, and never cover. Oil may have been sold short there, to be carried short, and brokers have become rich by selling wind, and getting the carrying prices of that wind, and never covering. The effect of that was to depress the prices on the producers. The larger producers took a very pronounced stand against that sort of trading in the oil exchanges, and it was denounced very severely in meetings and in letters to the press. Q. Who were the supporters of the oil exchanges? A. Well, they are generally called "lambs;" that was the public, you know; people coming in from the outside and bidding on the price of oil, and they generally lost. Q. Well, were producers as well as refiners and all others interested in this? A. Oh, undoubteflly. Q. In this speculation? A. Producers and others were interested in it. Q. They were all interested in it? A. Producers, merchants, laborers, clerks, and so on. Q. So there was a free field for a while in the oil exchange for people who took their chances in speculation, either on wind, as you express it, or on oil? A. On oil. Q. Have you any idea what the losses would be in respect to that specu- lation, *where producers and all others were participants in its benefit? A. I have never heard an estimate of that, but if I were to make one, I should think that $100,000,000 would not be too high. *BIack faced type indicates matter omitted, in the course of editing, from the nfllcial report. ;in the offlcial report this remark nf Mr. Farquhar appears in the following- form: "I want to find out who the speculators were that fleeced the public on oil."' PATRICK C. BOYLE. 537 Q. *Then you are free to say that the producer and everyone to the shipper participated in the profits of the oil gambling, from 1867 on to what time? A. Well, I would place it at a later period than 1867; I would place it up to about 1870. *Q. 1870; so we take it from 1870 on the regular exchange. A. From 1870 to the early nineties. Probably in 1890 there was some little specula- tion in oil, after the movement known as the Producers' Protective Associa- tion; that movement killed speculation in oil. Q. Now, how was that brought about? A. That movement was brought about by an agreement between the Standard Oil Company and an associa- tion called the Producers' Protective Association. We have the agreement here. Q. Then you give credit to the joint action of the Producers' Protective Association? *A. Yes, sir. Q. And the Standard Oil Company? *A. Yes, sir; and the Standard Oil Company. Q. For the suppression of speculation? A. For removing that feature of injudicious speculation; proper speculation is all right; it is proper and just for a person to buy oil and hold it; buy the certificates outright. No one has ever raised his voice against that — against the purchase of oil out- right. It is merely gambling on margins that has been destructive of values, and injurious to the business standing of communities in which these ex- changes were located. Q. Since that agreement, have either the producers or the Producers' Protective Association, or the Standard Oil Company sustained in any way the Petroleum Exchange in New York? A. Oh, no. Q. Have they been adverse to an exchange in New York? A. Well, I cannot say that they have been adverse to it; I can merely say that they let it alone. Q. Well, in other words, the regulation of prices made by the Standard Oil Company naturally eliminated the speculation entirely from it, in cer- tificates or otherwise? A. Undoubtedly. Q. At what date do you place Joseph Seep's quotations? A. On the 23rd of January, 1895. Q. Now, does it follow that Mr. Seep's quotations are standard and stable quotations following that agreement? A. They are. Q. So that we have now reached a market where speculation can do nothing at all with the price of oil? A. Precisely. *Q. That is the very point I want to reach. A. Precisely; we have reached the point where the consumer makes the price. Mr. Boyle described the methods adopted by speculators about 1880 to influence the oil market in various ways. These speculations, he said, would start rumors of big strikes in wells. These rumors, referring to places from which information could not be obtained readily, affected the market. Even if such reports were corrected in an hour or two their effect would be felt on the market. This practice gave rise to a protective system which was formed by placing experts in the producing fields at points of interest so that results of operations could be promptly reported. "The agents employed for this work were called scouts, the witness having left newspaper work for two years to serve as a scout on the frontier for the Union Oil Company, then the largest producing concern in the business. The reports of the scouts in the oil field off-set the effect of rumors set afloat by speculators. The witness described the methods that were pursued in the early days of the oil business in the sale of crude oil. He said the oil markets made the first prices of oil and that led to the formation of exchanges and a gathering of dealers in oil at stated places and times, where they did their oil trading. The WITNESS. The first oil markets were, in my opinion, made by the dump men on Oil creek. Now, the dump men were the first speculators in oil. A dump is a tank of any capacity from 10 barrels to 600. The dump man developed into a refiner later on, and his refinery was known as a *Black faced type indicates matter omitted, in the course of editing, from the official report. 538 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. B. S. refinery; that is, he took B. S. oil, the non-merchantable oil, and redeemed the better parts of it and placed it on the market. The dump man visited the small producers in all localities and bought their oil at so much by contract, and if there was one or two feet in the tank bottom he bought it in a lump sum, or at so much per barrel. He also bought the good oil, the merchantable oil, from small producers who could not hold their oil long enough to get a full shipment of 100 barrels or 50 barrels, whose wells had declined to such a point that they could not hold for a month at a time, and were obliged to sell from day to day or week to week, and the dump man was their market. Then the refiners sent their people up in the region to purchase oil, and they used to travel up and down Oil creek, like platoons of cavalry, pricing oil at the various wells as they came along. The usual method of approaching the producer was for the purchaser to say: "Well, have you any oil to sell?"' The answer would be: "I have so much." Then the producer would say: "What price are you giving to-day?" If it was thought that the producer was not posted on the existing prices, the trader would probably reply: "What is the dump man paying?" The reply would be: "The dump man is paying so and so." Well, he might name a figure a few cents above that, just sufficient to get their oil. The dump man was the first local merchant to make a price in the oil field. His price was stable and satisfactory during that time. You could always find a market with the dump man. For the first few years of the business the market was spasmodic; perhaps there would be days and weeks at a time when there would be no other quotations or transactions in oil. Perhaps months at a time there would be no quotations in oil from the large speculators and shippers — that is, the refiners' agents. Now, in the course of time, the dump man was eliminated from the business. *When the pipe lines came into existence, there was no further use for the dump man and he passed away; served his useful hour and went away into other pursuits. After that the refiners' agents had their own way. After that came the independent ship- pers, or shippers independent of the refiners' agents, persons who specu- lated, but the vast majority of the oil went into the hands of refiners' agents. Now, this crowd had a common place of meeting, some point where they would assemble and discuss the trades, and discuss conditions, and that eventually led to doing a little trading. These refiners' agents, during the first 10 years of the business, were migratory; that is to say, they moved about throughout the region, making individual contracts with producers and others, and their meetings would occur at night. They would meet in the evening after supper and discuss the trade; that is the history of the formation of the first oil exchange. Later on, as the business became sys- tematized, and got into fewer hands, they began to adopt regular hours for business. One of their first resolutions was to do no trading after a certain hour in the day, 6 o'clock; later on, they adopted a resolution to do no trading after 4 o'clock, and then they adopted banking hours for their trad- ing, but this was when the oil exchange became a permanent factor in the trade. All the trading, say from the period of 1875 or '76. up to 1895, was done on the exchange. Trading done outside of the exchanges, known as curb trading, was considered disreputable and classed with bucket-shop operations. The rapid fluctuations in oil in 1876 did a great deal to foster the exchange element, and showed people that it was possible to make money rapidly by these wide fluctuations, and the sudden advance of up- wards of $3 a barrel in 1876, brought the public into speculation with the producers. I can say here and now that producers who remained out of the oil exchanges and away from speculation invariably got wealthy; those who went into the oil exchanges as invariably got poor, and the number who went into the exchanges outnumbered those who remained out so largely that they formed themselves into a league after awhile to combat those organizations that had nothing to do with speculation, and shake out of them some of their earnings. Q. (By Vice-Chairman PHILLIPS.) Were there not some exceptions. Mr. Boyle, to that in regard to producers? Captain Murphy, for instance, ♦Black faced type indicates matter omitted, in the course of editing, from the ofTicial report. PATRICK C. BOYLE. 539 was a producer and a speculator both; has he been a success both ways, as one example along with many others? A. I thank you, Mr. Chairman, for calling my attention to him; that is one exception; that is one of them; I would thank you for another one. Q. (By Vice-Chairman PHILLIPS.) Well, there were some, but as a rule you are correct. I never speculated, myself, as you know. A. Oh, I know you never speculated; I am satisfied of that; you were one of the strongest opponents to the wildcat speculation in existence at that time; an outspoken opponent. We have had letters from you in our newspapers denouncing the wildcat speculation. Q- (By Vice-Chairman PHILLIPS.) Especially the scout system, or mystery business; *making mystery of wells, and not letting the public know what they had, and using that method upon the market. A. That mystery bui^iness was the cause of the institution of the scout system; *it established that system; it is responsible for that. Q. (By Mr. FARQUHAR.) We are to understand from your testimony then, that after this era of speculation and after the shut-down, the strong men in the oil region, the Rockefellers and all others in it, in order to sup- press all this speculation in one shape or another, in oil and oil certificates, agreed on a conservative basis throughout to make a shut-down to bring the oil up to a paying figure for the producer as well as the refiner. As a matter of regulation that system exists even to the present day, with a benefit to the whole oil trade, and the cheapness that has come to the con- sumer has come through the great organizations of oil men. Are we to understand that by your testimony? That is, the stronger the producers were, the stronger the refiners were, and in their uniting and finding a stable market the consumer has gained the benefit? A. I believe that is true. Q. That is your observation? A. I believe so. Q. And the credit of the suppression of the inordinate speculation in 1876, and later, is due entirely to the producer and the refiner as well as the stable rates of transportation in bringing a stable market and a stable price and a cheap price to the consumer himself. Are we to understand that that is the gist, as I may say, of your remark, or have you anything else to add? A. Well, only in part. The producer is a man of energy and force, and his effort has usually been in the production, the mere producing. He has been entirely uncontrollable. Show him an oil field, and he is off wild and excited, and no matter what the conditions of trade are he will drill as long as he *can find a place to drill, and he can get the means to drill regardless of anyone else. That is his right. He is injuring himself, as he is injuring others. Q. So that you regard over-production as the cause of small profits to the producer? A. Over-production and speculation. The over-production has been consuming them, has covered and blocked them for more than 30 years. We noticed yesterday that in 1862 it was necessary to turn the stop- cocks on the wells, and every year or two since there have been movements to curtail production, all due to the energy of producers— over-producing. Q. (By Mr. SMYTH.) Has the consumption of oil been gradually get- ting larger and larger year after year? A. Yes, sir; oh, yes, sir. Q. But it has not kept pace, in your judgment, with the production? A. Oh, yes, sir; I would say so. It has substantially kept pace with pro- duction, but the price at which it was offered had much to do with it, Mr. Commissioner; the cheapening of prices always increases consumption. Q. (By Mr. FARQUHAR.) What effect has the cheap crude oil on the refiners' profits? A. Well, sir. I couldn't say. The manufacturers' profits are very largely controlled by the prices of the crude. When he buys crude cheap he cannot sell refined very high, because the competition among the refiners is too active for that. The competition among refiners is controlled exactly as among producers; precisely in the same manner. I would say that in a period of very low prices the refiners suffered equally with the pro- ducers. *Black faced type Indicates matter omitted, In the course of editing, from the official report. 540 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. That is, there is a sensitive touch between the two, between the crude and refined? A. Between the crude and refined, yes, sir. At an intermediate price they both succeed better; that is, if the price be large enough to be remunerative to the producer, and still large enough on the side of the consumer to make it remunerative for the refiners to induce consumption. There is and will be a point beyond which it is dangerous to- go on either side. Q. Now, one question more on that. Before this commission testimony has been given in which we find a great deal of dissatisfaction and grumb- ling on the part of the producers, the testimony going to show that the producer is the only one that is affected injuriously in the whole of this oil business; that the refiners are making money, nearly all, I understand, but the producers are the under dogs in the fight. They have to take the rates that the Standard Oil Company, and even the association of the independ- ents, put up, following the Standard as we understand it. Now, as a busi- ness proposition, Mr. Boyle, can a producer ever ask to divide a profit with a manufacturer? A. I would think not. Q. Doesn't it legitimately belong to the producers to regulate their own output, their own trade, and their own business, so that they will conserve their own profit in producing the oil, and selling it to the refiner? Can they share in any profit beyond that legitimately? A. I should think not. There has been a very constant aim to do what you say, to regulate their supplies; *there has been a constant aim to try to do that, but the business is one that is uncontrollable by reason of the new producers constantly coming in in the opening of every field. *Q. That is what I want.? A. Well, conditions change continually now. If it were possible to form a combination, as did the men who produced oil on Oil creek in 1870, when they formed their Producers' Agency, either a corporation or a limited partnership company, regularly organized for a declared purpose to retire a certain portion of the oil (a combination at that time so close as to embrace everybody in the business), the same prices might exist to-day and we might be paying the price that was current in Cincinnati in 1865 — if it were possible to do that. Producers in that case could control their output, and ask and receive anything they required for their oil. The opening of new fields, as a rule, brings in a class of new producers. Let us take, for example, the Parker's Landing field, opened entirely by what we now call tenderfeet — farmers, stock companies, persons owning farms and interests. I happened to be present during the greater part of the development of that field, and I believe I am reasonably familiar with the operations there. Q. (By Representative LIVINGSTON.) Do I understand you to say that the producers' organization is distinct from the refiners' organization? A. Yes. sir. Q. Why do not the producers refine their own oil and get rid of the refiners? A. They have attempted it on many occasions. Q. I want to know why they failed? A. Well, I will have to refer you to the officers of their association. *l refer you to your own chairman. If you press the question to him he can probably answer you. Q. Do I understand you to say that the producers are able, that they have capital and brains enough to produce the oil? A. They certainly have. Q. Do I understand you to say that they cannot refine their own oil independently of that organization? A. Well, I can answer you this way: They never have; they have attempted it and failed. Q. They have not learned how to combine? A. The failure does not seem to be due to the lack of combination. They combine readily enough. Q. (By Mr. FARQUHAR.) But their combinations never stay? A. The combinations do stay also, but it seems to have been a matter of expe- rience. Q. (By Representative LIVINGSTON.) What astonishes me is that they are laboring under a disadvantage on account of the oil refiner. Why ♦Black faced type Indicates matter omitted. In the course of editing, from the official report. PATRICK C. BOYLE. 541 do they not put up their own refineries and refine the product that they n^ake and get all there is in it? A. They do not do it; we know that. Q. (By Mr. SMYTH.) Is it not considered a separate business, the producing and refining of oil? A. It is; *one is producing and the other is manufacturing. Q. (By Representative LIVINGSTON.) What is the reason of that? That is what I am after. Why don't the producers refine and sell their oils to the consumer? That is what I want to know, because if they can help themselves they will not get much sympathy from me, and if they cannot help themselves then I have to look out for them. Vice-Chairman PHILLIPS. Can you state how they are on that point now, Mr. Boyle. The producers were never able to unite sufficiently, being scattered and unable to get together; so the refiner comes in and proceeds to establish a large refining industry so as to get the drawbacks and rebates that built up, for instance, the Standard Oil Company and the large con- cerns. They were r\e\/er able to unite sufficiently to offer the railroads a sufficient carrying trade to get the rebates that built up the monopolies in the refining interests. Is that true or not? Mr. SMYTH. Is that due to a lack of organizing ability on the part of these producers? Why did the Standard Oil promoters have more ability to organize than these independents? Vice-Chairman PHILLIPS. The refiners connected with the business, as you have already stated, Captain Smyth, are different. There are two businesses which require different character of skill and ability. The farm- ers do not organize the mills and grind out their flour, and the farmers in the South, after raising cotton, do not establish the cotton mills, and the oil prodLicers cannot very well do that. Representative LIVINGSTON. That is not a reason why they should not do it; they can do it. Vice-Chairman PHILLIPS. But there were two distinct industries and I think Mr. Boyle will bear me out, that when the refiners got together, they offered a large amount of oil to transport to the seaboard; and in the early days there was a very heavy rebate given to the refiners; so much so that others could not organize against them. Representative LIVINGSTON. Right there a question. Vice-Chairman PHILLIPS. I think Mr. Boyle will bear me out that there were in the early days very large rebates given to the refiners. Representative LIVINGSTON. If one-third of the producers could organ- ize, could they not control it? I know that if one-third of the cotton raisers would organize they could control the price of every bale of cotton. I know that is true of wheat; *if one-third of the wheat raisers organized they could control the price of wheat. Now, could not one-third of the producers of oil organize and thereby get rid of this encumbrance and handicap? Vice-Chairman PHILLIPS. They could organize and establish their man- ufactories, but the manufacturing talent and experience, and the merchan- dising talent and experience, may be wanting among the producers. Q. (By Representative LIVINGSTON.) Would the railroads stand in the way of their organization? Is that one of the impediments? A. I agree with the chairman in what he says about the early conditions of the refin- ing oil business. The refiners were able to offer inducements to the rail- roads in the way of very large freight shipments, and obtained some con- cessions which enabled them to tide over a time when they needed assist- ance very much. Q. What I wanted to draw out was whether the railroads or any other combinations stand in the way of these producers. *That is what I am try- ing to prove now. I don't know why they did not organize. I cannot tell. If the railroad corporations, or any other body of men who have franchises, stand in the way of their getting a legitimate profit from their oil. this com- mission ought to know it. A. I am leading up to that point in discussing the beginning of the existing organization of the producers. *! am trying to trace it up and I started yesterday and will now continue on. ♦Black faced type iiidicixtos matter omitted, in the course of edithig, from the ■offlcial report. 542 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Q. Well, then, you will show that later? A. Yes, sir; I will show where they have continued to attempt it and the reasons why they failed. They are still trying to do it. You have not admitted failure, have you? (Ad- dressing the chairman.) Q. (By Vice-Chairman PHILLIPS.) Now, one other question. Is it not a matter of sworn evidence, Mr. Boyle, by perhaps the president of the Penn- sylvania Railroad Company, that the Standard Oil Company received over $11,000,000 in rebates in about 14 months in the early period? A. I do not so understand it, Mr. Chairman. I say there was certain testimony given by the present president of the Pennsylvania Railroad and certain figures were given, and certain deductions were made from those figures by another person who did not testify, and the deductions of this person are given as the testimony of the president. Q. (By Vice-Chairman PHILLIPS.) I think there is a document lying there. A. Well. I am referring to that document, and my remarks apply to it. The president only testified to figures and rates. He gave no sums; there is nothing stated in that testimony about any sums of money that were received. , Q. (By Vice-Chairman PHILLIPS.) Well, they paid rebates to the amount of over $10,000,000 in 14 or 16 months? A. He did not say that; the president did not so testify. Q. (By Vice-chairman PHILLIPS ) My recollection may not be correct about the figures, but it is in that volume. A. It is in that volume, and Mr. Lewis Emery, .Jr., testified to that and drew his deductions from testimony. Q. (By Vice-chairman PHILLIPS.) Is it not Mr. Cassatt's own testi- mony? A. No. he goes further than Mr. Cassatt; *he includes all the rail- roads. Mr. Cassatt testifies to one road, the operations of his own road, and Mr. Emery takes it for granted that the three other roads within the pool at that time conceded the same rate, and upon this, taking the entire produc- tion for the period of 17 1? months, he takes the total production for that period, and during this period he was shipping by his own pipe lines and by w^ater to the seaboard as much as 2,000 barrels a day, and he includes that. He takes in the entire production, and his own, too, which we know did not go over any railroad. Those roads were from the producing regions to the seaboard. There were shipments by water and several shipments from Huntington over the Chesapeake & Ohio to Norfolk. Mr. Phillips asked Professor Jenks to refer to Mr. Cassatt's testimony, but other commissioners objected that Mr. Boyle could know of the matter being discussed only as a reader of the records and that other witnesses should be interrogated on that question. The witness read what was termed a "practical exhibit." issued by the Petroleum Producers' Agency of the Petroleum Producers' Association, which v.-as created in 1S69 and 1870 and which proposed less production to get higher prices for oil and showed that a small production would yield more profit than a large production, because high prices would rule in the first instance and low prices in the latter case, Mr. Boyle read the circular of the Petroleum Producers' Association of Pennsylvania, dated Reno, Pa., April 25, 1870, and signed by C. V. Culver, secretary, giving the purposes and terms on which this association was to be formed. The circular stated that the objects of the association were to be the collection and dissemination of valuable statistics and information respecting the production of petroleum, the securing of the most advantage- ous facilities for transportation, the protection of the producing interests against imfriendly legislation and against all unjust exactions by whatever means, threatened or attempted, and the general improvement of the meth- ods of producing and handling oil. Any person actually engaged in the production of crude petroleum could become a member of the association, with the consent of two-thirds of the managers present at a regular meeting of the board and subscril)ing to the constitution and paying a membership fee of $5. It stated that a special canvasser of ability and integrity was to be employed to get the statistics in regard to production at the wells, the •Black faced type indicate.'^ matter omitted, in the course of editing, from the official report. PATRICK C. BOYLE. 543 number of barrels of oil stored in iron tankage, local shipments by river and railroad, the stocks of oil in hands of refiners, etc. The WITNESS. Now. the purpose of the agency formed by the Petro- leum Producers' Association, which was created in 1869 and 1870. is stated here in a few words, in what is called a "practical exhibit." (Reading.) "The establishment of the Petroleum Producers' Agency is expected to accomplish, among others, these important things: "1. It will prevent unwise competition between producer and sellers by taking advantage of which, buyers contrive to depress prices. "2. It will, as a result, secure a fair price for whatever amount of oil the world requires — unaffected by the fact that there is more produced than the consumption demands. "3. The surplus oil being kept in the control of the agency, it cannot be used by any one to manipulate or depress the market prices. "4. The surplus oil placed in tank exactly represents the over-produc- tion and unerringly indicates its extent and increase." Right there, they could make more money by holding the oil. than they could by putting it on the market. Mr. FARQUHAR. That is right; that was the means of raising the prices to the consumer. The WITNESS. (Reading.) "5. No concealment or misrepresentation can be made of the stock or over-production to unduly affect prices. "6. Every producer, being the holder of a tank receipt representing his share of the surplus oil, is doubly interested in restraining over-production — because he suffers both from the inability to realize upon his receipt for oil in tank and from having to deduct from the value of his production the value of that required to be placed in tank and the cost of tanking it. "7. The effect of competition and of the lack of it in buying and selling crude oil is shown by the fact that with an established demand for 16.000 barrels of oil a day, and a production of the same amount, the advantages of the buyers and sellers are so nearly balanced that $5 a barrel will be freely paid by the buyer and accepted by the seller — yielding $80,000 a day for the gross production. But if the production should fall off, say 1,000 barrels a day, competition between buyers would exist to such an extent that $6 would be just as readily paid and be readily accepted, making $90,000 for the whole. If the production should still further decrease, so as not to exceed 14,000 barrels a day, the price would promptly advance to over $7, and realize at least $100,000 for the total production." Q. (By Representative LIVINGSTON.) Just a little explanation right there. W^ould that be independent of the surplus carried at the time? Would these prices vary, notwithstanding the surplus on hand? A. The surplus would be retired and kept out of the way. or the markets advanced. Q. I understand your answer is yes? A. Yes, sir. (Reading.) "If, however, the advantage were to turn the other way, as would soon be the case, with such stimulating prices, and the production should reach, say 17,000 barrels, exceeding the demand by 1,000 barrels, the competition would be between the sellers instead of the buyers, and the price would decline to $4 a barrel, making $68,000 for the daily production; with less readiness, 18.000 barrels would bring at most $.3. .50 per barrel, or $63,000 in the aggregate, while 19,000 barrels would hardly find purchasers at $3 per barrel, or $57,000 for the daily product, and a production of 20.000 barrels ■would not command $2.50 per barrel, or less than half the amount that a production of 14.000 barrels would readily command, and apparent perma- nent production in excess of 20,000 barrels would so thoroughly demoralize the market as to make petroleum without a reliable quotation." Twenty thousand barrels then was considered a very extravagant esti- mate of the production. If it ever reached that the business would not only be a losing one, but there would be no market whatever. (Reading.) "The logic of this undeniably correct statement has a thousand times suggested that it would be a profitable speculation to buy the entire produc- tion at the price which is current when production is largely in excess of demand, and, reserving only so much as the market would actually require. 544 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. to set fire to the remainder, put it out of existence, and thereby realize twice as much from the remainder as the whole cost." Q. (By Representative LIVINGSTON.) That would be justifiable, would it? A. That is what they say here. (Reading.) "Wanton as the destruction of such valuable material would be, but one consideration has prevented its accomplishment long ago as a speculation; that is, the great advance in price which would naturally result from its consummation would so stimulate production as to entail upon the enter- prising speculator the possibility of loss by a second stock larger than the first. "There is, however, a common sense method of accomplishing a better result by better means. The oil is too valuable to destroy or waste; and to withdraw the supply from competition with the amount which the world requires, would enable the producer to realize a fair price for what is sold, and retain the surplus without other cost than that of putting it in tank. But who shall do this? If any individual, or firm, or company, were to undertake it, they would find their resources, however large, eventually ex- hausted, only to make a market for an enlarged production, stimulated by their enterprise. "There is but one way to secure a community of interest among pro- ducers, by affording them the advantages of the good prices resulting from selling through our agency without competition and compelling them to bear uniformly the burdens and losses resulting from excessive over-produc- tion. These ends are sought to be accomplished through the agency, which undertakes to receive all the oil produced, to pay a fair price for what the world will consume and to tank the surplus at the cost of the producer for his benefit. "The following table shows the practical result of selling 16,000 barrels of crude oil a day at $5 a barrel and storing the excess at the expense of the producer — estimating the cost of tankage at $1 per barrel. "Observe that if the supply is not in excess of the demand, the full market price will be paid for the entire production as fast as delivered, so that there would be no delay in making payment and no tanking of sur- plus oil. "The table is only to show what would be the result to the producer, the demand being for 16,000 barrels a day and the production steadily rising from 17.000 to 24,000 barrels a day. "The operation of the plan is to secure the producer a minimum price of $5 a barrel for all the oil which can be sold — deducting therefrom only the commission for selling the oil and the cost of tanking the surplus. For his interest in the surplus oil in store and in the tankage, he has a receipt estimated in the table at a valuation of $3 a barrel, at which valuation it is assumed the receipt can be readily sold, if the producer purposes to realize upon his entire production rather than wait for the surplus oil to be market- ed at a higher rate. "The table shows at a glance what the producer will realize from the advance made by the agency, what the proceeds of the sale of oil in addition to the advance and what his interests in the stored oil is worth at the esti- mated value. The right hand column shows what he may realize per barrel at once on his entire production by selling his interest in the tanked oil with the amount marketed. "The advantage to producers — resulting from the establishment of the agency by which the rates indicated can be realized from sales through it — contrasted with sales made in competition between sellers, is so marked and decided that it needs only the simple exhibit to prove that by the opera- tion of the agency at least from $1 to $2 a barrel upon the entire production may be saved to the producers at large — amounting in the aggregate to from $6,000,000 to $12,000,000 a year." PATRICK C. BOYLE. 545 Dally Pay- ments $5 per barrel. 17,000 $.51,000 18,000 rA (m ^^ ■= •se: 02 ftt. "2 as 19, 000 20,000 21,000 22,000 23,000 24,000 .-,7, IXX) m, a)0 m, (XX) (j(i, 000 (iy.ooo 72,000 $34,000 $80 000 36,000 I SO, 000 3S, 000 40,000 42,000 44,000 40,000 48,000 80.000 80.000 80, 000 80, 000 80,000 80,000 >^n «© d 1. "3 1!15 3g is ^2 ^%, >.cj -.§ a 5£ irTi h- .r: CD <;- o s o 5? 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 $1,000 $28,000 2,000 I 24,000 3,0(X) 4,000 5,000 t),000 7,000 8,000 20,000 1(5,000 12,000 8, OCX) 4,000 $1.()0 .$4.0.') 50. 35 1.33 4.33 .67 1.05 4.05 .95 .80 3.80 1.20 .58 3.58 1.42 .37 3.37 1.63 .18 3.18 1.82 .00 3.00 2.00 .60 .71 ifl^ 1.00 $4,823^ 4.52>| 4.40 4.29 4.18>^ 4.09 4.00 Q. (By Vice-chairman PHILLIPS.) Was not that a wild, visionary scheme? Did it cause a ripple in the oil region at the time it was presented? I think there are oil producers that never saw that or had any knowledge of it. *lt (did not have any effect, did it, in any manner, upon the oil fields at the time that it was presented? A. I am not prepared to agree with you in that statement, :Mr. Chairman. It seems to me there was a very consid- erable discussion of it in the newspapers, and it was talked over in the various towns of the region. A fund was subscribed for it at the time, and, while inoperative, it was owing to the great production in Butler county. Had conditions remained as they were when this was contemplated, it would undoubtedly have gone into effect. *lt was the great production in Butler county that discouraged this movement. Q. (By Vice-chairman PHILLIPS.) But it was entirely ineffective and inoperative and was not received generally by the producers? A. It was inoperative. Here is substantially the same plan, *differing only in degree, adopted a few years later by the Petroleum Producers' Association. This went into effect. This one was effective and agencies were established in the various points in the oil regions for the purchase of oil. Oil was bought from the producers and sold substantially on the same plan for the purpose of retiring oil, *with the additional purpose of taking oil away from the existing or competing companies. This is the report of the committee on organization of the Petroleum Producers' Association, Limited, adopted by the general council of the Petroleum Producers' Union, of which Mr. B. B. Campbell was president. This was a partnership affair. Q. (By Vice-Chairman PHILLIPS.) Did that have any material effect on the prices, either to the producers or consumers? A. I cannot say that it did; no. It was an effort, Mr. Chairman, in the direction of the curtail- ment of the production, made necessary because of over-production at that time — *from the surplus energy of the producers who were getting more oil than the world consumed. An address by the general council of the Petro- leum Producers' Union, of the same date, states the reasons for the existing depreciation, and urges the producers to join the union and to subscribe to it, and to this union $1,000,000 was subscribed. t Q. (By Vice-chairman PHILLIPS.) Was it ever paid in? A. Well, we have only reports of the subscriptions and the acknowledgment of the same, and the fact that it was put into practical operation. Agencies were estab- lished at various points in the oil country and they set up opposition buyers. Q. (By Vice-Chairman PHILLIPS.) Did it have any special effect on the trade? A. No noticeable effect on the trade and it was very shortly *Black faced type indicates matter omitted, in the course of editing, from the official report. tin the official report this answer is ?lven in the following form: "I cannot say that it did. But it was an effort for the improvpinent of trade conditions at that time. An address by the general council of the Petroleum Pro- ducers' Union of the same date states the reasons for the existing di^pression and Lrges producers to .ioin the union. To this nio\-ement $1,000.0(X) was subscribed." 35 546 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. abandoned, but it was an outgrowth of the movement inaugurated by David. Armstrong in 1877 and 1878 and 1879. Ben Campbell succeeded to the chair- manship. The witness read a drilling contract which was adopted by the Petro- leum Producers' Association and was used in connection with a movement in the oil regions in 1887 and 1888 for the restriction of operations in interior drilling. After providing that wells should not be drilled closer together than a prescribed distance, the contract in part is as follows: '•Whereas, abundant territory as well as our own experience teaches us that the price of any commodity is mainly dependent upon the relatioa between supply and demand, and that petroleum is no exception to this rule; "And whereas, the excess of visible supply of stocks of petroleum, fur- nishing an apparent supply largely in advance of the immediate demand, has been and still is the most depressing circumstance which affects the petro- leum industry; "And whereas, the effect of our 'shut-in' of production for eight months^ while not as advantageous as we had hoped, has nevertheless put the price on a higher plane than that upon which it had previously rested, and. as we believe, has prevented the commodity from sinking to even lower prices than we had experience of in recent years, and we had therefore to limit the production by a moderate restraint of drilling, as demanded by the interests of the producers of petroleum until the stocks are reduced to an amount consistent with the healthy relation between supply and demand, and as a result the receipt of remunerative prices to the producers; '"Now, therefore, we, the undersigned, producers of petroleum, do here- by agree to and with each other that we will not drill any wells for the production of petroleum on any farm or tract of land owned by us, except along or adjacent to exterior boundary lines of our respective properties, to a greater extent, exclusive of boundary-line wells, than one producing well for each 20 acres and each fractional part of 20 acres; provided that additional wells may be drilled with the consent of the local assembly of the Producers' Protective Association for the district in which the particular property may be situated and of the general executive board of said Pro- ducers' Association, or in case such consent cannot be obtained, upon the allowance of the arbitrators, or a majority of them, one to be chosen by the person or persons desiring to drill, one to be chosen by the local assem- bly of the Producers' Protective Association for the district in which such property is situated, and the third by the two so chosen. "And we further respectively agree that all conveyances made by any of us of oil territory during the continuance of this contract shall be made expressly subject to all the conditions of this agreement. "This agreement shall continue in force until the first day of May, 1889, but may be abrogated before that date by the votes of a majority of the general assembly of the Producers' Protective Association, and such general assembly shall be convened to consider the question of abrogation upon the demand of one-third of the local assemblies of said association." The witness said the shut-down movement of 1887 and 1888. in which the Standard Oil Company co-operated with the producers and did much to make the movement a success, was no doubt the most wholly successful action ever inaugurated by the producers. This movement had its incep- tion among some of the heavy operators in the Washington county field and it extended over the whole region and embraced all but a very few of the operators. Its scope was wide and its effects were greater than any like movement. The mutuality of the interest among all branches of the trade rendered its success certain. The producing, refining, land and working interests all co-operated to make the movement a success and enhance the value of the product of the producers. At the inception of the movement the reduction of stocks was going on quite rapidly and the consumption was 8,000 barrels a day over the production, so that the conditions were favor- able for the movement. The WITNESS. On August 2, 1887, at Bradford, there was a meeting of representative producers, at the invitation of H. L. Taylor, of Buffalo, at which time it was developed that the organization pending was so near completion as to insure a successful undertaking of the work mapped out. PATRICK C. BOYLE. 547 and the meeting decided to postpone action for a short time. About the same time the Producers' Protective Association held a few secret meetings in Bradford, in the interest of the shut-down. The movement became a subject of much discussion in the newspapers, and its probable outcome was very thoroughly discussed. The sensational press got in its work on this movement early in the game, and among other things given publicity in connection with the shut-down movement was a series of propositions which implied that the sole object of the movement was a battle against the Standard Oil Company, which allegations were promptly denied by Mr. Kirk. The Derrick criticised the action of *Thomas Phillips, in Butler county, who was alleged to be hustling to get down all the holes he could while the preliminaries of the shut-down were being arranged. In Butler county, in the Reibold pool, Phillips had two wells doing 2,900 barrels a day. The Derrick made a couple of attempts to interview Mr. Phillips on the subject of the shut-down, but he maintained a strict silence upon the subject. Early in September there were meetings of the Producers' Protective Association at Bradford and a conference of large producers at Pittsburg, which included D. O'Day, of the National Transit Company. The Phillips operations in Butler attracted special attention, and a special to the Derrick from Butler asserted that Mr. Phillips was a shut-down man in name only.f The leading producers about the middle of September, had another conference at Pitts- burg with officials of the Standard, presumably on matters connected with the shut-down movement. It was learned fi'om Washington county that McKeown and Willets, two of the largest operators in the field, had refused to have anything to do with the movement, contending against the shut- down movement as a means of bettering the conditions of the trade, which had been depressed from over-production for 10 years. Some persons asserted that the shut-down movement would have the effect of bringing in new producers, with the result of defeating the very object of the project. The discussion in the Derrick of the shut-down movement covered a wide scope, and many diversified opinions as to how to better conditions were expressed, but the general trend of opinion was largely in favor of the shut- down. Phillips' production from three wells in the Reibold pool amounted then to 5,000 barrels daily. Q. (By Vice-Chairman PHILLIPS.) Was not that more properly called the Glade Run? A. Yes, sir; Reibold was the railway station. I will change that to Glade Run. The WITNESS. On September 29, a meeting of the Producers' Protec- tive Association was held at Emlenton, at which matters pertaining to the shut-down were considered but not made public. At this meeting and among Emlenton producers it is said there was a decided change of sentiment toward the Standard Oil Company, it being asserted that but for the Stand- ard, Pennsylvania oil would be selling at 50 cents per barrel. On October 2, Phillips't four wells at Reibold were making 5,400 barrels a day, which might be called a pretty strong showing for a man working for the success of a shut-down movement. *There was in Butler county a decided sentiment in favor of the shut-down movement, and a session of the executive com- mittee of the Producers' Protective Association was held there to take some action and consider the situation in Butler. Q. (By Vice-Chairman PHILLIPS.) Now, Mr. Boyle, allow a correction there, please, as there is a name mentioned there. A. I want to take that name out; it was not intended to put it in. ♦Black faced type indicates matter omitted, in the course of editing-, from the official report. rAs an act of courtesy to the commission Mr. Phillips' name was eliminated from the official report, Mr. Boyle sugsesUns that the name had crept in his notes in connection with oil production by an inadvertence. tMr. Phillips' name was omitted from the official report. 548 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Q. (By Vice-chairman PHILLIPS.) That is all right. A. It was unin- tentional, LUt the facts were that these wells were drilling at the time. It was thoroughly understood by these persons at that time. They were finished and were shut in, but there was a violation of the agreement at that time, against which I protested.! *Q. (By Representative LIVINGSTON.) What is it that you are strik- ing out — Mr. Phillips' wells? Vice-Chairman PHILLIPS. In connection with the statement that they were not shut down at the time of the movement, which is not a fact. The WITNESS. I wish to state in this connection — and aside from my notes — that there was no intention to make any such insinuation, but that it was thoroughly understood at the time. Vice-Chairman PHILLIPS. I was in the movement from the beginning and my actions were thoroughly understood by all the people at that time. The WITNESS. There was no intention to cast any reflection upon Mr. Phillips, and at the time to which this statement refers the movement had not taken effect. Vice-chairman PHILLIPS. No. The WITNESS. It was just in the period of its inception at that time. Representative LIVINGSTON. That takes out the pith of the business, as far as that is concerned. The WITNESS. It is not out, Mr. Livingston. The moral effect of the drilling of the Phillips gushers at Reibold was very bad and rendered more difficult the work of the committee having in charge the work in that part of the field. On October 14, another gusher was added to the Phillips group, bringing his total production from five wells up to 6,300 barrels a day, or about one-ninth of the total daily production. In the middle of October, N. F. Clark, one of the leaders in the shut-down movement, stated that 80 per cent, of the producers had joined the Pro- ducers' Protective Association and were ready to get into the shut-down. He also found that more than two-thirds of the oil was produced by the small producers. During the month of October the executive committee of the Producers' Protective Association made efforts to get all the producers of oil into line, but still Mr. Phillips't gushers continued to arrive on sched- ule time at Reibold. On October 20 he added another to his list, having then a daily production of 5,520 barrels, from six wells. The first authentic news that the shut-down would be a success came out on October 23, when it was learned that the movement would go into effect on November 1, and that its essential features were as follows: The shut-down to include the shutting in of not less than one-third of the production of the operators in the agreement, the cessation of drilling operations and the general co-op- eration of the producing element. The Standard Oil Company entered into the agreement to help make it successful. The company set aside 6.000,000 barrels of oil, upon which it was proposed to donate to the producers the profits on 5,000,000 barrels of this oil — that is the advance above 62 cents- while the profits on the other 1,000,000 barrels were to accrue to the oil well workers who would be thrown out of work by the shut-in and shut- dovv'n. This result was arrived at only after prolonged and energetic nego- tiations on the part of the producers, but once all the elements of the busi- ness were combined it was practically assured that the movement would be successful. This looked like a one-sided proposition wherein the Standard was not likely to be much of a winner, but that being the agreement brought home by the producers' committee, they returned to the region with the sole idea of organizing the producers and making a success of the move- ment. How well they succeeded in handling the question is best evidenced by the fact that there were then 14,000 producers, and that they succeeded in enlisting 85 per cent, of the number in the movement. 'Black faced type indicates matter omitted, in the course of editing, from the official report. jThis part of Mr. Boyle's answer appears in the official report in the following form: "There is no intention of stating that his actions wtre contrary to contract; everything was open and understood." tMi-. Phillips' name does not appear in the official report. PATRICK C. BOYLE. 549 The shut-down commenced on November 1, 1887, and continued until November 1 of the year following, both sides to the agreement faithfully carrying out every condition. The Producers' Protective Association con- tinued their organization, which at the start was secret. I think the restric- tion extended so far that no one holding an office in the association was allowed to be known by name outside of the organization itself. Altogether it was one of the closest corporations ever organized for business purposes. They continued to hold their meetings and to discuss the conditions of the trade, which were not permanently bettered by this shut-in movement, owing to the very large developments in the McDonald field within two years of the termination of the shut-down agreement, where an enormous' production took place in a very short time. The Producers' Protective Association organized business associations, which were fostered by them. The first of these was the Producers' Oil Company, Limited, capitalized at $600,000, which was absorbed by the Pro- ducers & Refiners' Oil Company, capitalized at $2.50,000, the money sub- scribed for the latter having been invested in pipe lines furnishing an outlet from the McDonald field. The Producers & Refiners' Oil Company had also been organized by the Producers' Protective Association and still later, about 1894, an attempt was made to combine it with the United States Pipe Line Company, which had been organized with a capital of $1,000,000. The attempt to consolidate, combine or absorb one or the other of these lines at that time failed through the activity of one of their own stockholdors, who %vent into court and prevented this consolidation. The United States Pipe Line proposed to buy, with the consent of the Producers' Oil Company, Limited, the property of the Producers & Refiners' Oil Company, the pay- ment to be made in the stock of the United States Pipe liine Company, it having been proposed to increape the stock of that company for that pur- pose from $1,000,000 to $2,000,000. The WITNESS. That being the case, another company was formed, known as the Pure Oil Company. The Pure Oil Company was formed on or about the 24th of January, 189.5, at a meeting of producers at Butler. Pa. Subscriptions were received to the amount of about $50,000 toward the organization of what was called the Pure Oil Company. The stated purpose of this company was to market the products of the refineries and pipe lines. It was to be the commercial organization of the trust, then in process of formation, and it has since been sought by a reorganization of that concern, which took place about 1897 under the laws of New Jersey. The Pure Oil Trust was reorganized under the laws of New Jersey in 1897. Q. (By Vice-chairman PHILLIPS.) Why do you call the Pure Oil Com- pany a trust? Was not that a straight corporation, as the Standard and others have since been organized? A. I will give you my authority, Mr. David Kirk, the first president: he calls it a trust and it is so called here. It is cited as a trust agreement *in the exhibit which is here. Q. (By Vice-Chairman PHILLIPS.) It was organized under the laws of the State of New Jersey as a corporation? A. Mr. Kirk calls it a trust. Q. (By Vice-chairman PHILLIPS.) But does the fact that :Mr. Kirk calls it a trust make it a trust? A. I think the organization itself makes it a trust by the appointment of trustees for the conduct of the business. Q. (By Vice-Chairman PHILLIPS.) It is only a voting trust, and have not voting trusts existed in all ages, in Europe as well as in America — *vot- ing trusts to vote the stock. A. I am not contending against the legality of the trust, Mr. Chairman. It is merely a statement of fact. *Q. (By Vice-chairman PHILLIPS.) Yes; we want the facts. A. I am merely making a statement of facts, based upon information obtained from Mr. David Kirk. *Representative LIVINGSTON. Well, call It by some other name and go on. Mr. SMYTH. Do you not think we are losing a great deal of valuable time by these Interruptions? VIce-Chairman PHILLIPS. Yes, but we want correct his.tory, if it is possible to have it. *P.lack faced type indicates matter omitted, In the course of editing, from the official report. 550 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *The WITNESS. You will get the history correct, ail right. Mr. SMYTH. Still we can make the corrections afterwards, it seems to me, by records or in some other way. Mr. BOYLE. (Referring to the Pure Oil Trust.) The reorganization tooli place at Taylor's Hotel, in Jersey City, in 1897, and the powers of the *octopus grewf from that moment. They have attempted to take in all the corporations combined with them into one concern. The attempt was made several times, as I understand it, to absorb all the allied interests in which the Producers' Protective Association was concerned and they are still attempting it, with a very considerable show of success, as 1 am informed. Mr. Boyle read from the trust agreement under which the Pure Oil Company was formed (which appears in full in Chapter V, page 55, as follows: "Fourth — This agreement may be cancelled and the trust hereby created dissolved, only by the winding up of the Pure Oil Company, or by the con- sent, in writing, duly executed, of the equitable owners of four-fifths of the shares held in trust hereunder, and of four-fifths of all the other shares of the company, after providing in full for the redemption or purchase at $110 per share, in cash, of all the preferred and common shares of the company at the time outstanding." He said the purpose of the above provision was to make the trust per- petual, but if it should be dissolved, the shares originally costing $5 were to be purchased at $110 each. Q. (By Vice-Chairman PHILLIPS.) I think perhaps that is a mistake, is it not? A. Well, it is here, Mr. Chairman. *Q. (By Vice-chairman PHILLIPS.) The actual shares themselves? A. It is a part of Mr. Kirk's exhibit. Q. (By Vice-chairman PHILLIPS.) Isn't it 10 per cent, more than they cost? Q. (By Representative LIVINGSTON.) Do you mean to say that A and B, two members of the company, or trustees perhaps, in the trust, turn in $110 for their own stock or outstanding stock? A. It says, outstanding on the dissolution. It means the redemption of all stock at $110, the original cost of the stock being $5. Q. (By Vice-chairman PHILLIPS.) Does not that mean 10 per cent? A. I am only reading what it states. *lt is a part of the exhibit. Q. (By Vice-chairman PHILLIPS.) Is that a certified copy? A. Oh, no, no. It is a part of the records in the courts of Allegheny county. The copy is taken from the court record of Allegheny county. *Q. (By Vice-Chairman PHILLIPS.) I presume it is correct. A. It is a suit entered by Mr. Kirk, the retiring president.t Q. (By Representative LIVINGSTON.) What is the condition of that company now? A. It is in existence and it is largely under the control of this $3,000,000 corporation. There is an authorized capital here of $10,000,- 000, with possibly $400,000 of it paid in. and it is substantially controlling other organizations and combinations, in which upwards of $3,000,000 are invested. *Q. It is a live corporation? A. Oh, yes, sir. The fact that the voting powers of the five trustees of the Pure Oil Trust was "for the election of directors or for any other purpose;" was brought out in the testimony. The witness' statement that there were five trustees for this trust represented the condition of affairs in 1897, the num- ber of trustees having since been increased. Q. (By Mr. KENNEDY.) What are the voting powers of the five trus- tees of this organization? A. As stated there, to vote all the stock. Q. To vote all the stock? A. To vote all the stock represented in the trust, yes, sir; *for the election of directors. ♦Black faced type indicates matter omitted, in the course of editing, from the cfficial report. IThe words "octopus grew" do not appear in the official report, the words "or- ganization increased" being in their place. iThe bill in equity filed by Mr. David Kirk is given 'n full in Chapter V, page 145. PATRICK C. BOYLE. 551 Q. Not for the transaction of other business? A. For the election of directors. It is stated here in the second paragraph: (Reading.) "At all meetings of the company for the election of directors, or for any other purpose, to cast the entire number of votes which, as holders of said shares, they would be entitled to cast." Q. (By Representative LIVINGSTON.) *Does that occur in the original — for any other purpose? This is a true copy? A. This is a true copy, and the original may be obtained from the records of the court in Pittsburg. *Q. There is no necessity of making a specification there at all; for that and "any other purpose" means for all purposes. You submit simply this agreement and not the whole pamphlet? A. I submit the whole pamph- let as a part of the history of the organization of the "Pure Oil Trust." Q. (By Mr. SMYTH.) Your opinion is, then, that these five trustees controlled all these companies that are represented in the Pure Oil Com- pany? A. In the Pure Oil movement, it has come to be known now as the Pure Oil movement.t Q. (By Vice-Chairman PHILLIPS.) There are a much larger number than five trustees? *A. I should say so. Q. (By Vice-chairman PHILLIPS.) That is a mistake then? A. It is necessary to say that there have been some changes in the organization since then, and I am informed that at a meeting not long ago in Jersey City an attempt was made to re-construct the by-laws, change the by-laws, and in this change of by-laws they may have restricted the voting directly. Q. (By Vice-Chairman PHILLIPS.) This represents the condition of affairs existing in 1897 ?:■: A. Yes, sir. Mr. Boyle submitted copies of the by-laws and rules and regulations of the Pure Oil Trust, as follows: EXHIBIT A. By-laws and rules and regulations of the Pure Oil Trust. Incorporated November S, 1S95. Capital, $1,000,000. The objects of the company are to prcduce, purchase, transport, store and sell crude petroleum and its products and to protect and to aid other companies and par- ties in the production, transportation, manufacture, storage and sale of the same. The corporation may acquire, hold, maintain and dispose of any stocks, shares, bonds and other interests in or issued by the corporation, joint stock or limited partnership association ei. gaged in or aiding or promoting the producing, storing, transport- ing, refining and selling of crude petroleum or its products, or in any business Incident thereto. BY-LAWS. ARTICLE I. Meetings of Shareholders. Section 1. The annual meeting of the shareholders shall be held at the principal cfTice of the company on the fourth Wednesday of January in each year, commenc- ing at 10 o'clock a m., standard time. Notice of the annual meeting of shareholders shall be by written or printed let- ter addressed by the secretary to each shareholder at his or her last known place of residence, and mailed 10 days prior to the time fixed for holding such annual meeting. Sec. 2. Special meetings of the shareholders may be called whenever it shall be deemed advisable by the board of directors, or by the president upon request, in writing, signed by the shareholders owning collectively not less than one-third of the shares of the company. Notice of special meetings shall be given in the same way as the notices of annual meetings. Proxies. Sec. 3. Shareholders may be represented at any meetings of the shareholders by proxy, duly authorized In writing, executed within 30 days next preceding the meeting. . *Black faced type indicates matter omitted, in the course of editing, from the official report. tThis question and answer appear in the official report in the following form: "Q. Your opinion is that the company controls all these companies? A. Sub- stantially; it has come to be known as the Pure Oil movement." $In the official report this question is made a part of Mr. Boyle's answer. 552 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Quorum. Sec. 4. The legal representatives of n. jTiajority of all the shares of the com- pany shall constitute a quorum at any meeting of the shareholders; and without a quorum being present or represented by proxy no business shall be transacted or election held, but a less number may adjourn from time to time until a quorum be present. Voting. Sec. 5. At meetings of shareholders, general or special, all votes upon disputfd questions shall be by ballot, if demanded by any shareholder present, and all votes by ballot shall be de'termined by the number of shares represented by the respec- tive votes cast. At all meetings of shareholders for the election of directors each shareholder shall be entitled to cast as many votes as he has shares of the company standing to his name on the books of the company. The election shall be by ballot, and each ballot shall have endorsed thereon the name of the person casting the same and the number of shares represented thereby. Vacancies. Sec. 6. In case of death, resignation or removal of any director, the vacancy shall be filled by the remaining directors. Tellers. Sec. 7. The directors shall appoint two shareholders as tellers to conduct the election and to certify the result, in writing, to the partjes elected and to the presi- dent and secretary of the company. In case of the directors failing to so appoint, the shareholders present shall choose two tellers to conduct the election. The secretary of the' company shall furnish the tellers, for their guidance in conducting the election, a list of shareholders, showing the number of shares standing in the name of each on the books of the company, authenticated by the seal of the company. Time of Election and Term of Office. Sec. 8. The polls shall be open from 2 to 3 o'clock p. m. The terms of office of directors shall commence at noon on the first AV'ednesday after their election at the annual meeting of stockholders and continue until their successors are duly elected and seated. ARTICLE II. Directors — Meetings. Sec. 1. The board of directors shall fix the time and place for holding its meetings. Special meetings of the board may be held at any time on the call of the presi- dent or any two directors, after due notice given to each of the directors. Election of Officers. ' Sec. 2. At the first meeting after their election the directors shall organize by electing from their number a president and a vice-president to serve until their successors are qualified, and appo'nting a secretary and a treasurer to serve during the pleasure of the board. Quorum. Sec. 3. A majority of the directors shall constitute a quorum at any meeting of the board, and no business shall be transacted by the board without a quorum being present. Salaries. Sec. 4. The salary of the president and vice-president shall be fixed by vote cf the stockholders. Executive Committee. Sec. 5. For the more prompt and efficient management of the affairs of thg company there shall be an executive committee of the board, consisting of the president, vice-president and three other oirectors, who shall be appointed by and hold office during the pleasure of the board. In the intervals between the meet- ings of the board of directors its powers and duties shall devolve upon and be exercised by the executive committee, subject to the approval of the board at its next regular meeting. The proceedings of the executive committee shall be duly recorded in the same manner as the regular proceedings of the board of directors. A majority of the executive committee shall constitute a quorum. In case of disagreement of the executive committee on any subject the matter shall be referred to the board of directors. Minutes. Sec. G. The board of directors shall cause to be kept a complete record of their official proceedings and acts of the proceedings of all shareholders' meetings; present to the shareholders at the annual meeting a statement of the assets and liabilitiis of the company and of the condition of its affairs generally. PATRICK C. BOYLE. 553 ARTICLE III. Powers and Duties of Officers— President. Sec. 1. It shall be the duty of the president to preside at all meetings of the board of directors, to sign all certificates of stock and warrants for the payment of money ordered by the board of directors, and such other papers as he may be ordered by the board of directors to execute on behalf of the company. In case of the absence or inability of the president to act, the vice-president shall be invested with all the powers and shall perform all the duties of president. In case of absence or inability to act of both president and vice-president, the board of managers may appoint one of their number president pro tem., wlio shall during such absence or inability perform all the duties of president. Secretary. Sec. 2. The secretary sliall keep tiie minutes of the meetings of the board of directors in a proper book provided for that purpose; attend to the giving and pub- lication of all notices of the company, unless otherwise provided for by the board of directors; have the custody of the seal of the company and affix same to all cer- tificates of stock and such other papers as the directors may order; countersign all warrants on the treasury for the payment of money which shall have been previously signed by the president as authorized by the board of directors; attend to such correspondence as shall be assigned to him; act as secretary of all stand- ing committees of the board, and shall in general, under the direction of the board of directors, perform all the duties incident to the office of secretary of tlie com- pany. Treasurer. Sec. 3. It shall be the duty of the treasurer of the company to receive and de- posit or hold and pay, as the board of directors may order, all funds resulting from the sale of shares or any property of the company; and shall sign all stock certi- ficates and obligations of the company created by special order of the board of directors. The treasurer shall give bond for the faithful discharge of his duties in such amount and with such security as the ,1irectcrs may determine. RULES AND REGULATIONS. 1. The business of the company shall be the producing, purchasing, trans- porting, storing and selling of crude petroleum and its products, and aiding other companies and parties in the production, transportation, storing, manufacturing and sale of the same. The corporation may acquire, hold, manage and dispose of any stock, shares, bonds and other interests, in or issued by any corporation, joint stock company or limited partnership association engaged in or aiding or promoting the producing, transporting, storing, refining and selling of crude petro- leum and its products, or in any business incident thereto. And in addition to the powers hereinbefore provided for, . it may also purchase, hold, manage and sell on commission or otherwise, such Investment securities and other property, real, personal and mixed, as the corporation may be geneially or specifically authorized In writing from time to time, by the owners and holders of a majority in number of the shares of the capital stock of the company, to purchase, hold and sell. And the company may exercise such trusts and do such other things, not in- consistent with its charter, as it may from time to time be authorized in like man- ner to do. 2. The principal office of the company shall be located at Jersey City, in the county of Hudson and State of New Jersey, and branch offices may be established from time to time as may be determined by the consent of the owners and hold- ers of three-fifths of the shares of the company. 3. The shareholders shall make rules and regulations and by-laws for the gov- ernment of the company and management of its business and affairs as in their discretion they may deem advisable, which may he amended at any time by the consent of the owners and holders of three-fifths in number of the shares of the company, given in writing, filed with the secretary, and recorded in the minutes of the proceedings, both of the shareholders and directors of the company. 4. The affairs of the company shall be managed by a board of directors, con- sisting of nine members, to be elected annually by the shareholders at their annual meeting, at which each shareholder shall be entitled to cast, personally or by proxy, one vote for each share of stock in the company held by such share- holder. The directors shall choose annually from their own number a president and vice-president to serve until their successors are chosen; shall appoint all other t fficers, managers, agents or employes of the company; prescribe the duties and fix the compensation of each; and may suspend or remove any of them at dis- cretion, and they may make such additional by-laws as may be deemed by them advisable— all subject to the by-laws and rules and regulations adopted by tr^e shareholders for the government of the company. 554 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. 5. Interests of the company will be lepresented by chares which may be divid- ed into classes, including preferred, common and deferred shares, to be issued, held and transferred, subject to the by-hiws and regulations of the company. The preferred and deferred shares may be each sub-divided into various classes, each class having such special rights and limitations as will more particularly adapt them to the uses for which they are intended, subject to such relation to tne shares of otlier classes as may be establisiied in their issue. The rules and regulations relating to them will embrace the following features: 6. A majority of all the shares of the company shall be held in a permanent trust approved by all the shareholders to secure the control of the company and the faithful maintenance of the policy af.reed on for conducting the business of the company in the interest and for the protection of all concerned in its affairs. The shares so he^d shall be designated as trust shares. 7. The capital of the company shall be the net amount of cash paid into the treasury of the company for its permanent use as the })roceeds of its stock is- sued and sold for cash for account of capital; and no credit m excess of the amount shall be made to "capital" in accounts or statements of the company. 8. No preferred stock shall be issued except as cash to the extent of $100 for each share of such stock issued shall be paid into the treasury of the company to the credit of capital, or of surplus, or of the guaranty and redemption fund, to be created as prescribed in Section 12 hereof, as may bo deemed advisable. Any of the preferred shares may be converted, at the option of the holder, into common or deferred shares by so stipulating in their issue, and distinctly stat- ing the right of conversion in the certificates representing them; otherwise they shall not be convertible. 9. The deferred shares of the company may be issued for cash, investment se- curities, property, services, payment of expenses, making disbursements of any kind, and in exchange for shares of otlier classes issued by the company at the discretion of the directors with the written consent of the owners of a majority of the shares of the company at the time outstanding. 10. The holders of preferred stock shall be entitled to receive cumulative divi- dends therecn of $1.50 per share, quarterly, in full, before any dividend shall be pay- able on the common stock. 11. A guaranty and redemption fund shall be created and maintained by cred- iting thereto all of the cash received by the company from the following sources: (a) The proceeds of all shares of the company sold for cash by the company when issued, in excess of the amount credited to capital. (b) The cash proceeds of all shares, securities or other property of whatever kind, acquired by the company in exchange for its shares of any class, as such proceeds may be realized, at any time, by the sale for cash of any portion of such shares, securities or property. (c) The proceeds of all shares, of whatever class, purchased by the application of the guaranty and redemption fund as authorized, and resold for cash by the com- pany. 12. The guaranty and redemption fund shall be applicable to the general uses of the con;pany, but may be applied to buying shares of all classes, in the order of their priority, or right to dividend, as stipulated, at the lowest rates at which any shares of the same class can be bought, not over $110 per share, on demand of the several owners and holders of shares respectively, made within a pre- scribed time after the payment of dividends; provided, notice of the intention to make such demand shall have been given to the secretary of the company 30 days before the time fixed for the declaration of dividends; and provided further that no part of tlie guaranty and redemption fund shall be applied to buying at any price, the shares of any class, so long as there may remain unsatisfied any demand made by the owners and holders of the shares of any prior class to have the same redeemed at not over $110 per share. All shares so purchased shall be placed in the treasury to be used for the benefit of the company in such form and manner as may be determined by tlie direc- tors with the consent, in writing, of the owners and holders of a majority of the shares of the company. 13. When no shares of any class can be purchased at $110 per share, the guar- anty and redemption fund sliall bf> applicable, at the discretion of the directors, to the purchase of tlie shares of the several clas-ses other than the trust shares, at such rates above $110 per share as may be approved by the owners of a majority of the shares of the capital stock. The shares of any class so purchased may, when authorized by the owners nf a majority of all the shares of the company, be resold at any time, at the discretion cf the directors, at any price not less than that at which they were severally pur- chased; or they may be retired from the class to which they belong, and be placed in PATRICK C. BOYLE. 555 the treasury of the company, to be held, reissued, and sold for its use and benefit, sub- ject to such conditions as the directors may prescribe, in accordance with the regu- lations of the company. 14. When the dissolution of the company shall be determined on, voluntarily or otherwise, the trustees acting under the permanent trust, created and prescribed In Section 6 hereof, shall be trustees to convert its assets and wind up its affairs. The proceeds of all assets received by them shall be applied by them absolutely, as the guaranty and redemption fund is required by the rules and regulations to be applied, preceding, and as may be further prescribed hereinafter. Any portion of the guaranty and redemption fund remaining after providing for the purchase and retirement of all shares, as herein prescribed, shall be distributed to the owners of the trust shares, and of any other shares then outstanding, equal- ly per share. 15. The owners of a majority of the trust shares, acting together, shall have the right to convey to the company absolutely or in trust, permanently or tem- porarily, and subject to such conditions as may be stipulated in such transfer, any securities regularly yielding net income; provided, that the receiving and holding of such securities shall not subject the company to any prejudice, or embarrassment, or legal liability to pay any money on account thereof; and no such temporary transfer in trust shall be terminable until the well-established net income of the company from its regular business and other sources of permanent revenue shall he equal to the maximum amount to which it may be raised by such temporary transfer in trust. 16. Each holder of shares standing in his name on the books of the company shall be entitled to a certificate or certificates therefor, duly signed by the presi- dent and treasurer, with the seal of the company affixed and attested by the secre- tary of the company, and each owner of an interest in any of the trust shares shall he entitled to a certificate of the fact, signed by the chairman and attested by the secretary of the permanent trust, showing the extent of the interest, which in- terest shall be assignable and transferable on the surrender of the certificate repre- senting it, properly indorsed, as may be piescribed by the trustees, with the appro- val of the directors, and the owners of a majority of the trust shares. Mr. Boyle read from the Commercial Gazette, of Pittsburg, an article, reproduced in the Oil City Derrick of May 5, 1892, describing the enormous undertaking for providing the McDonald and Cherry Grove oil fields with tankage and pipe lines, which was done by the National Transit Company. The work was so immense It was likened to the operations of an army. In round numbers 10,000 tons of iron, rivets, lumber and other building material were shipped into the McDonald field by the tankage department of the National Transit Company. It was shown that by an enormous exer- tion and extremely large expense, this field was supplied with tankage and pipage so that the anxious owners of the oil wells had their product taken care of promptly. The WITNESS. (Reading): "A few days ago the superintendent of the National Transit Company's tank de- partment made an official report in which he said: 'A retrospect of the work dono proves conclusively that vast resources are required to cope with floods of oil such as were poured forth by the Cherry Grove and McDonald fields, and that nothing short of the experienced and well equipped organization that did the work could have accomplished It. " 'In round numbers, 10,000 tons of iron, rivets, lumber and other building ma- terial were shipped into the McDonald field by one department alone— the tankage department— and the tankage provided for at the rate of one for every 10 working hours, requiring the handling of an average of 150 tons of material per day to keep the large force of workmen employed; special trains were run for the accommoda- tion of the men and no expense spared to meet the demands of the field. Rolling mills and tank shops were pressed to their utmost capacity, in many cases running night hours to meet the extraordinary demand made upon them, and second-hand tankage, wherever it could be spared, was cut down and made to do service again In the new field. Men skilled in the special work of tank building were sought for and transported to building points from Chicago, Brooklyn and all the cities and towns of oildom, east and west, until their name was legion. More than a score of saw mills were drawn upon to furnish the lumber at the rate of thousands of feet per day, to roof the huge oil receptacles. " 'In addition to this force were the graders, turning out two and more tank grades per day. The Chartiers Valley represented a scene of activity rarely wit- nessed since the days when armies were similarly engaged throwing up temporary fortifications. For miles teams laden w'th iron, rivets, sheet iron, etc., were seen hurrying in seemingly endless confusion; and yet all were under proper direction, each going to a designated point arriving in such order as to prevent loss of time 556 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. from want of material, for there was no surplus, no reserves; everything was used on arrival, and special agents, laboring with overtaxed railroad officials to hurry forward supplies, others seeking belated cars on side tracks; the wires brought into requisition, the express companies shipping rivets, plate iron, and many other articles which ordinarily were shipped by freight. It was no longer a question of ex- pense, but simply a question of securing supplies as fast as required, by whatever means. Scarcely time for sleep — none for recreation; it would come later, as it did; besieged everywhere by the owner or expected ov/ner of a flowing well, with the ever present and ever occuring question: "When will you complete the next tank?" "To-morrow," the answer came uniformly, and so did the tank, but only to be filled at once and the necessity for another equally great pressing upon us." "This vigorous, graphic and conservative statement is fully borne out by th'* facts and gives an excellent pen picture of the excitement and fierce activity at- tending the development of that prolific territory. This was the work of but one d^ partment and involved merely the building of the iron tankage, which still stands In the McDonald field to show for itself what was done. But it does not involve that still mightier work of moving into the McDonald field the pipes for the miles of lines required to run this oil from the wells of the producers to the market of the world or v.fhere it might be fitted for such markets; it says nothing of the great pump stations wliich were erected at both McDonald and Greggs stations, on the Panhandle rail- road, to care for this enormous output of nature's wealth, or of the pumps in every valley of that field; the boilers and engines necessary as motive power to all this machinery needed to move the fiood of oil which poured from this, the most pro- lific white sand field ever developed on this continent. "The McDonald field is about nine miles long by two miles wide, or contains in the vicinity of IS square miles, yet the pipe line company has shipped hito that field 55 miles of two-inch pipe, 41 miles of three -inch pipe, 25 miles of four-inch pii-?, and 32 miles of six-inch pipe, a total of 153 miles of pipe, or over eight miles of pipe for every square mile of territory, and all this merely to carry the product from the wells to the mains of the company, which had been previously laid from the Wash- ington field to the grand depots at Clean, in New York, on the trunk line to New York and to Colegrove, connecting with the trunk line to Philadelphia. Neither do these figures include 70 miles of six-inch pipe from Greggs station to Bear Creek, as an additional outlet deemed necessary, owing to the possibility that the increasing production might become greater than the capacity of these two main lines to carry. "The field itself is but about a year old and all this work, or by far the greater part of it, was done between the middle of July and the beginning of November, 1S91. The plant is completed with the exception of laying such lines as may be necessary to connect new wells as they come in. The pipe line business has assumed its usual routine under the facilities provided by the gigantic system established; and while the output of the field is still large, it is handled without the slightest rip- ple of excitement. Not only the iron tankage with a capacity of 3.000,000 barrels of oil stands there, but the mighty pumps at the stations of McDonald and at Greggs are living and pulsating evidences of the achievement. "There was m.vch accomplished, however, which cannot appear to the mere ob- server in the field. Superficial examinations in the erection of a plant of this size within such a brief period of time, a plant that is as permai^ent as the field itself; working with the smoothness and perfection of one which might have occupied years in its construction. Neither can a superficial observer see the expensiveness of certain features unless he be an expert in the handling of oil. "The field itself is one succession of hills several hundred feet in height, with correspondingly deep hollows. There are wells on the hills as well as in the hollows. Very large producers were so situated that there was no advantage to the pipe lines from gravity whatever; everything had to be forced by pumps, a result of some wells being so much lower than others and the high pressure at which the lines were used, requiring the use of a pump st.ation in every productive valley. "The haste with which construction had to be prosecuted is faintly indicated by the growth of production in the oil field. The first oil well completed was the Royal Gas company's well in February, 1891. It was drilled for gas and the field has ac- cordingly been not only a surprise, but it is also an -iccident. This was followed by Sauter's No. 1, which wells were connected with the main discharge line of the National Transit company by two-inch pipes. The next well of any importance was the Matthews, situated about midway between the McDonald and the McCurdy field, already developed. It got some oil in the Gordon sand in the spring of 1891, and was a small well, say 10 or 12 barrels daily. This wtis connected in the usual way. "To the beginning of July there had been no such volume of production as to cause any unusual efforts to care for, or to transport. But in the early part of the month of July the Clark & Bannister well, on a town lot in McDonald, struck the fifth sand and started off at .30 barrels per hour; the Matthews, already referred to, more than two miles distant, struck the same sand about the middle of the month, nnd was credited with 40 or 50 barrels prr hour. Siuitor's No. 3, as if envioiip that McDonald should be outdone by that oul-in-the-country well, went to the fifth sand also and came in with ;i jump at 120 barrels per hour. PATRICK C. BOYLE. 557 "This was not a theory but a condition that had to be faced. The production must be cared for. A f)ump station was begun at McDonald without delay. Trans- portation had to be forced. Tiie capacity of the lines at the beginning of July was but about 3,000 barrels daily. This evidently would ha\e been inadtquale to run such an outpouring of oil as was going on. The production of oil by the middle of August was up to about 15,000 barrels per day. By the first of September the lines could handle 26,000 barrels per day. The production increased and exceeded that amount. By the first of October the lines could handle iO.OOC barrels per day. The petroleum still in- creased; the race between production and the capacity of the company to handle it became fast and furious. By November the production of some days was up to Cne vicinity of SO, 000 barrels per day, but by the 1st of December the capacity of the pipe line had been increased so that it was able to handle 90,000 barrels per day, if neces- sity should arise. "That day has not come. The production began growing less after November, but the plant of the pipe line company is none the less. It not only erected a plant capable of handling, but actually received and ran such a volume of oil as can scarcely be comprehended. The amount of oil carried away from the McDonald field In November, if carried in cars, would liave required a train of 25 full loaded cars to have been run more than once every hour, day and niglit, to have carried it. More than 750 trains would have been required. The plant able to move such a weight is necessarily large as well as powerful, and much machinery is necessary. "But keeping the machinery in motion was one of the difficulties encountered jn that field and successfully overcome which might have been a fatal obstacle to a less thoroughly equipped organization. The water available in the vicinity of the operations was so bad owing to coal mine drainage, that it could not be used for the boilers. It became necessary to pipe all the water from the Ohio river and Mon- tour run. The injury to the boilers before the water pipe system was completed caused the expense of a large number of boilermakers for ten weeks. The water sys- tem from the Ohio river and Montour run covered about seven miles, but it was subsequently found that a saving in distance could be effected by building a water station in Bridgeville from which a three-inch main was run and is now supplying that field. "The conditions under which this plant was erected, also involved the difficulties, delays, vexations and additional expense, of the means of transportation of ma- terial being in pressmg demand by all manner of interests in the newly developed field. Operators were anxious to get their machinery and tools to their leases at the earliest possible moment; well supply companies were making demands for trans- portation with all the vehemence possible to exercise; merchants and craftsmen attracted thither added tlieir mite to the pressure; not only upon the railroad com- pany to various stations adjacent to the field, but also for teams to transport their boilers, engines, rig timbers and building material, stocks of goods, supplies for man and beast; teams were brought into requisition to the number of many hun- dreds; the movement of teams were necessarily slow and accident to one was the concern of all, as the delay stopped the procession of loaded wagons for miles; a single car on a switch might delay the whole train, but one side track was available at any of the stations on the railroad near the field; a veritable army of men was employed; the work went on night and day under competent direction; as one gang quit for rest and sleep another went on, gas furnishing the light by night, so there was no pause from the beginning of the line or of a pump station until it was com- pleted. "The whole plant including 64 boilers, some of them 80 horse power; 145 pumps of various sizes, from the small ones in the valleys to the powerful works at the j.umping stations, with appropriate engines, all brought in, set up and put in run- ning order, supplied with water brought through miles of an artificial water sys- tem; about 150 miles of pipe lines in the field and 70 miles of large main out of it; iron tankage with a capacity of 3,000,000 barrels, all erected and completed within the brief period of four months. It is a triumph, whether viewed as an achievement of American enterprise or the result of business organization which enables such vast resources to be placed at the disposal of productive industry so promptly, skillfully and advantageously to the development of natural resources."— Industrial edition of the Pittsburg Commercial Gazette. At this time the Producers' Oil Company, Limited, owned only a private line on the margin of the field, probably sufficient to handle 2,000 barrels a day, and during the four months it did not increase beyond 5,000 to 6.000 barrels a day. If that production had been dependent upon that one line, it would have gone to waste, or would not have been produced. Q. (By Vice-chairman PHILLIPS.) If we had had a free pipe line law in Pennsylvania, which was opposed by the Standard Oil Company for years and finally granted, do you not think that there would have been pipe lines of sufficient capacity to have taken care of that volume of oil — if we* had had the right to build pipe lines in our S.at — if we had had — if the producers *ln the official report "we" is changed to "the producers." 558 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. had had the right; and is it fair therefore to instance the capacity of a. single pipe line just starting up, *to supply local matters, to care for the whole field? A. To begin with, we will have to assume that the producers, or the persons engaged in constructing the pipe lines under a free pipe line law, at some period previous to 1877, would have been willing and satisfied to form a compact organization, to put in sufficient capital, and to continue to act as a unit, as the persons owning the existing pipe line system there have done. If all these things could have been brought about then I be- lieve it would have been possible to have had enough lines there, but the constant co-operation of all the parties interested would have been neces- sary. They would necessarily have been obliged to have been united on every proposition, and that is something that was never accomplished be- fore nor has it been since. Q. (By Vice-Chairman PHILLIPS.) Do you not believe that if the pipe line industry had held out such inducements as the railroad industry has to the country that there would have been two or three large competing lines in the field, and that the burden of taking care of that oil would not have been self-imposed by the Standard Oil Company? A. All we can judge is by what did occur at the time when there were a great many competing or- ganizations. There were one or two strong pipe lines, and they were owned by one or two railroad companies, and managed in part or in whole, either openly or by agreement. Q. (By Vice-Chairman PHILLIPS.) It was then a growing industry— away back before it was monopolized. A. No, it was not a gi'owing industry. It was over-produced. There were no pipe lines in the business previous to the organization of the pipe lines in 1877 that had made a dollar. Q. (By Vice-Chairman PHILLIPS.) That was in the infancy of the industry, and you could not expect to have the kind of capacity you have described. Do you maintain that it is necessary that one company, be it the Standard or some other company, would be better for the oil country, *to crush out all opposition — better for producers and consumers, and all, than several large responsible competing companies, which undoubtedly would have been formed if the oil people had had the right of eminent domain and if they had not been opposed in getting it by the Standard Oil Company itself? A. I never understood that the Standard Oil Company was directly opposing it. The Standard Oil Company was not in the pipe line business at all at that time of the great opposition to and the great agitation for free pipe line laws. They did not come into it until 1877, *if then; if they came into it they came into it at that time. Q. (By Vice-chairman PHILLIPS.) Was there not a great effort made in Pennsylvania to get the right of eminent domain? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) The Standard Oil people, or the National Transit Company, which you say is controlled by the Standard Oil Company, or is a part of their system, opposed the giving of the right of eminent domain. They had secured the right of way by purchase through the State; they had secured the right of way across railroads, and when other companies undertook to do that, did they not lease and purchase ground in front of their right of way, and did not the railroads oppose other companies passing under or over their ground? It was impossible, was it not, for a number of years for other people to get to the seaboard, after the Standard Oil Company or the National Transit Company had secured their right of way? A. I did not so understand it, Mr. Chairman. I never knew of but one instance of a right of way being secured for ob- structive purposes. *Mr. SMYTH. I would submit very respectfully that the witness ought not to be interrupted so frequently. I think if you want to rebut his testi- mony that the proper time will come after his evidence is closed. If you have witnesses to contradict what he is saying they can be produced then, but it seems to me that you are giving testimony, Mr. Chairman, without being a witness. *Black faced type Indicates matter omittPd, in the course of editing, from the ofRcial report. PATRICK C. BOYLE. 55» *Vice-Chairman PHILLIPS. No, I was simply asking whether these were or were not facts in the case. iVIr. SMYTH. I understand that question as stating facts and appealing to him to confirm them. Vice-chairman PHILLIPS. I asked him whether they were or were not true; that is all. Mr. FARQUHAR. I think the chairman will see that he has made state- ments in the character of an argument. Vice-Chairman PHILLIPS. I asked him whether it was or was not the case, and I think that Major Farquhar put the question about by-products on a stronger ground to Mr. Boyle yesterday. Mr. FARQUHAR. The question as to by-products was in what way they were manufactured. Mr. KENNEDY. I submit that our rules will not permit the asking of leading questions, and a great deal of time has been consumed since this witness has been on the stand in asking leading questions. I think our ques- tions should be simple and direct, and have no leading features about them. Vice-Chairman PHILLIPS. The chair will just make this further re- mark. There have been objections made to having long papers read, and it is impossible for the commission to remember them, and they passed a rule — I think Major Smyth was not here at that time — requiring that testi- mony be furnished the commission two or three days in advance, when written. Now, this is not for publication, of course. I am just making this explanation so that at any given point any commissioner may ask a ques- tion, as that rule has not been followed very strictly, and in this case I do not think the testimony has been furnished, and I have been following that idea with Mr. Boyle. Q. (By Representative LIVINGSTON.) May I ask what this testimony about the pipe lines is leading up to? Is this simply a history of how the oil business or the pipe line business is conducted? A. It is to show the manner in which it is done — the manner in which the business is conducted, and the uselessness of the opposition attempted by the Pure Oil Trust — their uselessness and inability to do any business where it was required. Q. You want to show that the oil company could not do any business? *A. They could not do any business. Q. On account of their being hampered by the pipe company? A. No, they were not hampered by the pipe company; *they were hampered by their own inability. They were not able to do anything that they wanted. It was a limited concern, not organized under the pipe line laws of the State, but it was a private company. Its purpose was, in other words, to establish the later movement of the Petroleum Producers' Association, but it was a dog- in-the-manger policy; going into business for the purpose of annoyance, without rendering any useful service to the State. *l regret exceedingly that that question was withdrawn, because I would have liked to have answered it, Mr. Phillips. Mr. FARQUHAR. I do not regard that it was withdrawn. Q. (By Vice-chairman PHILLIPS.) *No, I will explain furthermore that I was trying to get at the reason why there were not other large companies on account of this opposition; *whether he did or did not know that to be the fact. A. I never knew of the Standard Oil Company opposing the con- struction of any pipe line by placing obstructions in their way. I have known of individuals obstructing the Standard Oil Company's operations. I have known of that. Q. (By Vice-Chairman PHILLIPS.) *Now, while on the pipe line ques- tion — I think it is entirely pertinent because I have my notes — I will ask this question, if there is no objection. Now. after the Standard Oil Company had assumed control — or rather the National Transit Company — were there not some 20-odd pipe line com- panies formed that went into different fields in the oil country to handle oil, to ship by railroad and to supply refineries from various local fields; were there not a large number? *A. Previous to this. *Black faced type indicates matter omitted, in the course of editing, from the cfTicial report. 560 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-Chairman PHILLIPS.) *Were there not a large number afterwards, and isn't there one in the field to-day — out in the Ohio field? It has been stated here by other witnesses that there would have been some 20-odd. *l do not say that I am stating this. Now, on that question I want to asli you this: You admit that there have been a number that went into the local fields *about Oil City and other places to manufacture oil, since the National Transit Company had authority or had control? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Now, was it not the rule of the National Transit Company to place a premium on oil in all those fields so as to add to the price of the oil, so that the local men could not handle it. Has that been their course, or has it not? A. Some instances have come under my own observation of pipe lines being constructed into new fields, *which were already occupied, for the special purpose *of competing. I have one now in mind in Oil City, that started first as the Peerless or Keystone Pipe Line, and it changes its name so often that I could not keep track of it. That line did not come in as a competing line in the field. *lt went In under special contract with the producers, and the conditions upon which it entered the field was the guarantee of a certain amount of oil at a fixed rate of pipage. The pipage rate was fixed at five cents below the existing rate of the National Transit Company, which was virtually a bid of five cents for that oil and was in itself a premium of five cents. The competing company went out and bid the same figure, *and sometimes more possibly, but the premium was always a bid to get the oil. *The premium, in other words, was a bid for the oil. Sometimes it was by special contract. Q. (By Vice-Chairman PHILLIPS.) You know a few years ago there was quite a large line started in the Washington field to which you have referred? It is known, I believe, as the Craig-Elkins line. *They were the parties largely interested in it. Mr. J. W. LEE. The Western and Atlantic.t Q. {By Vice Chairman PHILLIPS.) Did the Standard Oil Company put a premium on Washington county or Butler county oil while that line was in existence? A. For the reason I have stated, the oil was bid away from them by these so-called independent companies coming in. Q. (By Vice-Chairman PHILLIPS.) I do not so understand it. A. That is as I understand it. *l am answering the question as I understand it. Q. (By Vice-Chairman PHILLIPS.) There came a time when the Stand- ard Oil Company, or the National Transit Company, purchased that line, did there not? A. That is the assumption. Q. (By Vice-Chairman PHILLIPS.) And did they not take off the premium *when they purchased the oil? A. I don't believe there is any pre- mium on that oil now. Q. (By Vice-Chairman PHILLIPS.) *Now, there is none on it. But did they not reduce the price of oil seven cents per barrel to the producer the day or the next day after the purchase was made; *did they or not? A. If you will give me the date I will refer to this book here.J *l have absolute confidence in our figures; I cannot state it from memory. *but if you will give me the time I will look it up. Q. (By Vice-Chairman PHILLIPS.) I cannot at this time *give you the time. You have no knowledge? A. I have no knowledge on that subject. Q. (By Vice-Chairman PHILLIPS.) *One other question, now, in re- gard to that while we are on this pipe line business. This is very pertinent to this investigation, this pipe line system, because this is the controlling power in the oil field. Now, there was a new field called the Scio field opened up within the last two years. There is an independent pipe line in that field to-day, is there not? A. I have heard there were some people competing there for oil. •Black faced type Indicates matter omitted, in the course of editing, from the ofTicial report. 1In the offlcial report Mr. Lee's suggestion was embodied in Mr. Boyle's an- swer JThe witness referred to tlie Derrick's Handbook of Peti oleum. PATRICK C. BOYLE. 561 Q. (By Vice-Chairman PHILLIPS.) Well, was there or not a premium placed on that oil? A. I believe there is a premium. Q. (By Vice-chairman PHILLIPS.) Is that oil better than any other oil? A. It is said to be; it is said to be equal to Clarion oil. Q. (By Vice-Chairman PHILLIPS.) Well, have there not been very fre- quently premiums put on oil, it being claimed that it was better, and after- wards taken off when opposition ceased? A. I have knowledge of premiums being placed on oil, and I have knowledge of premiums being taken off, but I have no knowledge of the purpose of those premiums. ♦Vice-Chairman PHILLIPS. Well, that is sufficient on that question; there will be other people that will be more competent to tell of that. Q. (By Mr. FARQUHAR.) Which are the pipe lines that paid rebates to producers, when did they pay them, and how did they pay them? *That question will cover the whole ground that we have discussed for the last 20 minutes. A. The Mutual Pipe Line paid a rebate of five cents a barrel, *and all the successors to the Mutual paid the same rebate up to a certain period. Q. (By Mr. SMYTH.) Is that an independent pipe line? A. They were all independent pipe lines. ♦Vice-Chairman PHILLIPS. He is speaking of the infancy of the trade; the beginning of it. Mr. FARQUHAR. And speaking of the whole rebate and premium sys- tem so as to cover the whole ground without an interruption by questioning. The WITNESS. (Resuming.) They entered into a contract. I have some figures here on the subject. These rebates to which I refer now were a matter of common knowledge, as far back as 1878, *through the discus- sions of the producers' movements at that time, pro and con, in the columns of the press. Some time after the close of that movement one of the persons connected with the movement, *whom we will forbear to name here, made a demand upon the United Pipe Line Company for a rebate, and gave his reasons. The reasons will appear from this correspondence. Mr. Boyle read a number of letters that had passed betvreen R. P. Crawford, treasurer of the Bear Creek Oil Refining Company, and Mr. O. P. Swisher, and later Mr. Henry McSweeney, solicitor of the United Pipe Lines, and others. They related to questions concerning rebates on oil. The letters were presented by the witness and fully explain the attempt to secure re- bates on piping oil on the part of those who had become prominent in fight- ing the rebate system: Letter No. 1. B. B. Campbell, chairman; R. P. Crawford, treasurer. Bear Creek Refining Company, Limited, refiners of petroleum. City ofiice, corner Etna and Eleventh streets, Pittsburg, Pa., October 22, 1884. Mr. O. P. Swisher: Dear Sir— -I am informed that your former attorney, Mr. Hancock, has been superseded by Mr. McSweeney. I wish the latter to get the inclosed. If not ad- dressed properly, please see that it gets in the proper hands. ' Yours sincerely, R. P. CRAWFORD. Letter No. 2, written under the letter head of the Bear Creek Refining Company, on even date with the above. Mr. Crawford writes: H. McSweeney, Esq.: Sir— 1 met Mr. J. R. Campbell three weeks ago on a train to Oil City. I told him I was anxious to get an old unsettled matter fixed upon a matter of over- charge of pipage on oil from some small producing wells near the mouth of Clarion river. Mr. Campbell told me to write to you on the subject. In the days of the old Mutual Line (G. R. Harms, manager) we found oil on a lease obtained from Hon. Thomas Mellon and R. Galey, Sr., about one mile from the mouth of Clarion river. We had completed our arrangements to lay our own pipe lines to the rail- road. Mr. Harms came to see me, and he agreed to 15 cents pipage for all the oil from the lease above referred to, but not to extend to any other leases. The pipage at that time was settled monthly. I have the papers to show such settle- ment. The Union, Empire, United and National Transit have, in succession, fallen heir to the arrangement. It has been investigated several tim.es — by Mr. Hatch for and in behalf of the Union (afterwards the Empire) Line, by the pipe lines when operated in the pooling arrangement, and by Mr. Waller in behalf of the United, after the purchase by the latter of the Empire Line. *Black faced type indicates matter omitted, in the course of editing, from the oflicial report. 36 562 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. The wells are called Mellon (or Andes) and Brett. The last paid by the United was, up to and including the runs for April, 1879, as follows: April runs, Mellon, 903.66 barrels, at 5 cents $45 18 April runs, Brett, 133.01 barrels, at 5 cents 6 65 The charge of 20 cents pipage being in excess, we claim an allowance of 5 cents per barrel on all oil runs since that date, and to continue as long as we pro- duce from that particular territory. The wells have run down to a small business, but small as the claim niay appear, I must get it settled, either amicably or by law. I much prefer the former, but one of my partners is a lawyer (B. B. Camp- bell) and, 'ike all lawyers, is ready for the job. I write this in a spirit of kindness and fairness, as one business man should to another, and trust it will receive your prompt and careful consideration. R. P. CRAWFORD, Trustee. To which Mr. McSweeney makes reply under date of Oil City, Octo- ber 23, 1884. R. P. Crawford, Esq., Pittsburg, Pa.: Dear Sir — Your letter of the 22d instant claiming over-charge of pipage is re- ceived. Please send me copies of all papers upon which you base your claim, as well as a full and specific statement of the amount alleged to be due you, etc. As soon as I hear from you, I will carefully examine your claim and advise you as to the result. i Yours truly, H. McSWEENEY. Letter No. 4, written on the letter head of the Bear Creek Refining Com- pany, Limited. Pittsburg, Pa., November 14, 1884. Mr. H. McSweeney: Dear Sir— I answer yours of 23d ultimo as follows: I enclose sheets marked Nos. 1 and 2, showing runs from Mellon or Andes wells (two numbers), and from Brett wells, upon which there is due 5 cents per barrel: Andes or Mellon, 25,199.65 barrels, at 5 cents $1,259 98 Brett, 2,061.84 barrels, at 5 centts 103 09 Total $1,363 07 I also inclose sheet No. 4, showing a few runs from each Mellon and Brett, running backward of runs upon which the 5 cents per barrel over-charge was paid, to give you a start toward tracing it. As to the contract, I refer you to Charles P. Hatch, Roanoke, Roanoke Co., Va., formerly manager of the Empire Pipe Line, also John T. Galey, who was stockholder in the contemplated pipe line from these wells. Thomas F. Galey, Pollock postofhce, Clarion Co., Pa., can give John's address. I do not know where G. R. Harms is at present. The last I heard from him he was at Cincinnati, Ohio. There is no doubt about this claim being a just one. It is just what Mr. Hatch called it, "an over-charge," and knowing all about It I say the same thing. I think Mr. O. P. Swisher could tell you something about it, if he will be kind enough to freshen his memory. Hoping to hear from you soon, I am. Yours respectfully, R. P. CRAWFORD, Superintendent. Letter No. 5. on letter head of Bear Creek Refining Company, Limited. Pittsburg, Pa., November 15, 1884. II. McSweeney: Dear Sir — In making up the account for over-charge pipage, which I mailed to you yesterday, I left out the old Galey well, which was included in the contract. It is a very small producer, and if the others are settled I will let it go. I sold it last spring and have nothing to do with it now. I wish to say to you frankly that we made a mistake agreeing to 15 cents per barrel pipage from, those regions, as we should have built the line, which would have been a fraction over one mile, and pumped our oil to the railroad at less than 6 cents per barrel. But the contract was made, complied with for years, and now I only ask for compliance and continuance of same. Respectfullv, R. P. CRAWFORD, Superintendent. PATRICK C. BOYLE. 563 Letter No. 6, on letter head of the Norfolk & Western Railway Com- pany, Charles F. Hatch, general freight agent. Roanoke, Roanoke Co., Va., November 24, 1884. H. McSweeney, Esq., Solicitor National Transit Company, Oil City, Venango County, Pa.: Dear Sir— I have your favor of 20th referring to the matter of the claim of R. P. Crawford against the National Tran&it Company on account of alleged over- charge on pipage of oil produced from wells drilled on lands leased from Hon. Thomas Mellon and Robert Galey, on Clarion river, about one mile from the mouih. When the Empire Transportation Company purchased the Mutual Pipe Line, in 1872, we found among others was a contract, entered into by Messrs. Martin and Harms, owners of the Mutual Pipe Line, and R. P. Crawford and others upon tne subject mentioned, by which the Mutual Pipe Line agreed to transport the oil frum the wells mentioned at a rate of 15 cents per barrel. This agreement was an oral one and there was no v/ritten agreement embody- ing It, uut me facts were conceded upon the representation of Mr. Crawford, as well as Mr. Harms, representing the re&peccive interests. Following this the Mu- tual Pipe Line and its successor, the Uni^n Pipe Company, continued to transport the oil mentioned at the 15-cent rate, 'the Union Pipe Company was the name giwn to the pipe lii;e interests in the lower country belonging to the Empire Trans- poiLation Ccmipany. When the Empire Transportation Company sold its pipe line propefly, in 1877, all papers and agreements were turned over to the representa- tives of the Standard Oil Company, or the United Pipe Lines, and if my recollec- tion serves me right I gave their representative a statement showing the special contracts and rates for the transportation of oil, among which, I think, was tne one to which you refer. There is no^ doubt that the agreement referred to was made between Mr. Crav.^ford and Messrs. Martin and Harms, and that it was fully observed, as they owned the pipe line, and that this oral agreement was fully respected by their successors up to the time of the sale of the pipe interests of the Empire Transportation Company in 1S77. The reason for this contest rests upon the fact that, at the time Messrs. Martin and Harms had built their pipe lines, the parties owning the wells on the Clarion river, mentioned above, projected the construc- tion of a short line from the wells to the railroad, and the agreement entered into, establishing a 15-cent rate, was a compromise under which Mr. Crawford and others abandoned their project of constructing the Clarion line. Yours very truly, CHARLES P. HATCH. Letter No. 7. dated Oil City, November 20, 1884. R. P. Crawford, Esq: Der Sir— Your favor of the 14th instant, in relation to the alleged over-charge of pipage, was duly received. I will investigate the matter and advise you of the course this company will pursue as early as possible. Yours truly, H. McSWEENEY. Letter No. 8, on letter head Standard Oil Company, 44 Broadway; S. C. T. Dodd, solicitor; dated New York, September 15, 1884. H. McSweeney, Esq., Oil City, Pa.: Dear Sir— About the year 1879 R. P. Crawford, B. B. Campbell, and others caused a quo warranto to be filed against the United Pipe Lines, asking for a forfeiture of its charter upon this ground, among others, that it had made discriminations in its pipage charges. About the same time actions were brought in the Supreme Court of the State against the Standard Oil Company and the United Pipe Lines and various railroads, the burden of the complaint in each case being discrimina- tion. A criminal action was begun in Clarion county against J. J. Vandergrift, J. D. Rockefeller and others upon the charge that they had conspired with the rail- roads to give and receive discriminations in freight. R. P. Crawford was a lead- ing man in all these proceedings. When I investigated the facts, so far as the United Pipe Lines were concerned, 1 discovered that the only discrimination of which it had been guilty was in reference to several contracts which it had in- herited, one of which was the contract to which you refer, between R. P. Craw- ford, or the Bear Creek Oil Company, and the Mutual Pipe Line Company. The parties who were making all this fuss about the discriminations were tiie only parties receiving any benefits from the discrimination. They claimed that the discrimination was not only contrary to public policy, but was absolutely crimi- nal. I agreed with them so far as the public policy was concerned, and I directed the United Pipe Lines to repudiate all such contracts. R. P. Crawford applied to me frequently in relation to this maMer, and I always gave him the same reply, that we would charge the same rate of pipage to every man and would recognize no contracts whatever for a less rate. I do not think that we ought to depart from 564 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. this line of policy and particularly not in favor of R. P. Crawford. I would be glad to have him bring suit. If such contracts are good in law I would like to have it so established at the suit of R. P. Crawford or B. B. Campbell, the parties who so few years ago were endeavoring to put us in the penitentiary for the very thing for which they now claim the benefit. Yours truly, S. C. T. DODD. Letter No. 9, dated Oil City, Pa., December 17, 1884. R. P. Crawford, Esq., Pittsburg, Pa.: Dear Sir— After a careful consideration of the matter I have decided that this company must decline to recognize the claim made by you on account of alleged over-charges of pipage. Yours truly, H. McSWEENEY, Solicitor United Pipe Line Q. (By Vice-Chairman PHILLIPS.) What is the difference between pay- ing a premium on a given field where the oil is sold, and allowing a rebate to another, *in your judgment? Paying a premium of, say, from 10 to 15 or 20 cents a barrel on oil that is not any better in one section than it is in an- other. Was that done to evade the law, *as described by Mr. Dodd, or not? What is your view about that? A. I think I have already given my views on the question of premium. I think I have stated that they are in the nature of bids, and they were generally offered at such times as there was competition for a certain grade of oil; where there was competition for a particular grade of oil. Q. (By Vice-Chairman PHILLIPS.) You do not know of your own knowledge then, of any premium being paid *by the National Transit Com- pany, from 5 to 15 or 20 cents, where the oil was not any better in one field than another. A. Oh, as to the quality of the oil, I am not competent to speak. I am *not a manufacturer, and I am a producer only in a very small way, and I would not care to testify as to the quality of the oil; but I know that the practice of paying a premium was at one time general over the whole region; *the whole region received a premium — Allegheny, New York and Bradford. Q. (By Mr. SMYTH.) Who paid those premiums? A. The purchasers of the oil. *Q. And they were the different companies? A. They were the differ- ent companies, yes, sir. Q. It was a custom of the trade at that time? A. It was a custom of the trade then; anyone buying any oil then was obliged to allow the premium. Q. (By Vice-chairman PHILLIPS.) But the National Transit Company, or the Standard Oil Company purchasing agency, would pay this prem.ium on all credit balances — always. They have made it a rule, have they not, to buy all credit balances at the market value, whatever it was, on the ex- change? A. I think that rule was abandoned in 1895, Mr. Phillips. Q. (By Vice-chairman PHILLIPS.) Well, for a great many years it was done? -''A. Previous to that time. Q. (By Vice-Chairman PHILLIPS.) Previous to that time? A. Previous to 1895 they did buy at the ruling price of the exchange. Q. (By Vice-Chairman PHILLIPS.) Now, they fixed the price them- selves, before the time to which we allude, by this great discrimination. A. If I am required to answer as to an understanding of the point of their fixing it, I will say that I do not so understand it. I do not understand that they fixed the price; the price was fixed by the demand. The price of crude oil is reflected in the price of refined. Q. (By Vice-Chairman PHILLIPS.) But who reflects both the price of the crude and refined? A. The consumer; the consumer makes the price. He is the man who states what he will pay. Q. (By Mr. SMYTH.) You have said tliat it was largely caused by the export demand? A. Yes; *by the consumer. Q. I mean, not in this country? A. Wherever the consumer is. ♦Black faced type indicates matter omit.ted, in the course of editing, from the official report. PATRICK C. BOYLE. 565 Q. In your judgment the price is fixed by the foreign demand? A. In my judgment the price is fixed by the foreign demand. Q. (By Vice-Chairman PHILLIPS.) Then when the Standard marks oil up 10 or 15 or 20 points this is fixed by the market, is it? A. My reply was to a different question entirely. Mr. Phillips. I think you are taking a little advantage of the witness in putting it in that way. Q. (By Vice-chairman PHILLIPS.) Well, I would be sorry to take any advantage of you; I do not wish to do so. A. I haven't testified on that branch of the question. I stated a little while ago that in my opinion the premium was the result of the bid for oil where there was a demand. In districts where there is a demand for oil a premium is usually placed on it, as a premium is placed on leases where there is a demand for land. The producers carry out the same idea in their competition. Q. (By Vice-chairman PHILLIPS.) For the 15 or 20 years past has there been any special demand by outside refiners — anything to speak about? Have not the Standard Oil Company and the National Transit Company handled the great bulk of it? A. You have just mentioned a great line in the Washington territory, the Western and Atlantic; that was a demand; it brought capital in large quantities; it employed several millions of dollars. Q. (By Mr. SMYTH.) Do you think that the fluctuation in the market value of oil is caused by the demand for oil, or is it the result of manipula- tion entirely on the part of the refiners? A. It is unquestionably the de- mand for oil. Q. A large demand for oil, in your judgment, causes an advance in price? A. A large demand for oil causes an advance in price. Q. And when the production increases that causes a decline.* A. Sup- ply and demand regulate the price, tand I make that statement on the com- petent authority of your chairman. He is on lecord as stating that himself, in written communications to my newspaper, recognizing the law of supply and demand in connection with the shut-down movement in 1884. Everybody recognizes that. In the documents, which I read this morning, the com- plaints of the producers from the first movement dovvn have been always of over-production. tThe burden of their song was over-production, and the general admission was that the price was made by supply and demand. Q. (By Vice-Chairman PHILLIPS.) Has that law worked well in the case of the Standard Oil Company? Have their profits gone down on ac- count of over-production? Has the business not been continuously profitable to them regardless of the law of supply and demand. Do you know any one year, of your own knowledge, in which they have lost money? A. I know nothing about their commercial business at all, Mr. Phillips. Q. (By Mr. SMYTH.) I don't suppose they would admit that tthey had lost money. A. Well Q. (By Mr. FARQUHAR.) You do not know anything about their com- mercial business? A. I do not know anything about it. Q. Or anybody else outside of their own people? A. I would hardly think so.J Q. It would simply be a matter of rumor? A. It would simply be a matter of rumor, yes, sir. Q. Have you, of your own knowledge, ever known of a single statement issued giving away their business to anybody? A. Well, if it was knov.'n generally that any money was being lost by any company, its stock "r ould tumble very rapidly. Q. Did you ever know of any statement ever being given out by the Standard Oil Company under any of the two or three organizations that they have been in? A. I never have. Q. (By Vice-Chairman PHILLIPS.) What was the Ciipital stock of the Standard Oil Company tbefore it was reorganized as probably has been? *In the official report this question is given in the following form: "And when the demand slackens, the production decreases?" i'Black faced type indicates matter omitted, in the course of editing, from the official report. ^n place of the three questions and answers above, the official report gives the following: "Q. (By Mr. SMYTH.) I do not suppose they would admit it. A. I do not suppose anybody would." 566 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *What was the capital stock, say six or ten years ago. (A pause.) Was it more or less than $100,000,000? A. I think it was a little less than a hun- dred million. Q. (By Vice-chairman PHILLIPS.) How much less? A. Three or four millions possibly. Q. (By Vice-chairman PHILLIPS.) Do you know the highest point, or about the highest point, that stock has reached on the market? A. I have heard it stated that it was very close to five hundred. Q. (By Vice-chairman PHILLIPS.) Five hundred million dollars? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Then the law of supply ynd de- mand has not very materially affected them through this over-production in a great many years? The WITNESS. Is that for the purpose of showing the profits of their business? Vice-Chairman PHILLIPS. I presume that the stock would not be there unless it was earning that; it would not reach that price without having that earning capacity. A. Well, I may say, in the same connection, that the opposition companies show even a greater increase in value. The Tidewater Pipe Line Company stock was quoted at about 1,000 to 2,000, I think. Q. (By Mr. SMYTH.) Will you give us the price there; what is the capital of that? A. The capital is $10,000,000. Q. And what is the market value? A. Two thousand. Q. (By Vice-Chairman PHILLIPS.) Isn't that absolutely under the control of the Standard Oil Company? A. Oh, no, sir. Q. (By Vice-Chairman PHILLIPS.) Have they not running rates and agreements with the Standard Oil Company? A. There may be agreements, but it is controlled by themselves; *it is controlled by other parties. Q. (By Vice-Chairman PHILLIPS.) Are they not limited as to the quantity of oil that they ship through that line? A. By agreements; pos- sibly there are agreements there. Q. (By Vice-Chairman PHILLIPS.) Without an agreement with the Standard Oil Company, have you any idea, from your knowledge of the business, that that stock would have gone to that price — *without an agree- ment with the Standard Oil Company? A. Well, that involves an opinion that I do not care to express, Mr. Chairman. I have no knowledge upon the subject; *we cannot tell what might happen. Q. (By Mr. KENNEDY.) *l want to ask a question right here. Mr. Boyle was speaking on the subject of pipe lines just before this digression, and I want to ask him a question that I thought should have been asked yes- terday, and I am surprised that the question was not asked. He stated yes- terday that he knew of one or two pipe lines that had been sued on account of misrepresentation in regard to the quantity of oil on hand, I believe; *and he was not asked the name of that pipe line. I would like to ask Mr. Boyle now to state the name of the pipe line and the circumstances sur- rounding that suit. Vice-chairman PHILLIPS. And the date of it. Mr. KENNEDY. And the date of it, yes, sir. You stopped short with the statement yesterday. The WITNESS. The pipe line was the Pennsylvania Transportation Company, and the date some time in the summer of 1876. The suit was brought in connection with the gauge movement in which false representa- tions had been made about the quantity of oil in the storage tanks; a dis- crepancy of some 50,000 barrels, and the gauging of the tanks was a public one, and this was an examination of the integrity of the pipe lines at the time. All the lines were examined, by an agreement with the Oil Exchange. A statement was issued by the gangers of the Pennsylvania Transportation Company that they had 50.000 barrels in excess of the actual quantity on hand. It was a misrepresentation, to that extent, to the trade. Suits were entered against the gaugers, involving the president of the line and the •Black faced type Indicates matter omitted. In the course of editing, from the ofTicial report. PATRICK C. BOYLE. 567 superintendent. Criminal action was brought, I think, in Kittanning, but the case was never tried. But it was known in those days, in the early pipe line days, under the wildcat pipe line system, for pipe lines to be short. Subsequent to 1874, when the pipe line law requiring the publication of statements of the condition of the line and its responsibility, went into effect, they caught a great number of them. One was the Atlantic Pipe Line Company, which was found short 15,000* barrels on one occasion. Q. Have there been such shortages in recent times? A. There have been no such shortages in recent times, no, sir. There have been suspected shortages, and there have been several gauge movements organized by the oil exchanges to verify the statements of the National Transit Company. There was one very prominent one in 1884, when the stocks amounted to nearly 40,000,000 barrels. An examination of the thousands of tanks in which this oil was stored in various parts of the region proved the correct- ness of their statements and the report of the gauges were accepted by the various oil exchanges, and the public mind quieted as to the rumors of the shortages. Q. (By Vice-Chairman PHILLIPS.) Have you any knowledge of what it requires to fill the National Transit Lines, and of the residuum in the bottom of the tank, which would be called not merchantable oil? fThe WITNESS. Oh, what would be in there? Vice-Chairman PHILLIPS. Yes, sir; what would naturally be in there to fill the whole line of the system; and how much in the bottom of the tanks; how much oil would they require? Have you an idea of that? A. No, fl haven't an idea of that. Q. (By Vice-Chairman PHILLIPS.) Or have you any knowledge? A. My knowledge of that would be hearsay or assumption altogether. I doubt if an experiment has ever been conducted with that. There have been esti- mates based on the capacity of the line, tand the given quality of oil required, and I have heard it stated Q. (By Vice-Chairman PHILLIPS.) Do you suppose it would take 3,000.000 or 4,000,000? A. I have heard it estimated higher than that. Q. (By Vice-chairman PHILLIPS.) Higher than 4,000.000 barrels of residuum? A. Yes, sir; I have heard the quantity necessary to fill the lines estimated higher than 4,000,000 barrels. Q. (By Vice-Chairman PHILLIPS.) Do you know about how much oil was in the United Pipe Lines when oil took such a sudden advance about two or three years ago? A. Well, I think the capacity of the lines was fully represented in transit. tQ. (By Vice-Chairman PHILLIPS.) I mean, did they make monthly statements? A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Do you know about how much oil they had on hand at that time? A. We ought to be able to show it to you. Q. (By Vice-Chairman PHILLIPS.) Yes, I would be very much obliged for that information for about April, 1895. A. The amount of the stocks in April, 1895, was 4,545.784 barrels. Q. (By Vice-Chairman PHILLIPS.) Do you know how many certificates of the Standard Oil Company's oil were outstanding at that time? A. j\ cannot state from this work. J I cannot state, sir. Q. (By Vice-Chairman PHILLIPS.) Do you know the credit balances that were on hand at that time belonging to their people? A. I cannot state that. Only the monthly pipe line report would show that. Q. (By Vice-chairman PHILLIPS.) Well, is it not reported there for the month? A. I am looking for the stocks; this book runs by shipments. Q. (By Vice-Chairman PHILLIPS.) Does it show the credit balances each month? A. I don't think so. Q. (By Vice-Chairman PHILLIPS.) Are the certificates shown? A. I think not. Only the runs, shipments and stocks. ♦This figure is given as "6,000" in the official report. tBlack faced type indicates matter omitted, in the course of editing, from the cflicial report. JThe witness referred to the Derrick's Handbook of Petroleum. 568 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. (By Vice-Chairman PHILLIPS.) You have said that you heard it estimated, *and I presume your estimate is not far wrong, at 4.000,000 bar- rels. Could that, including the indifferent oil in the bottom of the tank, be delivered to the purchaser if there was a purchaser? A. If all production ceased at a given hour and everything entirely shut off, they would probably not be able to continue their operations beyond a day or two at the outside. But the production at this period was upwards of 85,000 barrels a day, and that going constantly into the line, equalled the shipments required to meet the demands of the trade. That going into the line constantly, day by day, met the demands of the trade. Q. (By Vice-Chairman PHILLIPS.) Did the Standard Oil Company or the National Transit Company own all that went into the line day by day at that time? A. As I stated before, we have no means of showing that except by the statement published every month. To return to Mr. Kennedy's question, reports of this kind were not at all infrequent in the days of w'ild-cat pipe lines and they were not alarming the trade when made. It was a condition that was so common as to be met with anywhere, but it showed at the same time that pipe lines then ran very close to the shore. They used oil wherever they had it, and expected to make it up in the future. The report of the Atlantic Pipe Line was posted in Titusville, March 17, and quoted by the Oil City Derrick on March 18, 1876, under the head of Titusville Doings. Pipe Line Returns. (Reading.) From our special reporter. Titusville, March 17.— The Atlantic Pipe Line, w'tli headquarters at St. Petersburg, and no connection with the associated lines, makes substantially the subjoined report in round numbers. It will be seen that a shortage of 6,000 barrels appears, the actual loss in handling over and above the 2 per cent, deducted for this cause by each line 'n the regions. This, however, is amply cov- ered by the purchase from reliable par':ies of 15,000 barrels, paid for and ready for delivery when required. Notwithstanding the very large percentage of certificates in proportion to the total stocks, the line is in the most prosperous condition, and by the 1st of May is expected to be entirely free of debt, with the whole cost of con- struction fully liquidated. During February the receipts were above the usual aver- age, footing up to 55,000 barrels. The statement for the month is as follows: Barrels. Total amount of crude oil in the pipes and tanks of the company, February 29, 1S76 84,045 Total amount of crude oil for which the company was liable on the 29th of Feb- ruary, 1876 90,000 Represented by certificates 78,000 Represented by credit balances 12,0 Standard Oil Company and persons and corporations affiliating witli them on freight carried over their respective roads. 3. The said railway companies have been, since October 1 last, and are at the present time, discriminating with regard to freight rate charges in favor of the Standard Oil Company, and others affiliating with thom, against independent ship- pers, and all oils shipped to tlie Standard Oil Company and said other persons and companies from all points in the United States coming into Canada are carried at a less rate of freiglit than the same class of goods shipped by the independent refiners competing against the Standard Oil Company and said other companies. 4. The said companies are at present, and have been since October 1 last, charging 35 cents per 100 pounds from Buffalo and Suspension Bridge to Montreal, as per iheir tariff issued at Montreal, while the\- charged only 25 cents per 100 pounds from Sar- nia to Montreal on the same class of goods, notwithstanding the fact that the dis- tance from Sarnia to Montreal is 77 miles more than that from Suspension Bridge to Montreal. 5. On all oils shipped from Buffalo and Suspension Bridge to Montreal by the Standard Oil Company and its connections the said railway companies are giving a secret rebate or reduction. 0. Shippers not connected with the Star.dard Oil Company and its connections are charged on shipments from Suspension Bridge to St. Johns, New Brunswick, on car- load lots, 45 cents per 100, while shippers from Sarnia are charged 30 cents per 100, although the distance from Sarnia is 77 miles greater than from Suspension Bridge to St. Johns, New Brunswick. 7. On all other points on the international boundary to w^hich shipments of nil are made, the same discrimination was made in favor of and rebates given to the Stand- ard Oil Company and companies and persons affiliating with them, against their competitors. I'y reason of the facts herein- complained of, your complainants have sustained loss and are greatly impeded in the transaction of their business. 9. Your complainants therefore submit that an order should be made directing the said railway companies to discontinue those illegal acts, and to refund all over- charges which they have so collected from jinir said complainants. Mr. Gall said they had not yet established the fact that rebates had been paid to the Standard Oil Company. ANDREW D. GALL. 587 After the witness had charged that the Standard Oil Company was receiving lower rates of freight in Canada than the so-called "independents" the following testimony was given: Q. (By Mr. FARQUHAR.) You mean on Canadian oil? A. Any oil, there is nobody else handling Canadian oil except themselves, *and they don't allow anybody else to handle it. You cannot buy a gallon of oil unless they oee fit to sell it. Q. (By Professor JENKS.) Do you know whether they refine and sell American oil to anyone; for instance, have you offered to buy? A. I have, and they have refused to sell *me anything, either the Lima oil or any of their products. Q. As a matter of fact, you cannot get their product? A. No, and we cannot get any of the other oil to handle unless we buy it from the outsider. Q. Does this same fact in reference to their refusing their products apply to the Sun Oil Company, of Hamilton? A. Yes, sir; precisely the same. Q. And to all others except those that are formally recognized as their agents? A. Yes. sir; or who buy exclusively from them. Q. Have you any knowledge of the fact that they insist upon dealers making an agreement that they will only buy from them? A. Yes, sir. Q. You have positive information of that fact? A. Yes, sir. They have asked me two or three different times, or sent men to ask us to buy all our stuff from them, and stop this inquiry, and all that kind of thing; which of course we refused to do. Q. (By Representative LIVINGSTON.) What inducement did they offer you to do that? A. They wanted to charge us about twice what the stuff was worth, and to cripple us as soon as they could. That was about the inducement, I think, but they didn't put it in that form. They offered us no inducement whatever. Q. (By Mr. FARQUHAR.) Is there evidently a policy on the part of the Canadian roads to build up the Canadian oil trade there, as against the American products by making the rates they do? A. I asked Mr. Bostwick, the general freight agent of the Canadian Pacific, that same question and he replied that they wanted to protect the Canadian industries. Q. Has it not been the plan of the government at Ottawa all the time to discriminate as much as they can against the American product? A. In past years it has been, but I cannot saf that it has been under the present government. Q. Is it not of advantage to the Grand Trunk and the Canadian Pacific to take a through rate on a short haul on the Canadian lines, in preference to prorating with the American lines in competition south of the St. Law- rence? A. I cannot see where it comes in, because on oils it is only a dis- tance of 75 miles less. Q. (By Representative LIVINGSTON.) Is it not done as a retaliatory measure? A. No. sir; 1 do not think it is. Q. (By Mr. FARQUHAR.) Has it not been the policy, as announced in the Canadian press and declared by your ministers, to take care of your home products, as against anything imported across the line? A. It was previous to the present administration. I cannot say that such is the case at the present time. Q. Do not the two roads there that are backed up by foreign capital, Canadian capital, one subsidized, uniformly make rates to the Canadians to the disadvantage of Americans? A. That is what it is, if you look at it in that way. The witness said that anyone can buy and refine crude petroleum in Canada and that very little of the crude product is produced by the Stand- ard Oil Company; men connected with the Standard Oil Company produce oil. Anyone familiar with the Standard Oil Company's operations there would hesitate starting a refinery because of a fear of their competition. He said there was also an uncertainty about the duty on refined petroleum being continued by the government, and if that duty should be removed, he ♦Black faced type indicates matter omitted, in the course of editing, from tlie official report. 588 REVIEW OP TESTIMONY— INDUSTRIAL COMMISSION. said, a refinery in Canada would not be worth mucli. He thought the Standard had the railroads of Canada under their control. He merely made this statement, based on his suspicion, and offered no testimony to sustain it. *IVlr. GALL. As I said, they (the Standard) have made in the last three months ten times, if not more, than they have ever spent in the last 10 years in Canada. Q. (By Mr. SMYTH.) How do you figure that out if the price of crude oil has advanced to $1.60 as against $1.40 and $1.30. A. Of course, as I said before, I do not know very much about the refining part of it, but it strikes me that a difference of 20 cents a barrel does not warrant an advance of five or six cents a ^-allon on the refined product. Q. But it has only been an advance from 14i/4 *to 17 cents. That is not five or six cents? A. But you take in past years when crude was a great deal higher than it is to-day, and the price of oil was never known to be as high. I do not remember of oil being as high as it is to-day. The witness said the Standard Oil Company had advanced the price of crude oil in order to increase the production, as there was a larger profit in refining Canadian oil than there would be in importing American oil. Pre- vious to 1896 the tariff on crude oil shipped into Canada was seven cents and later six cents a gallon. Q. (By Mr. FARQUHAR.) So the remedy needed by the Canadians and you, as handlers of this petroleum product, lies in the assistance of the government in establishing a tariff that will admit American oil there, and will bring the Standard oil price down? A. The remedy, I think, lies in that, and in obliging the railways to carry the petroleum products *and other things at a reasonable freight rate. He said the railroads of Canada had been compelled to make the local rates on American oil the same as on Canadian oil and that the only dis- crimination that now remains in the Canadian rates is on oil that is im- ported where there is a through rate from the United States. After October 1, 1898. the freight rate from Toledo to Montreal was 46% cents a barrel, and previous to that time it was 291/^ cents. The increase was made by the Canadian roads alone. The railroad companies had said that the rate is alike for the Standard and all others, but those who had brought the matter to the attention of the Railway Committee of the Privy Council did not be- lieve that, and they hoped to prove that such was not the case. He said that the independents and the Standard were importing more of the United States oil all the time. He did not wish to say that the independents im- ported more oil into Canada than the Standard, but in the 15 months pre- vious to giving his testimony such importations had largely increased. His company and the Sun Oil Refining Company were the only independent companies he knew of that were importing oil at the time he testified. His company imported nearly all their oil from the Cornplanter Refining Com- pany and the Warren Refining Company, both of Warren, Pa.; the Craig Oil Company, of Toledo; the Paragon Refining Company, of Toledo, and from Scofield, Shurmer & Teagle, of Cleveland, Ohio. He said the people of Can- ada preferred to buy from his company than from the Standard. Q. (By Vice-Chairman PHILLIPS.) Is this oil that is imported by you from the independents considered of better quality than that of the Stand- ard — equal or better? A. Well, from what I can learn from the consumers, the oil that we have been selling as American oil, which it was, is consid- ered much better than what the Standard was giving them and was selling them as Pennsylvania oil. As a matter of fact. I think they have been giv- ing th(>m for years the Ohio product and putting it off as Pennsylvania oil, although I have nothing to prove that except that the people said they con- sidered what we were giving them was far better. Q. (By Vice-Chairman PHILLIPS.) At the same price the citizens of Canada would buy from the independents in preference to the Standard? A. Every time; there is not one instance in a thousand but they will give us the preference over the Standard. ♦Black faced type indicates matter omitted, in the course of editing, from the official report. ANDREW D. GALL. 589 Q. (By Vice-chairman PHILLIPS.) You speak of importing oil from Toledo, Ohio? That is what is called the Ohio or Lima oil, is it? A. Yes, sir; I think so. Q. (By Vice-chairman PHILLIPS.) Do you sell that as Ohio oil? A. Oh, yes, sir. Q. (By Vice-Chairman PHILLIPS.) And you make a difference in price between the Ohio oil and the Pennsylvania oil? A. Oh, yes, sir. We sold Q. (By Vice-Chairman PHILLIPS.) You sell them both up there? A. We sell them both up there. We sold the Ohio oil last fall, this time last year, at precisely the same price as they were selling Canadian oil, and we were paying these excessive freight rates and five cents duty and we still sold it at precisely the same price as they did, and we didn't lose anything by it, although 1 admit we did not make much. Q. (By Mr. SMYTH.) The Canadian public would not pay you more fo'r the American oil than for the Canadian oil? A. They would not, not always, although they do sometimes; but we did not want to ask them any more at that time. Q. It is not recognized in Canada, then, among the consumers that the American oil is better than the Canadian? A. It certainly is. Q. And yet they will not pay more for it? A. They will; but at that time we were not asking more for it. The men who were interested in his company and the Sun Oil Refining Company, of Hamilton, were also interested in the Cornplanter Refining Company, of Warren, Pa. He considered the duty on American oil as higher than the duties on other products that are imported into Canada. The Canadian duty on oil was practically about 100 per cent., although it is a straight duty of five cents a gallon on all oil costing up to 25 cents a gallon. When asked whether the government did not tax oil at a high rate because it needed the revenue, he hesitated and finally said he did not think they needed it. He did not see why they needed it. In 1898, 6,880,734 gal- lons, paying a duty of five cents a gallon, were imported. Q. (By Mr. CLARKE.) What was Mr. Fielding's reason for being un- willing to propose a reduction of the duty on coal oil? A. Well, as nearly as I can remember, he merely said that everything was good, that every- body was prosperous, or was prospering, and it was not advisable at that time to disturb any of the other industries, and hence he hadn't done any- thing with the coal oil duty, because it was the only one that he wanted to touch at that time. Q. It is a fact, isn't it, that the Canadian government derives considera- ble revenue from the importation of oil? A. They do. Q. And they need that revenue and depend on it largely for government expenses? *A. Well (A pause.) Representative LIVINGSTON. *Answer that question, please; whether the Canadian government wants that tax for revenue or what they want it for? The WITNESS. That particular tax? Representative LIVINGSTON. Yes, sir. The WITNESS. I don't think they need it; I don't see why they need it. Q. (By Mr. CLARKE.) Don't you think they consider that they need it? A. Well, from Mr. Fielding's own remarks, I would not say that he thought they needed it, because he said nothing about it at that time. Q. (By Mr. SMYTH.) Do you know how much it amounts to in a year to the Canadian government? A. No, sir; I can find out from these statis- tics, I presume (producing book). Well, in 1898, there was 6,880,734 gallons at five cents a gallon; just what that would amount to I haven't figured out. Q. *Quite a neat little sum; this oil that you bought in Ohio was at five cents a gallon; what is the freight on it to Montreal? A. Forty-three cents at the present time. *Q. Forty-three cents a hundred pounds? A. Yes, sir. *Black faced type indicates matter omitted, in the course of editing, from tlie official report. 590 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. Q. How much would that be a gallon? A. I figure that it costs us three and one-third cents for an imperial gallon. Q. That would make the oil cost between 13 and 14 cents? A. It costs us more than that when we *add the duty and cost of importing; of course we have the bari'elling. They did charge us, after the 1st of October, in 1898, as high as 46% cents freight from Toledo, and previous to that time the rate from Toledo was 291/2 cents, and we pay 43% cents from Warren to Montreal; before the Standard got control of the market we got a rate as low as 23 cents. That was not later than April, 1898, 23 cents from Warren. When you go and ask the railway people anything about it they simply won't talk to you. They don't throw a man out, but they do the next thing to it; they won't have anything to say about it. Q. Then, you really cannot sell your oil much below 17 cents and make a profit, paying that high freight and paying ^the duty and costs? A. No, we cannot sell it to-day even for that price. Q. The freight is double what it was a few years ago? A. Well, almost. Q. Forty-six against 23, I think you said? A. Well, 43 was the freight charged from Toledo; *just think of that. We have been charged as high as 46%, and we did get it at 29% from Toledo. We got it as low as 23 from Warren — that was in April, 1898, and it is very nearly double. Q. Then one reason why the price of oil is higher in Canada to-day is the high freight? A. Yes, sir; certainly. Q. And with the duty and cost there is not very much profit in it at 17 cents? A. There is not any profit at 17 cents; we cannot sell Ohio oil for 17 cents. If I remember right, I figured it out that it cost us seventeen *and three-fourths for an imperial gallon; so we cannot sell it for less than 18 or over and make anything on it. Q. Do you blame the Standard Oil Company for that increase in the price of refined oil? A. I do, so far as the freight is concerned. Q. You think they instigate the high freight from Toledo and from Warren? A. Yes, sir. We knew nothing about this, mind you, from the railway companies, although they are supposed to give due notice, to post the notices in the stations, and so forth, in regard to advance in freight, or any other notices of that kind. We knew nothing about it. I heard of it first from our people in Warren; they had gotten hold of it in some way or other, I don't know how. I went up and for 10 days I tried to find out from the Canadian Pacific Railroad what the freight was, or what the increase was going to be, and I could get no satisfaction whatever. It was on the afternoon of September 30, 1898, about half past 3, that they told me what the rate was going to be, and the Standard knew all about it, because their man ran around the office there as though he owned the office. They would tell anybody else coming in there that they had no time to talk about it, and we couldn't get any information about it, although they knew all about it. Q. It is only your suspicion that they knew all about it; *you don't know that? A. Well, I know it almost as far as I know anything; because they got in a large lot of oil at that time before these freight rates came up. Just why they brought that in I could never make out, but they must have known, *or the oil couldn't have got in; but any amount of it came in shortly before, on or about the 30th of September, and along the first days of October, which must have been on the way previous to that time. Q. You think the Standard Oil Company pays the same rates from Pennsylvania and Ohio as you do? A. No, I do not; I certainly do not think anything of the kind. The railways say they do, but I don't believe it. Q. You think they actually pay it, but there is a rebate? A. Yes, sir. Mr. Gall said the Standard Oil Company was bringing refined oil into Canada by water in tank vessels and had been doing that for three or four months previous to the time he gave his testimony. His own company had shipped oil in barrels by water. The greater part of the business of the witness was in handling lubricating oil. He said his company could not handle illuminating oil on account of the freight rates. He bought most of his lubricating oil from the refineries at Warren, Pa. There was less lubri- cating oil made in Canada in 1898 than in 1896. In 1898 there was made in "Black faced type indicates matter omitted, in tiic course of editing, from the official report. ANDREW D. GALL. 591 Canada 868,957 gallons, and in 1896, 1,447,455 gallons of lubricating oil. The decrease, he thought, was due to the fact that the American product is bet- ter than the Canadian. Q. (By Mr. FARQUHAR.) Was there any reason given at the time for raising those freight rates, on the part of the American roads that were prorating with the Canadian? Did they give any business reasons for it? A. No, sir. I may say that the American roads did not increase their freight rates. Our Canadian roads did it. Q. Did they add the Canadian tariff on the through bill? A. Yes. sir; or increased the tariff and made it up to what it is at the present time. The rate from Warren to Suspension Bridge is still eight and a half cents. It was that before, and is yet, but the rate from Suspension Bridge to Mon- treal is 35 cents, making the through rate 43i/4. The American rates remain precisely the same as they were before. The witness said that when the tank cars of his company arrive at Montreal, the Standard Oil Company opens the tanks and takes samples out to see what the tanks contain. To substantiate this charge he said he had once found a Standard Oil agent taking a sample from one of his cars and he had a letter from his foreman complaining about that fact. When the attention of the Standard Oil Company officers was called to this case they said it was a mistake, that their man got in the wrong tank. ■ The Standard, he said, was able to find out what they were importing and what they paid for their oil. He didn't know how they found out about these things. In reply to a question he said they didn't open his letters. He didn't know whether the officials of the Standard he referred to were Cana- dians oi- Americans. Q. (By Mr. CLARKE.) You think, then, that they (the Standard Oil Company) practically run your railroads and your government? A. At the present time I wouldn't say that much about the government, because I expect to have these things regulated a little; but they run the railways; that is sure. The witness had offered to guarantee the Grand Trunk Railroad 400 tank cars a year to secure lower rates on American oil, but he could not do so. Q. (By Mr. SMYTH.) You do not think it is altogether a political action on the part of the Canadian government infiuencing the railroads arbitrarily to keep out American products? A. No, sir: I don't think any- thing of the kind; I haven't any such an idea at all, and I don't think any- body else in Canada has. Q. You do not believe that the railroads kept all the freight that they charged you? A. No, I do not; I think a part of what we pay in goes back to the Standard Oil Trust; that is my opinion. Q. (By Mr. FARQUHAR.) But you have no proof of that? A. We have not. Of course there are lots of things that we know of up there, and if I had been able to come before you later I could have given you some in- formation as regards them, but we haven't proved these facts yet. We are sure enough that we have the information, and it is rather a serious thing to do that unless we have reasonable grounds for thinking it is right. Q. As far as you know, then, you pay the same freight that the Stand- ard Oil Company has paid? A. Well, the railways say so. Mr. SMYTH. That is as far as you know? Mr. FARQUHAR. That is as far as you know, I say? The WITNESS. Yes, sir; as far as I know. Q. (By Mr. SMYTH.) Is there any law in Canada against rebates by railroads? A. Yes, sir; I don't know what it is, but they have laws gov- erning these things, but the trouble there is as it is elsewhere; it is pretty hard to have these things enforced. You can just fancy a concern of not any more magnitude than our own, tackling the Grand Trunk or the Canadian Pacific on questions of that kind; *it costs a lot of time and money. The railway committee, to which he had referred, merely had the power to investigate, and their findings and judgments were not final. If they should prove what the witness and others had charged against the rail- *Black faced type indicates matter omitted, in the course of editing, from the official report. 592 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. roads, Ihey would have to enforce the law through the courts, by a civil action against the railways based on the findings of the railway committee. *Q. (By Mr. CLARKE.) Are you aware that the Canadian roads in a case admitted that, so far as traffic between Canada and the United States is concerned they are subject to the jurisdiction of the Interstate Com- merce Commission in this country? A. That the Canadian roads admitted it? Q. Yes, sir. A. No, sir. I was not aware of that fact. Q. Then you have not appeared before our Interstate Commerce Com- mission with any complaint? A. No, sir. Mr. CLARKE. You can do so, of course, if you wish to. The WITNESS. You say that the railways admit that they are under the jurisdiction of the Interstate Commerce Commission? IVlr. CLARKE. That is on record, as far as concerns the traffic between the United Stated and Canada. The WITNESS. That is freight originating in the United States going into Canada? Mr. CLARKE. No matter where it originates. The WITNESS. I did not know that. Q. (By Mr. KENNEDY.) Is there any sentiment in Canada against these large industrial combinations? A. There is and the Globe newspaper, which is supposed to be the official organ of the present administration, has been hammering away at industrial combinations, particularly the Standard Oil Trust. Q. Have you industrial combinations in Canada similar to those in this country and in England? A. Oh, we haven't anything of that kind. The oil trust is a kind of a monopoly, and so is the sugar business, but that is due to the duty and so on. There are a few of what you might call mo- nopolies or trusts, but they are very insignificant, and simply they don't amount to anything outside of the oil business. It is something new to our people there, that kind of thing; and we have to thank the Standard Oil Company for introducing it. Q. Do the people of Canada propose to seek redress through legislation? A. I think that if the present administration don't alter things in some way, so that we will not be at the mercy of these trusts, or the Oil Trust in par- ticular, that would be one means of defeating them at the next coming election, because it is about the only thing that is spoken of — this freight dis- crimination and the duty on oil and binder twine and a few things like that. Q. (By Vice-chairman PHILLIPS.) Has any gentleman of the commis- sion anything further? Have you anything further to state, Mr. Gall, for the information of the commission? A, Well, I may say that this present government said that if it was shown that there was any combination or trust, or anything of the kind, on anything whatsoever, they would imme- diately remove the duty on the articles mentioned or complained of. Well, they committed themselves in that way, so I made a declaration to the effect that there was a combination in the oil business, and it was read be- fore the House at its last session. Well, they are going to consider it, and I suppose they are considering it yet; there was nothing done about it; that is the declaration that I wrote to them, Mr. Gall's "declaration" was read to the commission. *Black faced type indicates matter omitted, in the course of editing, from the official report. F. B. THURBER. 593 CHAPTER XXIIL EXTRACTS FROM THE TESTIMONY OF MR. F. B. THUR- BER, MR. HENRY O. HAVEMEYER, MR. G. WALDO SMITH, MR. MARTIN R. COOK, MR. CHARLES C. CLARKE, MR. GEORGE J. KINDEL, MR. SAMUEL SPEN- CER, MR. MARTIN A. KNAPP, MR. C. A. PROUTY AND MR. P. E. DOWE. Quite a number of witnesses wlio were not called by the Industrial Commission to testify specifically in relation to the Standard Oil Company were interrogated in regard to the oil interests. This was so in the case of Mr. F. B. Thurber, of New York, president of the United States Export As- sociation; Mr. Henry O. Havemeyer, of New York, president of the American Sugar Refining Company; Mr. G. Waldo Smith, of New York, president of the Wholesale Grocers' Association of New York and vicinity; Mr. Martin R. Cook, of New York city, wholesale liquor dealer; Mr. Charles C. Clarke, of Peoria, Illinois, distiller of alcohol, cologne, spirits and rye whisky; Mr. George J. Kindel, of Denver, Colorado, manufacturer of bedding; Mr. Samuel Spencer, president of the Southern Railway Company; Commissioners Martin A. Knapp and C. A. Prouty. of the Interstate Commerce Commission, and Mr. P. E. Dowe. of New York city, president of the Commercial Travelers' League. Mr. F. B. Thurber. president of the United States Export Association, appeared before the commission on April 7. 1899. Mr. Thurber's testimony regarding trusts was of especial interest because he had been a prominent witness before the Hepburn Committee in New York City in 1880. when he regarded industrial combinations and trusts as menaces to the best interests of the country. His testimony before the Industrial Commission showed that 20 years observation of tlie working of such aggregations of capital had caused him to change his mind on that subject. In opening his testimony, he said: "For many years as a merchant and more recently as president of the United States Export Association. I have studied the effect of aggregations of capital commonly known as 'trusts' upon our commercial, industrial and political system. I may say that when I began it was with a strong preju- dice against them. I believed that they would tend to oppress the public with high prices and also that their political infiuence was to be feared. I had no conception that they were a natural economic development, conse- quent on the development of the great forces which now control the world — steam, electricity and machinery — or that there was any rational basis for their existence. But a careful study of their effect, ranging over a period of years, has materially modified my opinion. "The best horse will shy at an umbrella if it is opened in his face too suddenly, and the economic results of these great forces have been so sudden and startling that it is perhaps natural that even intelligent men should 'shy' at them until, like the horse, they can smell of them and see that they are not dangerous. The 'trust' is a result of these forces. * * * "The next most prominent aggregation of capital in the commercial world is known as the Standard Oil Company, and the effect upon the price of oil is illustrated by the following statistics, compiled by the TTnited States government, showing the wholesale export price for refined petroleum for the period extending from 1871 to 1898: 38 594 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. "Prices of refined illuminating oils per gallon exported from the United States, 1871 to 1898. (.The prices represent the market value of article at time of exportation) : Year. Cents. Year. Cents. 1871 25.7 1872 24.9 1873 23.5 1874 17.3 1875 14.1 1876 14.0 1877 21.1 1878 14.4 1879 10.8 1880 8.6 1881 10.2 1882 9.1 18S3 8.8 1884 9.2 1SS5 8.7 1886 8.7 1887 , 8.7 18&S 7.9 1889 - .. 7.8 1890 7.4 1891 7.0 isy2 5.9 1893 4.9 1894 4.2 1895 , 4.9 1896 6.8 1897 6.3 1898 5.7 "This great decline in the price of oil is attributable partly to the in- crease in production, but more largely to improvements in manufacture and transportation, which were only attainable through the aggregation of capital in this industry." In reply to a question by Vice-Chairman Phillips, Mr. Thurber said: "My impression is that the Standard Oil Company as a whole has been liberal with producers, and paid them as good prices, perhaps, as they could have ob- tained from a larger number of refiners. Certainly in the organization of that industry, the result has been beneficial to consumers and to producers alike." Q. (By Vice-Chairman PHILLIPS.) Take for instance, the pipe line system through which the oil is chiefly conveyed from the wells to certain stations. The price of pipe was 50 or 60 cents a foot when the lines were built, and they charged 20 cents a barrel for piping the oil. The same sized pipe is now bought for from 12 to 15 cents, and still they are charging the same price per barrel as formerly. As a matter of fact, the oil can be piped for five cents a barrel.* Now, do you consider that a cheapening to the producer or the consumer? A. I should say that it was a question of the value of the service that they are rendering. Now, as compared with the freight by rail, the construction of pipe lines has effected an enormous saving; and they could not have been constructed by individuals, but only by some large aggregation of capital. I do not know whether 20 cents is a fair price or not; I have no idea about it; but I do know that the railroads felt that they were greatly in.iured by the construction of pipe lines, because it reduced their receipts so much. Q. (By Mr. RATCHFORD.) I wish to ask if you have any instance in mind in which a certain trade has paid its employes a certain price for their labor under the system of open competition and then, when the trade was organized as a trust, advanced the prices of its product enormously and at the same time reduced the wages of its employes? A. I have no recol- lection of an instance where a trust has advanced the prices of its products and decreased the wages of labor. There may be such instances, but I have none in mind. I do know that the Standard Oil Company, the American Sugar Refining Company and others have never had trouble with their labor. They pay good wages and get good service and everybody makes money; and at the same time the consumer gets the product at a reasonable price. *Mr. J. W. Lee stated that on a charge of 15 cents a barrel by the United State.s Pipe Line Company (the transportation company allied with the Pure Oil Trust, of which Mr. Lee was president) that company has a profit "if there is anything left." lie also said that the cost of pipage was seven and eight cents a barrel, which he said did not include interest on the capital invested. His testimony to the effect that "seven and eight cents" did not include interest on the capital In- vested does not appear in the official report. HENRY O. HAVEMEYER. 595 MR. HENRY O. HAVEMEYER, President of the American Sugar Re- fining Company, 117 Wall street. New York, testified on June 14, 1899. In beginning his testimony Mr. Havemeyer declared that '"the mother of all trusts is the customs tariff bill." He said: "There is no such thing as monopoly in these days except that which results from patents and copy- rights." Q. (By Vice-Chairman PHILLIPS.) Mr. Havemeyer, speaking in re- gard to monopoly, if I understood your paper you attributed monopolies or trusts to two causes, first, patents, and second, to the tariff. Did I under- stand you correctly? A. Yes, sir. Q. (By Vice-chairman PHILLIPS.) That they were the outgrowth of patent rights? A. Patents, yes, sir. Q. (By Vice-Chairman PHILLIPS.) And the tariff levied by the govern- ment? A. Yes, sir; practical monopoly. Q. (By Vice-chairman PHILLIPS.) Well? A. Not legal monopoly, but practical monopoly. Q. (By Vice-chairman PHILLIPS.) Well, now, the Standard Oil Trust is admitted, is it not, to be one of the largest that has ever existed? A. I said with few exceptions. Of course anything that depends upon the tariff; it hasn't anything to do with the tariff. The Standard Oil Company hasn't anything to do with the tariff. You read the tariff bill and you will find that there is no tariff on oil. Q. (By Vice-Chairman PHILLIPS.) That is what I was coming to, sir. A. I said the tariff. Q. (By Vice-Chairman PHILLIPS.) You said due to two causes, patents and the tariff. A. Yes, sir. Q. (By Vice-Chairman PHILLIPS.) Now, do you understand that the Standard Oil Company has never been affected in any degree by the tariff, and yet it is one of the greatest monopolies of this country or of any other country; *and yet the tariff hss not entered into it in any manner, shape or fo"'.-n, nor have patent rights. A. ]\Iy dear sir, you are entirely off on the subject of monopoly. A monopoly is something which is carried on or may be carried on and against which there could be no competition. The oil busi- ness is open to the public. It is open to every citizen of the United States. The reason that we cannot go into it is because the Standard Oil Company makes the price so low that we cannot compete with it, and give the con- sumer the benefit. You have got to take either one position or the other. The consumer is the man to be considered because he gets the benefit of the cheap goods, and every man that interferes with these monopolists, as you say, is wiped out and very properly wiped out. Q. (By Vice-Chairman PHILLIPS.) Then you understand the reason for the Standard oil Company becoming so prominent in monopolizing the oil trade is because it is able to manufacture cheaper than others? If that be the case why have they bought out or crushed out all refiners, all pipe lines thus far except the few that are just now starting out to do business; and if you take their own business as a basis, will you not find that they are making an exorbitant profit. For instance, oil is selling *at $1, a little over $1 a barrel now, and very frequently less than $1, and is it not shown by the Standard Oil Company's own figures that they have been making in the last 10 or 12 years more profit on each barrel of oil than they have been paying for the crude? A. Well, you are confounding profit with monopoly. What is the reason I can not own a gold mine with a million dollars in it? It is all mine. Q. (By Vice-Chairman PHILLIPS.) I am undertaking to meet the proposition that you made that the Standard Oil Company made refined oil ♦Black faced type indicates matter omitted, In the course of editing', from the official report. 596 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. cheaper and that was the reason why they dominated the trade. t *A. Yes, sir; they knocked them out, they smashed them as you put it, and that leaves them still a margin. Q. (By Vice-Chairman PHILLIPS.) Not becavise they make it cheaper, but because they purchase them, circumscribe them or circumvent them In some way. A. Well, it is all business; that is all business. Havemeyer and Elder might start a refinery which cost them $10,000,000 at the start that they own; somebody who has made a million may start and Havemeyer and Elder, to protect themselves, put down the price of sugar and practi- cally say to them: "You can't market a barrel of your sugar while this sugar is being sold." Q. (By Vice-Chairman PHILLIPS.) Do you understand *now, as we are illustrating about the tariff and about these large monopolies, that the Standard Oil Company, if the markets had been open to the people and if they hadn't monopolized the pipe line business and dominated legislation, got a reduction in freights, got discriminating rates; *what I want to say is that if another company could have been put on an equality with them before the law 20 years ago and had the privilege of piping, refining and handling one-quarter of this great commodity, that they could have afforded to pay the Standard Oil Company for that privilege $50,000,000, and have made a vast sum? That would be my judgment now in regard to it. A. I think before the interstate law went into effect, the Standard Oil Company had advantages which it should not have had, but that is ancient history. They are here to-day and they go right from the fields to the consumer. They furnish oil cheaper than it can be furnished by anybody else. That is for the benefit of the consumer and is to the absolute annihilation of the middle man or anybody else in the oil business, in my judgment. If it goes into the pockets of a few people it is so much perhaps to be regretted, but there is where it goes, and legally; it would be very nice to have that divided up, but until you can find out what Carnegie is going to do with his millions I don't think you are going to get the Rockefellers to publish what they are going to do with what they have got. Q. (By Vice-chairman PHILLIPS.) You stated that the Standard Oil Company are here, and the reason that they are here is because they can do things cheaper. A. Yes. sir. Q. (By Vice-Chairman PHILLIPS.) I understand you to say that. I know people who are piping and refining oil at home and shipping it abroad and are making some profit, and could make more profit if the markets were open to them as they are to the Standard. A. Oh, I dare say there is a field at present for competition with the Standard Oil Company, but if it ever got momentous I think that the prestige and the ability and the great wealth of the Standard Oil Company would knock them out; I may be wrong; I am talking about something that I don't know much about. Q. (By Mr. C. J. HARRIS.) Do I gather from that remark that you think it is a pretty good idea for all competitors to be knocked out but one, and for him to control the business? A. I say that is true and you cannot alter it, or the Federal government cannot alter it, or anybody else cannot alter it; and the sooner you realize it and stop the talk about it the better off the country will be on the subject. Q. What we are trying to get at is what is better for the country. We want to knew whether it is a good state of affairs. A. Well, take the price of oil. Do you suppose it is better for the country to have oil two cents cheaper or to establish half a dozen competitors who are in it for the same amount of gore that the Standard Oil Company is — every bit — and who in- crease tho price. It is like we had it in sugar; you stop here the work by giving $24,000,000 in tariff on sugar to have a few people in Louisiana and a few people in the Hawaiian Islands employed and see where you are. Mil tlie ofTicial report this question appears as a part of Mr. Havemeyer's an- swer in tlie following form: "T am undertaking to meet the proposition that \ou in,^i rciinod oil cheaper. That is the reason wliy they dominate trade." *Rlaek faced type indicates matter omitted, in the course of editing, from the cifTu ial report. G. WALDO SMITH AND MARTIN R. COOK. 597 MR. G. WALDO SMITH, President of the Wholesale Grocers' Associa- tion, of New York and vicinity, College Point, Long Island, New York, tes- tified June 12, 1899. Q. (By Senator MALLORY.) *1 would like to ask a general question, as a summary of my understanding of what Mr. Smith has said on a certain point. I understand, Mr. Smith, that it is your opinion that combinations of people or corporations for the purpose of controlling the production of any particular article, do not destroy competition *in the long run? A. They may temporarily. It may until the fact is developed that there is a margin of profit to be got by somebody, and then immediately somebody makes the investment and cuts the price. Q. That is, it v/ill not destroy it effectually, but only temporarily? A. Yes, sir. The only exception would be som.e article like a patent medicine; some highly advertised article like some of the patent medicines. Q. Do you know anything about the workings of the Standard Oil Com- pany? A. No, sir. Q. Nothing except what is generally known? A. No knowledge of any name or nature. I know this, that I used to buy oil at $1.2.5 and sell it for $1.50. and could not get as much as I could sell. Now, I know you can buy four gallons for what you used to make on one. Who has done that I don't know. Q. I understand that so far as the refined oils are concerned they are much cheaper now than they were before the Standard Oil Company was organized. But the point I want to get at is whether a combination of cor- porations — I won't use the Standard Oil Company as an illustration, be- cause I might be doing them an injustice — whether a combination of corpo- rations for the purpose of controlling a specific product can be so powerful as to ultimately crush out all possible effort to compete with it. Can it not. by its methods, undersell those who go into the business and drive them out of the business — a powerful combination consisting of millions of dollars? (A pause.) What I want to get at is this: Your general position is that no matter how large the combination is, it will not prevent competi- tion as long as competition will pay. Is it not possible for a combination to be so strong as to crush out all possible effort to compete with it? A. That may be true, and it is certainly true that great aggregations of capital that can command the best brain power in the world can undersell lesser aggregations of capital and inferior brain power. That of course can be done and should be. It is legitimate and right and the interests of the people are subserved by it. For instance, the Standard Oil combination has saved the people millions of dollars in the reduction in the cost of oil. Q. (By Vice-Chairman PHILLIPS.) You do not attribute that reduction to the fact that it is monopolized? A. No. Q. (By Vice-chairman PHILLIPS.) But to new discoveries? A. Yes, and new methods. And the brain has been brought to bear upon it, and wonderful ability has been brought to bear upon it. MR. MARTIN R. COOK, wholesale liquor dealer. New York City, tes- tified May 19, 1899. Q. (By Mr. KENNEDY.) You state that you believe the trusts would be a very good thing if they were properly conducted. Will you state the particulars in which you think they should be conducted dilTerently from the way in which they are conducted? A. In a word, I should answer that by saying that if we should adopt the same principles that the Standard Oil Company have, and on which they have made their success, that would be all that we would have to do. It is a very simple one; to charge as small a profit as possible, and pay a reasonable dividend and profit. *BIack faced type indicates matter omitted, in the course of editing:, from the official report. 598 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. *Q. (By Mr. C. J. HARRIS.) If they paid as small a profit as possible, how is it that the members of the Standard Oil Company have become so immensely wealthy? A. They have been able to lessen expenses very much below what the small oil refiner used to have, and by controlling the whole product and economizing, and with the immense business which they do, they have been enabled to make a great deal of money. Q. What can refined oil be sold for at a profit? A. I don't know, I am not familiar with that. I know more about the Standard Oil Company in this way: Where I live we have a small bank, and the vice-president of the largest plant of the Standard Oil Company is one of our directors, and, in the course of many years association, I have learned something of their methods of doing things. There is a rivalry between the different plants to see which can produce the best results. That is to say, produce oil of equal quality at the lowest cost, and he told me that the moment any one of them did make an improvement, or a marked difference in the price, or even a slight difference, and reported it to Mr. Rockefeller, instead of the extra profit going to the stockholders, Mr. Rockefeller's policy had been and always was to reduce the price of the oil. The idea is that their small profit shall be on practically the whole product of oil of the country, and on their methods of handling it. They have a vast number of tank ships, and they dump the oil right into the ships and carry it to the different parts of the world. They have their plants all over the world, and, as I say, a small percentage has made the great wealth which they have accumulated. So it might be the same with the distilling business. I have said that we have a plant, the product of which is practically 10 per cent, of the con- sumption of spirits and alcohol of the country; now, 10 such plants as that would supply the whole consumption of the country, and that would be, say, 60,000,000 gallons. If they should get two cents a gallon on that product even with their present capitalization, it would pay them very largely, and yet there is none in the trade that would not be willing to pay that price. In fact, I said a year ago if they would give us a fixed profit of two cents a gallon, not upon their inflated capitalization or fixed charges, but based upon corn, we would be very willing to take it, and not undertake to have any competition. Q. (By Vice-Chairman PHILLIPS.) Would you consider it an unrea- sonable profit, if you should make more profit on each bushel of corn you bought than you paid for the corn itself; would you consider that an un- reasonable profit ; The WITNESS. How was that? "Vice-Chairman PHILLIPS. Would you consider it an unreasonable profit if you made more profit on each bushel of corn you bought than you paid for the corn itself? The WITNESS. Well, if it went into my own pocket and I could control it, I would think it would be all right; but when it comes to business, then it is another thing, you know. Q. (By Vice-Chairman PHILLIPS.) Do you know or do you believe the Standard, for instance, makes more on each barrel of oil than they pay the producer for that barrel? A. No, I do not. *Q. (By Vice-Chairman PHILLIPS.) You do not think so? A. No, sir; oh, no, sir. Q. (By Vice-Chairman PHILLIPS.) You do not think their profits show that in the last 10 or 15 years? A. No, sir; I don't know anything about that. "Mr. A. L. HARRIS. I rise to a point of order, Mr. President. In regard to this Standard Oil matter, I do not think we ought to examine Mr. Cook about that; we had better drop that part of the subject; we have gotten that evidence from other men, you understand. Vice-Chairman PHILLIPS. But the question had been entered upon. Mr. FARQUHAR. I move that that be struck out. Mr. C. J. HARRIS. I object to that, most assuredly. *niark faced type indicates matter omitted, in tiic course of editing, from tlie oftieial report. CHARLES C. CLARKE. 599 *Mr. KENNEDY. I object to that. Mr. Cook has said if'all trusts were conducted as the Standard Oil Company is conducted, he would be in favor of them; now we cannot have that stricken out. Mr. FARQUHAR. But he cannot explain the Standard Oil Company's mode of doing business, and the Standard Oil Company is not on examina- tion, either, as a matter of fact. Vice-Chairman PHILLIPS. The chair would rule that anything pertain- ing to trusts is competent by any witness before the commission, whether it is on his own subject or not. Representative OTJEN. Whatever the man knows, it should make no difference what the subject is. Vice-Chairman PHILLIPS. And the witnesses have all been examined on that line. Mr. A. L. HARRIS. Well, I withdraw my objection, Mr. Chairman. Vice-Chairman PHILLIPS. Have any gentlemen of the commission any further questions to ask? Representative OT.IEN. *l would like to ask just one additional ques- tion, although I think this investigation of the oil matter is a little out of place. Do you think that the profit made by the Standard Oil Company from the oil industry of Ohio, of $50,000,000 a year, is a moderate profit? A. I don't know anything about ii. Q. (By Mr. C. J. HARRIS.) I would like to ask one question more and that is this: What percentage of the total consumptive demand of the country must be reached in order to control the price? A. Oh, I don't know that there is any fixed percentage; I know if you are going to have a close control of it, you would need it all. Q. Every bit of it? A. Every distillery, if it is a close control of it; of course, that you probably never would have. It is practically impossible. I suppose fhat the competition of the Standard Companyf to-day is limited to one or two very small concerns, outside of our own company, which I have named. Q. (By Professor JENKS.) You think they control probably say 85 per cent, of the output? A. I should say so. MR. CHARLES C. CLARKE, of Peoria, Illinois, distiller of alcohol, cologne, spirits and rye whisky, testified May 13, 1899. In reply to a question by Vice-Chairman Phillips, Mr. Clarke said: "I believe that these great accumulations have been a direct benefit to the industries of the country, for the reason that they have made possible industries, commercial enterprises, that would not have been undertaken except for the accumulation, and they accomplish results that no single indi- vidual or small company could accomplish. For instance, the Standard Oil Trust has solved the question of pumping oil from Pennsylvania to Chicago. No single individual could have accomplished that with the small sums that were ordinarily invested in oil companies." Q. (By Vice-Chairman PHILLIPS.) Could not that have been done by what we call the regular corporation as well as through a great trust, worth nearly $100,000,000? A. Perhaps so in time. Q. (By Vice-Chairman PHILLIPS.) They are comparatively inexpen- sive to build; a pipe line costs much less than a railroad. A. I would not be surprised but that it would come about, but at the same time I have noticed in all trusts, and especially in our own trust, that they are all the time employing men to experiment in new directions, both for trade and in lessening the cost of production and demonstrating that they can have trade in foreign countries and in different directions where it had never been before. They have taken up new patents and tried them and have made every effort possible to increase the volume of business. tThe Standard Distilling: and Distributing Company. *Black f:iced type indicates mattef omitted, in the course of editing, from the official report. 600 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. MR. GEORGE J. KINDEL, of Denver, Col., who came before the com- mission on October 10, to complain of railroad rates, which he claimed resulted in discriminations against him. took occasion to incidentally bring in a grievance against the Standard Oil Company. He protested against the price of refined oil at Denver, which he thought was higher than it should have been, and paid his compliments to the Standard Oil Company in the usual manner of a number of other witnesses who referred to that company. He said that the Standard Oil Company had knocked out other refiners by selling oil at a very cheap rate until it had driven its competitors from the field, after which, he said, it raised the price 100 per cent. This was very good testimony until it was shown that Mr. Kindel had got his facts backward and that the Standard Oil Company was not a refiner of oil at Denver, that industry being carried on by another firm, the Stand- ard doing a limited business there in handling the crude oil. This fact hap- pened to be known to Commissioner Kennedy, who had lately visited Den- ver as a member of a sub-commission on transportation which went there to investigate charges concerning discriminating railroad rates. When it was learned that Mr. Kindel's criticism concerning the price of refined oil did not bear upon the Standard Oil Company the matter was dropped and the witness confessed that he had been misinformed and that what he had said had been based on mere hearsay. Under the rules of the commission, Mr. Kennedy's correction of the witness was stricken from the official report, while the erroneous statement of the latter was allowed to stand, without even his final admission and excuse that his testimony was based only on hearsay. In that way the mis- information contained in Mr. Kindel's testimony was allowed to remain in the official report without any adulteration of fact. It was very proper that this should be so. because the testimony looked worse for the Standard Oil Company when shorn of the statement of a member of the commission con- tradicting the loose and erroneous comment of the witness. In this connec- tion it is interesting to note that at the close of the testimony given by Mr. Howard Page, a member of the commission took occasion to endeavor to answer a question about which the witness said he knew nothing, and that was allowed to remain in the official record. Of course, the result of this India rubber rule that seemed to be applied to the final preparation of this testimony for publication is of consequence only as the remarks deliber- ately cut out or any testimony added might tend to cause the reader to be misled in regard to the information that was actually elicited by the inves- tigation. Mr. Kindel's bit of interesting testimony, with parts eliminated from the official report indicated by black faced type, follows: Mr. KINDEL. You take oil. for instance; we have oil fields in Colorado, and yet our coal oil costs 100 per cent, higher to-day in Denver than in Chi- cago. Gasoline — I got fooled on that this spring. I bought a gasoline engine and figured the cost on it of seven to nine cents a gallon. I bought the engine and put it up at my works. I expected to pay 5 or 10 per cent, more, but I was not prepared to pay 100 per cent. more. Our freight rates to the Standard Oil Company on oil, from coal oil points to the Pacific coast points are 96 cents, while from Chicago, right through our oil fields up there, it is 781/2 cents; and the oil wells are controlled by the Standard Oil people. Q. (By Mr. C. J. HARRIS.) Do they control in Colorado? A. Yes. sir; they buy the oil. For instance, there are the several owners of the wells, and they pay them so much, and they refine it. ****** * Q. (By Vice-chairman PHILLIPS.) Referring again to the oil. are there any individuals or companies refining oil near Denver, where you have a considerable oil field? A. Not that I know of; they have all been knocked out by the Standard Oil Company. Q. (By Vice-Chairman PHILLIPS.) How did they knock them out? A. By reducing the price to such a point that they had to sell oil there for five cents and less; and after they are out, then they raise the price until it is al)OUt 100 per cent, higher. GEORGE J. KINDEL AND SAMUEL SPENCER. 601 *Q. (By Vice-chairman PHILLIPS.) A hundred per cent, higher? A. Yes, sir; it was the last time I investigated it. Q. (By Vice-Chairman PHILLIPS.) Is there any competition there in the petroleum business? A. No, sir; not that I know of. Q. (By Vice-Chairman PHILLIPS.) Any competition there amongst themselves? A. No. sir. Q. (By Vice-chairman PHILLIPS.) Nor from abroad? A. No. sir; the prohibitive freight rates bar anybody from going in; you can't ship in. Q. (By Vice-chairman PHILLIPS.) Does the Standard Oil Company ship oil from a distance or does it refine the oil which is produced in those fields? A. They produce the most of it right there and refine it. Q. (By Vice-chairman PHILLIPS.) Do they own the wells themselves? A. No, sir; some of our wealthy men own the wells, and they sell their supply to them. They may own some of the wells, but I know Senator Hill is one who is reputed as being a large owner of oil wells in Florence, and he does not refine any. He produces oil and they refine it. They control the market price as the seller of this product. *Q. (By Mr. KENNEDY.) On the contrary, Senator HIM, who was before our sub-commission in Denver last summer, testified that he owned none of the producing wells, but owns a refinery. A. Is that the way of it? Well, if that is it, I am misinformed; it is only hearsay. Q. All the testimony we took was to that effect. He is not a producer at all, but a refiner. A. Well, I complained of the excessive price of the oil to Standard Oil Company managers, and they told me what I have just stated, that they had to buy the oil from Senator Hill and refine it, and said: "Why don't you kick about them as well as about us." *Mr. KENNEDY. Mr. Bell had the commission investigate that matter particularly this summer, and we found that the Standard Oil Company con- trolled the output of the oil, but did not produce or refine it. They came in there and bought practically the control of the product and distributed it throughout the State. MR. SAMUEL SPENCER, of New York, president of the Southern Rail- way Company, testified on October 11, 1899. He said that on the Southern Railroad there was no discrimination of rates and that that statement applied to the petroleum industry, as well as to any other. Q. (By Mr. CLARKE.) As a matter of fact, has any company, like the Standard Oil Company for instance, any advantage in getting the business of the people along the line of your road over any other company? A. No, sir; unless they have superior advantages within their own business; none, so far as the railroad company furnishes them. Q. (By Senator MALLORY.) Are the rates charged for hauling these tank cars the same as is charged for hauling similar cars for anybody else? A. The only difference is that if a man owns his own car, under the present car mileage system, we pay him a special rate for mileage upon his car, but we would do that for any man who furnishes them, and I would like to see that done away with, but we cannot do it. The cars are there and every- body has to take them at the established rate, and we have to do the same thing or go without the business. *Black faced type indicutrs matter omitted, in the cour.=p of Pditins, from ih'- official report. 602 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. COMMISSIONER MARTIN A. KNAPP. of the Interstate Commerce Commission, testified on October 5, 1899. Q. (By Senator MALLORY.) There is a species of discrimination, to which my attention has been called, that you have not mentioned exactly — at least I do not think that it falls under any of these charges. That is the charging of different rates over the same road in different directions — over the same lines of road. For instance, from my State, Florida, vegetables are sent up to New York, and on the same cars coming back there is a dif- ferent rate per hundred charged. A. Oh, yes, sir. Q. Now, the excuse that is offered for that, the reason, as I understand it, is that they have to bring the cars back anyhow, that they have got to go down South again, and it is better to get something than nothing for it. Have you had occasion to consider the validity of that excuse and the reason? A. Oh, yes, sir; in numerous cases — that is to consider the general question which that situation raises. I recollect, without being able to give exact figures, an investigation in which it appeared that a certain railroad system charged a good deal more for carrying petroleum products south- bound in tank cars to certain interior destinations, than it charged for carrying cottonseed oil, a much more valuable product, in the other direc- tion on the same cars. Q. Now, the reason, I suppose, in that case is the same as the one I refer to. Is that, in your judgment, a sufficiently strong reason to justify the discriminations which are practiced in consequence? A. I do not hesi- tate to say that I do not think it is sufficient. Of course, you gentlemen all understand this. I assume it depends on the point of \ie^y. If you accept railroad transportation as a purely private enterprise, to be conducted like a farm or a factory, then its financial interests might justly lead it to many and obvious discriminations, but if you say, as I think we are all now dis- posed to say, and presently everybody will say, that railroad transportation is not a private commodity, not a private enterprise, but purely for the public service, and that public rights are to be considered at least equally with the rights of the carriers, then of course the asserted justifications often entirely fail, and discriminations which might be excused, on the theory of private enterprise, become palpably insufficient and inadequate, when you contemplate the railroad system as the agency of the State. COMMISSIONER C. A. PROUTY, of the Interstate Commerce Commis- sion, testified on October 5, 1899. Mr. Prouty seemed to think that the location of the refineries of the Standard Oil Company at seaboard points, where oil could be shipped by tank boats to Boston and from Boston distributed through the New Haven territory, gave that company an unfair advantage, because of the railroad rates, over competitors who were obliged to ship by rail from interior points. He thought that it was significant that, w^hile general freight rates from Cleveland to Boston had declined since 1887, there had been no decrease in the rate on oil. He said that the territory embracing practically all of Connecticut and parts of Rhode Island and IVTassachusetts was con- trolled, when he testified, by the New York, New Haven & Hartford Rail- road Company. The rate on gr'ain and grain products, on iron and iron articles and on petroleum, from Cleveland to Boston in 1887 was 22 cents a hundred pound.s. To-day, he said, the rate on grain was probably l.i cents a hundred pounds and on iron articles 20 cents a hundred pounds, the rate on petroleum from Cleveland to Boston being 24 cents a hundred pounds. Nearly every commodity shipped from the West into New Haven terri- tory secured a throu,gh rate from Chicago or Cleveland or elsewhere, but on petroleum and its products, almost alone, there was no through rate. When the New Haven territory is reached, the local rate over the New^ Haven Road must be paid. The high rates met by independent refiners of Cleve- land and Titusville in all that territory, he had been told, prevented them from sending their .goods there. C. A. PROUTY. 603 "Here is another significant fact," he said. "The New Haven Road says that petroleum and its products shall be second class, unless the party to whom it is shipped has a private siding and tank facilities beside the rails, into which he can pump that petroleum, and in that case it is fifth class. The Standard Oil Company people have these tanks and all these private sidings, all over the New Haven territory. A person without these facilities must pay second class, and the person with these facilities pays fifth class. The fifth-class rate from Boston to New Haven is probably 10 *or 12 cents per hundred pounds; the second-class rate is probably 20 cents. There is a difference of 10 cents a hundred pounds; so, I say, that while the Standard Oil Company does pay the published price — they have gotten above the point of taking a rebate — they have got to the point where they can make the rate and the manipulation of these rates is just as effective to keep inde- pendent people out of that territory as the payment of the rebate would be, and more so.f "Now, I will give you another illustration. Of course. I haven't the time to go through this whole business; but this is the rate from Cleveland down to New Orleans. You know the Standard Oil people have some refineiies in Cleveland, and there are a great many independent refineries at Cleveland. The Standard Oil Company has large refineries at Whiting, Ind., just south of Chicago, and that is the only company that has any refinery at that point. There is a general relation of rates from Cleveland and Chicago to New Orleans. I had the opportunity to get the rates on about 20 articles, which take substantially the same rate that petroleum and its products ordinarily take, and I find that the Cleveland rate is just about two cents higher than the Chicago rate on an iron article, as it is on almost everything that you can think of. It costs about two cents more to send from Cleveland to New Orleans than it does from Chicago. Linseed oil takes the rate of 26 cents from Chicago and 28 cents from Cleveland. But when you come to petroleum, you find this to be true, that whereas the rate from Cleveland is 31 cents to New Orleans, the rate from Chicago is 23 cents to New Orleans. The independent refiner pays the 31-cent rate, and the only person in the world who gets the benefit of the 23-cent rate is the Standard Oil Company, of Whiting. Now, that is the way I think — and I ought very probably to say — that the Standard Oil Company manipulates rates to-day. i "Now, I do not think, gentlemen, that the property of the Standard Oil Company is not just as much entitled to respect, *as long as they use it properly, as that of everybody else. I do not believe any legislation against that company would be wise.§ But I do think that the avenues of com- merce, that the arteries through which the life blood of this country circu- lates, ought to be unimpeded; I think that the humblest shipper should have the same rights as the mightiest monopoly, and I think there ought to be somewhere some power which can see that this is so." Q. (By Senator MALLORY.) Have you any idea what influence it is that enables the Standard Oil Company to get such concessions as it evi- dently does get? A. My dear Senator, the influence is exactly the same influence which produces every discrimination; the interest of the party which grants the discrimination, somewhere. I suppose, in the case of the New Haven Road, it is perfectly apparent what the reason for it is. The New Haven Road can make more money by transporting that petroleum upon a local rate than it can by joining in the through rate. You asked me why the New Haven Road does not adopt the same policy in reference to *Black faced type Indicates matter omitted, in the course of editing, from tiie official report. tThis and other severe accusations by Mr. Prouty against the Standard Oil Com- pany seem entirely unwarranted and inconsistent, in view of his later statement that it was peri^ectly clear that the New Haven Road made the local rate because it could make more money on it than by .ioining' in a through rate. Jin the official report this sentence is given in the follovting form: "That is the way in which the independent refiners claim tlie Standard Oil people manipulate rates to-day." Sin the official report the following appears n the place of the above sentence: "I do not believe any legislation against that company, which is in any sense unjust, would be wise or redound to the benefit of the country, etc." 604 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. all commodities, and I simply say to you, because, if the people of Connecti- cut had to pay the local rate on everything they burn up and wear and eat down there, they would soon send up here to the Capitol some Senators and Representatives who would speedily endeavor to enact a law which would stop it; but they let it go along in reference to one or two commodities where they would not in reference to all. Q. Have you any suggestion as to a practical, expeditious and certain remedy for such an evil as that, conceding that it exists? A. Of course, I do not say that it is an evil. I do not say that it is an unjust discrimination. I simply state the facts as they appear, as it seems to me, on the surface. Mr. Prouty said, assuming that through rates should be given into the New Haven territory, some one should be empowered to compel the making of such rates. He said it was undoubtedly in the power of Congress to invest the power to make such a through rate in somebody. MR. P. E. DOWE, of New York City, president of the Commercial Trav- elers' National League, went before the commission on June 15, 1899. His testimony could ordinarily have little or no bearing on the Standard Oil Company, for the reason that commercial agents could be employed only to a moderate extent by that company. Although the witness gave no evidence of having special information on the subject of the oil industry, Vice-Chair- man Phillips questioned him in regard to that subject. Mr. Dowe gave some testmony that would not be likely to please Vice-Chairman Phillips, and curiously enough it does not appear in the official report. This portion of the testimony, which was eliminated, follows: Q. (By Vice-Chairman PHILLIPS.) Then it is quite certain that they cannot produce as cheaply as an individual who is capable of managing his own affairs? A. I don't quite agree with you in that, Mr. Chairman; I would like to agree with you entirely, but it seems to me that they do cer- tainly cheapen the cost of production. The following is a portion of Mr. Dowe's testimony: Q. (By Vice-Chairman PHILLIPS.) If the chair understood you cor- rectly, you stated the trusts really cheapen things, that manufacturing is cheaper than without trusts. Now, do you limit that to a large number under one control in various parts of the country where they have gone into a combine or a trust; do you believe, in other words, that one central organization can run 40 different manufacturing establishments in 10 or 1.5 States as cheaply as owners can in each of these States, provided their works were large enough to manufacture a reasonable amount of goods? A. Why certainly they can produce for less money with the syndicate by cutting off the expenses of salaries of traveling men first, and second the cutting off of salaries of officials. *l find in tlie record of trust organiza- tions, that there is combining and re-combining; for instance, Jones, Brown & Robinson have a concern which sells out to the American Wind Bag Com- pany, and the American Wind Bag Company will ultimately sell out to the American Wind Syndicate, and so on; it is a wheel within a wheel. Some salesmen were disposed of by Jones, Brown & Robinson; and then there were some salesmen who represented the American Wind Bag Company, and they were dispensed with when they went into the American Wind Company. At the same time there was a dropping of officials of Jones, Brown & Robinson; they receive a great deal of money for their plant, probably it is three times what it is worth, and it may be a possibility that Jones was president of the Wind Bag Company and he drops his position when it sells out — when it goes to the American Wind Company. Q. (By Vice-Chairman PHILLIPS.) *That is, under certain circum- stances; I admit the truth of that; but there are certain industries where they are not subject to such (>xpenscs as traveling salesmen, and so on. that certainly cannot be run as cheaply as by individuals who look specifically after their own plants. *l am thoroughly convinced — I have it here stated, *BIack faced typr> indicates matter umittod, in tiie rourfe nf editing, fnmi the cfficial report. p. E. DOWE. 605 that the largest trust in this country is not producing as cheaply as those of much smaller capacity can produce; their whole plants are run by em- ployes. Their production and their manufacturing is all run from one central office, and all who manage their affairs are employes. A. I can understand very readily how trusts would be less profitable than the indi- vidual concerns on the ground that much of the capital is watered. If I had a plant and business which was worth intrinsically $100,000, and the agent of a trust would come along and say: "Mr. Dowe, we will give you 1200,000 for your plant; we will give you $100,000 in common stock and $100,000 in preferred stock." If I think I am strong enough to buck against the trust, and I decline, they finally think that I am a pretty good judge of my business, and I am quite well fixed and I will interfere with the imme- diate business of the trust, and they will agree finally. to give me $200,000 in cash. Now, I have made, besides the salaries of those who are identified with me in this $100,000 plant that they have bought, a margin of 10 per cent. They will expect to make 10 per cent, on $200,000, and somebody is going to be defrauded; and I can readily understand how it would be diffi- cult, unless the prices were advancing, to make 10 per cent, on $200,000 where we used to make it on $100,000. Q. (By Vice-Chairman PHILLIPS.) Do you believe that any great trust could exist for any length of time, provided other people could organize and pursue that same line of industry at the same terms and conditions as they had as to terms of transportation? A. No, it would result in breaking them up. *Q. (By Vice-Chairman PHILLIPS.) Then it is quite certain that they cannot produce as cheaply as an individual who is capable of managing his own affairs? A. I don't quite agree with you in that, Mr. Chairman; I would like to dgree with you entirely, but it seems to me that they do certainly cheapen the cost of production. Q. (By Vice-Chairman PHILLIPS.) There may be a few, when they have a large expense for traveling salesmen, etc., but there is no great com- bine that would exist five years if any other persons or corporations could go into the same business on the same terms, as to the transportation of manufactures. A. Who will go into the business? The salesmen would be willing to if they could get the capital back of them, and they would have a knowledge of the business, but since I have made a personal argument pre- viously, I would make one again. I sell printing presses; supposing the manufacturers of printing presses would go into a combination, and they would say: "Mr. Dowe, you know the technical points of the business; we cannot pay you $5,000 a year; we can give you $2,500 and a house position." Well, I might be egotistical enough to believe that I could organize a com- pany of my own and I would get some friends to put up some money and I would go to New .lersey and I would capitalize a million dollar company, with a few thousand dollars to begin with, and ultimately sell some stock. I would get my friends and others interested, and they might approach their friends. The instructions then to the representatives and agents of the printing press syndicate would be to outsell me under any circumstances that no matter what prices I might quote, to go under, and I would soon be wiped out. Q. (By Vice-Chairman PHILLIPS.) Well, the proposition was that they should be on terms of equality with the others; if there was a law to pre- vent your company from underselling at any given point where you had a market for your goods, and keeping the price up at other points; if there was a law to prevent that, to prevent, if you please, what might be called destructive competition, I think any company would be willing to take the stock if they could get in on terms of equality; that was the proposition. A. Yes, sir; that is a pretty hard proposition. I appreciate the fact that some of the officials that are thrown out or that have sold out their intere.st in concerns which were bought up by the trust, will remain idle a certain length of time; but some of them are somewhat energetic and progressive, *Black faced t.vpe indicates matter omitted, in the course of editing-, from the official report. 606 REVIEW OF TESTIMONY— INDUSTRIAL COMMISSION. aud probably would get into manufacturing. I presume they will, but whether it could be on the basis of equality or not, is a question. Q. (By Vice-Chairman PHILLIPS.) The opinion very largely prevails among business men that the trusts will go down of their own weight. They cannot be managed as economically as men or smaller companies could manage their own affairs. A. It is the belief of the traveling men that trusts are largely watered, and are organized for speculative reasons, and that they will go down of their own weight; that they cannot be handled as economically as ordinary business would be handled by the individual owners. Q. (By Representative BELL.) Well, hasn't the Standard Oil Trust lasted now for over 30 years? The WITNESS. The Standard Oil Company or the South Improvement Company? *Representative BELL. It is all one under different heads, for the pur- pose of doing the same things, evading the law, and it bids fair to live for several generations yet. Q. (By Vice-chairman PHILLIPS.) Do you believe that the Standard Oil Company is producing oil as cheaply, refining oil as cheaply, and mar- keting as cheaply, as others could do and would do, if they had the same opportunity? A. With the same opportunity others could produce as cheaply; but they control such a large proportion of the product that they virtually make the price for crude oil. *Black faced type indicates matter omitted, in tlie course of editing-, from tlif official report. APPENDIX. Supplementary affidavits of Henry Demarest Lloyd, Charles B. Mathews, M. L. Lockwood, F. S. Monnett, James W. Lee and John D. Archbold. After the Industrial Commission had concluded the taking of testimony on the subject of the Standard Oil Company, Messrs. Henry Demarest Lloyd, M. L. Lockwood, F. S. Monnett and James W. Lee, whose testimony had been referred to by Mr. John D. Archbold, together with Charles B. Mathews, prepared affidavits which were, by their request, embodied in the report of the commission. These affidavits, in the cases of those who had appeared as witnesses, were largely devoted to a reiteration and elaboration of state- ments they had previously made when on the stand and in contradiction to the testimony given by Mr. Archbold. Mr. Mathews sought to justify his acts when connected with the Buffalo Lubricating Oil Company and during his contention with the Vacuum Oil Company, his competitor in business. Mr. Archbold, also by affidavit, replied to these supplementary statements, and by so doing added much of interest to throw light on the contentions under consideration. It will be seen by Mr. Lloyd's voluminous defense of "Wealth Against Commonwealth" that he assumeo fairness in his work, because he claims to have quoted at great length from a great number of official documents and from the testimony of Standard Oil witnesses who have appeared before various investigating committees. No important attempt to misrepresent any great cause has ever been made without quoting the words of men who are connected with the cause being attacked. The art of falsification is never more powerfully applied than by making selected quotations from "authorities," from "official" publications and from the language of the very men it is desired to misrepresent, in order to produce an erroneous impres- sion in the minds of readers who do not suspect that quotations from un- questionable sources may be ingeniously arranged to form a falsehood. They do not know that a partial truth is the most vicious form of a lie. In view of these well-known facts Mr. Lloyd's protestations in relation to the respectability and reliability of his "authorities" are in themselves of little consequence. Mr. Mathews' statement of the circumstances surrounding his contro- versy with the Vacuum Oil Company should only be read in connection with the record in that case to which Mr. Archbold refers as the most complete and reliable statement of the facts involved and which appears on pages 801 to 951, inclusive, of the report of the Committee on Manufactures of the House of Representatives. 1888.* Not only does this record show there ♦Furnished by tlie Standard Oil Company: The CHAIRMAN. Now, there is some other testimony which you have hus- gested htre, which you offer in the nature of records, which will be marked. Mr. DODD. It is the indictment, etc., in that Buffalo case Tiie CHAIRMAN. That will be admitted for the reason that upon examination of Mr. Mathews here before the committee he agreed to furnish us with this copy f'f the record, and as he has not done so, I will put It in the case to complete his testimony. Mr. DODD. I also have a copy of the affidavit of the jirors in that case. The CHAIRMAN. This portion we will have to dispose of in executive session. I understand that this affidavit was an affidavit forming part of the record. (Report Committee on Manufactures, House of Represcntatixes. Standard Oil Trust. 18SS, p. 801.) ii AFFIDAVIT OF HENRY DEMAREST LLOYD. was not a particle of evidence by which any member of the Standard Oil Company could have been held in that case, but it shows that the Everests were only convicted of enticing away a workman under contract, this work- man, with a knowledge of their trade secrets, having been previously enticed away from them to a rival refinery. Very aptly Mr. Mathews quotes the old saw : "No man e'er felt tha halter draw, "With good opinion of the law." His quotation is perhaps the best explanation of his criticisms, as well as those of his friend Lockwood, of the legal proceedings in connection with this case. It will be seen that Mr. Lockwood, in his affidavit, takes great pains to prove that the net profit on oil at wholesale at the point of manufacture is considerably less than the gross retail price of oil sold in cans at retail in some parts of Texas and Florida. This might be an herculean task for a pigmy, and it is performed fairly well by Mr. Lockwood. He might also have proven that crude oil at the well is less valuable than the highest grade of lubricating oil retailed in small bottles, and thus have added still further to his national reputation as a debater of moot questions. Mr. Lockwood also juggles statistics in relation to oil production with great facility. Mr. Monnett in his affidavit attempts to set himself straight in his now much advertised "bribery case," and by so doing gave Mr. Archbold an op- portunity to tell the commission the whole story in connection with that matter. Mr. Lee, "being duly sworn, deposes and says" several things to show that the Pure Oil Trust is a good trust, and, while in outward form and feature quite like some bad trusts, its spirit is very different. As a non-dividend paying combination the Pure Oil Trust is peculiar and admittedly different from combines conducted on business principles. In order that the reader may judge of the contentions contained in these affidavits they are given here in full: AFFIDAVIT OF HENRY DEMAREST LLOYD, Author of Wealth Against Commonwealth. Henry Demarest Lloyd being sworn and shown the following statement* made by Mr. John D. Archbold before the Industrial Commission: "I desire to say a word regarding the effort at pathetic reference of Mr. Lockwood to the Rice case in Mr. Lloyd's book. I desire to characterize this statement in Mr. Lloyd's book, as well, indeed, as all the other statements with reference to our business, as cunning fiction, made up entirely on one- sided testimony and dressed for sale. Whether Mr. Lloyd expected to share, as a result of his advocacy of Rice, in what Mr. Rice might be able to get from us, I am unable to say, but he certainly lays himself open to that sus- picion. "I desire to say further with reference to this book of Mr. Lloyd's, that if you are disposed to waste your time reading it you will find it, with refer- ence to its statements regarding the business of the Standard Oil Company, one of the most untruthful, distorted compilations that was ever inflicted upon a suffering public." "Q. (By Mr. FARQUHAR.) Will you state the title of the book? A. Wealth vs. Commonwealth"— Makes deposition as follows: That he is the author of Wealth Against Commonwealth. That the main and central statements of Wealth Against Common- wealth are: First — That certain men, now commonly known as the Standard Oil Company, entering the oil business before and after 1872, with no more capital and business experience than men already successfully established in the business, were declared by judicial and legislative investigations by the State and National governments to have obtained in a few years after 1872 a controlling and monopolistic position in the great oil industry. *See Vol. I. Rcpcrt of tlip Tndti.^trir.i Cr rnmis:-ion. Part TT. i>a,t;p 7.7,9. AFFIDAVIT OF HENRY DEMAREST LLOYD. iii Second — That judicial decisions and formal reports of legislative in- vestigations declare them to have done this largely by making with the rail- ways secret and unlawful contracts, by which their competitors and the people at large were denied the protection of competitive markets for buying and selling and deprived of their right to work at the occupation of their choice, and were forced to abandon their efforts in the oil industry to pro- vide a livelihood for themselves and their families. After taking 3,700 pages of evidence and sitting for months, the railroad investigating committee of 1879 of the New York Legislature said in their report: "The history of this corporation is a unique illustration of the possible outgrowth of the present system of railroad management in giving preferential rates, and also show- ing the colossal proportions to which monopoly can grow under the laws of this country. * * * fj^g parties whom they have driven to the wall have had ample capital and equal ability in the prosecution of their business in all things save their ability to acquire facilities for transportation." Third — That this success of the oil monopoly has encouraged the forma- tion of other monopolies by similar means, filling the minds of the people with alarm and threatening not only the prosperity, but the peace of the country. Deponent further swears that his account of these matters in Wealth Against Commonwealth makes no claim to be the result of original investi- gation, nor personal knowledge, but is in all things essential and contro- versial a transcription fiom the documentary records of State and Federal courts, civil and criminal, of Legislatures, of Congress, of the Interstate Com- merce Commission, and of sworn testimony given in legal proceedings and official inquiries, corrected by rebuttal of testimony and cross-examination, with no changes in substance and no changes in form other than those neces- sary for such condensation and simplification as make the transcription in- telligible to the common people. He further swears that in giving the public the particulars on which the official verdicts have been found his account is so far from being "one-sided" that in less than 500 pages it contains more than 200 quotations, some of them nearly a page in length, from the testimony and statements in behalf of the members of the oil monopoly, and that in all cases he has indicated the nature of their defense, so much so that what is pertinent in the replies to him which have been made for them will be found to have already iDeen given by him in Wealth Against Commonwealth. Deponent further says that every controversial statement made by him is supported by exact references, by page and volume, to the official sources of information on which it is based; that in the five years which have elapsed since the appearance of the book it has not been shown that his conclusions have gone beyond the decisions or the testimony on which they are based, nor has the accuracy of his quotations and condensations been disproved. Deponent further points out, in answer to the charge of "one-sided testi- mony," that the selection of the testimony was not his work, but that of courts and legislative committees which, after hearing both sides on direct and cross-examination, choose the "one side" which was to be believed. De- ponent believes he would have been entirely within his legal and literary rights in accepting this "one-sided testimony" as the testimony officially and judicially attested and approved. But the deponent points out that, though he would have been justified in disregarding the testimony of the other side, as these public authorities disregarded it after hearing it, he has not done so, but in all cases has made sufficient reference to and frequent quotations from this testimony on the other side. The deponent, in answer to the characterization of "all" of the state- ments of Wealth Against Commonwealth as "cunning fiction, made up en- tirely on one-sided testimony and dressed for sale," refers to his verbatim quotations from the many decisions of the Supreme court of Ohio and Su- preme court of New York, the Federal court of the Southern district of Ohio, decisions of the Interstate Commerce Commission, of the Criminal court of oyer and terminer of Erie county, of New^ York, in the Buffalo cases; of the court of Cuyahoga county. Ohio, in the case of the Standard Oil Company against W. C. Schofield & Co., in the "contract in restraint of 39 iv AFFIDAVIT OF HENRY DEMAREST LLOYD. trade" case, the decision of the Supreme court of New Yorli in the case of Samuel Van Sickle against the Acme Oil Company for the suppression of inventions and inventor, the decisions of the Interstate Commerce Commis- sion in the cases of other refiners than Rice attacked by the same methods, the formal declarations of the New York Assembly Railroad Investigating committee of 1879, and of the Senate select committee of the Forty-ninth Congress; and, adding to these the many quotations made by him from the testimony of the members of the oil monopoly or men favorable to them, respectfully submits that these decisions and findings and friendly testimony can not be properly described as "cunning fiction made up entirely on one- sided testimony and dressed for sale." Further, as to the complaint that the statements "regarding the business of the Standard Oil Company" are "distorted," deponent states that he would have been able to add largely to his quotations from the defense of the Standard Oil Company but for the fact, stated by the New York Assembly Legislative Committee of 1879, that they were "unable to ascertain the exact relations of these different organizations, owing to the refusal of several members * * * subpoenaed as witnesses to obey the subpoena, and the refusal of those who did attend to answer our questions." The committee refers to the combination as "this mysterious organization, whose business and transactions are of such a character that its members declined giving a history or description of it lest their testimony be used to convict them of a crime." The deponent further points out that Wealth Against Commonwealth quotes from official sources the fact, which is not now denied by anyone, though denied at first, that the men seeking to obtain a monopoly of the oil business organized a company called the South Improvement Company, and that this company in 1872 made secret and unlawful contracts with the prin- cipal railroads by which their competitors could move. And deponent further states that Wealth Against Commonwealth cites other decisions and findings to the effect that, although the charter of this company was almost immediately forfeited by the State of Pennsylvania and the contracts with the railroad canceled, substantially similar relations with various railroads were thereafter re-established by the Standard Oil men, as is shown in many cases. To show the part taken by the president of the Standard Oil Company in this South Improvement Company, Wealth Against Commonwealth quotes the testimony of one of his principal associates before Congress in 1888 and quotes said president at about the same time in his testimony before the New York Senate Committee of 1888, when asked under oath if he had not been in the "South Improvement Company," as saying, "I was not." Wealth Against Commonwealth reproduces from the official publications of Congress and the State of New York the details of the contract made by the South Improvement Company with the railroads of the oil regions as showing that this bound the railroads in substance: First, to increase the oil freight rates, sometimes to double; second, not to charge it the increase; third, to collect the increase from its competitors; fourth, to put the rates of freight up or down as might be necessary to overcome its competitors; fifth, to spy out the details of the business of these competitors and make reports to Ihe South Improvement Company of all shipments made by these competitors, with full particulars as to how much was shipped and to whom, and so on. The purpose of this contract was stated by the vice-president of the Erie Railroad, a witness friendly to the South Improvement Company and the Standard Oil Company, to be to give it "a complete monopoly." The Hon. S. C. T. Dodd, now and for many years counsel for the oil monopoly, when still an anti-monopolist, a member of the constitutional con- vention of Pennsylvania in 1873. said: "The South Improvement Company's scheme would give that corporation the monopoly of the entire oil business of this State, amounting to $20,000,000 a year." AFFIDAVIT OF HENRY DEMAREST LLOYD. v The causes of the forfeiture of the company's charter and the cancella- tion of the contracts are declared in Wealth Against Commonwealth to have been publicly stated by Mr. Dodd in the proceedings of the Pennsylvania constitutional convention of 1873, as follows: "Their scheme was contrary to law, but before the legal remedy could have been applied the oil business would have lain prostrate at their feet, had it not been prevented by an uprising of the people, by the threatenings of a mob, if you please, by threatening to destroy property, and by actually commencing to destroy property of the railroad company, and had the companies not canceled the contract which Scott and Vanderbilt and others had entered into, I venture to say there would not have been one mile of railroad track left in the county of Venango, the people had come to that pitch of desperation." The identity of the South Improvement Company and the Standard Oil Company is shown by the fact that 10 of the 13 members of the South Im- provement Company were active members of the Oil Trust, among them the president and the majority of its directors. The New York Assembly Com- mittee of 1879 officially confirmed this, saying: "The controlling spirit of both organizations being the same." The denial and explaining away of this affair by the president of the Standard Oil Company are fully credited to him in Wealth Against Com- monwealth, on pages 53 and 59, one quotation from him occupying three- quarters of a page. Deponent further states that nowhere in Wealth Against Commonwealth does he allege that business was continued under this contract, but does allege that the fact that these men were willing to make and did make such a contract and withdrew only when threatened with popular revolution is a headlight illuminating their whole track then and since. Deponent further states that Wealth Against Commonwealth cites offi- cial records, like the decision in 1885 of the Supreme court of Ohio, to show that the Standard Oil men, after the abrogation of this South Improvement Company contract and the nominal abandonment of the scheme, proceeded to make other contracts with various railroads practically similar in import- ant particulars to the contract of the South Improvement Company, and that he cites the adjudications and testimony in the Rice case and in other cases before the Interstate Commerce Commission which are to the effect that these relations continued even after the passage of the interstate commerce law had made unlawful railroad discriminations criminal. Deponent further says that his statement in Wealth Against Common- wealth that this South Improvement Company no longer exists in name, only "in reality," and that the decease of the name was no obstacle to the continu- ance of the scheme is supported in Wealth Against Commonwealth by offi- cial findings in others than the Rice cases. Wealth Against Commonwealth quotes from the exhibits, affidavits, and decisions in the case of Standard Oil Company vs. W. C. Schofield et al., Cleveland, 1880, to the following effect: "In 1876, four years after the for- feiture of the South Improvement Company charter and the cancellation of the contracts, the president of the Standard Oil Company conducted a nego- tiation with a firm of Cleveland competitors by which they were put under bond to refine only about half their capacity for the ensuing 10 years." An Ohio court set aside the contract as unlawful and "in restraint of trade." Wealth Against Commonwealth cites, as indicating the source of the power which had enabled this bond to be forced on unwilling competitors, a decision of the Supreme court of Ohio in 1885, 13 years after the apparent abandonment of the South Improvement Company scheme. This decision revealed that in 1875, a year before making this contract "in restraint of trade," the Standard Oil Company had secured a contract from the Lake Shore Railroad which, like the South Improvement Company contract, was meant, as the Supreme court of Ohio said, "to keep the price" of transporta- tion "down for the favored customers, but up for all of the others and the inevitable tendency and effect of this contract was to enable the Standard Oil Company to establish and maintain an overshadowing monopoly, to ruin all other or.erators and drive them out of business." vi AFFIDAVIT OF HENRY DEMAREST LLOYD. The purposes of the oil company in this contract with the railroad the court declared to be "unlawful," and the court in the same case declared a contract between two railroads which was related to the business of the oil company and in its interest to be "not only contrary to a sound policy, but to the lax demands of the commercial honesty and ordinary methods of business." Deponent further refers the Industrial Commission to the fact that Wealth Against Commonwealth quotes official findings showing that the monopoly of pipe linos now held by the Standard Oil men and constituting the most valuable part of their property was obtained by them by the help of railroad discriminations closely resembling those they sought to procure from the South Improvement Company. The report of the New York Assembly Committee of 1879 is quoted to show that the rates made by the railroads to the pipe lines of the Standard Oil Company were such that the company "could over-bid in the producing regions and under-sell in the markets of the world." The relations of the oil monopoly with the railroads in this case were regarded by the committee as in "flagrant violation of every principle of railroad economy and natural justice." This discrimination was followed by the absorption of the pipe lines belonging to the men who could not get the rates that were "flagrant" by those who could get them and by the creation of the present pipe line mo- nopoly. The last great act in the completion of this monopoly was the conquest of the Tidewater Pipe Line, also along the lines of the South Improvement Company scheme. The Tidewater was the first trunk pipe line built to the seaboard, one of the most important developments ever made in the oil business, and due not to the oil trust but its competitors, as has been all the improvements except the "Improvement" Company. It was built by the sur- viving independent oil producers and refiners of Pennsylvania in their des- perate struggle to escape the discriminations of the railroads against them and in behalf of the monopoly. The railroads, in the interest of monopoly, made war on the Tidewater, reducing rates, as was stated by a witness friendly to the monopoly, to "not enough to pay for the wheel grease," with the ultimate result that the Tide- water Pipe Line passed, in 1883, into the control of the National Transit Company, which is the pipe line branch of the oil monopoly. Wealth Against Commonwealth quotes the president of the Standard Oil Company under oath in 1888, before the New York Senate Committee on Trusts, as swearing that the Tidewater was a "competing company," in op- position to his company, and quotes him in the same investigation, when asked if he had any connection with the National Transit Company, which is the most valuable part of his oil trust's property, as saying, under oath, "I have not." Wealth Against Commonwealth then quotes the attorney and the treasurer of the Tidewater as both testifying that a contract to settle their rivalry in business had been made in 1883, and quotes the Interstate Commerce Commission in 1892 as judicially finding the same fact, saying: "About December, 1883, the pipe lines, with the view of getting better rates adjusted their differences, and the competition between them ceased. The pipe line business appears then to have passed into the control of the Na- tional Transit Company." Wealth Against Commonwealth reproduces the oflicial finding of the New York Assembly Committee of 1879, that, in 1877, the railroads of the East, largely the same that took part in the South Improvement Company, united in a railroad way against the Pennsylvania Railroad, and "joined hands with the Standard Oil Company and proceeded to enforce by a war of rates, which terminated successfully in October of that year." a sale by the Pennsylvania Railroad to the oil monopoly of its entire outfit, pipe lines, cars and refineries in New York and Pennsylvania. This again was like the South Improvement Company scheme of 1872, in which the railroads had bound themselves to "maintain the business against loss or injury by com- petition," and to put the rates of freight up or down as might be "necessary to overcome * * * competition." Wealth Against Commonwealth also AFFIDAVIT OF HENRY DEMAREST LLOYD. vii quotes the testimony shortly after in a Pennsylvania court of the present president of the Pennsylvania Railroad, Mr. A. J. Cassatt, always friendly to the oil trust, to the effect that after this forced sale by the Pennsylvania Railroad of its oil business and oil outfit, all the remaining competitors of the oil monopoly who were doing business over the lines of the Pennsyl- vania Railroad were notified, according to the South Improvement Company precedent, that the Pennsylvania Railroad would thereafter give lower rates to the members of the oil monopoly than to them, though they had been during the preceding year the largest shippers of oil over the road, and that they would not be allowed to put cars of their own on the road, though the Standard Oil Company were allpwed to do so. In referring to Mr. John D. Archbold in these proceedings. Wealth Against Commonwealth confines itself to the records. It quotes him when put on the witness stand, in the proceedings brought by the State of Penn- sylvania against the Pennsylvania Railroad in consequence of this discrimi- nation, as stating, under oath, that he was not allowed a rebate amounting to $0,641/2 per barrel, but immediately afterwards compelled to produce his books, admitting "there was a total allowance of $0,641^ a barrel." Deponent further states that judicial inquiry in Pennsylvania and legisla- tive inquiry in New York are used by him in Wealth Against Commonwealth as showing that the Pennsylvania and other railroads, acting as if in pursu- ance of the South Improvement Company plan, paid to some of the mem- bers of the Standard Oil Company, under the name of the American Transfer Company in 1878, an allowance of 22% cents a barrel on all the oil these railroads carried from the oil regions. This payment was defended as made for the service of the American Transfer Company in collecting and de- livering the oil to the railroads, but Wealth Against Commonwealth quotes the present president of the Pennsylvania Railroad, then third vice-presi- dent, Mr. A. J. Cassatt, as swearing that this allowance was paid to the American Transfer Company on oil which it (the American Transfer Com- pany) never handled. "It is paid on all oil received and transported by us." (Commonwealth of Pennsylvania v. Pennsylvania Railroad et al., 187ft. p. 691.) Deponent further points out that official, judicial, and legislative sources of information are quoted in Wealth Against Commonwealth to the effect that the plans contemplated in the South Improvement Company contract with regard to a monopoly of oil terminal facilities had been substantially carried out since the cancellation of that contract. The South Improvement Company's bargain of 1872 had provided substantially that the railroads should turn over to it such oil terminal facilities as they possessed at the seaboard. Seven years later, in 1879, the New York Assembly Committee found that the oil combination was in control of the oil terminal facilities of the four great trunk lines at New York, Philadelphia and Baltimore, and the committee stated in their report that "they can use the power here given, and have used it, to crush out opposition;" and 20 years later, in 1892, the western traffic manager of the Erie testified before the Interstate Commerce Commission that he would not receive at the Weehawken oil docks of the Erie road a shipment of oil in competition with the oil of the monopoly, and in 1892 the Interstate Commerce Commission found that the oil combination "have a monopoly of those facilities to the exclusion of complainants." As to the Rice case, which Mr. Archbold emphasizes. Wealth Against Commonwealth quotes the decisions of a Federal court, of the Interstate Commerce Commission, of the Supreme courts of New York and Ohio, and the tcftimony of friendly railroad men and of men connected with the Stand- ard Oil Company to the effect that the important features of the South Improvement Company scheme were substantially reproduced in the treat- ment given Rice by many railroads. Freight rates were doubled to Rice and more, but not only were not increased to the monopoly, but actually lowered to it. and freight rates col- lected from Rice were paid over to it. The railroads in 1879 and later, which in 1872, in the language of the South Improvement Company contract, under- took to "maintain the business against loss or injury by competition." and to viii AFFIDAVIT OF HENRY DEMAREST LLOYD. make the freight rates such as might be "necessary to overcome such compe- tition," again refused Rice, after the passage of the interstate commerce act, as the Pennsylvania Railroad did to the other independents mentioned above, the right to put on his own cars, and in repeated cases, refused him informa- tion even as to what would be the freight rates charged him if he undertook to ship anything. Wealth Against Commonwealth quotes from the testimony of one of the men of the oil monopoly given before the Interstate Commerce Commission, to the effect that the feature of the South Improvement Company arrange- ment, by which the business done by its competitors was to be spied out for the oil monopoly, was reproduced in the treatment given Rice. In the first South Improvement Company only half a dozen of the eastern trunk lines took part, but in this later application of its methods to Rice nearly all the railroads in the Mississippi Valley and on the Pacific coast took part. A deliberate and successful attempt was made to prevent Rice from doing business, except by accident and at a loss, in any town, county or State in which these roads could, by their power of manipulating rates, determine the question of business existence. Wealth Against Commonwealth quotes from the records to show that the things done for this purpose by the railroads and inuring to the interest of the oil monopoly were so relentless and destructive and so outside the law that' the judges and other public representatives in their decisions and reports were startled out of their formal phraseology usual in such deliver- ances into expressions of unaffected indignation. Referring to one of the arrangements by which the railroads doubled Rice's freights, and out of every 35 cents he paid them handed over 25 cents to the Standard Oil Company — in reproduction of the South Improvement Company and the American Transfer Company schemes — Wealth Against Commonwealth quotes Judge Baxter, of the Federal Circuit Court of Ohio, as calling it "abhorrent," "dangerous," "gross," "illegal," "an inexcusable abuse by a public trust," "unparalleled wrong," "discrimination so wanton and oppressive it could hardly have been accepted by an honest man. and a judge who would tolerate such a wrong or retain a receiver capable of perpetrating it ought to be impeached and degraded from his position." A Senate select committee on interstate commerce, of the Forty-ninth Congress, is quoted as, after investigating the matter, characterizing the transaction as follows: "No comment is needed upon this most impudent and outrageous proposition" — by the oil company to the railroad. Wealth Against Commonwealth shows that the Ohio Supreme Court, in deciding a case brought by the State of Ohio against certain railroads to for- feit their charters for their treatment of Rice, decided that these railroads had charged "discriminating rates," "strikinglj^ excessive," which "tended to foster a monopoly," "actually excluded these competitors," "giving to the favored shippers absolute control." It shows also that the Supreme Court of New York, in deciding another case in which Rice was a litigant with the oil trust, for his rights as a stock- holder, said that the oil trust was "for the purpose of forming a combination whose object was to restrict production, control prices, and suppress compe- tition," and the "trust agreement was therefore opposed to public policy and void." Wealth Against Commonwealth calls public attention to the fact that a large part of the time and attention of the Interstate Commerce Commission was taken up for several years in hearing the complaints of Rice to it for redress, and that in a large proportion of the cases brought by him before the commission, it found his complaints justified, and ordere.d the roads to give him relief. The discriminations made by the railroads against Rice to the benefit of the oil monopoly were so great that even the self-contained Interstate Commerce Commission had to call them "vast discrepancies." Wealth Against Commonwealth quotes the commission as stating in 1893 that these discriminations were made "on no principle. * * * Neither greater risks, greater expense, competition by water transportation, nor any fact or circumstance brought forward in defense, nor all combined, can account for these differences." AFFIDAVIT OF HENRY DEMAREST LLOYD. ix Again, speaking of the refusal of rates to Rice, the commission said: "Complainant did not succeed in obtaining rates. The denial of his right was plain and stands unexcused. * * * What reason there may have been for it" — the refusal of rates — "we do not know, but find they were not just or legal reasons." The refusal to give Rice these rates was an "illegal refusal," the commis- sion decided; "the obligation to give the rates * * * was plain and un- questionable." The treatment of Rice by the railroads in another particular the commis- sion adjudicated to have been "specially oppressive," and it "would have put success in the traffic out of the question." Rice was misled and misinformed by the railroad officials, and Wealth Against Commonwealth quotes the Interstate Commerce Commission as noting this fact and pointing out the "remarkable thing" that so many of these "defendants," the railroads, "should make the same mistake, a mistake, too, that it was antecedently so improbable any of them would make. The Louisville & Nashville, the Cincinnati, New Orleans & Texas Pacific, the Newport News & Mississippi Valley, and the Illinois Central Companies are all found giving out the same erroneous information, and no one of them can tell how or why it happened to be done, much less how so many could contemporaneously, in dealing with the same subject, fall into so strange an error. It is to be noted, too, that it is not a subordinate agent or servant who makes the mistake in any instance, but it is the man at the head of the traffic department, and whose knowledge on the subject any inquirer would have a right to assume must be accurate. In no case is the error excused." Wealth Against Commonwealth quotes some of the expressions used by the Interstate Commerce Commission with regard to the complaints before it of discriminations by the railroads, as follows: "Great differences in rates," "unjiist discrimination." "international dis- regard of rights," "unexcused," "a vast discrepancy," "enormous," "illegal," "excessive," "extraordinary," "forbidden by the act to regulate commerce," "so obvious and palpable a discrimination that no discussion of it is neces- sary," "wholly indefensible," "patent and provoking discriminations for which no rational excuse is suggested," "obnoxious," "disparity * * * absurd and inexcusable," "gross disproportions and inequalities," "long prac- ticed," "the most unjust and injurious discrimination * * * amj ^jjig (jjg. crimination inured mostly to the benefit of one powerful combination." The deponent further states that in Wealth Against Commonwealth he has taken the verdicts, decisions and findings of the courts and legislatures as the authoritative version of the facts, and that it has not been shown that he has either inaccurately quoted or omitted any important fact on the record, nor that he in any case has failed to give the reader information as to the nature of the defense, nor have his statements in any case gone beyond the record. Deponent further^ says that his statement in Wealth Against Common- wealth that Mr. Archbold, when asked what was his part in the business of the Standard Oil Company, replied, "I am a clamorer for dividends; that is the only function I have," is a quotation from the testimony of Mr. Archbold before the New York Assembly Commission of 1879 investigating the rail- roads and their relations to the oil monopoly and other favored shippers. Wealth Against Commonwealth quotes from the reports, decisions and testimony of the Interstate Commerce Commission to show that the principal matters litigated before the commission have been discriminations made by the railroads to the profit of the oil monopoly; that the cases referred to cover the oil business on practically every road of any importance in the United States— in New England, the Middle States, the West, the South, the Pacific coast; on the great east and west trunk roads — the Pennsylvania, the Erie, the Baltimore & Ohio, the New York Central, and all their allied lines; on the transcontinental lines — the Union Pacific, the Central Pacific, the Southern Pacific; on the steamship and railroad association controlling the South and Southwest; and that from ocean to ocean, and from the Gulf of St. Lawrence to the Gulf of Mexico, wherever the American citizen seeks an opening in this industry, he finds it a "privilege" of a few and shut against the common people. X AFFIDAVIT OF HENRY DEMAREST LLOYD. The witnesses on whose testimony are founded the decisions of the courts, legislative committees, and other findings which make the substance of Wealth Against Commonwealth have come forward all through the period between 1872 and 1894, and the date of Wealth Against Commonwealth, and from every point of importance in the industry — New York, Pittsburg, Cleve- land, Oil City, San Francisco, Titusville, Philadelphia, Marietta, New Orleans, Buffalo, Boston, Cincinnati, Louisville, Memphis; they have come from every province of the industry — the refineries, the oil fields, the pipe lines, the rail- roads, the wholesale and retail markets; bound together by no common tie of organization or partnership, they have, each and all, exactly the same story to tell. Wealth Against Commonwealth gives as the substance of their complaint that one selected knot of men, members of one organization, were given unlawfully, the control of the railroad highways to the exclusion and ruin of the people, and quotes to sustain it the evidence taken by many official investigations and the decisions of substantially every court to which the facts have been submitted. Deponent furthpr points out that the testimony taken by the Interstate Commerce Commission in Boston, March 12, 1898, seems to show that one of the most important railroads in New England, the Boston & Albany. 26 years after the South Improvement Company scheme dies "in name." was "under- billing"* cars of the oil trust to such an extent that in some cases half of such shipments within Massachusetts went free.f Lastly, the evidence taken in the investigation in the early part of 1900 by the Canadian parliamentary committee, if correctly reported, seems to indicate that the same South Improvement Company system, substantially, has been extended by the Canadian railroads to the oil trust, and that these railroads have been putting the "price" — of transportation — "down for the favored customers and up for the others." just as the Supreme Court of Ohio found the railroads of that State doing for the same organization in 1885. *Mr. Howard Page has informed the revitwer that: He is vice-president of the Union Tank Line Company, which company furnishes all tank cars us„_-pi. Percent Barrels. ^^ ^^^j^ Barrels. Percent of totel. barrels. 1894 18,118.9.33 : 81.4 18.348,0.51 j 81.8 16,341,161 ! 82.1 18,141,479 82.4 19,999,939 83.7 4, 145, 232 18.6 22,264.]&5 1895 1896 4,084,720 1 18.2 3,569,719 17. » 3,876,706 1 17.6 3,914,999 j 16.3 22,432,771 19,910,880 1897 22, 018, 1.S5 1898 23,914,938 Total 90,949,563 ! 82.3 19,591,376 17.7 110,540,939 The commission will note that by ingeniously presenting this data for years preceding — now mark, preceding this absorption of the Cudahys and Manhattan refineries — that he made these figures do his falsifying for him, and apparently proved to you that my estimates were false. And more and worse, on page 541 of his testimony ,t he further convicts himself of purposely deceiving and misleading the commission. He there gives what purports to be the independent refineries operating at that time. In that list, in addition to the above absorbed refineries and pipe lines, and the 26 refineries in that list which Scofield, Shurmer & Teagle, of Cleveland, declare to be shut down and gone out of the business, he gives the Tide- water Oil Company, with its 43,150 barrels of still-refining capacity, as in- dependent and outside of the Standard Oil Company's combination. The Tidewater Company was the first concern that ever started in un- handicapped by railway discrimination and upon anything like even terms in transportation facilities in competition with the Standard Oil Company, their pipe lines and railroad connections guaranteeing them equal transpor- tation charges with the Standard Oil people, and since they whipped the Standard Oil Company into giving them a large percentage of the oil busi- ness they have become as much a part of the Standard Oil conspiracy against the producers and consumers of oil as Archbold himself. Everybody who is posted knows this, and yet Archbold has the impudence and audacity to impose on your honorable body this kind of testimony with the purpose of deceiving the commission and the country in an attempt to prove that my estimates were false. 'See Vol. I. Report of the Industrial Commission, P.irt Tl. i>. .")t!0. tSoe Vol. T, Report of the Industrial Commission, Part 11. p. .'41. AFFIDAVIT OF M. L. LOCKWOOD. xxi He further testifies (preliminary report, p. 560): "Mr. Lockwood testifies that by manipulation of price of Ohio crude oil, in conjunction with the railways, we succeeded in getting the price down, to an abnormally low figure, and then bought substantially the whole Ohio producing field." And here again Mr. Archbold uses figures to deceive and mislead the commission and the country. For, mark you, it was not until the latter part of 1886 that the wither- ing force of railway discrimination was applied to the man who had de- veloped the Lima oil field, and by July of 1887, after that withering force had befen applied, they had forced the price of crude Lima oil down to 15 cents a barrel. At that time, 1887, the Standard Oil Company owned practically nothing in production in the Lima oil field. Think of what the financial slaughter must have been to force over 55 per cent, of the producers to transfer their property to the Standard Oil people in a little more than two years. In some places nearly whole townships were sacrificed — transferred to the Standard. I know all about it. I was one of the producers who was obliged to sacrifice his property there. Think of a financial condition brought about by monopolistic control of the price of wheat, for instance, among the farmers of a State that would force them in two short years, in order to save themselves from the sheriff, to give up to such monopoly over 55 per cent, of their farms. Would it not be a pardonable extravagance for some farmer who happened to be in the tliickest of it to testify:* "They held it at 15 cents a barrel in Ohio until they broke the hearts of the producers, and then bought nearly the entire country upon that basis." And here Mr. Archbold could sit coolly down in his office at 26 Broadway, surrounded by his high-priced lawyers and statisticians, and compile this table of figures to prove what he wanted. Here are Archbold's figures, t expressed in barrels of 42 gallons: Penns ylvania oil. Lima oil. Grand total. 6 a 5i ti 6 a 5§ SSa 1 55 -o "2 •d -o Year. 2d 0.0 IH 2d 0.0 "22 Is. PiJO ■a2 n ^ « S"-; « ado g (u c cS •o .c fl o o «n^! and oil tion ■2 -ss O o Qi/i o 5^^ ^0.0. o .^os Sq.$ ^03 SO.B H cc X H CD cc P4 X 'J} 1890... 30,065,867 2,618,637 8.71 16,014,882 8,400,568 55.95 45,080,749 11,019,205 2^A4: 1891... 35,742,127 4,913,775 13.74 17,381,923 9,319,156 53.61 5.3,124.050 14,232 931 26.79 1892... 3^,332,306 4,Xi8,S22 13.02 1«, 68.5, im 7,843,324 47.01 50.017,499 12, 182, 146 24.36 1893... 31,256,28;^ 6, 705, 276 21.45 1 17,8:3,2.55 7, 261 i, (•99 40.74 49,079,5;« 13 966,175 28.46 1894... 30. 696, 716 7, 210, .345 2:^. 49 18,575,603 6, 690 951 36.02 49,272,319 13,9 '1,296 28. 21 1895... 30,891,868 9,119,920 29. ,52 21,719,2,50 6,808,876 31.35 52.611,118 15,928,796 30.28 1896... 33 908,041 9, .580, 654 27. 66 25,222,091 8,031,793 31.84 ,59, 130, 132 17,412,447 29 45 1897... a5, 170, 367 9,7x7,353 27.83 22,79.3,0,33 7,497,349 32.89 j 57,963.400 17,284,702 29. 82 1898... 31,&15,151 11,248,443 35.55 20,266,328 7,220,«06 35.63 j 51,911,479 18, 469, 049 3.5.58 Total 292,708,726 65,323,225 22.32 175,481,558 69,073,522 39.36 468,190,284 134,396,747 28.70 The commission will especially note that these statistics given by Arch- bold did not begin until the year 1890, after the financial slaughter was over in Ohio and the price of Lima oil had gone up. But they seem to prove to his satisfaction that the situation was not as bad as I had pictured it. he selecting his figures from such dates as to best deceive the commission and the country. Why did he not give his statistics for the years 1887. 1888, 1889? The answer is "because they would have proved too much," and ex- posed the awful wreckage which in a little over two years enabled the Standard Oil people to get possession of over 55 per cent, of the oil produc- tion of the Lima oil field. *See Vol. I, Report of the Industrial Commission, Part IT, p. 403. tThe table here quoted is to be found In Mr. Archbold's testimony, Vol. I, Report of the Industrial Commission, Part II, page 561. xxii AFFIDAVIT OF M. L. LOCKWOOD. His figures, however, are of service, for they prove that just in propor- tion as the producer is able to get a fair price for his product, that he is more than able to hold his own with the Standard Oil Company in the acqui- sition of property, for in 1895, when Lima oil went to $1.27 a barrel, the pro- ducers of Lima oil had been able to reduce the Standard Oil Company's percentage of production to less than 32 per cent. Mr. Archbold further testifies, on page 561, that "Mr. Lockwood's state- ment * * * is so ridiculous as not to call for any answer." He takes exception to my attack upon the courts and upon the corruption of our public men by railroads and corporate interests, and then he takes the commission into his confidence and says: "I think you will agree with me that we must conclude that the fool killer has been very remiss in his duty in the vicinity of Zelienople, Pa." And now, in conclusion, I desire to submit that when Mr. Archbold ruthlessly denies all facts and systematically and cunningly compiles figures and falsifies, as per his classification of the Tidewater Oil Company, that the commission must agree with the country that the knave killer has not done his full duty in the vicinity of No. 26 Broadway, New York. And now I desire to repeat what in substance I said when I appeared and testified before your honorable body, that I have no combat against Mr. Arch- bold and his associates, for I do not believe that they are any worse than some other men might be, armed as they have been with special privileges and advantages over the highways, the railways, of the country. I have no combat with men. My protest is against this accursed system of favoritism over the railways by which a few men, by the organization of trust combina- tions, can monopolize, destroy the equal rights of the citizenship, declare 48 per cent, dividends on a three-times watered stock in 12 months, and thereby absorb the wealth produced by the many. M. L. LOCKWOOD. Witness: IRA S. ZEIGLER. I do solemnly swear that the above statement is true to the best of my knowledge, information and belief. M. L. LOCKWOOD. Sworn and subscribed to before me this 14th day of May, A. D. 1901. [Seal] IRA S. ZEIGLER, Notary Public. State of Texas, County of Orange: Before me, V. H. Stark, a notary public in and for Orange county, Texas, on this day personally appeared J. T. Stark, who, after being by me duly sworn, on oath deposes and says that he is a resident citizen of the United States of America, and is now a resident citizen of the State of Texas, and has resided in the said State of Texas for a period of 44 years next preced- ing the date of this affidavit; that for a period of 10 years he has been a consumer of illuminating oil; that he now pays for said oil 20 cents per gallon; that for five years next preceding the filing of this affidavit he has not been able to purchase illuminating oil for a less price than 20 cents per gallon, and that said prices have been the regular price from the merchant to the consumer for said oil for the period above mentioned in Orange county, Texas. That for a period of seven years next preceding said above three years he has paid 25 cents per gallon for said oil. J. T. STARK. Sworn to and subscribed before me this 14th day of May, A. D. 1901. And I do hereby certify that affiant above subscribing is credible. I Seal] V. H. STARK, Notary Public, Orange County, Texas. AFFIDAVIT OF F. S. MONNETT. xxiii State of Texas, County of Orange: Before me, V. H. Stark, a notary public in and for Orange county, Texas, on this day personally appeared H. T. Fountain, who, after being by me duly sworn, on oath deposes and says that he is a resident citizen of the United States of America, and is now a resident citizen of the State of Texas, and has resided in the said State of Texas for a period of 18 years next preced- ing the date of this affidavit; that for a period of five years he has been a consumer of illuminating oil; that he now pays for said oil 20 cents per gallon; that for five years next preceding the filing of this affidavit he has not been able to purchase illuminating oil for a less price than 20 cents per gallon, and that said prices have been the regular price from the merchant to the consumer for said oil for the period above mentioned in Orange county, Texas. H. T. FOUNTAIN. Sworn to and subscribed before me this 14th day of May, A. D. 1901. And I do hereby certify that affiant above subscribing is a credible person. [Seal J V. H. STARK, Notary Public, Orange County, Texas. State of TexaSj County of Orange: Before me, V. H. Stark, a notary public in and for Orange county, Texas, on this day personally appeared N. Burton, who, after being by me duly sworn, on oath deposes and says that he is a resident citizen of the United States of America, and is now a resident citizen of the State of Texas, and has resided in the said State of Texas for a period of 34 years next preced- ing the date of this affidavit; that for a period of 30 years he has been a consumer of illuminating oil; that he now pays for said oil 20 cents per gallon; that for four years next preceding the filing of this affidavit he has not been able to purchase illuminating oil for a less price than 20 cents per gallon, and that said prices have been the regular price from the merchant to the consumer for said oil for the period above mentioned in Orange county, Texas. N. BURTON. Sworn to and subscribed before me this 14th day of May, A. D. 1901. And I do hereby certify that affiant is a credible person and is at present district and county clerk of Orange county, Texas. [Seal] V. H. STARK, Notary Public, Orange County, Texas. AFFIDAVIT OF F. S. MONNETT, Ex-Attorney-General of Ohio, Columbus, Ohio. The Honorable Industrial Commission, Washington, D. C: I beg leave to submit a reply affidavit to the scurrilous misrepresenta- tion of a man by the name of John D. Archbold, testifying before your com- mission, as appears upon page 543* et seq. ANSWER TO ARCHBOLD'S PRELUDE. The State of Ohio, Franklin County, ss: It is true that the Standard Oil Company is and has been interested in Ohio, as set forth in the prelude of Archbold's testimony; that certain cor- porations, like the Buckeye Pipe Line Company, the Ohio Oil Company, Solar Refining Company, and the Standard Oil Company of Ohio, are and have been duly chartered by the State, but I specifically deny that they are "carefully observing the obligations imposed upon them by their charter." but each and every one have openly and notoriously violated their charter, and have violated the statutes of the State, criminally and civilly, and are now so violating them, and did not dare to come into court and answer the charges of such violation as set forth in the petition in quo warranto and *See Vol. I., Report of the Industrial Commission, Part II, page 543. xxiv AFFIDAVIT OF F. S. MONNETT. the interrogatories thereto attached, the Buckeye Pipe Line Company, the Solar Refining Company, and the Standard Oil Company of Ohio, other than filing such an aflfidavit to their pleadings, as the inclosed one indicates, and as appears on page 34 of the Supreme Court record of the case, and which still stands in open and notorious defiance of the State laws. COPY OF BUCKEYE PIPE LINE COMPANY'S JURAT TO ANSWER IN SUPREME COURT OF OHIO. The State of New York, County of New York, ss: Henry H. Rogers, being duly sworn, says that he is president of the defendant herein, a corporation, and that the averments of its foregoing answer are not verified because the admission of the truth of certain facts stated in the pleadings might subject the defendant and its officers to a criminal or penal prosecution and to a forfeiture of its charter, franchises and privileges, and for the same reason the interrogatories are not answered. HENRY H. ROGERS. Subscribed and sworn to by the said Henry H. Rogers before me this 18th day of January, 1899. JOHN BENSINGER, Notary Public for Kings County. Certificate filed in New York County. They ceased to hold bona fide meetings in the State of Ohio of their directors and stockholders, as required by statute; they removed their prin- cipal place of office to 26 Broadway, New York, entered into and remained in the Standard Oil Trust by part of the companies, continuing to nourish the trust certificates issued by the Standard Oil Trust by paying dividends thereon, in open defiance of the court, for eight years; they escaped the contempt of the court for violating the original decree of the Standard Oil Company, wherein they were adjudged to have entered into the trust con- tract illegally, and escaped punishment in contempt by the Supreme Court of Ohio by a vote of three to three. The three judges voting to hold them in contempt were the three judges that were on the bench when the original decision was rendered. It is charged and uncontradicted that their infiuence defeated .Joseph P. Bradbury for renomination as judge of the Supreme Court of the State of Ohio, who was known to be against their treatment of the court in this decree, and not until after his defeat and election of a judge in his place did they get a tie vote that failed to convict them. They have openly and notoriously evaded the taxes due the State by making returns upon their property, in many instances estimated at less than 10 per cent of its real value, considering the earning capacity of the property. I reaffirm that on their own figures, as reported to the excise board, they shipped from the oil fields of Ohio to their various refineries an average of upward of 30,000,000 barrels per year, as appears in my testimony, on page 311 of the records* of your commission, and that the gross receipts for refined oil and by-products received by the Standard Oil combination com- panies from Ohio's crude oil would reach $120,000,000 a year. I did not claim, as indicated in Archbold's reply, that any such amount was consumed in Ohio; it was the amount that was extracted from Ohio and mostly piped out of Ohio. If Archbold's testimony is as represented in its prelude on page .543,* in which he says that the said corporations composing his com- bination of companies are "carefully observing the obligations imposed upon them by their charters," I wish to caution the commission against drawing any conclusions or deductions from any of his evidence; and his reiteration of this matter, after all that has been shown in the courts by the affidavits of their own officers and their conduct before the court and in the State Legislature regarding the same, Is most reprehensible. *See Vol. I, Report of the Industrial Commission, l^art IT. AFFIDAVIT OF F. S. MONNETT. xxv I would like to characterize this absurd statement of Archbold's and his misrepresentation of the conduct of his companies in Ohio in much stronger terms, but I "bow to the wish of the commission." He entirely misquotes Mr. Kinkead; at least, he misconstrues Mr. Kinkead's "satisfaction on his investigation." Mr. Kinkead demanded rec- ords and answers to the State's interrogatories that were never answered, but when Mr. Archbold undertakes such a large job of swearing as to malign, contradict and vilify, and reflect upon Senator Theo. F. Davis, M. L. Lockwood, Mr. Lloyd, Mr. Phillips, Senator Lee, Mr. Emery, Theodore B. Westgate, David Kirk, Messrs. Dennison, Akin and Murphy, and the whole army of witnesses, their victims and others that do not bow down their knee to worship at his oily shrine, and cry "Allah, Allah" at the altar of his by-products, I am not surprised that he would palm off such testimony upon the commission. Looking at his testimony in the light of the various records as shown in the courts, in the face of the testimony of the other witnesses and of the company's refusal to testify when called upon to do so, what strength or force can his testimony have as to what his corporations have done to obey the law in Ohio when these companies had an opportunity to demonstrate to the court that they were law abiding, but did not dare answer the interroga- tories submitted to them for fear of penal or criminal prosecution, as they allege, in Ohio. BURNING OF THE BOOKS. I submitted to the commission the sworn testimony of the witnesses who helped burn the books and of the draymen who helped haul them to the funeral pyre. I also gave them an opportunity to produce a single volume, whether daybook or ledger, covering the subject-matter that was contained in the books so burned. They never did produce them, and never have pro- duced them, and openly refused to produce them under the court's order, and flagrantly subsidized 110 newspapers in the State of Ohio to protect them in their methods. Since said sworn testimony one of their traveling auditors or employes has admitted that he was out collecting the books and records that were shipped into the office and burned, and he himself was ordered, if subpoenaed, to answer no questions, but to go to jail in contempt. This employe said the State was "hot on their trail." THE BRIBERY CASE IN OHIO. * I charged them before the Supreme Court with having attempted to bribe the Hon. D. K. Watson, former Attorney-General, and also myself as Attorney-General, as fully set forth in the complaint, and began taking tes- timony to establish the fact, but Mr. Archbold said in his testimony on page 544* that they had called upon the court to investigate the charges, and if the court did not investigate they would. On the day I began to take the testimony to establish every allegation made in reference to the bribery in my reach, showing how the $400,000 was offered, and showing how $100,000 was offered to my predecessor, and giving all the details, telegrams and inter- mediaries, and all the evidence connected therewith, the Chief Justice of the Supreme Court, at the request of the attorneys of record of the Standard Oil Company, verbally ordered me not to take the testimony, and the charges were thereafter dismissed by the court without the hearing of any testimony on the part of the State to establish the same. So that, instead of the trust "courting investigation," they deliberately evaded and suppressed an inves- tigation of these bribery charges, the court holding among other grounds that they had no jurisdiction over the question of contempt as charged, as to whether the Standard Oil Company was allowed taken, either by the company or the court, although the State stood ready to give a full exposi- tion and exposure thereof. Through their pipe-line charges and by means of their monopoly in transportation, the Standard Oil combinations continue their monopoly in handling oil in Ohio, as every consumer of oil in this State can verify by his pocketbook. •See Vol. I, Report of the Industrial Commissijn, Part II, page 511. xxvi AFFIDAVIT OF JAMES W. LEE. Campaigns come and go, commissions investigate, and legislatures meet and adjourn, and magazine articles are written and read, and yet, through their monopolistic and criminal exactions, the Standard Oil combinations of transportation and distribution thereof levy tribute upon the owner of the oil rock and exact from the consumer of the refined oil and its by-products this unnatural profit. The public are its victims; the little band of law violators owning the controlling shares are the beneficiaries of the plunder. The public for a short time stand aghast at their very boldness and defiance. The government alone can check their abuses. Subsidized papers and public officials bribed by these law violators will work their own ruin sooner or later. The exposure made by the Industrial Commission has had its wholesome place in this work, but some more drastic measures must soon be administered. The States have the sovereign power to protect all lawful efforts of organized wealth, but when the State creates the corporations that use their delegated powers for other purposes than the government itself could use them, it is time then to revoke such charters by the courts. This government was established to promote the "general wel- fare," not for the special welfare of a few magnates; neither can this sover- eignty delegate its governmental functions to seven trustees to operate the government for their "special welfare" and for "their posterity." No corporate creature of this government can deprive a citizen of his property through monopolistic combinations and exact an unnatural and an unconscionable tribute or excise from the consumer by this brute force, and long hold the public good will. Neither can this band of law violators long deny the common citizen the equal protection of the laws; neither can they destroy competitors' property at will without adequate compensation. They have shown little respect in Ohio for "vested" rights of competitors, and little respect for "vested facts" or "truth" in their reports and testimony from my views of this evidence. F. S. MONNETT. I swear that these statements made by me of my own knowledge are true, and that all other statements I believe to be true. F. S. MONNETT. Sworn and subscribed to before me this 6th day of June, 1901. (Seal.) L. R. PUGH, Notary Public, Franklin County, Ohio. AFFIDAVIT OF JAMES W. LEE, President Pure Oil Company, Pittsburg, Pa. State of Pennsylvania, County of Allegheny, ss: James W. Lee, being duly sworn, deposes and says, in answer to the statement made on page 507, Volume 1, Part II, of the report of the Indus- trial Commission: It is not true that the said affiant acknowledged himself to be not only a member but the head of a trust. The company to which reference is made is the Pure Oil Company, and it is not now nor has it ever been in any sense a trust. It was organized to have exactly the opposite effect, to prevent, if possible, instead of securing monopoly. The fact that a portion of its stock is held in a voting trust does not in any way contribute to make it a trust. This voting trust was created for the express purpose of preventing monop- olies in the business in which it is engaged from securing the control of its business and destroying the small measure of competition which the said company affords in the industry in which it is engaged. These voting trusts had been employed for proper and laudable purposes long prior to the date at which modern trusts came into existence. Aflfiant is not now nor ever has been connected with modern trusts — that is, a corporation or combination of corporations intending to create and maintain a monopoly in any industry. AFFIDAVIT OF JOHN D. ARCHBOLD. xxvii Affiant desires to reiterate the statement that the Standard Oil Company was absolutely opposed to the passage of the free-pipe line law in Pennsyl- vania in 1883, and to the attempted passage of a similar law in 1879 and 1881. This was a matter of common and general knowledge at the time, and their agents forwarded hundreds of telegrams in opposition to the measure during the time of its consideration. The letters submitted on pages 517 to 526 of the report* are wholly inconsequential as proving the matter which they were offered to establish. They are in the nature of negative testimony. Affiant has knowledge of a case in which the general freight agent swore that no discrimination in rates was made, and then the honest auditor of said road testified and submitted written statements showing discriminations to the amount of thousands of dollars in said year. Affiant desires to call attention to the average price given for oil in New York, beginning in March, 1896, and says that the average prices were given for the month of March. The price he gave was 9 to 9%, which was the price on March 9, 1896, and the statement of the average price for March 7, 1898, on page 528,* is simply confirmatory of affiant's statement of the rapid reduction in price after the Pure Oil Company began the sale of oil in the city of New York. On page 528 Mr. Archbold gives the average price for July at 6.23, while the affiant gave the price at 5V2. The price given by affiant was correct, and Mr. Archbold found it necessary to give the average price of all their business for July in order to raise the price above this figure of 5%. The average price for July as given by him includes not only the sales made in July but their previous contracts for July, some of them possibly made before the Pure Oil Company began business. Affiant says that the statement made by Mr. Archbold on page 530* that affiant approached the Standard Oil Company, or any of its officers or em- ployes, seeking the sale of any portion of the independent interests, is wholly untrue. The only approach affiant ever made to an officer or employe of said company was made to the attorney of the company, and there was no suggestion of sale or even of combination, but simply that the Standard Oil Company would cease to use the destructive methods which they were employing against the independent interests, stating to said attorney that this, if it was not, should be a free country in which anyone, even with limited capital, should be entitled to engage in a legitimate business and to carry it on without efforts on the part of others engaged in the same busi- ness seeking by unfair methods to destroy it. JAMES W. LEE. Sworn to and subscribed before me this June 11, A. D. 1901. JAMES S. CAMPBELL, Notary Public. AFFIDAVIT OF JOHN D. ARCHBOLD, Vice-President Standard Oil Company. To the Honorable Industrial Commission, Washington, D. C: Gentlemen — I beg to submit the following affidavit relative to the new assertions contained in the affidavits of F. S. Monnett, Charles B. Mathews. M. L. Lockwood and J. W. Lee, filed with you in June last. At the time I gave my former testimony, the question of attempted bribery and burning of books was pending before the Supreme Court of Ohio for investigation, and I was instructed by counsel that it was not proper to go into details respect- ing these matters. That court has completely vindicated the Standard Oil Company from both charges, and has dismissed all the actions instituted against it by Attorney-General Monnett. The Attorney-General, notwith- standing this result, reiterated before you his charges and reflected upon the purity of the court. I therefore desire the privilege of setting forth the facts 'Report of the Industrial Commis.^iim, Vol. I. xxviii AFFIDAVIT OF JOHN D. ARCHBOLD. shown by the court in some detail in order that you may judge between F. S. Monnett on the one side, and the Supreme Court of Ohio and the Standard Oil Company on the other. BRIBERY. The first public mention of the bribery charge came from George Rice in an interview at Marietta, which was given out to the newspapers on March 3, 1899. The last paragraph of this interview was as follows: Ir» this connection it miglit be of interest to the citizens of the State to know that they have an incorruptible official in Attorney-General F. S. Monnett, who within the past month has been offered the sum of $500,000, less $100,000, to be re- tained by the person attempting the bribery, to stop proceedings against the Stand- ard Oil interests, and evidence has come to me from such source and in such manner that establishes this fact beyond the possibility of a doubt. To his friends Monnett pretended surprise and expressed anger at Rice's disclosure. He told the court afterwards that the story had been given Rice in confidence in the Attorney-General's office, and that Rice had given it out because he had been goaded to anger by charges of blackmail. The story was soon made prominent in all the newspapers. Reporters thronged Monnett's office and telegrams crowded his desk urging him to tell what he knew about it. He put on a mask of fairness; he feigned hesitation, and told them the matter was in court and he did not "feel at liberty to dis- cuss it," but before closing his mouth confirmed it in confidential paren- theses. He pretended it was true, conceded the reported negotiation and figures, but concealed the name of the man who offered them. When pressed for the name, his usual reply was, "I do not think it a wise plan. If I were to give out his name, half a dozen different departments of the trust would be after him at once, and it might be they could force him or persuade him to keep his mouth shut, and in that case I might be placed in an unpleasant predicament." The Standard's attorneys, Kline and Elliott, after a few days of this mystery, addressed Monnett a letter on the 20th of March, as follows: New York, March 20, 1S99. Hon. P. S. Monnett, Attorney-General of Ohio: On March 4, instant, George Rice annr.vnced to the public press that a bribe of $500,000, less $100,000 commission, had been offered you to induce you to stop or delay proceedings against the Standard Oil Company, now pending in the Supreme Court of Ohio. You are reported to have entirely denied, at Toledo, the Rice story, but by the time you arrived at Columbus, on the evening of the same day, you concluded that the story was true, an(^ accordingly in various newspapers on the morning of the 5tli instant you made the statement that the Standard Oil Company, through some friend of yours, had offered you $400,000 to influence your action with respect to the cases pending against it and other companies in the Supreme Court of Ohio. Reputable newspapers of the State, notably the Clev*:'land Leader, the Toledo Blade, and the Ohio State Journal, have called upon you to disclose the name of the "friend" who thus corruptly approached you. You are reported in the Cleveland Plaindealer of March 7 as saying that "if you v.'ere to give out the name of your friend, h?lf a dozen departments of the trust would be after him at once, and it might be they could force or persuade him to keep his mouth shut." You do not seem to realize that the reason given by you for refusing to disclose the name of your friend is an admission that the company does not know the name of tlie party whom you say it commissioned to offer you $400,000, and therefore you must have Icnown that the alleged friend made the offer to you without the author- ity or knowledge of the Standard Oil Company. In the New York World of the 9th instant you are reported as saying that you had written the friend who tried to bribe you that you would not expose him until public interest demanded it. In another interview in the Cincinnati Commercial Tribune of the 6th instant, you are reported as saying that "Your friend had agreed to protect you." The ar- langoment for protection, therefore, seems to be mutual. So far as any connection with the Standard Oil Company with any attempt to bribe you is concerned, it is totally false. You have the names, or claim to have, not only of the friend who approached you, but also of others acting with him. biuuiie, Aia Birmingham, Ala. .. i^ittle Rock, Ark.... San Francisco, Cal. Denver, Colo Jacksonville, Fla. .. Savannah, Ga Springtield, 111 Indianapolis, Ind. .. Dubuque, Iowa Des Moines, Iowa .. Atchison, Kans Louisville, Ky "Winchester, Ky. ... New Orleans, La. ... Portland, Me Hagerstown, Md. .. Worcester, Mass. .. St. Paul, Minn \ ;cksburg. Miss. ... Jackson, Miss Kansas City, Mo. .. Lincoln, Neb Keene, N. H Albany, N. Y Wilmington, N. C. .. Fargo, N. Dak Portland, Oreg llarrisburg. Pa (_harleston, S. C. ... Sioux Falls, S. Dak. Memphis, Tenn Windsor, Vt Seattle, Wash Wheeling, W. Va.... Madison, Wis Cheyenne, Wyo Point of Supply. Whiting . . . ... do ... do ... do ... do Baltimore . ... do Whiting ... ... do ... do ... do ... do ... do Parkersburg Whiting ... Buffalo .... Franklin . . Buffalo .... Whiting . . . ... do ... do .. do ... do Buffalo .... Parkersburg Baltimore . Whiting ... ... do P'ranklin .. Baltimore . Whiting ... ... do Buffalo .... Whiting ... Pittsburg .. Whiting ... do 1 Rate in Cents. 1 |Per 100 Per 1 lbs. gallon 1 23 1.5 1 44 2.8 1 301/2 1.9 1 781/2 5 1 77 4.9 1 29 1.9 1 22 1.4 1 9 .6 1 s .5 1 15 .95 231/2 1.5 27 1.7 1 111/2 .74 1 121/2 .74 1 23 1.5 1 24y2 1.6 1 i4y2 .92 1 181/2 1.2 1 20 1.3 1 23 1.5 1 ■« 2.8 1 27 1.7 1 30 1.9 1 I81/2 1.2 1 121/2 .8 1 20 1.3 1 47 3 1 781/2 5 1 471/, 3 1 20 1.3 j 28 l.S 1 18 1.15 1 I81/2 1.2 1 781/2 ! 7 .45 1 121/2 .8 1 77 4.9 It will be noted that the freight rate on a gallon of oil from Whiting, Ind., to Madison, Wis., is eight-tenths of a cent per gallon; to Denver, Col., and Cheyenne, Wyo., it is 4.9 cents and to San Francisco 5 cents per gallon. The charges run all the way from 12% to 7SV2 cents per hundred pounds. The consumer, remote from the base of supply, always expects to pay more for a given commodity than one on the spot where it may be produced. It would not be reasonable to expect to buy a gallon of oil as cheap in Mexico or the Klondike as in Oil City or Los Angeles. It was hardly necessary to make any extended investigation to reveal such facts as these. In the investigation of the prices of illuminating oil, replies were received from 1,553 retail dealers in oil scattered through every State in the Union. Of those, 1,475 bought their oil direct from the Standard Oil Com- pany or some of its branches. The highest wholesale price reported is 2714 WHOLESALE AND RETAIL PRICES. xlv cents per gallon in Nevada, and the lowest 5 cents per gallon in Virginia. The extreme is due to the fact that a higher grade of oil was considered than that called for in the report, and the point where the oil was delivered was remote from any railroad. It may be objected to these averages that a sufllcient amount of data was not received upon which to base a satisfactory estimate. For instance, while 147 dealers reported from New York and 121 from Pennsylvania, only two reported from Nevada and nine from Colorado. These numbers may have been fairly proportionate, however, for the States of smaller population as compared with the numbers represented by the larger Commonwealths, but when the great number of dealers in oil is considered, the number of replies is comparatively very small. The retail price of refined oil runs all the way from 6 cents per gallon in Pittsburg to 35 cents in Virginia City and 40 cents in Idaho City. The highest price received at retail for a gallon of oil in Pennsylvania was 15 cents, and the average price for the State 10.70 cents. This gives the retailers an average profit throughout the State of 2.43 cents per gallon. On a barrel of 50 gallons the Pennsylvania retailer thus clears $1.21, or nearly 30 per cent. The manufacturer of refined oil is content with a profit of 15 cents* a barrel. Of course, it does not always imply that the highest retail price means the greatest percentage of profit. It is a singular fact that some of the biggest percentages of profit are reported by the Pennsylvania dealers. A dealer at Audenreid reports a profit of 81 per cent, on the whole- sale cost of refined oil. At Allegheny the gain was 74 per cent, and at Bradford 77. A comparison of the average wholesale price, including freight, the average retail price, the profit per gallon and the rate per cent, of profit on illuminating oil, for each State, is given in the following table: Average Average Profit Per Wholesale Retail Per Cent. State. Price. Price. Gallon. of Cts. Cts. CtP. Profit. Alabama 1-3.08 16.86 3.7S 29 Arkansas 13.50 17.69 4.49 3:3 California 14.60 15.89 1.29 8 Colorado 16.90 21.22 4.32 2.J Connecticut 9.75 12.21 2.46 2.5 Delaware 9.16 12.00 2.S4 31 Florida 13.36 15.72 2.36 17 Georgia 13.52 17.95 4.43 32 Idaho 21.84 31.56 9.72 44 ininois 9.20 11.93 2.73 30 Indiana 8.33 11.18 2.85 34 Iowa 10.34 13.19 2.85 27 Kansas 12.57 15.00 2.43 19 Kentucky S.74 11.40 2.66 30 Louisiana 10.97 15.11 4.14 37 Maine 10.18 12.90 2.72 26 Maryland 8.39 10.96 2.57 30 Massachusetts 9.90 11.78 1.88 19 Michigan 8.92 10.70 1.84 20 Minnesota 10.15 13.07 2.92 2S *Mr. J. W. Lee in testifying as to the profits of the independent refining com- panies before the Industrial Commission said that they would be entirely satisfied with a manufacturer's profit of ten cents a barrel on the oil that runs through their refineries. In reply to the question whether he called this a very good man- ufacturing profit, he answered: "Yes, I should say so. I have heard independent refiners say they would be entirely satisfied to enter mto a contract for any num- ber of years to make ten cents a barrel ou every barrel of crude oil they refined, ami with oil at one dollar a barrel that would be about ten per cent, profit." (See Report of the Industrial Commission, Trusts and Industrial Combinations, Vol. J, page 273.) xlvi WHOLESALE AND RETAIL PRICES. Mississippi 12.69 17.11 4.42 34 Missouri 11.16 14.57 3.41 30 Montana 21.70 26.73 5.03 23 Nebraska 12.02 15.65 3.63 30 Nevada 25.78 32.50 6.72 32 New Hampshire S.82 12.33 3.51 40 New Jersey 8.45 10.96 2.51 30 New York 8.71 10.76 2.05 23 North Carolina 10.94 14.39 3.45 31 North Dakota 13.31 17.23 3.92 31 Ohio 8.35 10.10 1.75 20 Oregon 15.40 19.54 4.14 26 Pennsylvania 8.27 10.70 2.43 29 Rhode Island 9.44 12.13 2.69 28 South Carolina 12.44 15.81 3.37 27 South Dakota 13.57 18.71 5.14 38 Tennessee 13.29 16.53 3.24 24 Texas 13.30 17.14 3.84 29 Itah 20.87 25.45 4.58 22 Vermont 9.84 1.3.07 3.23 32 Mrginia 9.09 11.75 2.'".6 21 Washington 16.54 21.06 4.52 21 West Virginia 8.50 11.17 2.67 31 Wisconsin 9.03 13.71 4.68 51 Wyoming 18.77 24.58 5.81 30 It will be observed that the smallest percentage of the retail dealer's profit is credited to California, but there is a net difference of 1.29 cents per gallon, or 54 1/^ cents per barrel, between what he pays for the oil and what he receives for it. The gi-eatest profit is in Wisconsin, 51 per cent., but Idaho dealers are able to realize 9.72 cents on the gallon, while those of Wisconsin make 4.68 cents. The States in which more than 4 cents a gallon is realized upon refined oil are Arkansas, Colorado, Georgia, Idaho, Louisiana, Mississippi, Montana, Nevada, Oregon, South Dakota, Utah, Washington. Wisconsin and Wyoming. The States in which not less than 3 nor more than 4 cents a gallon is realized by the retail dealer upon refined oil are Alabama, Missouri, Nebraska, New Hampshire, North Carolina, North Da- kota, South Carolina, Tennessee, Texas and Vermont. The States in which the average profit is not below 2 nor in excess of 3 cents a gallon are Connecticut, Delaware, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine. Maryland, Minnesota, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and West Virginia. In only four States does the profit fall below 2 cents a gallon, or $1 a barrel, viz: California, Massachusetts, Mich- igan and Ohio. It can thus be set down with absolute certainty that the greater proportion of the consumers of the country pay the retailer on the average above $1 profit upon every barrel of oil they consume. The States of greatest population are mostly included between the 2 and 3-cent-a-gallon class. The Industrial Commission makes no attempt to draw any conclusions as to the results of its investigations upon the wholesale and retail prices of the four products it has taken under consideration. It admits that its efforts at making comparisons have proved ineffectual and that it is imprac- ticable to obtain any exact data upon the subject. But one thing has been thoroughly demonstrated and that is that the consumer pays the retail dealer a greater profit for handing out the commodities he needs in the quantities he desires than he does the middleman, the freight carrier or the manufacturer. But he has little occasion to find fault that such is the case. The retail dealer is entitled to a fair return for the money he has invested in his business and the work he performs in the preparation and delivery of his goods. WHOLESALE AND RETAIL PRICES. xlvil WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). The complete tables of the results of the Industrial Commission's inves- tigations on refined oil prices in the different States are herewith presented: ALABAMA. Annipton Bessiemei' Columbia Decatur Dothan Florence Gadsden Gate City.... Girard Hamilton Huntsville — Livingston Luverne Madison Montgomery.. New Decatur. Oxford Ozark Pratt City Successor Troy Tuscaloosa York Station.. Standard Oil Co Delivered .do do .do Eufaula, Ala .do Delivered .do do .do do .do • do .do do .do Columbus, Ga , f Tupelo, Miss j I Memphis, Tenn do Delivered Shipping point, when stated. "5° — o Or: .1 .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. do Montgomery. Delivered do Decatur Delivered do do do do do Meridian, Mis 3.12 4.12 Cents. nvz iiy2 *15 111/2 131/2 101/4 12 '/2 12 12 J. 0) 0) eta on. xce ale uct i «- K"-'? Q^^ Cents. 1 Cents. 1 15 3V2 30 15 31/2 30 20 41/2 30 1.5 3V2 30 20 6V2 48 16 S'/2 28 15 3 25 15 3 25 1 11 20 1 12 tl6 25 +I6V2 20 121/2 15 13 15 im 15 12 15 16 18 12 15 ni2 13% 17 101/4 15 13 18 1 5—6 9 3% 21/i 2 21/4 3 2—4 3 314 31/4 41/2 3 3-10 56 21 20 15 20 25 12V4— 25 25 30 26 43 25 ARKANSAS. Benton Waters-Pierce Oil Co.§.. do Delivered do 1116 141/i 20 16 2-3 20 20 17 20 IS 15 1214 15 17 20 15 20 15 20 18 20 20 18 4 2 1-6 5 9-20 51/2 .3% 25 15 Berryville do do do EurekaSp'gs.Ark. .95 131/2 14% 1314 13 14 11 40 38 do 26 do do 54 do do 4 Devall Bluff. .. . do do 4 11/4 4 7 1 14 4 4 "4—7 3% 36 do do .... 11 13 do . . do i2y2 13 13 13% 15 11 13 14 15 1116 141/2 20 do do ... 30 Do do . .. do do do Globe Oil Co do 33 1-3 Waters-Pierce Oil Co... do do Hope. do 54 28 33 1-3 25—43 24 Hot Spring"! do do do do 2.3 Do do do Standard Oil Co do *Probably includes charge for barrel. tHigher grade, 175°. tProbably a higher grade, or includes charge for barrel, being shipped from Montgomery. §This company is controlled by the Standard Oil Company. IIEupion oil, a somewhat higher grade than Brilliant, the grade of the Waters-Pierce Company given in table. Brilliant is reported to test about 110°, and Eupion about 150°. xlviii WHOLESALE AND RETAIL PRICES. WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL U50° test or less, the common lower grade, unless indicated). — Cont'd. ARKANSAS.— Continued. >> ■° ■ I ' i 1 ho 0) d) IK O u 0, £ M cC o t- G cS ^^t ^'^ Town. Maker. Shipping point. O ■S aJ P- when stated. P. rt 2 rt I OS Id (D Cents. Cents. Cents. Cents. Waters-Pierce Oil Co... do iiy2 11 y2 15 14 12 13 14 15 15 i7y2 2% 21 Do '.'.' do 30 do do do do 3.3 SMi 25 do do Mammoth Spring. Nashville do do 15 2 15 Standard Oil Co do 131/2 111/2 12 IW2 14% 14 20 15 6y2 3y> 4S do 30 do do 20 8 66 2-3 Siloam Springs.... do do do do 20 5% 37 Texarkana do do 20 6 43 do Monticello 1.06 12% 20 6.31 46 CALIFORNIA. standard Oil Co.... do do do do do do do do do Delivered do do Delivered do do do Sacramento Delivered San Francisco. do do .do. Alameda Bakersfield. . . Do Chico Colusa Coronado Eureka Do Femdale Fresno Grass Valley. Jamestown.. . Loren do Los Angeles | do Do ! do JIarysville ' do Mendocino C'y — j do National City do Oakland do Oroville ; do Pacific Grove do Pasadena I do Do do Placerville ; do i Sacramento Pleasant on do San Francisco Sacramento j do j Delivered Do ' do do San Jose do I do San Rafael do San Francisco San Diego do delivered San Francisco do ' do Do do do Santa Cruz do do Santa Rosa do do Stockton do do Vallejo do do Ventura do do Visalia do do Woodland do .' do San Francisco... Delivered do do do San Francisco... Delivered do Marysville San Francisco... Delivered do 13 20 20 i4y2 13 13 13% 13y2 13 16% 16% 13 13 13 13V2 13V2 13 13 13 13 13 13 13 19 13 14% 14 13% 13% 15% 17 14 5 3% 3 10.625 5.625 5.43 21A 8% 4.55 4.08 2 2% 3 2.75 4% 1% 4.35 7 3 7 2 3 5y2 6 4% 1% 3 •Probably higher grade. WHOLESALE AND RETAIL PRICES. xlix WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. COLORADO. 1 bo 2 "3° P. J, 41 60 o Ml 75 o — 0) o 8^1 4% 4 2y2 31/2 7 3 7% 2 31/2 5% 30 36 38 25 30 4 29 33 1-3 25 20 33 1-3 33 1-3 30 53 25 60 33 1-3 14 21 35 66 2-3 IDAHO. Caldwell Standard Oil Co Delivered | Coeur d'Alene do Spokane. Wash., i 1 Genesee do 1 Delivered | Idaho City do I Boise *6 Idaho Falls Continental Oil Co.t Delivered..'.'.'.'. .'.'.' Moscow Standard Oil Co I do I Salmon City do I Chicago, 111 *15i4 Wardner do Delivered 25% 30 20 30 22 25 26 40 23 30 21 25 i2y2 37y2 22% 35 4% 9 3 8 7 4 9% 12% ILLINOIS. Amboy Ashland Astoria Harrington Belleville Bemont Bloomington.. Braceville Bunkerhill Cairo Do Canton Carmi Carroll ton Centralia do Chatsworth I do Choroa I do Chicago I do Do I do Do ' do Standard Oil Co Delivered. do do do do.... do do Waters-Pierce Oil Co.t do Standard Oil Co do .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do.. 9 13 4 44 10 15 5 50 9 15 6 66 2-3 6 8 33 1-3 9 12 3 33 1-3 8y2 12 3% 41 8% 15 6V2 76 8y2 i2y2 4 47 9 12 3 33 1-3 8% 12% 4 47 9 12—15 3—6 33^^-66% 9Vi 12 2Vi 26 9 12 3 33 1-3 9% i2y2 3 31 9 i2y2 3y2 39 8y2 13 4y2 53 »V2 13 4y2 53 tio 12 2 20 6y2 9 2y2 38 6% 10 3% 53 •Not on railroad. tThis company \s controlled by the Standard Oil Company. tHigher grade. WHOLESALE AND RETAIL PRICES. 11 WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. ILLINOIS.— Continued. Shipping- point, when stated. 2 c ■3° Chicago , Do Do do Do do Do do.. Chillicothe do.. Columbia do.. Danville do.. Delavan j do.. Duquoin 1 do.. Earlville do.. Edwardsville do.. Effingham | do.. Eureka | do.. Forieston do.. Galesburg do.. Geneva do. . Golconda do.. Grayville 1 do.. Greenfield do.. Greenup | do.. Griggsville \ do.. Hillsboro I do.. Hoopeston ! do. . Jacksonville < do.. Jersey vi lie do.. Kewanee do.. Kinmundy do.. Lacon do. . Lebanon do.. Lewiptown do. . Marine do. Marion do. Marseilles do. Mattoon do. Monmouth ] do. Mount Carmel j do. Milford j do. Minonk | do. Morriaon j do. Mount Carroll do. Mound City do. Naperville , do. NauvOo do. Onarga do . Oregon 1 do. Ottawa ; do. Peoria do. Peotone do. Savanna do. Sumner do. Taylorville do. I'pper Alton do. ^■andalia do. Virdon do. Standard Oil Co. do Delivered do do do do do do do do do Chicago, 111 ! Delivered ] do do do do ! do 1 Evansville, Ind..,! do I Delivered do Jacksonville Delivered do : do ; do do I do Peoria, III ! Delivered do do do do do t do I do do I do ! do ' do do do Fort Madison, la. Delivered do do do IVs V2 0.95 .do. .do. .do. .do. .do. .do. .do. X o J3 C8 3V2 9 9 9 S'/i 81/2 81/2 •12 Sif. 91 i 6% sv. S1/2 71/4 8 71/0 81/.^ 9 9 oj (D tm g . O) .9 (U p. CO o Cents. Cents. 61/2 9 6 7 6 1/2 10 61/2 10 eva 8 SVz 12 9% 12V^ 81/2 10 81/2 12 9 121/2 ■71/2 10 9 121/2 91/2 13 8y2 12 10 12 8V2 12 7 10 10 1.5 9 15 91/0 12 9 12 9 111/2 914 121/2 sv^ 10 10 12 9 12 9 12 9 13 Cents. 31/2 1 31/2 31/2 11/2 3l^ 3" 1% 3y2 31/2 1.2 31/2 31/2 3 41,2 6 2y2 Ms 5 ci 53 16 2-3 53 53 23 41 31 17 41 39 16 39 36 41 20 41 42 45 66 2-3 26 33 1-3 11 31 17 20 33 1-3 33 1-3 44 1 13 4 47 12Vo 3.5 39 13 4 44 12 2.5 26 15 6 66 2-3 13 4.5 53 12 3.5 41 121/2 4 47 15 3 25 13 4.5 53 12 3.5 41 10 1 11 13 4 44 13 3.5 39 13 6.25 92 10 .5 5 12 3.5 41 10 2.5 33 1-3 12 4 50 10 £.5 33 1-3 12 3.5 41 14 5 55 121A 3.5 39 121/i 3.5 39 12 3 33 1-3 121/i 3.5 39 121/2 1 3.5 1 39 1 *Possibly a higher grade. Only one reported. 42 lii WHOLESALE AND RETAIL PRICES. WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. ILLINOIS.— Continued. be (D V o "5° . o £ "» »c ^■3 o a oi qj U 0, 4) S"^fc ^ Town. Maker. Shipping point. 0! a •9 oJa Ml— 2 oj when stated. P. il o o — Pi" c ti! W hi 1^ Cents. Cents. Cents. Cents. Standard Oil Co do . . . . . Delivered 81/2 10 9 9 121/2 12 13 10 4 2 3.3 1 47 do 20 Peoria, 111 0.6 34 White Hall do do . .... 11 do 8 s 10 9 1 25 Woodstock Wyoming Yorkville do do 12y-. do do 9 12 3 33 1-3 do do 8 10 2 25 INDIANA. Albion Independent Oil Co. Alexandria \ Standard Oil Co — Angola [ do Attica I do .\uburn do Batesville | do Bedford i do Do I do Bloomfleld ; do Bourbon ; do I^iazil I St. Josephs Oil Co.. Brookston Standard Oil Co Butler j do Cannellon I do Charlestown do Columbus i do ConnersviUe do CrawfordsviUe do Cruwnpoint | do Delphi i do Dublin I do Kas^t Chicago ; do Edinburg do E 1 w o o d do Elkhart I do Fort Wayne do Do do Do , do Greenfield ; do Hammonti do Do ; do Hartford City '' do Huntington ! do Indianapolis I Scoftold. S. & T.... Do I Standard Oil Co Do do JefferHonville ' do Knights^ town | do I^awrenceburg do Madison do Michigan City j do Monticello do Mount V'ernon I do Nanpanff do Oakland City do I>elivered. Anderson. Delivered. do.... do.... do.... do do do do , do , do , do .... . do do do do do do do do do do do do do do do do do do do do do do do do do do do do do do do do 1/2 Circa 1 8% 10 Ve 81/2 8V2 8% 8 9 7 8 81/2 7 81/2 8y2 9 S1/2 8 8% 8y2 7% *Sl2 C'a 6V2 8 ''2 S SVi 9 SVi; 10 15 10 121/2 11 10 12 10 12 10 121/2 13 10 11 12 1.5 4 1.5 3 2.25 2 3 3 4 1.5 5.5 4.5 1.5 1 3 3.5 3.75 I 1. •Probably a higher grade. WHOLESALE AND RETAIL PRICES. liii WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. INDIANA.— Continued. , , , ^ 0. o'Oc rs o P. /2 9% ^^2 8 8% 9% 81/2 91/2 9 10% 71/2 81/2 10 81/2 11 8 J. v. t. Cents. 4y2 3Vi 214 1V2 3 3y2 4.3 MONTANA. Anaconda J Continental Oil Co.t. , Delivered. Billings ' do. Boulder do. Bozeman do Butte do Do do Deerlodge do Orea tf a lis do Helena Standard Oil Co Kalispel Continental Oil Co. Livingston do Missoula do F'hilipsburg do Red Lodge do Virginia City 1 do .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. 20 25 20 25 22 25 20 23 20 25 21 25 23 30 22 25 22 25 20 25 20 25 25 y2 30 24 33 20 25 26 §35 25 25 13y2 15 18 30 i3y2 131/2 25 20 17 37y2 25 34 NEBRASKA. Alliance ! Standard Oil Co Delivered. ,\«>hland do Omaha, Neb. .•\uburn do do. Beatrice ' do I Delivered. Blair do. Central City do. Columbus do. Crawford I do. Dorche-ster do. Falls City do. Fremont do. Friend do. Geneva do. Gothenburg do. Holdrege , do. Indianola do. Lincoln do. Do do. Nebraska City do. Norfolk do. do do do do do do do do do Omaha, Neb. Delivered Omaha, Neb. Delivered do do do 1.3 1.8 1 14 18 12 V" 15 11 15 11% 15 11 14 i3y2 17 iiy2 15 1121 25 11% 15 11 15 11 15 11 y2 15 12 15 11% 20 13% 20 i2y2 25 10 15 10 12% 10—11 15 12 15 4 28% 1 1-5 9 2 1-5 17 3'i 30 3 27 3% 26 3% 30 4 19 3% 30 4 36 4 36 3% 30 3 25 3 6-10 22 6% 48 7% 42 5 50 2.50 25 4 40—36 3 25 •May be Euplon oil; only one reported. tKupion oil, reported as 150° test: Brilliant oil, the more common grade of the Waters- Pierce Oil Company, is stated by some dealers' to test about 110°. t'l'his company is controlled by the Standard Oil Company. §Not on railroad. IIThls may be a higher grade. Crawford is ii(>ar Wyoming, 473 miles' from Omaha on the main line. WHOLESALE AND RETAIL PRICES. Ixiii WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. NEBRASKA.— Continued. 0) 1 -3 ' i i s 13 C 0) p. ft . cj Town. Maker. Sliipping point, g 0. 0. OJ entage retail de when stated. — ft \ s^-g ■sg Be ^2 "^1 1 Cents. Cents. Cents. Cents. Standard Oil Co (Jo 10 13 3 30 Do . (Jo 81/2 SV2 81/2 13 12 12 4.50 3.50 3.50 53 Do (3o do 41 Do 'fecofleld, S. & T (Jo 41 Do ..do 8 14 12 3.50 41 (3o .' do 12 131/2 9 llVa 11 11 11 V2 111/2 15 18 16 15 15 14 15 15 3 4.50 3.75 2.3 4 3 3.50 3.50 1 25 Shelton (Jo do 33 1-3 St Paul Omaha, Neb ..do 3% 2.2 30 (Jo 18 ..(Jo 36 (Jo do 27 Wilber (Jo do 30 York (Jo do 30 NEVADA. Carson Virginia City Standard Oil Co do Reno. Nev do , 1.6 0.96 21% •271/2 30 35 6.9 6.54 30 22% NEW HAMPSHIRE. Bartlett I Standard Oil Co Delivered. Belmont do > do Canaan 1 do do Claremont | do .' do Concord do 1 do Conway , do ' do Epping ; Jenney Mfg. Co j do Exeter Standard Oil Co • do Farmlngton do Haverhill do Hinsdale do Keene Independent Ref. Co. Laconia Standard Oil Co Littleton do Manchester do Marlboro do Newport I do Portsmouth .| do Til ton ; do Winchester I do W oltsboro ,; do .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. 10 14 91^ 12 91/2 14 81/2 11 91/2 12 10 13 9y4 12 9% 12 9y* 12 10 12 8% 12 1014 14 91/* 11 9 13 91/* 12 9 12 9 13 91/4 12 91.4 12 9 12 9 12 2% 2 I/O 3 ' 2% 2% 2?4 31 i 3% 1% 4 2% 40 29 47 29 26 SO 29 29 29 20 41 33 1-3 18 44 29 33 1-3 44 29 29 33 1-3 33 1-3 NEW JERSEY. Bayonne Belvidere Beverly Bloomfleld... Bordentown. Bridgeton Do Burlington.. Camden Do Standard Oil Co Delivered. Atlantic Ref. Co.t..- do Standard Oil Co do .do. .do. .do. .do. .do. .do. Crew, Levick & Co.. .do. .do. .do. .do. .do. .do. .do. , 1 10 8Vi 12 71/2 10 8% 11 7 9 m 11 81/2 10 7 10 9 10 7 8 2 3% 21/2 41 33 1-3 30 28 30 17% 42 11 14 •Probably a higher grade or includes charge for barrel. tThis company is controlled by the Standard Oil Company. Ixiv WHOLESALE AND RETAIL PRICES. WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (.150° test or less, the common lower grade, unless indicated). — Cont'd. NEW JERSEY— Continued. Town. Maker. Shipping point, when stated. "5° d ft Wholesale price, per gallon. Retail price, per gal- lon. Excess above whole- sale price, freight de- ducted, per gallon. ft ^. — d J Cape Mav Standard Oil Co . . do > Cents. Cents. 9 81/2 9 9 9 9 S'/o 7 8 8 9 9 9 9 SV2 8 1/2 Cents. 12 12 12 11 11 12 12 9 10 9 12 12 12 12 12 11 Cents. 31,4 3 2 2 3 i 3 3 3 3 3% 21/2 33 1-3 East Orange Elizabeth do 41 do do 33 1-3 Flemington ' do . .. .do 22 Garfield ' rin do 22 Hackettstown Harrisonville do . .do 33 1-3 do do 41 do 22 Jersey Citv , do do 25 Do do . ...do 121^ 33 1-3 Kevport fin. do Lambertville Leonardo Long Branch Milburn Millville Morristown Do do do 33 1-3 do do ... 33 1-3 do do do 33 1-3 41 do do do do 30 Trew Levick c o o Hi 1 — bo Bluff ton I do Cadiz ■ do Cardington < Pennsylvania Oil Co," CarroUton | Standard Oil Co ' Cedarville do | Xenia & Dayton. I Celina do 4 Delivered Chagrin Falls ! do , do i Cincinnati ' do , do Do ^ do ; , do Circleville i do do , Cleveland : do do Do I do do Do do do Cleves do Cincinnati .... Clyde Sun Oil Co.* Toledo Collinwood Cleveland Ref'g Co. Delivered Freedom Oil Works. Freedom, Pa. Standard Oil Co I Delivered do 1 do Connorville I Freedom Oil Works.] Steubenville. . Cortland i Standard Oil Co J Delivered Columbiana Columbus. . . Columbus Grove. Delta Deshler East Liverpool Findlay Fremont do. Garrett.s(ville ' do. Greenville ! do. Greenwich \ do. Hamilton ,' do. Harrison do. Hillsboro do. Holgate do. Jackson do. Lancaster do. Leetonia , do. Lima do. London do. Lorain do. Loudon vl lie i do. Manchester do. Man.cfield do. Marion i do. Maumee ! do. .do. .do. .do. .do. .do. Medina Miamisburg Millersburg Monroevllle Montpelier.. Mount Gilead Mount Vernon... Xewcomerstown . New London...., Independent OU Co Standard Oil Co... do do .do. .do. ..do. .do. .do. ..do. .do. .do. .do. .do. .do. .do. .do. .do. .do. -do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. 0.6 0.56 Delivered. do.... do.... Cents. Cents. 5% 7% 8 10 8% 8 71/2 10 10 12 6V2 8 7% 10 tV4. 10 8 10 8 10 81^ 12 7V2 10 m 12 9y2 12 6V2 7y2 evi 9 8% 10 61/2 10 ey* 8 6 9 8 10 6 9 8y2 i2y2 8% 10 7 10 8y4 10 7% 9 5y2 7 sy* 10 sy* 12 6V2 9 8% 10 7% 10 8% 10 7y2 10 8y4 12 7y2 9 8 10 m 10 8% 10 7% 10 9% 11 6% 10 8y4 12 7% 10 5% 9 8 n 7V4 10 7 9 8% 11 eyo 8 5y2 8 7% 10 sy* 12 7 10 m 10 V/2 10 8y* 10 8 12 8V4 10 J3 — V to fe-c — ^'S'O H Cents. 2.25 2.50 1.75 2 4.50 1.50 2.50 1.75 2 2 3.50 2.12 3.75 2.50 1 2.50 1.75 3.50 1.75 3 1.40 2.44 4 .45 3 1.75 1.50 1.50 1.75 3.75 2.50 1.25 2.25 1.75 2.50 3.75 1.50 2 2.50 1.75 2.25 1.75 3.25 3.75 2.25 3.25 3 2 2 2.75 1.5 2.5 2.5 3.75 3 •This company Is controlled by the Standard Oil Company. WHOLESALE AND RETAIL PRICES. Ixlx WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. OHIO. — Continued. New London , New Philadelphia.. New Straitsville.... Niles Do North Amherst North Baltimore... Norwalk Oberlin Oxford Painesville t Paulding Quaker City Sabina Salineville Sandusky Shelby Springfield St. Marys St. Paris Toledo Do Upper Sandusky.... Urbana Wadsworth Wauseon ^A■ashington AVesterville Wilmington Youngstown Standard Oil Co do do do Freedom Oil Co Standard Oil Co.... do Sun Oil Co.* Standard Oil Co Cleveland Ref g Co.. Standard Oil Co , do do do do do Independent Oil Co. Standard Oil Co.... do do do do do do Scofield, S. & T Standard Oil Co.... do do do do Shipping point, when stated. Delivered... do Nelsonville. Delivered.. . do Cleveland... Delivered.. . do , do do do do Cambridge. Delivered... , do do Mansfield... Delivered... do do do do do do do do do do do do 2 c "3° .72 — o o — Cents. 8'^ 81/4 til 514 6 -5% 7% 7 5% 7V2 914 8% 9 8% 6% 7% 8 7 7 6V2 8V4 71/4 7 SVa t9% 7l^ 8y4 7% i^ I. O o ■° Dunbar ! do < Duncansville Dushore E. Downingtown.. Elizabethtown Elklick Emlenton Erie Standard Oil Co Falls Creek \ do Frankford Atlantic Rerg Co Do j do Franklin Franklin Oil Works. Girardville ; Glen Campbell Atlantic Ref'gCo. Greatbend Standard Oil Co... Greencastle .\tlantic Ref'g Co. Greensburg ' Standard Oil Co... (Jrove City ' Eclipse Refg Co.t do do Pittsburg. Delivered. do.... do Pittsburg. Standard Oil Co — ij Delivered. Atlantic Ref'g Co. . . do do do Standard Oil Co do Atlantic Refg Co... do.... Eclipse Refg Co.t.... Franklin.. Delivered. do do do.... do do do do do do do Harrisburg Capital City Oil Co.. Hawley Standard Oil Co Homer City j Atlantic Refg Co.... Honesdale I Houtzdale DenVingerBros.'6iiCo. Hughe-sville , Atlantic Ref'g Co.. .. Huntingdon do Irvona do Irwin do...... .leannette do JfTfnyn Hendrick Mfg. Co.... Jersey Shore .Vtlantic Refg Co.... Jf'ssup do Kingston ' do Lancaster i Crew-Levick Co I^ansdale .do. .do. .do. .do. .do. .do. .00. do do do do do do do do Philadelphia. ^2 \ 1 Cents. ! Cents. 1 8 10 8 10 S'i 15 8'/2 10 c% 10 VA 12 sy* 12 GVa 8 9% 12 SVa 12 eVi 10 6% 12 6V2 10 71/2 9 S% 10 8 11 8 10 9 12 8 10 7% 10 8 10 1 7 10 6V2 11 8V2 12 6% 8 9'i 12 S% 10 10 13 ! 7 * 1 7% 10 1 7 9 8% 12 IV* 11 7 10 7 10 7 10 7 10 7y2 12 9 15 81/2 12 7% 10 9 12 9% 15 10% 13 7% 12 7y2 10 8% 12 7 10 •IOV2 14 8% 10 9 12 8 1/2 12 SV2 12Vi 7% 15 8 10 8V2 10 8 10 7 10 V/o 9 7Vi 1 9 •§ <""=^ Cents. 2 2 6.75 1.50 3.25 4.25 2.75 1.50 2.5 3.5 3.75 5.25 3.5 1.5 1.25 3 2 3 2 2.25 3 4 3.5 1.5 2.5 2.85 3 3 4.5 6 3.5 2.5 3 5.5 2.5 4.5 2.5 3.25 3 3.5 1.5 3 3.5 4 7.25 2 1.5 2 3 1.5 .94 •Water White, the common grade. tThls company is controlled by the Standard Oil Company. WHOLESALE AND RETAIL PRICES. Ixxi WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated).— Cont'd. PENNSYLVANIA.— Continued. l^ebanon I^ehighton Lewisburg Lewistown Liberty Lockhaven Luzerne Lykens Mahanoy City.. Marietta Martinsburg Manheim Mauchchunk Meadville Morcer Meyersdale Midway Mo(:ire.-4 Mount Carmel.. Do New I'righton.. Newcastle Do Atlantic Ref'gCo. do Standard Oil Co... do Atlantic Refg Co. do Shipping point, when stated. Standard Oil Co... do do Atlantic Ref'g Co. Keystone Oil Co. Delivered. do do do do do do do do do.... Altoona... Delivered. do do.... do.... Pittsburg. Delivered. do.... do.... do.... do.... Xi-iri'istown I'ar;-ons Patton I'en Argyl Philadelphia Do Do Do Do Philipsburg Pittsburg Pittson Reynoldsville Royersford Schuylkill Haven Scranton Sharon Sharpsburg... Sheridanville. Slatington Siimeipet Stroudsburg.. St. Clair Sunbury Tarintum Titusville Towanda I'ninn City.. . Washington.. Wayne Waynesburg. Wt-llsboro W estchester.. Wyoming Standard Oil Co | do Eclipse Oil Co.* Atlantic Ref'g Co do do do do do Standard Oil Co Atlantic Ref'g Co Freedom Oil Co. and Penna Oil Co. Atlantic Ref'g Co do do do do Standard Oil Co Pure Oil Co Atlantic Ref'g Co ' Crev.-Levick Co Denlinger Bros. Oil Co. Waverly Oil Co Standard Oil Co do Atlantic Ref'g Co do J Atlantic Ref'g Co. and Maloney Oil Co. Atlantic Ref'g Co do do do do do do do do Atlantic Ref'g Co. and American Oil Works. Atlantic Ref'g Co do Continental Oil Co.. Atlantic Ref'g Co... Standard Oil Co Crew-Levick Oil Co. Atlantic Ref'g Co... .do., .do., .do., .do., .do., .do., .do., .do., .do., .do., .do., .do., .do., .do., .do., .do.. .do., .do., .do., .do., .do., .do., .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. 91 I. ^ Oi V o u j o cd !i^ c o ffl ■^ ^ , Cents. Cents. 7% 101/2 8 » 81/2 SV2 7 8 7 7 9 7 81/i 7% 8% 8% 81/2 7V4 7 7 6 61/2 Q> O Cents. 9 12 10 12 10 12 10 12 9 9 12 9 13 10 10 12 12 10 10 10 10 10 gi /2 Dallas Do do .... 25 Waters-Pierce Oil Co... do do 25 Do do 30 do do 17 Kagle Pass do 25 Waters-Pierce Oil Co... do .. ..do , 33 1-3 do 25 do 30 Do do . do 30 do do 20 do do 30 Gatesville do .. . do 20 Georgetown do do 50 do do 51 do do 29 do do 50 do do 15 do do 25 Hico do . ..do do do 1.-) 12 1 2 1 50 Do do 20 1 •Correspondent says this is 120° oil IHigher grade; also sells Brilliant. JEupion oil, higher grade; said to test 150 is said to test 110°. §Possibly higher grade; only one reported. ilBrilliant; stated to be 110° test; Eupion costs 12 cents. and no good." Brilliant, the more commonly reported grade, Ixxiv WHOLESALE AND RETAIL PRICES. WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. TEXAS.— Continued. UTAH. Town. Maker. Shipping point, when stated. •a c •55 «-3 a 0, if -5 fa Wholesale price, per gallon. Retail price, per gal- lon. Excess above whole- sale price, freight de- ducted, per gallon. a u 5"3 Huntsville Waters-Pierce Oil Co... do Cents. Cents. 13 12.5 •17 tl5 12 13.5 14 12 12 121/2 t20 12 14 12 12 13 13 tl5 11% 11% 13 Cents. 15 15 20 20 15 16 20 16 Cents. 2 2.5 3 3 2.0 6 4 15 Italy do 20 (Jo do 17 Kyle do .... do 33 1-3 do do 25 do do IS do do 42 . do do 33 1-3 do . do do do 17 25 15 17 14 4.5 3 2.5 36 do do 9", do do do do 25 do IS do 16 2-3 . . do do Tyler Do do do 15 20 20 15 15 17 2 7 3.5 3.5 4 15 do 53 do . ...do 33 1-3 do do 30 Do do do do 30 Wichita Falls do 37 Brigham Continental Oil C0.5 do Ogden .9 21 21 20 21 21 22 21 20 20 21 20 20 24 25 25 25 25 35 23 2.1 4 5 4 4 13 2 9 19 Kavsville do do Standard Oil Co do 25 Lehi do 19 do 19 Park City Continental Oil Co do do do do 59 Pleasant Grove... do 9% Prove Citv do Salt Lake City... do 23 25 25 25 2.44 5 ... 15 Smithfield do do do Ogden 1.56 10 SpanLsh Fork Delivered 25 Springville do 25 VERMONT. Boston, Mass. Delivered , do do do Barton Landing.. Leonard & Ellis Bellows Falls Standard Oil Co Bethel do I ?ra d f ord I do Derby Line 1 American Oil Works. Hardwick Standard Oil Co i Boston, Mass. Hartford do Delivered Middleburg do do Montpclior do do Morrisville do Newport .Standard & American Oil Co do Northfield Standard Oil Co do Randolph do do Royal ton do do Rutland do do Saint Auburns do do Do do do Stowe do Waterbury Swan ton do Delivered Windsor Standard Oil Co. & In- dcpond.ont Ref. Co. ' do AVoodstock Independent Ref. Co i Windsor 11% 10 sn 9'2 9% 9 1/2 10 9% 12% 11 S 9% 9% 10 9% 11% 10 13 3.5 10 1.:. 13% 2.25 14 4 14 0.0 12 3.6 13 3.5 14 4.5 14 4.5 13 3.5 3..-, 4.56 2.25 3.75 1 •Possibly higher grade; only one reported. lEupion oil, higher grade; said to test l.^O". Brilliant, the more commonlv reported grade is) said to te.st 110". ^Brilliant; stated to be 110° test; Euplon co;- ts V> cents. WHOLESALE AND RETAIL PRICES. Ixxv WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (150° test or less, the common lower grade, unless indicated). — Cont'd. VIRGINIA. Town. Maker. Shipping point, when stated. Freight rate, if paidby dealer, per gallon. Wholesale price, per gallon. 1 -3 u I. ft 1 O' a Q) "•3I Cents. 4 3 J. 5 1.25 2.25 3 3 4 3 3.5 3 2 2.25 .25 1 2 ft M- 1- Buena Vista Standard Oil Co .... Cents. Cents. 10 914 10 8% 9% 9 9 11 9 9% 9 10 9% 9% *5 6 Cents. 14 12% 12% 10 12 12 12 15 12 13 12 12 12 10 9—10 8 40 do do 31 Farmville do do 25 Fredericksburg do do 14 Hampton SouthernOil&SupplyCo. 23 Leesburg 33 1-3 Luray do do 33 1-3 Lynchburg do do 36 Marion do do 33 1-3 Newport News do do 36 Norfolk do do 33 1-3 Petersburg . .do . . do 20 Portsmouth . do do 23 Richmond do do 2V2 Do Standard Oil Co. and do 80—100 Winchester Standard Oil Co do 33 1-3 WASHINGTON. Ballard Standard Oil Co do Seattle % 1 0.62 1.1 13'/i 131/2 13V, 191,2 191,2 231-2 151,2 Hi,'2 14 15 131/2 21 I3I/0 I3I2 20 I9I2 13 Vi 131/2 17 IS 20 25 25 28 20 20 20 IS 20 25 17 20 IS IS 2.75 3.25 5.50 4.88 4.4 4.5 4 6 3 5.5 4 3.5 5 5.5 4.5 4.5 19 do do Tacoma 3S do ... 24 Davenport do do 21 do 19 do Aberdeen u. 25 do 38 42 do do do 20 38 19 26 33 1-3 do Seattle ' do Seattle do do do Seattle .. 1% do Do do do 28 33 1-3 33 1-3 do do.. . Do do WEST VIRGINIA. Beaver Atlantic Ref'g Co.t. Clarksburg do Shepherdstown.... Standard Oil Co \Vellsburg Freedom Oil Co Weston ' Atlantic Refg Co.. Wheeling ' do Delivered. do.... do.... do.... do.... do.... sy* 14 s 10 7 10 8% 11 9 10 1 •"A cut rate between oil companies; has been selling at 9 and 10 cents.' spondent. tThis is controlled by the Standard Oil Company. 4.25 3.50 2.25 1 Report of corre- Ixxvf WHOLESALE AND RETAIL PRICES. WHOLESALE AND RETAIL PRICES OF ILLUMINATING OIL (l50° test or less, the common lower grade, unless indicated). — Cont'd. WISCONSIN. Appleton Standard Oil Co. Arcadia I .. do Barron , do Barronette 1 do Beloit I do Berlin do Do I do Black River Falls j do Burlington ! do Cedarburg do. Shipping point, when stated. .do. .do. .do. Chilton Darlington Delavan Elkhorn do. Elroy ' do. Grand Rapids....! do. ...do. ...do. ...do. ...do. ...do. ...do. ...do. ...do. ...do. ...do. ...do. ...do. ...do. Delivered. do.... do.... do.... ; do.... do.... do.... do.... do.... do.... do.... do.... do.... do.... do.... Green Bay Hartford.. . Horicon Hudson Janesville.. Kenosha.. . Lancaster.. Madison.. .. Manston.. . Marinette. . Menonionie Milwaukee. Do Mineral Point — [ do. Necedah I do. Oconto I do. Onalaska do. ..do. .do. ,.do. ..do. ,.do. .do. Prairie du Chien. Princeton Reedsburg Richland Center. Ripon River Falls Shawane ' do Sheboygan I do Sturgeon Bay.. Waupun Wausau West Superior. .GO. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. ■ do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. .do. do I Milwaukee. do 1 do do 1 Delivered... do do 2 d "3° ^ , B P. « g a^ o Cents. 2.25 2.50 4.25 1.25 ■4 2 2 2.50 2 1 2 3.50 2.25 2 1 2.25 2.25 1.25 2.13 3.5 4 2 3 3.25 3.50 .50 2 2.50 2.50 3 2.50 1.50 2.75 1.25 2.50 2 4 2.50 2.75 2.8 1.24 2.50 5 WYOMING. Carbon. Cheyenne Laranii<' Do Rock Springs. Sheridan Standard Oil Co. and i Continental Oil Co. ; Cheyenne. Continental Oil Co I Delivered. .do. .do. .do. .do. .do. .do. .do. .do. •Perfection— a standard grade. '.. 30 16 20 19 22V4 18 25 20 25 20 25 3.5 7 5 5 CONTENTS. Page. Preface 3 Chapter I — Introduction 6 Chapter II — Formation of the United States Industrial Commission 9 Chapter III— Garbled Testimony 25 Chapter IV — Misleading statements in the Commission's "Review" and "Digest" of Evidence 36 Chapter V— The Pure Oil Trust 50 Chapter VI — Testimony of Mr. John D. Rockefeller, President, and Mr. S. C. T. Dodd, Solicitor, of the Standard Oil Company of New Jersey 65 Chapter VII — Testimony of Mr. J. W. Lee, President of the Pure Oil Trust 71 Chapter VIII— Testimony of Mr Theodore B. Westgate, a director of the Pure Oil Trust 124 Chapter IX — Testimony of Mr, M. L. Lockwood, of Zelienople, Pennsyl- vania, oil producer , 136 Chapter X— Testimony of Mr. Frank S. Monnett, Attorney-General of the State of Ohio 166 Chapter XI — Testimony of Mr. T. F. Davis, of Marietta, Ohio, oil pro- ducer 170 Chapter XII— Testimony of Mr. John D. Archbold. Vice-President Stand- ard Oil Company of New York 186 Chapter XIII — Testimony of Mr. H. H. Rogers, Vice-President of the Standard Oil Company of New Jersey and President of the National Transit Company of New York 255 Chapter XIV— Testimony of Mr. Thomas W. Phillips, of the Pure Oil Trust, and popularly known as the "father of the Industrial Commission," of which he was the Vice-Chairman 261 Chapter XV — Mr. Thomas W. Phillips, Vice-Chairman of the United States Industrial Commission 290 •Chapter XVI — Testimony of Mr. Lewis Emery, Jr., a stockholder of the Pure Oil Trust 294 Chapter XVII — Testimony of Mr. W. H. Clark, of Newark, Ohio, dis- charged employe of the Standard Oil Company 410 Chapter XVIII — Testimony of Mr. B. A. Mathews, Manager of the Standard Oil Company for Central and Southern Ohio 414 Chapter XIX — Testimony of Mr. George Rice, of Marietta, Ohio, pro- ducer and refiner of oil 421 Chapter XX — Testimony of Mr. Howard Page, of New York, Vice- President of the Union Tank Line Company 466 Chapter XXI— Testimony of Mr. Patrick C. Boyle, statistician of the oil industry and editor and proprietor of the Oil City Derrick, Oil City, Pa 498 Chapter XXII — Testimony of Mr. Andrew D. Gall, of Montreal, Canada, President of the Gall-Schneider Oil Company. Limited 580 Chapter XXIII — Extracts from the testimony of Mr. F. B. Thurber, Mr. Henry O. Havemeyer, Mr. G. Waldo Smith, Mr. Martin R. Cook, Mr. Charles C. Clarke, Mr. George J. Kindel, Mr. Samuel Spencer, Mr. Martin A. Knapp, Mr. C. A. Prouty and Mr. P. E. Dowe 593 Appendix — Affidavits of Henry Demarest Lloyd, Charles B. Mathews, M. L. Lockwood, F. S. Monnett, James W. Lee and .John D. Archbold. Wholesale and retail prices of illuminating oil. CONTENTS. WITNESSES. Page. Archbold, John D 186 Boyle, P. C 498 Clarke, Charles C 599 Clark, W. H 410 Cook, M. R 597 Davis, T. F 176 Dodd, S. C. T 69 Dowe, P. E 604 Emery, Jewis, Jr 294 Gall. Andrew D 580 Havemeyer, Henry 595 Kindel, George J 600 Knapp, Martin A 602 Lee, James W 71 Lockwood, M. L 136 Mathews, B. A 414 Monnett, F. S 166 Page, Howard 466 Phillips, Thomas W 261 Prouty, C. A 602 Rice, George 421 Rockefeller, John D 65 Rogers, H. H 255 Smith, G. Waldo 597 Spencer, Samuel 601 Thurber, F. B 593 Westgate. T. B 124 APPENDIX. Affidavits — Page. Archbold, John D xxvii Lee, James W xxvi Loyd, Henry Demarest ii Lockwood, M. L xvii Mathews, Charles B xi Monnett, F. S xxiii Wholesale and retail prices of illuminating oil xli University of California SOUTHERN REGIONAL LIBRARY FACILITY 305 De Neve Drive - Parking Lot 17 • Box 951388 LOS ANGELES, CALIFORNIA 90095-1388 Return this material to the library from which it was borrowed. >;,-.'T:m';.I. El- '^'•, ■'^-: ;; 'CcV.fr-; 1 FOR^^IA- UC SOUTHERN REGIONAL LIBRARY FACILITY AA 000 853 181 6 : h-^T-. ■:^l:^K::■^^smi'M^'^' h^'j s^rx;^ UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on the last date stamped below. MAR 2 2 1975 NOV 1 iSdO 4 J^V M :-■"-(■« ibol m DEC ^m* 1 :^ Form L9-Series4939