Watson's Jeffersonian Magazine, January, 1907

by Various

Standard Oil Before the Bar.

The most definite and concrete form which the agitation against trusts and combines has ever assumed in this country, and the most interesting legal step the government has taken in a generation, was the filing of a bill in equity, by United States Attorney General Moody, on Nov. 15, in the Eighth Judicial Circuit, in St. Louis, Mo., against the Standard Oil Company, of New Jersey, and seventy of its subsidiary corporations and limited partnerships, as well as against seven of the leading officers and directors of the big trust, to have the combination dissolved under the Sherman Anti-Trust law, as being in restraint of trade and commerce. The government, for nearly two years, has been gathering information on which to base some such action. But last June the attorney general appointed two assistants, Messrs. F. B. Kellogg and C. B. Morrison, to act with Assistant Attorney General Purdy in gathering information as to the transgressions of the Oil Trust in the business of refining, transporting, distributing and selling oil throughout the United States.

THE STRIPES MAY GO ON YET, IF YOU DON’T WATCH OUT.

Their report was such as to justify legal action on the part of the Department of Justice, and after the information had been carefully examined by the President and the Cabinet, the bill in equity was filed. The recital of alleged facts in this petition, is virtually a history of the Standard Oil Company from its infancy to the present time. It sets forth that the Standard Oil Company, of New Jersey, with its seventy allied corporations and limited partnerships, produces, transports and sells about 90 per cent of the refined oil products used in this country and about the same proportion of the refined oil exported from the United States; that this practical monopoly has been procured by a course of action which, beginning in 1870, has continued, in the main, under the same persons down to the present time; that these persons now surviving are John D. Rockefeller. William Rockefeller, Henry H. Rogers, Henry M. Flagler, John A. Archbold, Oliver H. Payne and Chas. M. Pratt; that their design throughout has been the suppression of competition in the production, transportation and sale of refined oil and to obtain a monopoly therein; that between 1870 and 1882 the purpose was effected by agreements between many persons and corporations engaged in this business; that in the latter year the business was made certain by vesting in nine trustees, including five of the persons named above, sufficient stock in the thirty-nine corporations then concerned to suppress competition among themselves; that this plan was acted upon until it was declared illegal by the Supreme Court of Ohio, in an action against the Standard Oil Company of Ohio, one of said corporations, in 1892; that during the seven years following, the same individual defendants, as a majority of the liquidating trustees, were pretending to liquidate the trust, but as a matter of fact were managing all the corporations in the same old way and were exercising the same control over them; that in 1899 the individual defendants increased the capital stock of the Standard Oil Company, of New Jersey, from $10,000,000 to $110,000,000; that the company was then a producing and selling corporation, and that they added to its functions the power of purchasing stock in other companies, and practically all the powers exercised by the trustees under the unlawful agreement of 1882; that the Standard Oil Company, of New Jersey, then taking the place of the trustees, acquired all the stock of the corporations theretofore held and controlled by the trusts, paying therefor by the issue of its own shares in exchange; that the President of the Board of Trustees became the president of the Standard Oil Company, of New Jersey, that the trust assumed the direction of the business of the Standard Oil Company, of New Jersey, and has continued it ever since.

After this summary of Standard Oil history, the petition goes on to say that the purpose and effect of the corporation as a holding company was precisely the same as the purpose and effect of the appointment of the trustees previously referred to, namely: to suppress competition between the corporations and limited partnerships, whose stock was first held by the trusts and then by the Standard Oil Company, of New Jersey; that by the foregoing methods, and by securing railroad rates which discriminated in favor of the corporations whose stock was held by the holding company, the latter was enabled to secure a monopoly in large sections of the country, with the result that prices to consumers are much higher in those sections than in sections where competition, to some extent, prevails.

The bill further sets forth that from 1882 to 1895 the Standard paid dividends amounting to $512,000,000 on a professed valuation of a trifle less than $70,000,000, besides accumulating a surplus “of unknown magnitude,” and that for the last nine years the dividends have run from 33 to 48 per cent.

Almost on the very day that this bill was filed the Standard declared a quarterly dividend which aggregated $10,000,000.

In filing this bill Attorney General Moody said that the question of criminal prosecution would be left “for future consideration.”