In 1874 the Oil Combine had on some lines 10 different transportation advantages over its competitors, i. e., 49 cents direct rebate per barrel of refined oil, 22 cents rebate on crude-oil pipeage, 8½ percent of refined oil carried free (due to the method of calculating crude and refined equivalents), 13 cents a barrel advantage through possession of the railroad oil terminal facilities, 15 percent of by-products carried free, a rate to New York 10 cents a barrel less than the published rate on refined oil, and 15 cents on crude oil, exclusive use of tank cars, underbilling of carload weights, twenty thousand lbs. often for cars containing forty thousand or even sixty thousand lbs. of oil, or a lump sum per car regardless of excess weight, and a mileage payment from the railroads on the tank cars amounting in itself to a large rebate.
Nearly all the refineries of the oil region and of Pittsburg passed by sale or lease into the hands of the Combine in 1874–5.
W. H. Vanderbilt, and other prominent railroad men were stockholders in the Standard.
Frank Rockefeller, brother of John D., testified before a congressional committee July 7, 1876, that he believed Tom Scott, W. H. Vanderbilt, and other big railroad men shared in the oil rebates.
The New York Central and the Erie sold their terminal facilities for handling oil to the Standard Oil Co., thereby making it practically impossible for the roads to transport oil for the competitors of the Trust. The Pennsylvania Railroad also, under compulsion of a rate war, made a deal with the Standard by which the latter acquired the oil cars, pipe lines, and refineries of the Empire Company, a creature of the Pennsylvania Railroad.[[23]]
Vanderbilt told the Hepburn Committee, August 27, 1879, that “if the thing kept on the oil people would own the roads.”
After the Pennsylvania fought the Standard in 1877 and lost, the Combine paid 11 cents net freight (after deducting rebate) on each barrel of oil to New York, while its competitors paid $1.90 per barrel,[[24]]—a discrimination of 1600 percent by means of exclusive tank cars and rate arrangements. The trunk lines would not furnish competitors of the Standard with tank cars nor give them rates and conditions that would allow them to use their own tank cars.
The independents had to sell their tank cars or side-track them, because the Oil Combine prevented the railroads from giving them practical terms. At times when oil could have been shipped by the independents they could not get cars, though hundreds were standing idle on the switches.
So the independents had to ship their oil in barrels, paying a higher rate than on tank oil, and paying not only on the oil, but on eighty lbs. of wood in the barrel, making four hundred lbs. per barrel instead of three hundred twenty lbs. per barrel by tank.
Josiah Lombard of New York, the largest independent refiner of oil at the seaboard, testified as follows before the Hepburn Committee June 23, 1879: