George Rice became a producer of oil in 1865. A little later he established a refinery at Marietta, Ohio. In January, 1879, the freight rates on oil were raised by the railroads leading out of Marietta, and by their connections. In some cases the rates were doubled, while the rates from Cleveland, Pittsburg, Wheeling, and other points where the Combine had refineries, were lowered. The Baltimore & Ohio, the Pennsylvania, the Lake Shore, and all the other railroads involved, made the deal in unison, and after a secret conference of railway officials with the Standard Oil people. The change hurt the railroads, cut off their business in oil from Marietta entirely, but they obeyed the orders of the Standard nevertheless.
“What would be the inducement?” the freight agent of the B. & O. connection was asked.
“That is a matter I am not competent to answer,” he replied.[[26]]
Rice, finding himself shut off from the West, North, and East, developed new business in the South, but everywhere he went he was met with new discriminations, and even refusals in some cases to give him any rates at all. He could not ship to certain points at any price. In other cases the oil rates were jumped up for his benefit, and his cars were delayed or side-tracked by the railroads. Not satisfied with obstructing and in large part blocking the shipment of refined oil out of Marietta, the Combine did all it could to cut off Rice’s supply of crude oil from the wells. It bought up and destroyed the little pipe line through which he was getting most of his oil. Rice then turned to the Ohio fields and brought his oil in by rail over the Cleveland and Marietta Railroad. Under threat of withdrawing its patronage the Combine then compelled the road to double the rates to Rice and pay over to the Combine five-sevenths of all the freight the road collected on oil. Rice had been paying 17 cents a barrel from the oil fields to his refinery. His rate went up to 35 cents while the Combine paid only 10 and got 25 cents of each 35 paid by Rice.[[27]] “Illegal and inexcusable abuse,” said Judge Baxter when Rice took the case into court; and the Senate Committee was also emphatic in its condemnation. The case is in line with the whole history of the railroads in their relations with the Oil Combine, the remarkable fact in this instance being that the victim had nerve enough to fight the Combine. He took the facts to the Ohio Legislature, to the courts, to investigating committees of New York, and Congress, and rendered a great public service by bringing the ways of the railroads and the trust to the light of publicity. If all the victims of the Oil Combine had manifested equal pluck and public spirit, the evil we are discussing would long since have ceased to exist.[[28]]
CHAPTER VI.
THE SENATE INVESTIGATION OF 1885 AND THE INTERSTATE COMMERCE ACT.
In 1885 the United States Senate appointed a committee to investigate railway discriminations, etc., and this committee made one of the ablest reports that has ever been issued in relation to railway abuses. It threw a flood of light upon the nature and prevalence of discrimination, and the reasons for it. On page 7 of this report the committee says that our efficient service and low rates (low average rates) “have been attained at the cost of the most unwarranted discriminations, and its effect has been to build up the strong at the expense of the weak, to give the large dealer an advantage over the small trader, to make capital count for more than individual credit and enterprise, to concentrate business at great commercial centres, to necessitate combinations and aggregations of capital, to foster monopoly, to encourage the growth and extend the influence of corporate power, and to throw the control of the commerce of the country more and more into the hands of the few.”
On page 40 the committee says: “Railroad companies are not disposed to regard themselves ‘as holding a public office and bound to the public,’ as expressed in the ancient law. They do not deal with all citizens alike. They discriminate between persons and between places, and the States and Congress are consequently called on to in some way enforce the plain principles of the common law for the protection of the people against the unlawful conduct of common carriers in carrying on the commerce of the country.”
On page 188 the following example is given: “One reference to the testimony must suffice to illustrate the universality of individual favoritism, the reasons which influence the railroads in favoring one shipper to the ruin of another, and the injustice of the system. Mr. C. M. Wicker of Chicago, a former railroad official of many years’ experience, was asked if he knew anything of discrimination upon the part of the transportation companies as between individuals or localities, and testified as follows:
“Mr. Wicker. Yes; I do. And this discrimination, by reason of rebates, is a part of the present railroad system. I do not believe the present railroad system could be conducted without it. Roads coming into this field to-day and undertaking to do business on a legitimate basis of billing the property at the agreed rates would simply result in getting no business in a short time.
“Senator Harris. Then, regardless of the popularly understood schedule rates, practically it is a matter of underbidding for business by way of rebates?