The railroads discriminate against the Texas oil wells by making the rates on north-bound oil considerably higher than on south-bound oil. Again the rate to various points from Lima, the centre of the Ohio and Indiana oil fields, is considerably higher than from Chicago, the Standard Oil shipping point. For example:
| Miles. | Rate per hundred. | |
|---|---|---|
| Lima to Chattanooga | 470 | 43 |
| Chicago to Chattanooga | 643 | 39.5 |
| Lima to Mobile | 916 | 32.5 |
| Chicago to Mobile | 926 | 23 |
| Lima to New Orleans | 962 | 32.5 |
| Chicago to New Orleans | 922 | 23 |
| Lima to Memphis | 512 | 26.5 |
| Chicago to Memphis | 526 | 18 |
| Lima to Cincinnati | 132 | 10 |
| Chicago to Cincinnati | 305 | 11 |
It costs 3½ cents more per hundred to ship from Lima, 470 miles, than from Chicago, 643 miles; 9½ cents more from Lima, 916 miles, to Mobile, than from Chicago, 926 miles, to the same place. The shorter distance has the higher rate till you get 50 percent off, then the half distance from Lima has about the same rate as the 100 percent distance from Chicago.
The average rate on 25 staple commodities is about 2 cents higher per hundred from Cleveland to New Orleans than from Chicago to New Orleans, while the rate on petroleum is 8 cents higher. This is a strong discrimination against the Cleveland refineries in favor of the Chicago shipping point at Whiting. The Standard Oil is the only shipper of oil from Whiting.[[294]]
The methods by which the Standard controls New England are still in full swing. The report of the Industrial Commission tells how the Standard Oil railroads keep the independent refineries at Cleveland out of New England through high rates on oil by rail, while the Standard ships by water, and by making oil second class unless the shipper has a private siding or tank opposite the rails of the New Haven and Hartford Railroad, but fifth class if the shipper has such siding or tank, i. e., if the shipper is the Standard Oil Co.[[295]] “The freight rate from Cleveland to Boston,” says the report, “was formerly 22 cents per hundred pounds alike on iron articles, grain, and petroleum. But since the Interstate Commerce Act the rates have been changed, so that the rate on grain is 15 cents per hundred pounds, on iron 20 cents, and on petroleum 24 cents. Again, on almost every commodity through rates are made from Cleveland and other western points to points reached by the New York, New Haven and Hartford Railroad. On petroleum there are no through rates, but a local rate is added to the Boston rate. Moreover the New York, New Haven and Hartford prescribes that petroleum and its products shall be in the second class of freight unless the person to whom it is shipped has a private siding or tank opposite the rails, in which case it is fifth class, the rate for fifth class being probably one-half that for second class. These arrangements are explainable by the fact that the Standard Oil Company ships oil from its seaboard refineries to Boston largely by tank steamers, and distributes it from there for a comparatively short distance at the local rates.”[[296]]
In the West the Standard has persuaded the railroads to lift the rates on oil so high as to make competition difficult. The rate from Pennsylvania points to Chicago was raised from 17½ cents to 19½ cents, and the rate from Chicago to St. Paul went up from 10 cents to 20 cents.[[297]] The Standard pumps oil to Chicago by pipe, and the higher the rates by rail the more impossible it is for the independents to compete. Of course it is against the direct interests of the railway stockholders to have rates so high as to check the traffic in oil by rail, but the Standard does not care about that, and it is a small matter even to the railroad managers compared to incurring the displeasure of Standard Oil, which has sufficient control in the railway world to cause any disobedient railroad most serious loss and even make a railroad war upon it.
Before the Standard found other methods of controlling transportation and milking the public it used to receive half a million dollars a month in rebates. But some railroad men who are in a position to know say that since 1900 the Standard Oil has not asked for rebates, the reason being that the tariffs are made in such a way as to give the Trust all the advantage it requires.[[298]]
The fight now going on in Kansas between the people and the Oil Combine has forcibly illustrated the methods of the Standard. When the Kansas oil fields began to show signs of large prosperity the Standard went into the State, put up refineries and storage tanks, laid pipe lines, and began to build a through pipe line from Kansas to its Chicago station at Whiting. By getting the railroads to raise their rates on oil, compelling producers to agree to sell their oil only to the Combine, resorting to cut-throat competition to drive them out of any market they attempted to enter, they practically captured the oil business of the State and were able to put the price of crude oil down and squeeze the independents until many of them were ready to sell out to the Combine at the victor’s own price.
The power of the Trust over the railroads is illustrated by the case of Mr. I. E. Knapp of Chanute, who went to the field in 1899 and secured a number of paying wells. He also obtained a market for his crude oil with the Omaha and Kansas City gas companies, transporting the oil in tank cars of his own. In the recent investigation in Kansas it appeared that he had enlarged his business till he had 20 tank cars in transit. He paid the railroads 10 cents per hundred lbs. to Omaha and Kansas City, and they counted the weight at 6.4 lbs. per gallon. With this rate and ¾ of a cent mileage on his cars he was able to make a good profit, but suddenly in May, 1902, two weeks after he had signed a year’s contract with the gas companies, the railroads changed the weight classification to 7.4 lbs. per gallon, adding thereby $7.50 per car to the freight, while the freight on the products of crude remained unchanged. That is, the Standard could still ship gas-oil as a product of crude at the old weight of 6.4 lbs. a gallon.[[299]]
Mr. Knapp protested and the railroad agents, admitting that the classification was arbitrary and not general even on their own roads, succeeded in getting the order reversed, but only for a short time, when back it went, and in reply to further protest from the Kansas agents their superior officers wrote that they were tired of the correspondence and declined to discuss the matter further. So for 11 months Mr. Knapp had to fulfil his contract with a handicap of $7.50 per car more cost than he had figured on. The result was that in May, 1903, he turned over his crude oil to the Standard which thereafter supplied the Omaha and Kansas City gas companies, while Knapp’s 20 cars were side-tracked and in the spring of 1905 were still idle at Chanute.