Wealth against commonwealth

by Henry Demarest Lloyd

The San Francisco complainant goes on to charge that a plan was concocted and put in operation by which rates were lowered whenever the combination wanted to fill its warehouses on the Pacific coast, and as soon as they were full were put back again. This lowering and raising of rates was "to the public sudden and unexpected."[748] It was known in advance only to the ring and the railroads. Before other shippers could take advantage of the low rates they would be raised again. The complaint recites that in pursuance of this plan, after the combination had transferred to the Pacific coast at the end of 1888 from its Eastern refineries all it needed for the next season's business, the railroads advanced the rates from 82½ cents a hundred pounds to $1.25. The next May the railroads made a similar seesaw, and, he says, in December, 1892, "are still making ... such arbitrary and sudden reductions ... to the undue advantage" of the oil combination "and to the detriment and injury of all other shippers." The San Francisco merchant also charges that in the interest of the Eastern refineries of the combination rates are made to prevent the large product of the oil-fields and independent refineries of Colorado and Wyoming from reaching the Pacific coast, "which needs them to furnish fuel for its manufactories, as well as for light for its residents." Similarly we find the Chicago and Northwestern Railroad charging $105 for a car-load of cattle from Wyoming to Chicago, while for a car of 75 barrels of oil the freight would be $348. In connection with these charges the press published the telegrams, filling columns, which were said to have passed between the officials of the railroads and the oil combination in the negotiation of this arrangement. In one of these telegrams the freight agent of the Southern Pacific explains the new deal. "He" (the agent of the oil combination) "would stock up at the low rate, then notify the association of railroads when to advance." The advance or decline was to be "made at certain seasons of the year in accordance with this supply on hand." When the negotiation was finished and the plan was agreed to, a San Francisco agent of the oil combination is said to have telegraphed to its officers in New York: "I think we have managed this freight business pretty well from this long distance, especially when you think that we have secured the 90-cent rate with which to stock up from time to time." His telegram also discloses that the arrangement extended to lead and linseed-oil, showing, what is well known, that the combinations in these articles belong to the members of that in oil. These charges are, it is to be remembered, still unadjudicated, this published evidence is not yet substantiated. But the arrangement which is charged is in exact pursuance of that part of the South Improvement Company contract which bound the railroads to "lower or raise the gross rates of transportation ... for such times and to such extent as may be necessary to overcome ... competition."[749] And Attorney-General Olney has been publicly informed[750] that during the summer of 1894 oil rates between Pennsylvania and Colorado were put down from 75 cents a hundred to 25 cents, and a few weeks later raised again to the old rate. Another increase made the rates to Denver higher, for oil, than to the Pacific coast. He has been asked to ascertain, judicially, if this shuffling of rates was not made, like that complained of before the Interstate Commerce Commission, to allow the oil trust "to stock up at the old rate." His informants suggest that the same powers with which he has brought railway employés to trial for infractions of the Interstate Commerce law can be used against the railways.

This is not all of the story. This patented car spoken of was a mere aggregation of old elements, as the courts held, and the patent was void. Advised by their lawyer that this would be the view the courts would have to take, competitors of the combination in the business of the Pacific coast, where they had been at the head until these new tricks of trade came in, introduced a car of their own of the same class. They thus became entitled to the same low rates and the same free return of the car as their powerful rival. This put them again on an equality in transportation. They had not been using these new cars long before two of them, shipped as usual from the East, failed to arrive. Their search for the missing cars put them in possession of the interesting information that a litigation, of which they had had no notice or knowledge whatever, had for some time been in progress, and was at that moment at the point of decision. As their interests had been entirely unrepresented, this decision would certainly have been against them, and would have forever made impossible the use of their cars on any railroad of the United States. This had been done by an apparently hostile litigation by the oil combination against the Southern Pacific Railroad. The former sued in the United States courts for an injunction to forbid the railroad from hauling the cars of the competitor, on the ground that they were an infringement on its own patented cars. No notice was given the persons most interested—the owners of the cars in question—whose business life was involved, and they were not at first made parties to the suit. The dummy defendant—the railroad—made no valid opposition, but with great condescension admitted that all the averments of its antagonist were true. The case was sent through the courts on a gallop to get a decision. After that the merchants whose cars were the object of the attack, as they had not been parties to the case, could not have it reopened, and it would stand against them without possibility of reversal. The firm found that a temporary injunction had been applied for and had been granted; that this had been followed by proceedings to make the injunction perpetual; that subpœnas had been issued, served, and returned, and an order had been obtained from the court for taking testimony. In place of the regular examiner of the court, a special examiner had been appointed; he had begun taking evidence the same day, and taking it privately. The testimony so taken had been sealed and filed. The railroad had made its answer December 2d, the testimony already taken was filed in court December 3d, making the case complete for decision by the judges. December 4th the firm heard for the first time of what was being done, and December 5th applied for the right to take part, which saved them. To get such cases ready for a hearing in the United States Circuit Court, where this was done, usually requires a year. But in this instance it was done in two weeks! Only just as the door of the court was closing irrevocably, as far as their rights were concerned, did the firm get inside, and secure leave to have their side represented. The whole fabric of the litigation fell at the first touch. The temporary injunction against the use of their car was dissolved, the permanent injunction was refused, the patent of the oil trust's car was declared worthless, and this decision was upheld by the United States Circuit Court of Appeals in February, 1893.[751]

Meanwhile their oil, side-tracked in the Mojave Desert and elsewhere, was being cooked to death, their customers were going elsewhere, and they were being put to loss and damages which they are now suing to have made good to them. "There are some equivocal circumstances in the case," said Judge Hoffman, dissolving the injunctions in 1890. He pointed out that the railroad made no objection to the injunction which deprived it of business. This "tends to corroborate suspicions," he said, suggested by other features of the case. The railroad persisted in remaining in the case to the end, after the real parties in interest came in, and, although codefendants with these parties, the road manœuvred for the benefit of the other side in a way which the Court again said "had an equivocal appearance." The counsel for the firm, in his brief for the United States Circuit Court of Appeals, pointed out more causes for "suspicion." He showed the Court that the records of the case had been mutilated in many places. All the mutilations were in favor of the other side of the case. Who was the author of the mutilations was not shown, but it was shown that the record had been intrusted by the lower court to a representative of one of the oil trust, to be printed and delivered to the Court of Appeals. "It would be a very easy matter for a vicious attorney," said the lawyer of the independents, "under such circumstances, to make changes and alterations in the record that might not be noticed, but would nevertheless greatly prejudice the case."

When the victims of the smokeless rebate used the only property many of them had left—their right of appeal to courts or Legislature or executive officials—they were showered with abuse, as people with "private grievances,"[752] "strikers and sore-heads," "black-mailers,"[753] "moss-backs," ... "naturally left in the lurch" ... "people who came forward with envy and jealousy of the success" of the oil combination,[754] "throttlers," "ravenous wolves," "hoary old reprobate," "senile old liar," "public till-tapper," "plunderers," "pestilence."[755] Such are a few of the blossoms of rhetoric with which those who sought their rights in courts or before the Legislature have been crowned. These witnesses have come forward all through the period between 1872 and 1892, and from every point of importance in the industry—New York, Pittsburg, Cleveland, Oil City, San Francisco, Titusville, Philadelphia, Marietta, Buffalo, Boston, Cincinnati, Louisville, Memphis, New Orleans. They have come from every province of the industry—the refineries, the oil fields, the pipe lines, railroads, the wholesale and retail markets. Bound together by no common tie of organization or partnership, they have, each and all, exactly the same kind of story to tell. The substance of their complaint—that one selected knot of men, members of one organization, were given, unlawfully, the control of the highways, to the exclusion and ruin of the people—has been sustained by the evidence taken by every official investigation, and by the decision of every court to which the facts have been submitted.

As the counsel of the New York Chamber of Commerce before the New York Legislative Committee of 1879 said: "Such a power makes it possible to the freight agents of the railways to constitute themselves special partners in every line of business in the United States, contributing as their share of capital to the business the ability to crush out rivals." Men who can choose which merchants, manufacturers, producers shall go to market and which stay at home, have a key that will unlock the door of every business house on the line; they know the combination of every safe.

In their appeal to the executive of Pennsylvania, the Petroleum Producers' Union refer to the conduct of the railroad officials as "inexplicable upon any ordinary hypothesis, or under any known theory of railroad politics."[756] What the railroad managers did, we know; why they did it, has never been judicially demonstrated. One of the earliest intimations of the kind of lubricant used was given by the anti-monopoly leader of the people in the Constitutional Convention of Pennsylvania of 1872, who is now the legal leader of the oil combination. He said: "I am told that discriminations are now made to so great an extent as to be ruinous to certain companies unless the railroad companies' officers are given a bonus. That is the evil under which we labor. I do not know how to cure it, but it must be cured somehow." Again he said: "It is charged—I do not make the charge myself—but it is charged upon a railroad company running through the oil regions that it will not, without delay, transport oil delivered to the railroad station by the various pipe lines unless it is interested in the pipe line.... It is said that whenever a new pipe line is built, it is necessary that somebody connected with the particular railroad company shall be presented with stock in the pipe line; otherwise, it (the railroad company) will not furnish cars without tedious and unnecessary delay. This is a discrimination which should be stopped."[757]

It is plain that the purpose of the discrimination was something more than to shunt the control of the trade—more than "to maintain the business" of the favorite. Ten cents a barrel difference would have done that, for, as the Supreme Court of Ohio pointed out, that alone amounted to a tax of 21 per cent. a year on the capital of the "outsiders."[758] When 10 cents was enough, why was the tax made 22½ cents, 25 cents, 64½ cents up to $1.10?

Some railroad men are known to have been stockholders in the oil combination. "I think I owned—I guess I had $100,000 in it.... I don't know anything at all about it"—the company—the head of the New York Central admitted.[759] Who were the owners of certain shares of their capital stock these men have always refused to divulge. In giving in court a list of stockholders of one of their corporations one of the officers uncovered only three-quarters of the stock. Who held the other fourth he avowed he could not say, although the stock-book was in his custody.[760] The dividends were paid to the vice-president, and by him handed over to these veiled prophets. There was a similar mystery about the owners of about $2,000,000 of the National Transit stock, the concern which owns and manages the pipe lines. Asked for the names of the owners of this portion, the "secretary" said:

"It is a private matter.... I decline to answer."[761]

The president of this pipe-line branch also refused to give Congress this information.[762] This secrecy will couple itself at once in the mind of the investigator with the charges just quoted, that railroad officials had to be given backsheesh of pipe-line stock before their roads would carry the oil of the pipe lines.