To pay money to the railroads for them to pay back was seen to be a waste of time, and it was agreed that the South Improvement Company for its members should deduct from the ostensible rate the amount to be refunded, and pay the railroads only the difference. Simplification could not go further. The South Improvement Company was not even to be put to the inconvenience of waiting for the railroads to collect and render to it the tribute exacted for its benefit from all the other shippers. It was given the right to figure out for its members what the tribute would amount to, and pay it to them out of the money they owed the railroads for freight, and then pay the railroad what was left, if there was any left.[59] The railroads agreed to supply them with all the information needed for thus figuring out the amount of this tribute, and to spy out for them besides other important details of their competitors' business. They agreed to make reports every day to the South Improvement Company of all the shipments by other persons, with full particulars as to how much was shipped, who shipped, and to whom, and so on.[60]
The detective agency thus established by the railroads to spy out the business of a whole trade was to send its reports "daily to the principal office" of the thirteen gentlemen. If the railroads, forgetting their obligations to the thirteen disciples, made any reduction in any manner to anybody else, the company, as soon as it was found out, could deduct the same amount from its secret rate.[61] If the open rate to the public went down, the secret rate was to go down as much. For the looks of things, it was stipulated that any one else who could furnish an equal amount of transportation should have the same rates;[62] but the possibility that any one should ever be able to furnish an equal amount of transportation was fully taken care of in another section clinching it all.
The railway managers, made kings of the road by the grant to them of the sovereign powers of the State, covenanted, in order to make their friends kings of light, that they would "maintain the business" of the South Improvement Company "against loss or injury by competition," so that it should be "a remunerative" and "a full and regular business," and pledged themselves to put the rates of freight up or down, as might be "necessary to overcome such competition."[63] Contracts to this effect, giving the South Improvement Company the sole right for five years to do business between the oil wells and the rest of the world, were made with it by the Erie, the New York Central, the Lake Shore and Michigan Southern, the Pennsylvania, the Atlantic and Great Western, and their connections, thus controlling the industry north, south, east, west, and abroad. The contracts in every case bound all the roads owned or leased by the railroads concerned.[64] The contracts were duly signed, sealed, and delivered. On the oil business of that year, as one of the members of the committee of Congress figured out from the testimony, the railroad managers could collect an increase of $7,500,000 in freights, of which they were to hand over to the South Improvement Company $6,000,000, and pay into the treasury of their employers—the railways—only $1,500,000.
The contract was signed for the New York Central and Hudson River Railroad by its vice-president, but this agreement to kill off a whole trade was too little or too usual to make any impression on his mind. When publicly interrogated about it he could not remember having seen or signed it.[65]
"The effect of this contract," the vice-president of the Erie Railway Company was asked, "would have been a complete monopoly in the oil-carrying trade?"
"Yes, sir; a complete monopoly."[66]
Of the thirteen members of the South Improvement Company which was to be given this "complete monopoly," ten were found later to be active members of the oil trust. They were then seeking that control of the light of the world which it has obtained. Among these ten were the president, vice-president, treasurer, secretary, and a majority of the directors of the oil trust into which the improvement company afterwards passed by transmigration. Any closer connection there could not be. One was the other.
The ablest and most painstaking investigation which has ever been had in this country into the management of the railroads found and officially reported to the same effect:
"The controlling spirits of both organizations being the same."[67]