Wealth against commonwealth

by Henry Demarest Lloyd

The freight rates were raised as agreed and without notice. Rumors had been heard of what was coming. The public would not believe anything so incredible. But the oil regions were electrified by the news, February 26, that telegrams had been sent from railroad headquarters to their freight agents advising them of new rates, to take effect immediately, making the cost of shipping oil as much again as it had been. The popular excitement which broke out on the same day and "raged like a violent fever" became a national sensation. The Titusville Morning Herald of March 20, 1872, announces that "the railroads to the oil regions have already put up their New York freight from $1.25 to $2.84, an advance of over one hundred per cent." Asked what reason the railroads gave for increasing their rates, a shipper said, "They gave no reason; they telegraphed the local roads to put up the rates immediately." This advance, the superintendents of the railroads told complaining shippers, had been made under the direction of the South Improvement Company, and they had been instructed to make their monthly collections of oil freights from that concern.

The evidence even seems to show that the South Improvement Company was so anxious for the dance of death to begin that it got the freight agents by personal influence to order the increased rates before the time agreed upon with the higher officials. Strenuous efforts were made to have the public believe that the contracts, though sealed, signed, delivered, and put into effect, as the advance in rates most practically demonstrated, had really not been put into effect. The quibbles with which the president of the South Improvement Company sought to give that impossible color to the affair before the committee of Congress drew upon him more than one stinging rebuke from the chairman of the committee.

"During your whole examination there has not been a direct answer given to a question." "I wish to say to you," said the chairman, "that such equivocation is unworthy of you."

The plea needs no answer, but if it did, the language of the railroad men themselves supplies one that cannot be bettered. To the representatives of the people, who had telegraphed them for information "at once, as the excitement is intense, and we fear violence and destruction of property," General McClellan, of the Atlantic and Great Western, replied that the contract was "cancelled;" President Clark, of the Lake Shore, that it was "formally abrogated and cancelled;" Chairman Homer Ramsdell, of the Erie, that it was "abrogated;" Vice-president Thomas Scott, of the Pennsylvania Railroad, that it was "terminated officially;"[68] Vice-president Vanderbilt, of the New York Central and Hudson River Railroad, that it was "cancelled with all the railroads."

Contracts that were not complete and in force would not need to be "cancelled" and "abrogated" and "terminated." These announcements were backed up by a telegram from the future head of the oil trust then incubating, in which he said of his company: "This company holds no contracts with the railroad companies."[69] But in 1879 its secretary, called upon by the Ohio Legislature to produce the contracts the company had with the railroads, showed, among others, one covering the very date of this denial in 1872.[70]

Before Congress the South Improvement Company sought to shelter themselves behind the plea that "their calculation was to get all the refineries in the country into the company. There was no difference made, as far as we were concerned, in favor of or against any refinery; they were all to come in alike."

How they "were all to be taken in" the contract itself showed. It bound the South Improvement Company "to expend large sums of money in the purchase of works for refining," and one of the reasons given by the railroads for making the contract was "to encourage the outlay." Upon what footing buyer and seller would meet in these purchases when the buyer had a secret arrangement like this with the owners of the sole way to and from wells, refineries, and markets, one does not need to be "a business man" to see. The would-be owners had a power to pry the property of the real owners out of their hands.

One of the Cleveland manufacturers who had sold was asked why he did so by the New York Legislature. They had been very prosperous, he said; their profits had been $30,000 to $45,000 a year; but their prosperity had come to a sudden stop.[71]

"From the time that it was well understood in the trade that the South Improvement Company had ... grappled the entire transportation of oil from the West to the seaboard ... we were all kind of paralyzed, perfectly paralyzed; we could not operate.... The South Improvement Company, or some one representing them, had a drawback of a dollar, sometimes seventy cents, sometimes more, sometimes less, and we were working against that difference."[72]