Wealth against commonwealth

by Henry Demarest Lloyd

Since then all chance of escape by the canal has been cut off. The railroads made a war of freight rates against it, and the only canal that connected the oil regions with the Erie canal route to the sea was dried up, and turned into a way for a railroad by a special act of the New York Legislature. The railroad so built has ever since been managed as one of the most diligent promoters of the policy of excluding the common people from the oil business.

According to the funeral notices given out by the railroad officials and the members of the South Improvement Company this concern was dead, but in the quaint phrase of the producers it was really alive and hard at work, but "with a new suit of clothes and no name." These interviews between the independent refiners and the railroad officials of the three trunk lines form one of the most extraordinary scenes which have taken place between a government and its subjects since the era of modern democratic liberty.

The railway officials are, in the world of the highway, the government. They hold their supreme power to tax commerce, and to open and close the highways, solely and altogether by grant of the State, and under the law of the common carrier. It is only by the exercise of the sovereign power of eminent domain to take the property of a private individual by force, without his consent, for public use—never for any other than public use—and only by the grant of the right to cross city streets and country roads that the railroads come into existence at all. This says nothing of the actual cash given to the railroad projectors by the government, which, in New York State alone, amounts to upwards of $40,000,000.[161]

The independent refiners represent the people, claiming of the highway department of their government those equal rights which all citizens have as a birthright, and the government informs these citizens that their rights on the highways have been given as a private estate to certain friends of the ruling administration, much as William the Conqueror would give this rich abbey or that fertile manor to one of his pets.

"We have no franchise that is not open to all," say the "trustees." "It is a free open market." "There is nothing peculiar to our companies." "It is as free as air."

In truth they have had no less a franchise than, as in 1872, the excluding possession of all the great trunk-lines out of the oil country, and all their connections east and west, and this franchise has since widened until, in 1893, it reaches from ocean to ocean, and from gulf to gulf.

Their franchise was meant to be as exclusive as if they had had from the government letters-patent in the old royal fashion of close monopolies in East Indian trade, or salt, or tobacco at home, giving them by name the sole right to use the roads, and forbidding all others, under pain of business death, from setting their foot on the highway. But with this difference: the exclusive franchise in the latter case would exist by law; but in this case it was created in defiance of law, exists in contempt of the law, and in its living the law dies daily.

The refiners and producers who were pleading in this way with the railroads for a chance to live after May 1, never doubted but that, as they were told, and as their arrangements with the Pennsylvania road guaranteed, they were having and were to have at worst until that date, equal and impartial rates and facilities. Under this safe-conduct they parleyed for the future. But the Pennsylvania Railroad was at that moment negotiating with the oil combination to collect from the independents, under the guise of freight, 20 to 22½ cents a barrel on all they sent to market, and pay it over to the combination. The payments were made to one of the rings within the oil ring, called the American Transfer Company. "It is the same instrumentality under a different name," said the counsel of the New York Chamber of Commerce before the New York Legislature. The official of the Pennsylvania road who issued the order to take this money out of the treasury pleaded in excuse that proof had been given him that other roads were doing the same thing.[162] Receipted bills were brought to him, showing that the New York Central and the Erie had been "for many months" paying these men who called themselves American Transfer Company for having "protected" their oil business, sums ranging from 20 cents to 35 cents a barrel on all the oil those roads transported.[163] So deeply was the watch-dog of the Pennsylvania road's treasury affected by the proof that his company was doing less than the other roads, that he instructed the comptroller to give these men three months' back pay, which was done. Twenty cents a barrel was sent them out of all the oil freights collected by the Pennsylvania for the three months preceding, and thereafter the tribute was paid them monthly. Then it was increased to 22½ cents a barrel. The same amount per barrel was refunded to them out of their own freight. They received this on all oil shipped by them, and also on all shipped by their competitors.[164] They who received this tribute pretended to the railroad officials that they "protected" the roads from losing business. The railroad men pretended to believe it.

The way in which this revenue was given and got shows what a simple and easy thing modern business really is—not in any way the brain-racker political economists have persuaded themselves and us. The representative of the oil combination writes a bright, cheery letter; the representative of the Pennsylvania answers it, and there you are; 22½ cents a barrel on millions of barrels flows out of the cash-box of the railroad into the cash-box of the combination. In one year, 1878, this tribute, at the rate of 22½ cents on the 13,750,000 barrels of oil shipped by the three trunk-lines, must have amounted to $3,093,750. The American Transfer Company had a little capital of $100,000, and its receipts from this rebate in this one year would amount to dividends of 3093 per cent. annually; the capital of the oil combination which owned this Transfer Company was at this time $3,500,000.