The History of the Standard Oil Company

by Ida M. Tarbell

GEORGE RICE
Plaintiff in numerous cases brought against the Standard Oil Company. Prominent independent witness in various State and congressional investigations.

A few weeks later Mr. Watson was re-elected attorney-general. He at once began a search into the authenticity of the documents in Mr. Cook’s little volume. He sent for the reports of the investigations by the committees of the New York Senate and of Congress. He read the testimony word for word. But he still doubted the correctness of the document, fearing that, even if it were in the main correct, there might be some loophole by which the Standard Oil Company could escape. Now, in reading the report of the House investigations, Mr. Watson had been particularly impressed with the clearness and directness of the questions put by one of the members of the investigating committee, Mr. Buchanan, of New Jersey. He accordingly went to Washington, inquired from a friend if Mr. Buchanan could be relied upon, and, receiving the assurance of his high character, sought an interview with him. “Was the Standard trust agreement as published in the committee’s report bona fide?” was the inquiry. “Yes,” said Mr. Buchanan. “But why do you ask?” “Because if it is,” replied Mr. Watson, “I believe the Standard Oil Company of Ohio has violated the laws of the state, and on my return to Columbus I shall file an action in quo warranto against it in the Supreme Court of the state.”

“You would not dare do that, would you?” exclaimed Mr. Buchanan.

“I was young then,” Mr. Watson told the writer in describing this interview, “and I supposed it was expected of a public officer to perform his duty. So I explained to Mr. Buchanan that there was a statute in Ohio which required an attorney-general to bring suit against any corporation which he had reason to believe was violating the laws of the state; that I had no personal feeling against the Standard Oil Company, but I meant to enforce the law against it as I would against any other company which I believed to be violating the law.”

“I admire your courage,” said Mr. Buchanan, “but I would not do it.”

On May 8, 1890, Mr. Watson filed his petition in the Supreme Court of Ohio.[^[129]] The petition averred that, in violation of the law of Ohio, the Standard Oil Company had entered into an agreement by which it had transferred 34,993 shares out of 35,000 to the trustees of the Standard Oil Trust, most of whom were non-residents of the state; that it was these trustees who chose the board of directors of the Standard Oil Company of Ohio, and directed its policy, and prayed that, on account of this violation of law, the company should be “adjudged to have forfeited and surrendered its corporate rights, privileges, powers and franchises, and that it be ousted and excluded therefrom, and that it be dissolved.”

The petition came on the trust like a thunderbolt. There had been already more or less erratic and ill-advised anti-trust legislation in various states, but it had been framed in ignorance of the actual organisation of the trust, and carried out with a crude notion that the trust, in spite of the fact that it was already thoroughly intrenched in the business life of the country, could be destroyed by a hostile act of a Legislature. Mr. Watson’s suit was something very different. It was an application of recognised laws to admitted facts. It brought the Standard Oil Company face to face with several legal propositions it did not like to meet. After a long delay an answer was filed by the Standard. To Mr. Watson’s joy, the one thing he feared—the denial of the correctness of the agreement—made no part of this answer. It admitted the agreement, but it denied that the Standard Oil Company of Ohio was a party to it. The agreement was signed by the individual stockholders of the Standard Oil Company, not by the company in its corporate capacity. The Standard Oil Company of Ohio had nothing to do with the Standard Oil Trust. True, certain of its stockholders had turned over their stock to the nine trustees, but the company did its business as before, discharging all its duties as its charter required. This was the essential point of the defendant’s answer. This, and the claim that if the court should hold that the action of the stockholders in becoming parties to the agreement in their individual capacity was a corporate act of the Standard Oil Company, even then the charter should not be forfeited, since the law barred an act committed more than five years before a petition was filed.

Anticipating that the trust would get together a strong array of counsel to defend its attacked member, Mr. Watson retained his personal and professional friend, John W. Warrington, an eminent lawyer of Cincinnati, to assist him. They were opposed by Joseph H. Choate, S. C. T. Dodd and Virgil P. Kline of Cleveland.

But, while the preparation for the argument of the case was going on, the courageous young attorney-general was beset on all sides for an explanation. Why had he brought the suit? What was the influence which had controlled him? Men in power took him aside to question him, incapable, evidently, of believing that an attorney-general could be produced in Ohio who would bring a suit solely because he believed it was his duty. Some suggested that some big interest, hostile to the Standard, was behind him; others said the suit was suggested by Senator Sherman, then interested in his anti-trust bill. Along with this speculation came the strong and subtle restraining pressure a great corporation is sure to exert when its ambitions are interfered with. From all sides came powerful persuasion that the suit be dropped. Mr. Watson has never made public the details of this influence in any documentary way, but the accounts he at the time gave different friends of it led to so much gossip in Ohio that in 1899 the attorney-general of the state, F. S. Monnett, made detailed charges of six deliberate attempts to bribe Mr. Watson to withdraw the suits.[^[130]] But one bit of documentary proof of the efforts to reach the attorney-general ever reached the public—that came out without his knowledge or consent, Mr. Watson claims, seven years after the suit was brought. It is interesting enough as evidence of the character of the pressure Mr. Rockefeller can set in motion when he will. Among Mr. Rockefeller’s Ohio friends was the late Marcus A. Hanna, who was even then a strong factor in the Republican party of the state. A few months after the suit was brought he wrote Mr. Watson a letter of remonstrance. Many of Mr. Watson’s friends saw this letter at the time and felt deep indignation over its contents. In 1897, when Mr. Hanna was a candidate for the United States Senate, an enterprising newspaper man of Ohio recalled that during 1890 it was common gossip in Ohio that Mr. Hanna had written the attorney-general a letter asking him to withdraw his suit against the Standard Oil Company. The correspondent sought Mr. Watson, who, so he avers, let him read the letter through, although he refused to allow him to copy it for publication. “No one could read it and ever forget it,” said the correspondent; but to reinforce himself he sought persons who were associated with Mr. Watson at the time—yes, they remembered the letter perfectly. Certain of them said that they could never forget some of its expressions. Between them they pieced up the following portions of the letter which they declared correct and which the correspondent published in the New York World for August 11, 1897: