“Much has been said in favour of the objects of the Standard Oil Trust and what it has accomplished. It may be true that it has improved the quality and cheapened the cost of petroleum and its products to the consumer. But such is not one of the usual or general results of a monopoly; and it is the policy of the law to regard, not what may, but what usually happens. Experience shows that it is not wise to trust human cupidity where it has the opportunity to aggrandise itself at the expense of others. The claim of having cheapened the price to the consumer is the usual pretext on which monopolies of this kind are defended.”[[131]]
From all this the court decided the Standard Oil Company deserved punishment. The charter was not taken away—the statute of limitations being advanced as a reason for this leniency, although, as Mr. Watson and Mr. Warrington showed, the statute of limitations could hardly be pleaded in this case, when the state had been kept in ignorance by the concealment of the agreement. The company was allowed to live, but it was ousted from the privilege of entering into the trust agreement, from the power of recognising the transfer of the stock, and from the power of permitting the trustees to control its affairs. It was also ordered to pay the costs of the action.
The judgment of the court was not rendered until March 2, 1892, almost two years after the filing of the petition. As soon as it was received Virgil P. Kline, the chief counsel of the Standard Oil Company of Ohio, went to New York for consultation with the trustees. Five days later he wrote to Judge Spear, the chief justice of the Ohio Supreme Court, saying: “Decisive steps will be taken at once not only to release the Standard Oil Company from any relations to the trust, but to terminate the entire trust.” But there were “practical difficulties” in the task. The company pleaded for a “temporary recognition,” and he asked an interview where he could explain the situation. This was granted, and on the 16th of March Mr. Kline explained to the judges in chambers, to Mr. Watson, and to his successor in office, the situation of the company. The trustees had all but seven shares of its stock. Trust certificates had been issued for these ten years before. The Standard Oil Company did not know who held these certificates, and could only know through the trustees, therefore the trust certificates must be transferred back, the owners hunted up, and each one induced to make an exchange. A system must be devised for doing this. Anybody could see this would take time. The court was friendly in the matter, and Chief Justice Spear gave to Mr. Kline an informal note granting an extension. “The court is not disposed to change its order at this time,” the chief justice wrote, “but, so long as those in control appear to be engaged, as now, in an honest effort to dissever the relations of the company with the trust, and liquidate and wind up the affairs of the trust, the court will not be disposed to interfere.” Thus time was gained.
While Mr. Kline was securing time, the trustees were pushing a liquidation scheme. On March 11 the following notice was mailed to all holders of Standard Oil Trust certificates, and was published in a newspaper in each state where a Standard Oil Company had been organised:
NOTICE
A special meeting of the holders of Standard Oil Trust certificates will be held at the office of the trust, Number 26 Broadway, in the City of New York, on Monday, March 21, 1892, at eleven o’clock A.M., for the purpose of voting upon a resolution to terminate the trust agreement, in accordance with the terms of said agreement, and to take such further action as may be thereby rendered necessary.
H. M. Flagler, Secretary.
The meeting was held as called. Mr. Rockefeller was in the chair, and Mr. Dodd, who had drawn the trust agreement, now presented the resolution which was to dissolve it. The remarks with which Mr. Dodd introduced his resolution denied every point which the courts had charged against the combination:
“Something over ten years ago,” said Mr. Dodd, “a few individuals owning stocks in a number of corporations engaged in transporting and refining oil, entered into an agreement by which their stocks were placed in the hands of trustees, and certificates were issued by said trustees showing the amount of each owner’s equitable interest in the stocks so held in trust. This was not done in order to vest the voting power in the hands of a few persons, because the persons chosen as trustees then held, and always have held, the voting power by virtue of their absolute ownership of a majority of the stocks. It was not done to reduce competition, because the companies whose stocks were placed in trust were not competing companies, and could not be so long as their stocks were owned by these few persons. It was not done to limit production or to increase prices, but, on the contrary, was done to increase production, cheapen cost of manufacture, and to lower prices, and it has been successful in that object far beyond the anticipations of those who originated the plan. It was called a trust, because it was a trust in the sense in which the word was then understood. It vested a fiduciary obligation in a few for the benefit of many, and the trustees thus created have faithfully observed the trust confided in them.
“Other persons, however, found this trust plan a convenient one, and it is alleged that it has been adopted for and adapted to purposes quite different from those which actuated the framers of this trust. Whether these allegations be true or false, it is true that a trust is now defined to be a combination to suppress competition and to reduce production, and to increase prices. Public opinion has not unwisely been aroused against combinations for such purposes, and legislation of more or less severity, and rather more or less peculiarity, has been directed against them in seventeen or eighteen states of the Union. All such arrangements are now miscalled trusts, and all trusts are popularly supposed to partake of the same nature. For this reason, if for no other, it should be seriously considered whether this trust should not be terminated. So long as it exists, misconception of its purposes will exist.
“But another reason exists which seems to make it desirable to dissolve this trust. Some two years ago a quo warranto issued in the name of the state of Ohio against the Standard Oil Company, a corporation of the state of Ohio, setting forth this trust agreement and alleging that that corporation, by becoming a party thereto, had done an act beyond its power, and thereby had forfeited its charter. The defendant corporation denied that it was a party to the agreement, and alleged that the agreement was on its face, and plainly, an agreement only between individuals, owners of corporate stocks, relating to their personal property, and was neither made by the corporation nor for the corporation. The court, however, held that the agreement was a corporate agreement, and decreed, among other things, that the corporation must cease to permit trustees to vote upon stocks held in trust.
“As this agreement was not entered into as a corporate agreement, and as this decision gives it an effect quite different from the intent of the parties who entered into it, it seems better to end it.”[[132]]
It is probable that Mr. Dodd had foreseen from the first just such an attack on his agreement as had come, for he had put into that instrument a paragraph providing for a dissolution, and it was in accordance with that article that the trust was now dissolved. The trustees were to continue to exist—under a new name: “Liquidating trustees.” The property they had to take care of was vastly in excess of what it had been ten years before. Then the capital of the thirty-nine constituent companies was $70,000,000. These companies had been combined until they had been reduced to twenty, and their combined capital was now $102,233,700.[[133]] Property of about $20,000,000 in excess of the capital was held by the trustees. Mr. Dodd’s resolution provided for the division of this property, and for the transfer of the trust certificates back to the corporations to which they belonged. The individual holders of the trust certificates were to get in exchange a proportionate share in each of the twenty companies. “A will not get stock in one corporation and B in another; each will get his due proportion in the stocks of all,” said Mr. Dodd. All of this change would make no difference with the management of affairs. Mr. Dodd assured the stockholders: “Your interests will be the same as now. The various corporations will continue to do the same business as heretofore, and your proportion of the earnings will not be changed.”
The trustees went about liquidating at once, but it was not until the following November that the immense number of certificates held by them personally were exchanged. The process followed can be easily illustrated by Mr. Rockefeller’s case. When the trust was ordered dissolved Mr. Rockefeller held 256,854 of the 972,500 shares of Standard Oil Trust which were out. He turned over to an attorney an assignment of this amount, with instructions to secure from each of twenty companies in the trust stock certificates for the portion belonging to him. The corporate stocks were turned over to Mr. Rockefeller, and the assignment of certificate, a properly framed and numbered document, was turned over to the liquidating trustees. This assignment of legal title, for all practical purposes, was the same thing as the trust certificate. It enabled the trustees to collect dividends from the various companies and pay them just as they had before. The documents showing the formal procedure in the case of Mr. Rockefeller’s stocks are printed in the Appendix.[[134]]