The History of the Standard Oil Company

by Ida M. Tarbell

BYRON D. BENSON
The first president of the Tidewater Pipe Company.

DAVID K. MCKELVY
The successor of Mr. Benson as president of the Tidewater.

MAJOR ROBERT E. HOPKINS
Treasurer of the Tidewater from its organization until his death in 1901.

SAMUEL Q. BROWN
The present president of the Tidewater, successor to Mr. McKelvy.

And while Mr. Rockefeller was making this lavish expenditure of money and energy to meet the situation created by the bold development of the Tidewater, what was his attitude toward that company? One would suppose that Mr. Rockefeller, of all men, would be the first to acknowledge the service the Tidewater had rendered the oil business; that in this case he would have felt an obligation to make an exception to his claim that the oil business was his; that he would have allowed the new company to live. But Mr. Rockefeller’s commercial vision is too keen for that; that would not be business. The Tidewater had been built to feed a few independent refineries in New York. If these refineries operated outside of him, they might disturb his system; that is, they might increase the output of refined and so lower its price. The Tidewater must not be allowed to live, then. But how could it be put out of commission? It had money to operate. There were plenty of oil producers glad to give it their product, because it was independent. The Reading Railroad had gone heart and soul into its fight—it had refiners pledged to take its oil, and these refiners had markets of their own at home and abroad. What was he going to do about it? There were several ways to accomplish his end; in two of them, at least, Mr. Rockefeller excelled from long practice. The first was to get out of the way the refineries which the Tidewater expected to feed, and this was undertaken at once. The refiners were approached usually by members of the Standard Oil Company as private individuals, and terms of purchase or lease so generous made to them that they could not afford to decline. At the same time they were assured confidentially that the Tidewater scheme was a pure chimera, that they understood the pipe-line business better than anybody else and they knew oil could not be pumped over the mountains. All but one firm yielded to the pressure. Ayres and Lombard stood by the Tidewater, but soon after their refusal to sell they were condemned as a public nuisance and obliged to move their works! The Tidewater met the situation by beginning to build refineries of its own—one at Bayonne, New Jersey, and another near Philadelphia—in the meantime storing the oil it had expected to sell.

Having done his best to cut off his rival’s outlet, Mr. Rockefeller called upon the railroads to carry out that article of their contract with him which bound them to protect him from “injury by competition.” What was done was told a few months later to the Committee on Commerce in the House of Representatives by Franklin B. Gowen, the president of the Reading Railroad. According to Mr. Gowen the Tidewater and Reading were no sooner ready to run oil than a meeting of the trunk lines was held at Saratoga, at which the representatives of the Standard Oil Company were present, and on that day the through rate on oil was reduced to twenty cents per barrel to the Standard Oil Company. “It was subsequently reduced to fifteen cents,” Mr. Gowen told the Committee, “and I believe, though I do not certainly know, to ten cents per barrel in cars of the Standard Oil Company; ... and I am told that at the meeting at Saratoga a time was fixed by the Standard Oil Company within which they promised to secure the control of the pipe-line—provided the trunk lines would make the rate for carrying oil so low that all concerned in transportation would lose money.

“I know this, that only three or four months ago we were told—I do not mean myself, but the gentlemen who directly represented the pipe-line which leads to our road—that if they would agree to give all their oil to the Standard Oil Company to be refined, we could carry 10,000 barrels a day, and the rates would be advanced by the trunk lines. But, to use the language of those making the offer, ‘we’ (meaning the Standard Oil Company) ‘will never permit the trunk lines to advance the rate on oil until your pipe-line gives us all its product to refine,’ and the prophesy of four months ago has become the history of to-day.” Mr. Flagler differs with Mr. Gowen in his explanation of this cut in rates. Mr. Flagler contends that the Standard Oil Company really opposed it, but that the railroads insisted on it. Mr. Flagler’s testimony is interesting reading in connection with all that we know about the Tidewater Company. It will be found in the appendix.[^[87]]