11. The people have been excluded from the free and equal use of the docks, storehouses, and other terminal facilities of the railroads in the great harbors of export.[696]
12. Inventors and their better processes have been smothered.[697]
13. Men have been paid more for spying than they could earn by working.[698]
14. "Killing delay" has been created in the administration of justice.[699]
All are poorer—oil-producers, land-owners, all labor, all the railroads, all the refiners, merchants, all the consumers of oil—the whole people. Less oil has flowed, less light shone, and there has been less happiness and virtue. In every one of the few intervals, says Hudson, during which oil could flow freely to Pittsburg, all the businesses connected with it were active and expanding.[700]
When the trust's secretary was asked for the proper name of the combination, his reply was: "The Lord only knows; I don't." "An indescribable thing," he said again.[701]
"Do you understand the practical work of refining as a refiner?" he was asked.
"I do not.... I have not been inside a refinery in ten years."[702]
"Two mills a ton a mile for five hundred miles would be a dollar a ton?"
"I am not able to demonstrate that proposition."
"You have some arithmetical knowledge?"
"I cannot answer that question."[703]
He could not state what proportion of the oil trade is now controlled by the trust. He had never looked into that question. He did not know who knows these things.[704]
"You own the pipe line to New York?"
"Yes, sir."
"What does it cost you to do business on that pipe line?"
"I do not know anything about it.... I have never been in the oil regions but once in my life.... I am not a practical oil man.... For perhaps eight years I have given absolutely no attention to the details of our business."[705]
Asked upon another occasion, before the Pennsylvania Legislature, about the accounts of the company when he was its secretary, he said:
"I am not familiar with the accounts."[706]
"I am a clamorer for dividends. That is the only function I have," said another trustee.[707]
"When was your last rate given you, the rate at which you are now being carried (on the New York Central)?"
"I could not tell."[708]
The secretary had testified that this associate attended to getting the rates of freight; but the latter avowed that he could not remember "any rate" that he had paid "at any time." But a little later he who could not remember any rate he had ever paid was able to tell the committee, off-hand, the exact rate of freight on oil by steamer from Batoum in Russia toLiverpool, and knew the rate from the wells at Baku by rail to the sea at Batoum![709]
"Had you ever been interested in the refinery of oil in any manner when you first became connected with the oil business?" another trustee was asked.
"Never."
"Or the production of oil?"
"Never."
He was a railroad man, and had been taken into the combination for his value as such; but when he was asked if he could tell any of the rates of freight his company had paid, he said:
"I cannot."[710]
"What is your business and where do you reside?" another of the trustees was asked by the State of New York.
"I decline to answer any question until I can consult counsel."[711]
"What is the capital stock?" was asked of another.
"I do not know."
"How much has the capital been increased since?"
"I don't know."
"Where are the meetings of the Standard Oil Company held?"
"I don't know."
"How many directors are there?"
"I don't know."
"Do they own any pipe lines?"
"I don't know."
"I don't know anything about the rates of transportation."[712]
"What quantity of oil was exported by the different concerns with which you were connected from the port of New York in 1881?" the president was asked.
"I do not know."
"How many millions of barrels of oil were refined by such concerns in the vicinity of New York in 1881?"
"I don't know how much was refined."
"Did not the concern with which you were so connected purchase over 8,000,000 barrels of crude petroleum in 1881?"
"I am unable to state."
He was asked to give the name of one refinery in this country, running at the time (1883), not owned or substantially controlled by his concern. "I decline to answer."[713]
He was asked if he would say the total profits of his trust's companies for the last year (1887) were not as much as $20,000,000.
"I haven't the least knowledge on that subject."[714]
Phrenologists are right. Memory is not to be ranked with the mental attributes of the highest importance. The head of the New York Central could not tell when a stock dividend of something like $46,000,000 had been declared on one of his railroads—and a $46,000,000 dividend is something worth remembering. "I don't know.... I don't remember."[715]It is lucky for the rest of us that these great men forget something.
One of the chiefs of the oil combination was a witness in Cleveland in 1887 in a suit by the State of Ohio against certain railroads.
"What business in connection with the oil business is done in the building in which the oil trust has its office in New York?"
"I do not think I could state just what business is done in that building, I am sure."
Asked on the witness-stand in the Buffalo explosion case when it was he formed the "trust" with $70,000,000 of capital, the president replied: "I am unable to state," and he could not say where its articles of agreement were, nor whohas control of it. When questioned before the Interstate Commission he could not tell within $25,000,000 how much business they were doing a year.[716]
These men keep no books. The whole arrangement is just a happy family, like Barnum's monkeys, birds, cats, dogs, and mice in the same cage. "It is a business of faith," one of the ruling four puts it. Another was asked about the by-laws under which he and his associates transacted their business. "I don't know that I have seen a copy," he replied, and as to where it was he was able only to "suppose."[717]
When the committee of the Legislature called for the books recording the transactions of the trust and its attorneys and committees, there were practically none to produce. All there was in the way of a record of transactions of a magnitude beyond those of any other commercial institution in this country or the world were a few pages of formal entries from which nothing could be learned. The executive committee received and passed upon the disbursements of money by the treasurer, and the reports of sub-committees and of members, who had sweeping powers of attorney, by which these countless millions were kept rolling themselves up into more, but it never kept any records.
"I have no knowledge of any formal record having been made," one of them said. The reports were "either verbal or on pieces of paper.... I think it was memorandums," he continued, and the memorandums were "undoubtedly destroyed." They were transcribed into the records of the trustees, he said, but the search of the committee showed that the transcription was a "skeleton," consisting mainly of the mere phrase, "Minutes of the executive committee approved." "The real minutes do not appear upon the book," Senator Ives, of the committee, said.
"There is no book to produce?"
"There is no book."
"And there is no memorandum?"
"There is no memorandum."[718]
"Does the trust keep books?" the "president" was asked by Congress.
"No, we have no system of book-keeping."
On further pressure he said that the treasurer had "a record to know what money comes in."
"You have never seen those books?"
"I do not think I have ever seen those books."
"Has any member of the nine" (trustees) "ever seen those books?"
"I do not know that they have."[719]
Simplicity is said to be always a characteristic of greatness. What could be simpler, and so greater, than this? The elements of success are only—
1. Not to know anything about the business.
2. To keep no books.
3. To have "a record to know what money comes in," and
4. Never to look at it.
Finally, the operations of these men have, in their own language, not been "business." Its secretary told Congress that the "trust" was "not a business corporation,"[720]and an associate declared in court that it "cannot do business." The report of the New York Legislature shows that on October 3, 1883, the president had by a formal instrument been made the attorney of the trust to sign and execute all the contracts made by it. The same instrument in express terms confirmed the execution of contracts heretofore signed by him, showing that he had been making contracts.[721]
"Those gentlemen" (the members of the trust who hold its power of attorney) "do actually execute contracts involving pretty large amounts, sometimes without a formal resolution of the Board of Trustees, do they not?" one of them was asked.
"Undoubtedly they do."[722]
Following their employers, the lawyers in the Pennsylvania Tax case for the oil combination argued that its operations were not business within the meaning of the tax law. If the "no money" of 1862 has become the control, in one industry alone, of $160,000,000 in 1892 by methods that are not "business," what are they?
Note.—The principal members of the oil combination were heard at great length in its defence before the committee of Congress investigating trusts in 1888.[723]Their testimony has been frequently used in our pages. But they felt that their case needed further elucidation, and asked the committee to hear them again. The committee declined to hear them again "explain or contradict," as they offered to do, but by printing their communication gave them the benefit of their denials and explanations.[724]Their offer was mainly to go again over the ground that the "South Improvement Company never did any business," that the combination "obtained no preferences" on the railroads, that they had cheapened transportation, improved machinery, made better oil at less cost, and so on. The chief officers and owners had been heard on all these points to the extent of hundreds of pages of testimony. But though it did not recall them to the witness-stand, the committee, in addition to printing their communication, printed most of the documentary evidence they desired to submit. This covered nearly two hundred pages more.[725]The examination, which any one can make, of this record discloses an interesting fact concerning the proof, and the trust's offer to prove, which can best be shown in parallel columns:
Note.—The principal members of the oil combination were heard at great length in its defence before the committee of Congress investigating trusts in 1888.[723]Their testimony has been frequently used in our pages. But they felt that their case needed further elucidation, and asked the committee to hear them again. The committee declined to hear them again "explain or contradict," as they offered to do, but by printing their communication gave them the benefit of their denials and explanations.[724]Their offer was mainly to go again over the ground that the "South Improvement Company never did any business," that the combination "obtained no preferences" on the railroads, that they had cheapened transportation, improved machinery, made better oil at less cost, and so on. The chief officers and owners had been heard on all these points to the extent of hundreds of pages of testimony. But though it did not recall them to the witness-stand, the committee, in addition to printing their communication, printed most of the documentary evidence they desired to submit. This covered nearly two hundred pages more.[725]
The examination, which any one can make, of this record discloses an interesting fact concerning the proof, and the trust's offer to prove, which can best be shown in parallel columns:
Similarly, throughout, the trust's offer to prove falls when confronted with its own proof. Many more instances could be given, but more than one instance is not needed.
CHAPTER XXXIII
THE SMOKELESS REBATE
Withsearching intelligence, indomitable will, and a conscience which makes religion, patriotism, and the domestic virtues but subordinate paragraphs in a ritual of money worship, the mercantile mind flies its air-line to business supremacy. That entirely modern social arrangement—the private ownership of public highways—has introduced a new weapon into business warfare which means universal dominion to him who will use it with an iron hand.
This weapon is the rebate, smokeless, noiseless, invisible, of extraordinary range, and the deadliest gun known to commercial warfare. It is not a lawful weapon. Like the explosive bullet, it is not recognized by the laws of war. It has to be used secretly. All the rates he got were a secret between himself and the railroads. "It has never been otherwise," testified one of the oil combination.[731]The Chevalier Bayard declared proudly, as he lay on his death-bed, that he had never given quarter to any one so degraded and unknightly as to use gunpowder. Every one would close in at once to destroy a market combatant who avowed that he employed this wicked projectile.
The apparatus of the rebate is so simple that it looks less like a destroying angel than any weapon of offence ever known. The whole battery consists only of a pen and ink and some paper. The discharge is but the making of an entry—but the signing of a check. But when the man who commands this simple enginery directs it against a businesscompetitor you can follow the track of wreckage like the path of a cyclone, by the ruins which lie bleaching in the air for years. The gentlemen who employ it give no evidence of being otherwise engaged than in their ordinary pursuits. They go about sedate and smiling, with seemingly friendly hands empty of all tools of death. But all about them as they will, as if it were only by wish of theirs which attendant spirits hastened to execute, rivals are blown out of the highways, busy mills and refineries turn to dust, hearts break, and strong men go mad or commit suicide or surrender their persons and their property to the skilful artillerists.
"And in the actual practice of daily life," says Ruskin, "you will find that wherever there is secrecy, there is either guilt or danger." "When did you discover the fact that these rebates had been paid?" one of the victims was asked.
"We never discovered it as a fact until the testimony was taken in 1879.... We always suspected it; but we never knew of it of our personal knowledge, and never would really have known it of our personal knowledge.... I had no idea of the iniquity that was going on."[732]
Nothing so demolishing was ever so delicate and intangible as this, for its essence is but a union of the minds of a railroad official and some business friend, perhaps a silent partner, bent on business empire. The model merchant, fortunate in having a friend willing so to use a power sovereigns would not dare to use, walks the public way, strong in his secret, and smiles with triumph as all at whom he levels his invisible wand sicken and disappear. "He has the receipt of fern-seed. He walks invisible."
Men who hunt their fellow-men with this concealed weapon always deny it, as they must. To use it has always been a sin, and has been made a crime in every civilized State. Under United States law it is, since 1887, an offence punishable with imprisonment in the penitentiary.[733]Moral ideals are not born in legislatures. When an act attains by a law the distinction ofbeing made a crime, it is already well on its way to extinction. It is made infamous by law, because it has already become infamous before the conscience and honor of men. It was not the prohibition of highway privilege by the Constitution of Pennsylvania or the laws of the United States which made the rebate an iniquity. This legal volley is but a salute to the established conscience.
The question most often pressed before all the many legislative and judicial inquests held upon the dead bodies which strew every field of the oil industry has been whether the extraordinary powers which the invention of the locomotive and the transformation of public highways into private property had given railways over the livelihoods of the people had been used to make it impossible for any but a preferred few to live.
One of the successful men disposed of the evidence that these powers had been so used by styling it before the committee of Congress of 1888 as the "worst balderdash," and before the New York Legislative Committee of 1888 as "irresponsible newspaper statements," "a malignity and mendacity that is little short of devilishness." The secretary of the oil trust waved it away as "all this newspaper talk and flurry." The president knows nothing about the existence of such privileges, except that he has "heard much of it in the papers." And yet another of the trust in theNorth American Reviewof February, 1883, similarly describes the accusation as "uncontradicted calumny," to which, he regrets to say, "several respectable journals and magazines lent themselves."
After taking 3700 pages of evidence and sitting for months, the committee of 1879 of the New York Legislature said in their report: "The history of this corporation is a unique illustration of the possible outgrowth of the present system of railroad management in giving preferential rates, and also showing the colossal proportions to whichmonopoly can grow under the laws of this country.[734]... The parties whom they have driven to the wall have had ample capital and equal ability in the prosecution of their business in all things save their ability to acquire facilities for transportation."[735]
The committee of the Ohio Legislature which took the evidence of the treatment of the Marietta independents by the railroads[736]is, so far as the author knows, the only body of all the legislative and judicial tribunals that have been investigating for the past thirty years which has found the relations of the railroads and the oil combination to be proper. It used the words "public," "uniform," "in accordance with law," "equitable," "no special discriminations or privileges" to describe the conduct of the common carriers in that case. But in doing so it had to except from these exculpations the railroad which originated the attack on the independent refiners, and the rates of which controlled the others, as it was the initial road. It had also to admit that the oil combination had received "better rates," but defended them on the ground that its shipments were larger. These two exceptions are doors wide enough to admit every possibility of the rebate. The Secretary of State for Internal Affairs of Pennsylvania made an investigation in 1878 on the complaint of citizens. He reported to the Attorney-General that no case had been made out "beyond the ordinary province of individual redress." He was hung in effigy by the citizens, and the evidence he took remains, like that of the Ohio Committee of 1879, a valuable repository of facts from which students can draw their own conclusions.
More than any others the wrongs of the oil industry provoked the investigations by Congress from 1872 to 1887, and caused the establishment of the Interstate Commerce Commission, and more than any others they have claimed the attention of the new law and the new court. The cases brought before it cover the oil business on practically every road of any importance in the United States—in New England, theMiddle States, the West, the South, the Pacific coast; on the great East and West trunk roads—the Pennsylvania, the Erie, the Baltimore and Ohio, the New York Central, and all their allied lines; on the transcontinental lines—the Union Pacific, the Central Pacific, the Southern Pacific; on the steamship and railroad association controlling the South and Southwest. They show that from ocean to ocean, and from the Gulf of St. Lawrence to the Gulf of Mexico, wherever the American citizen seeks an opening in this industry, he finds it, like the deer forests and grouse moors of the old country, protected by game-keepers against him and the common herd. The terms in which the commission have described the preferences given the oil combination are not ambiguous: "Great difference in rates," "unjust discrimination," "intentional disregard of rights," "unexcused," "a vast discrepancy," "enormous," "illegal," "excessive,"[737]"extraordinary," "forbidden by the act to regulate commerce,"[738]"so obvious and palpable a discrimination that no discussion of it is necessary," "wholly indefensible," "patent and provoking discriminations for which no rational excuse is suggested," "obnoxious," "disparity ... absurd and inexcusable," "gross disproportions and inequalities,"[739]"long practised," "the most unjust and injurious discrimination ... and this discrimination inured mostly to the benefit of one powerful combination."[740]
This was what the Interstate Commerce Commission found all along the record from 1887 to 1893. When one of those who got the benefits so characterized was before the New York Legislature in 1888, he said:
"I know of no discrimination in the oil traffic of any kind since the passage of the Interstate Commerce Act."
"Do you use any means for the purpose of avoiding the effect of that new law?"
"None whatever."[741]
But the people have found that the explicit prohibitions of the Interstate Commerce law were of no more protection to them than the equally explicit prohibitions given long before by the State constitutions and laws, the common law of the court, and by the still older common law of right, which the statute was created to enforce. The "unjust," "enormous," "illegal" differences in freights by which the public was excluded were got from the railroads after, as before, Congress, obedient to an aroused and universal demand, had passed a special statute and created a special tribunal to prevent and punish this special sort of crime. This is the adjudicated fact.
This "uncontradicted calumny," "worst balderdash," "malignity and mendacity," "irresponsible newspaper statements" proves upon examination to be:
1. Testimony of unimpeached and in many cases uncontradicted witnesses, given under oath in legislative investigations and in court, subject to examination and cross-examination and rebuttal.
2. Reports of State legislative committees.
3. Copies of the contracts.[742]
4. Decision of courts, State and national.[743]
The South Improvement plan of 1872 is still in unrelenting operation, according to the latest news. A case is now pending before the Interstate Commerce Commission,[744]in which charges of highway abuse even more sensational than any of those we have seen judicially proved are made against thethirty railroads by which the oil of Ohio, Pennsylvania, and New York reaches the Pacific coast. A San Francisco oil dealer is the petitioner for relief. He recites the discriminations given the oil combination on the Pacific coast before the Interstate Commerce law was enacted. These were admitted by the officials of the roads before the United States Pacific Railway Commission of 1887. The traffic managers of the Southern Pacific testified that the oil combination, "from the time it acquired the oil business on this coast, had lower rates than the general tariff provided, or than other shippers paid on coal oil."[745]The general freight agent of the Central Pacific Railroad admitted that his road had the same arrangement, and had accepted the business "at rates dictated" by the oil combination.[746]The general traffic manager of the Union Pacific Railroad said:
"We have paid them a good deal in rebates." It was a "pretty large" preference.
"What was the effect on the small dealer?"
"I should think it would be embarrassing to the small shipper!"[747]
When the Interstate Commerce law went into force the oil combination introduced a patented car for the transcontinental trade, which it claimed the sole right to use. Though the new car was to the disadvantage of the railroads, as it cost more to haul, the managers gave it lower rates than any other car and carried it back free, while they punished the shippers who gave them a lighter and better car by charging them $105 for carrying that back.
The San Francisco complainant goes on to charge that a plan was concocted and put in operation by which rates were lowered whenever the combination wanted to fill its warehouses on the Pacific coast, and as soon as they were full were put back again. This lowering and raising of rates was "to the public sudden and unexpected."[748]It was known inadvance only to the ring and the railroads. Before other shippers could take advantage of the low rates they would be raised again. The complaint recites that in pursuance of this plan, after the combination had transferred to the Pacific coast at the end of 1888 from its Eastern refineries all it needed for the next season's business, the railroads advanced the rates from 82½ cents a hundred pounds to $1.25. The next May the railroads made a similar seesaw, and, he says, in December, 1892, "are still making ... such arbitrary and sudden reductions ... to the undue advantage" of the oil combination "and to the detriment and injury of all other shippers." The San Francisco merchant also charges that in the interest of the Eastern refineries of the combination rates are made to prevent the large product of the oil-fields and independent refineries of Colorado and Wyoming from reaching the Pacific coast, "which needs them to furnish fuel for its manufactories, as well as for light for its residents." Similarly we find the Chicago and Northwestern Railroad charging $105 for a car-load of cattle from Wyoming to Chicago, while for a car of 75 barrels of oil the freight would be $348. In connection with these charges the press published the telegrams, filling columns, which were said to have passed between the officials of the railroads and the oil combination in the negotiation of this arrangement. In one of these telegrams the freight agent of the Southern Pacific explains the new deal. "He" (the agent of the oil combination) "would stock up at the low rate, then notify the association of railroads when to advance." The advance or decline was to be "made at certain seasons of the year in accordance with this supply on hand." When the negotiation was finished and the plan was agreed to, a San Francisco agent of the oil combination is said to have telegraphed to its officers in New York: "I think we have managed this freight business pretty well from this long distance, especially when you think that we have secured the 90-cent rate with which to stock up from time to time." His telegram also discloses that the arrangement extended to lead and linseed-oil, showing, what is well known,that the combinations in these articles belong to the members of that in oil. These charges are, it is to be remembered, still unadjudicated, this published evidence is not yet substantiated. But the arrangement which is charged is in exact pursuance of that part of the South Improvement Company contract which bound the railroads to "lower or raise the gross rates of transportation ... for such times and to such extent as may be necessary to overcome ... competition."[749]And Attorney-General Olney has been publicly informed[750]that during the summer of 1894 oil rates between Pennsylvania and Colorado were put down from 75 cents a hundred to 25 cents, and a few weeks later raised again to the old rate. Another increase made the rates to Denver higher, for oil, than to the Pacific coast. He has been asked to ascertain, judicially, if this shuffling of rates was not made, like that complained of before the Interstate Commerce Commission, to allow the oil trust "to stock up at the old rate." His informants suggest that the same powers with which he has brought railway employés to trial for infractions of the Interstate Commerce law can be used against the railways.
This is not all of the story. This patented car spoken of was a mere aggregation of old elements, as the courts held, and the patent was void. Advised by their lawyer that this would be the view the courts would have to take, competitors of the combination in the business of the Pacific coast, where they had been at the head until these new tricks of trade came in, introduced a car of their own of the same class. They thus became entitled to the same low rates and the same free return of the car as their powerful rival. This put them again on an equality in transportation. They had not been using these new cars long before two of them, shipped as usual from the East, failed to arrive. Their search for the missing cars put them in possession of the interesting information that a litigation, of which they had had no notice or knowledge whatever, had for some time been in progress,and was at that moment at the point of decision. As their interests had been entirely unrepresented, this decision would certainly have been against them, and would have forever made impossible the use of their cars on any railroad of the United States. This had been done by an apparently hostile litigation by the oil combination against the Southern Pacific Railroad. The former sued in the United States courts for an injunction to forbid the railroad from hauling the cars of the competitor, on the ground that they were an infringement on its own patented cars. No notice was given the persons most interested—the owners of the cars in question—whose business life was involved, and they were not at first made parties to the suit. The dummy defendant—the railroad—made no valid opposition, but with great condescension admitted that all the averments of its antagonist were true. The case was sent through the courts on a gallop to get a decision. After that the merchants whose cars were the object of the attack, as they had not been parties to the case, could not have it reopened, and it would stand against them without possibility of reversal. The firm found that a temporary injunction had been applied for and had been granted; that this had been followed by proceedings to make the injunction perpetual; that subpœnas had been issued, served, and returned, and an order had been obtained from the court for taking testimony. In place of the regular examiner of the court, a special examiner had been appointed; he had begun taking evidence the same day, and taking it privately. The testimony so taken had been sealed and filed. The railroad had made its answer December 2d, the testimony already taken was filed in court December 3d, making the case complete for decision by the judges. December 4th the firm heard for the first time of what was being done, and December 5th applied for the right to take part, which saved them. To get such cases ready for a hearing in the United States Circuit Court, where this was done, usually requires a year. But in this instance it was done in two weeks! Only just as the door of the court was closing irrevocably, as far as theirrights were concerned, did the firm get inside, and secure leave to have their side represented. The whole fabric of the litigation fell at the first touch. The temporary injunction against the use of their car was dissolved, the permanent injunction was refused, the patent of the oil trust's car was declared worthless, and this decision was upheld by the United States Circuit Court of Appeals in February, 1893.[751]
Meanwhile their oil, side-tracked in the Mojave Desert and elsewhere, was being cooked to death, their customers were going elsewhere, and they were being put to loss and damages which they are now suing to have made good to them. "There are some equivocal circumstances in the case," said Judge Hoffman, dissolving the injunctions in 1890. He pointed out that the railroad made no objection to the injunction which deprived it of business. This "tends to corroborate suspicions," he said, suggested by other features of the case. The railroad persisted in remaining in the case to the end, after the real parties in interest came in, and, although codefendants with these parties, the road manœuvred for the benefit of the other side in a way which the Court again said "had an equivocal appearance." The counsel for the firm, in his brief for the United States Circuit Court of Appeals, pointed out more causes for "suspicion." He showed the Court that the records of the case had been mutilated in many places. All the mutilations were in favor of the other side of the case. Who was the author of the mutilations was not shown, but it was shown that the record had been intrusted by the lower court to a representative of one of the oil trust, to be printed and delivered to the Court of Appeals. "It would be a very easy matter for a vicious attorney," said the lawyer of the independents, "under such circumstances, to make changes and alterations in the record that might not be noticed, but would nevertheless greatly prejudice the case."
When the victims of the smokeless rebate used the only property many of them had left—their right of appeal to courts or Legislature or executive officials—they were showered with abuse, as people with "private grievances,"[752]"strikers and sore-heads," "black-mailers,"[753]"moss-backs," ... "naturally left in the lurch" ... "people who came forward with envy and jealousy of the success" of the oil combination,[754]"throttlers," "ravenous wolves," "hoary old reprobate," "senile old liar," "public till-tapper," "plunderers," "pestilence."[755]Such are a few of the blossoms of rhetoric with which those who sought their rights in courts or before the Legislature have been crowned. These witnesses have come forward all through the period between 1872 and 1892, and from every point of importance in the industry—New York, Pittsburg, Cleveland, Oil City, San Francisco, Titusville, Philadelphia, Marietta, Buffalo, Boston, Cincinnati, Louisville, Memphis, New Orleans. They have come from every province of the industry—the refineries, the oil fields, the pipe lines, railroads, the wholesale and retail markets. Bound together by no common tie of organization or partnership, they have, each and all, exactly the same kind of story to tell. The substance of their complaint—that one selected knot of men, members of one organization, were given, unlawfully, the control of the highways, to the exclusion and ruin of the people—has been sustained by the evidence taken by every official investigation, and by the decision of every court to which the facts have been submitted.
As the counsel of the New York Chamber of Commerce before the New York Legislative Committee of 1879 said: "Such a power makes it possible to the freight agents of the railways to constitute themselves special partners in every line of business in the United States, contributing as their share of capital to the business the ability to crush out rivals." Men who can choose which merchants, manufacturers, producers shall go to market and which stay at home, have a key that will unlock the door of every business house on the line; they know the combination of every safe.
In their appeal to the executive of Pennsylvania, the Petroleum Producers' Union refer to the conduct of the railroad officials as "inexplicable upon any ordinary hypothesis, or under any known theory of railroad politics."[756]What the railroad managers did, we know; why they did it, has never been judicially demonstrated. One of the earliest intimations of the kind of lubricant used was given by the anti-monopoly leader of the people in the Constitutional Convention of Pennsylvania of 1872, who is now the legal leader of the oil combination. He said: "I am told that discriminations are now made to so great an extent as to be ruinous to certain companies unless the railroad companies' officers are given a bonus. That is the evil under which we labor. I do not know how to cure it, but it must be cured somehow." Again he said: "It is charged—I do not make the charge myself—but it is charged upon a railroad company running through the oil regions that it will not, without delay, transport oil delivered to the railroad station by the various pipe lines unless it is interested in the pipe line.... It is said that whenever a new pipe line is built, it is necessary that somebody connected with the particular railroad company shall be presented with stock in the pipe line; otherwise, it (the railroad company) will not furnish cars without tedious and unnecessary delay. This is a discrimination which should be stopped."[757]
It is plain that the purpose of the discrimination was something more than to shunt the control of the trade—more than "to maintain the business" of the favorite. Ten cents a barrel difference would have done that, for, as the Supreme Court of Ohio pointed out, that alone amounted to a tax of 21 per cent. a year on the capital of the "outsiders."[758]When10 cents was enough, why was the tax made 22½ cents, 25 cents, 64½ cents up to $1.10?
Some railroad men are known to have been stockholders in the oil combination. "I think I owned—I guess I had $100,000 in it.... I don't know anything at all about it"—the company—the head of the New York Central admitted.[759]Who were the owners of certain shares of their capital stock these men have always refused to divulge. In giving in court a list of stockholders of one of their corporations one of the officers uncovered only three-quarters of the stock. Who held the other fourth he avowed he could not say, although the stock-book was in his custody.[760]The dividends were paid to the vice-president, and by him handed over to these veiled prophets. There was a similar mystery about the owners of about $2,000,000 of the National Transit stock, the concern which owns and manages the pipe lines. Asked for the names of the owners of this portion, the "secretary" said:
"It is a private matter.... I decline to answer."[761]
The president of this pipe-line branch also refused to give Congress this information.[762]This secrecy will couple itself at once in the mind of the investigator with the charges just quoted, that railroad officials had to be given backsheesh of pipe-line stock before their roads would carry the oil of the pipe lines.
The United States Senate Committee which investigated the cattle and meat monopolies had a similar experience. Their report says: "The secretary of the Union Stockyards testified at Chicago that when the company was established the stock was subscribed by the railroads; but when asked to show his stock-books he declined, after consultation with the company's attorneys, and persisted in this refusal at Washington City. For the purposes of our investigation it was not considered necessary to ascertain inwhose names the stock now stands, for we were satisfied that whatever the ownership it would not appear in the names of the railroad presidents, directors, and stockholders, who are the real owners.... The refusal of the secretary, under direction of his employers, to make public the list of stockholders must have been because of the fact that the same men own the stockyards and the railroads running to them, and they do not propose to submit their books to scrutiny because they dread the truth.... This extraordinary conduct on the part of the stockyards company is not alone in the chain of evidence which shows complicity between the stockyards and the railroads."[763]
The smokeless rebate makes the secret of success in business to be not manufacture, but manufracture—breaking down with a strong hand the true makers of things. To those who can get the rebate it makes no difference who does the digging, building, mining, making, producing the million forms of the wealth they covet for themselves. They need only get control of the roads. All that they want of the wealth of others can be switched off the highways into their hands. To succeed, ambitious men must make themselves refiners of freight rates, distillers of discriminations, owners, not of lands, mines, and forests—not in the first place, at least—but of the railway officials through whose hands the produce must go to market; builders, not of manufactories, but of privileges; inventors only of schemes to keep for themselves the middle of the road and both sides of it; contrivers, not of competition, but of ways to tax the property of their competitors into their pockets. They need not make money; they can take it from those who have made it.
In the United States the processes of business feudalization are moving more rapidly to the end than in any other country. In Chicago, the youngest of the great cities of the youngest of the great nations, there are fewer wholesale dry-goods stores in 1894 for a population of 1,600,000 than therewere in 1860 for 112,172. In almost every one of the meteoric careers by which a few men in each trade are rising to supreme wealth, it will generally be found that to some privilege on the railed highways, accomplished by the rebate, is due the part of their rise which is extraordinary. A few cases of great wealth from the increased value of land, a few from remarkable inventions like the sewing-machine, are only exceptions.
From using railroad power to give better rates to the larger man, it was an easy step to using it to make a favorite first a larger man, then the largest man, and finally the only man in the business. In meat and cattle we see men rising from poverty to great wealth. From being competitors, like other men, in the scramble, they get into the comfortable seat of control of the prices at which the farmer must sell cattle, and at which the people must buy meat.[764]Many other men had thrift, sobriety, industry, but only these had the rebate, and so only these are the "fittest in the struggle for existence." We find a merchant prince of the last generation in New York gathering into his hands a share of the dry-goods business of the country which appears entirely disproportionate to his ability and energy, great though these be. Is his secret a brain so much larger than his competitors' brains as his business is greater than theirs? The freight agent of the New York Central testified that he gave this man a special rate "to build up and develop their business."
"They were languishing and suffering?"
"To a great extent."[765]
"This," said the counsel for the Chamber of Commerce of New York before the committee, "is deliberately making the rich richer and the poor poorer, by taxing the poor for the benefit of the rich through the instrumentality of the freight charge."[766]
The officials of the Pennsylvania Railroad, by the use of rebates, handed over the State of Pennsylvania to three coal-dealers, each of whom had his territory, and was supreme in it, as would-be competitors found out when they undertook to ship coal into his market. They made a similar division of the iron and steel business. The rebate is the golden-rule of the "gospel of wealth." We have already seen that the secret of the few corporations which have become the owners of almost every acre of the anthracite coal of Pennsylvania was the rebate.[767]
Along one of the most important lines out of Chicago grain dealers who had been buying and selling in an open market, building elevators, investing capital and life, found five years ago market and railroad and livelihood suddenly closed to them, and the work of thirty years brought to an untimely end. The United States Interstate Commerce Commission, and the United States District Attorneys co-operating with it, broke down in the attempt to compel the railroad men who gave these privileges of transportation, or the business men who received them, to testify or to produce their books. The United States grand-jury in Chicago, in December, 1890, proceeded against the shippers and the railroad men. All of them refused to tell the rates given or received, or to produce their books.
Why do you refuse to answer? they were asked.
Because to do so would incriminate us.
Here, too, would-be successful men have gone gunning with the smokeless rebate for control of the wheat and corn and all the produce of the American farmer. Grain is fated to go the way that oil, hard coal, cattle, and meat have already gone. The farmer may remain the nominal owner of his farm under these circumstances, but he will be real owner of nothing but the piece of paper title.
First the product of the farm; then the farm. In America rises the shadow of a coming land-ownership more concentrated, more cruel, with the impersonal cruelty of corporate anonymity, than any the world has yet seen.
The grain broker who becomes, by favor of the general freight agent, the sole shipper and warehouseman of grain along a line of railroad, becomes thereby the sole buyer, and in the sole buyer of the produce we have the fast-growing germ of the future sole buyer of the land.
"Petroleum is the victim to-day," said the address, in 1872, of the Petroleum Producers' Union "to all newspapers and boards of trade opposing monopoly.... Coal, iron, cotton, breadstuffs, or live-stock may be in the grasp of the monopoly to-morrow." The prediction is more than half fulfilled.
"I ran away from home, and went to California," said a prominent grain merchant to the writer, "to escape being compelled to testify as to the freight rates I was paying. But these decisions that we cannot be forced to incriminate ourselves give me safe-conduct, and I am going home to take all the rebates I can get."
This is what is going on to-day in the "division of property" in America. Our society is woven together by the steam shuttle that moves between its farms and dinner-tables, its cotton-fields and factories, thousands of miles apart, and the shuttle is crooked. Out of $800,000,000 paid yearly in this country for the carriage of freight, it was estimated in 1888, by one who knew, that $50,000,000 to $100,000,000 goes to favored shippers.[768]As the result of personal examination made as an expert for stockholders, he declared that one of the great trunk lines had in the last twenty years thus diverted to favorites of the managers $100,000,000 of the money of the stockholders. Besides his yachts and trotters, every Captain of Industry worth talking about keeps his stud of railway presidents and general freight agents.
Public opinion, as yet only in the gristle in these new questions, turns upon first one and then another as the author of its troubles—the soulless corporation, the combinationof corporations, railroad oppression, or what not. But the corporation is merely a cover, the combination of corporations an advantage, the private ownership of public highways an opportunity, and the rebate its perfect tool. The real actors are men; the real instrument, the control of their fellows by wealth, and the mainspring of the evil is the morals and economics which cipher that brothers produce wealth when they are only cheating each other out of birthrights.
The success of the same men in Europe shows that railroad discrimination is not the essence of their power, though it has in America been the chief instrument. By their wealth and their willingness to use it in their way they have become supreme. Supreme even where, as in England and Germany, they had no such unjust and crushing preference on the highways as in America. Back of highway privilege, back of money power, back of trade supremacy gained by these two means must be reckoned, as the essence of this phenomenon, the morality—our morality—which not only allows but encourages men to do each other to death, provided only the weapon be a bargain and the arena a market. "Everything shall not go to market," says Emerson; but everything does go to market. The millionaire is the modern hero, says the New YorkEvening Post. The men who have found in the rebate the secret of business success—and there are more of them than the public guesses—have only extended a fiercer hand to the results all were aiming at. They have used the smokeless rebate because it was the best gun. But if that had not been ready to their hand, they would have taken the next best. The course of conquest might have been slower, but, unless checked by moral interventions, it would have reached the same end. If society is founded on the idea that property belongs to the strongest, these will sooner or later get all the property, by bargains or by battles according to "the spirit of the age."
The highest State and national courts and the Interstate Commerce Commission of the United States have sustainedthe people in the assertion of their rights, under the law, to come and go with free and equal rights on the highways. The judges have solemnly warned the guilty men that they must give up their "abhorrent" attempt to drive citizens out of the industries of their choice, and to add the property of the people to their vast estates. Although thus declared in the right by the highest judges of the law and the fact, the people are poor, defeated, and unsuccessful. Though thus warned by the authoritative voice of the ministers of right and justice that their purposes and practices are iniquitous and intolerable, the men who have determined that whole provinces of American industry shall be theirs, and theirs only, continue their warfare of extermination upon poor men with methods practically unchanged. They evade or defy the laws of the States and of the nation, and the decisions of the courts, State and national. Guided by the advice of the skilfullest lawyers, they persist in open violation, or make such changes in their procedure as will nullify statute and decision without danger to them. For thirty years the independents in the oil regions have had this reinforcement of the law, and for thirty years, in spite of it, their rights have been defiantly, continuously violated to the common ruin. The people spend their lives passing about from field or factory, or shop or office, to market, from market to court, from court to Legislature, from Legislature to printing-office. They are the type of the time, disturbed by the demand of the new tyranny of wealth for tribute from their daily labors, and forbidden to rest until out of their suffering a new liberty has been won—the industrial liberty, for which political and religious liberty wait for their full realization.
CHAPTER XXXIV
THE OLD SELF-INTEREST
Thecorn of the coming harvest is growing so fast that, like the farmer standing at night in his fields, we can hear it snap and crackle. We have been fighting fire on the well-worn lines of old-fashioned politics and political economy, regulating corporations, and leaving competition to regulate itself. But the flames of a new economic evolution run around us, and we turn to find that competition has killed competition, that corporations are grown greater than the State and have bred individuals greater than themselves, and that the naked issue of our time is with property becoming master instead of servant, property in many necessaries of life becoming monopoly of the necessaries of life.
We are still, in part, as Emerson says, in the quadruped state. Our industry is a fight of every man for himself. The prize we give the fittest is monopoly of the necessaries of life, and we leave these winners of the powers of life and death to wield them over us by the same "self-interest" with which they took them from us. In all this we see at work a "principle" which will go into the records as one of the historic mistakes of humanity. Institutions stand or fall by their philosophy, and the main doctrine of industry since Adam Smith has been the fallacy that the self-interest of the individual was a sufficient guide to the welfare of the individual and society. Heralded as a final truth of "science" this proves to have been nothing higher than a temporary formula for a passing problem. It was a reflection in words of the policy of the day.
When the Middle Ages landed on the shores of the sixteenth century they broke ranks, and for three hundred years every one has been scurrying about to get what he could. Society was not highly developed enough to organize the exploration and subjugation of worlds of new things and ideas on any broader basis than private enterprise, personal adventure. People had to run away from each other and from the old ideas, nativities, guilds, to seize the prizes of the new sciences, the new land, the new liberties which make modern times. They did not go because the philosophers told them to. The philosophers saw them going and wrote it down in a book, and have believed themselves ever since to be the inventors of the division of labor and the discoverers of a new world of social science. But now we are touching elbows again, and the dream of these picnic centuries that the social can be made secondary to the individual is being chased out of our minds by the hard light of the crisis into which we are waking.
"It is a law of business for each proprietor to pursue his own interest," said the committee of Congress which in 1893 investigated the coal combinations. "There is no hope for any of us, but the weakest must go first," is the golden rule of business.[769]There is no other field of human associations in which any such rule of action is allowed. The man who should apply in his family or his citizenship this "survival of the fittest" theory as it is practically professed and operated in business would be a monster, and would be speedily made extinct, as we do with monsters. To divide the supply of food between himself and his children according to their relative powers of calculation, to follow his conception of his own self-interest in any matter which the self-interest of all has taken charge of, to deal as he thinks best for himself with foreigners with whom his country is at war, would be a short road to the penitentiary or the gallows. In trade men have not yet risen to the level of the family life of the animals. The true law of business is that all must pursuethe interest of all. In the law, the highest product of civilization, this has long been a commonplace. The safety of the people is the supreme law. We are in travail to bring industry up to this. Our century of the caprice of the individual as the law-giver of the common toil, to employ or disemploy, to start or stop, to open or close, to compete or combine, has been the disorder of the school while the master slept. The happiness, self-interest, or individuality of the whole is not more sacred than that of each, but it is greater. They are equal in quality, but in quantity they are greater. In the ultimate which the mathematician, the poet, the reformer projects the two will coincide.
Our world, operated by individual motive, is the country of the Chinese fable, in which the inhabitants went on one leg. Yes, but an "enlightened self-interest"? The perfect self-interest of the perfect individual is an admirable conception, but it is still individual, and the world is social. The music of the spheres is not to be played on one string. Nature does nothing individually. All forces are paired like the sexes, and every particle of matter in the universe has to obey every other particle. When the individual has progressed to a perfect self-interest, there will be over against it, acting and reacting with it, a correspondingly perfect self-interest of the community. Meanwhile, we who are the creators of society have got the times out of joint, because, less experienced than the Creator of the balanced matter of earth, we have given the precedence to the powers on one side. As gods we are but half-grown. For a hundred years or so our economic theory has been one of industrial government by the self-interest of the individual. Political government by the self-interest of the individual we call anarchy. It is one of the paradoxes of public opinion that the people of America, least tolerant of this theory of anarchy in political government, lead in practising it in industry. Politically, we are civilized; industrially, not yet. Our century, given to thislaissez-faire—"leave the individual alone; he will do what is best for himself, and what is best for him is best for all"—has done one good: it has put society at the mercy of its own ideals, and has produced an actual anarchy in industry which is horrifying us into a change of doctrines.
We have not been able to see the people for the persons in it. But there is a people, and it is as different from a mere juxtaposition of persons as a globe of glass from the handful of sand out of which it was melted. It is becoming, socially, known to itself, with that self-consciousness which distinguishes the quick from the dead and the unborn. Every community, said Pascal, is a man, and every man, said Plato, is a community. There is a new self-interest—that of the "man called million," as Mazzini named him—and with this social motive the other, which has so long had its own way, has now to reckon. Mankind has gone astray following a truth seen only partially, but coronated as a whole truth. Many civilizations must worship good men as gods and follow the divinity of one and another before civilization sees that these are only single stars in a firmament of humanity. Our civilization has followed the self-interest of the individual to learn that it was but one of the complex forces of self-interest.