"We did not have to clean out the patent stills, while by the old process they would have to be cleaned out about every day or thirty-six hours."[353]
A number of residents of Titusville, dealers in oil and consumers, testified to the superiority of the illuminant Van Syckel produced. It burned much better than that made by the monopoly, several said. "The burning qualities was extraordinarily good." "It gave better satisfaction to my customers." "It did not gum the lamp-wicks, and did not smell."[354]
This was done in spite of rusty and choked-up pipes, defective stills and apparatus.
One of the owners of the Solar, who was a practical refiner and the overseer of the works, testified that he had seen Van Syckel's continuous process run successfully both in Titusville and Buffalo:
"The result was much beyond my expectation."
"How long did you run the works?"
"I think about two weeks."
"What was the cause of it stopping?"
"The president of the company, also the treasurer, had been to New York two or three times; after the second or third visit he came back seemingly disgusted with the business; afraid of losing his money if he continued any longer, and quit."
"Was there a mortgage upon your property?"
"Yes, sir." It had been foreclosed, he said, in conclusion, by one of the leading members of the oil combination.[355]
The only thing Van Syckel can do to carry out his part of the contract he does. He develops his invention. He is successful in his application to the United States patent-office. He made his contract with the combination in 1876, and got four patents thereafter in 1877, 1878, and 1879.
"Well," it was said in court, "they are a large concern; they would make money out of this; I should think they would want it if it is such a good thing." "Why, my dear man, they have got a monopoly of the business, anyway," Van Syckel replied. "They don't care what kind of oil theysell; but they have got a plant that has cost them millions of dollars that they have got to change, and all that sort of thing, if they take my patent. That is the situation."
He lived on the $125 a month while he was testing and proving the invention. In July, 1880, when four years of his life had been thus wasted, the allowance was changed, without notice or his consent, to $75 a month. The next month he was refused even that sum "unless I signed a receipt in full of all demands, and I walked out without it."
His pipe line has become a part of the net-work of pipe lines of which the oil combination boasts. His refinery of 1869, one of the largest built in western Pennsylvania up to that time, passed into its hands. Three times in succession, after it refuses to build for him as it agreed, he arranges to put his idea of continuous distillation into use, and in each case the refinery in which he sets up his pipes and stills is bought up by it and destroyed. He is kept dangling for years by its policy of delay. Then his independent efforts are broken up; capitalists are made afraid of him. He can get no means for building new works. "Ever since I went into their hands," he said in court, "I have been just as I am now. I could not make oil; could not build a refinery; could not get anybody help me to do it; and here I have stood these last twelve years, and I want to be out. That is just where they want to keep me, so I cannot make any oil. It is the whole profit of the whole of it. They hold me to my contract, and they break theirs."
When twelve years had gone by, and he found that they would neither build for him as agreed nor let any one else build for him, Van Syckel turned to the law and sued them for damages. On the trial all the facts as we have stated were admitted—the abandonment of the enterprise in consequence of the threats that he would not be allowed to ship and market his oil; the interviews in New York; the contract; the sale; Van Syckel's later efforts to make oil in other refineries; his success in producing better and cheaper oil; its popularity; the purchase and destruction of the works using the newmethod. Not a word of evidence was adduced in disproof. The judge and the jury found all these questions in Van Syckel's favor.
The defence was twofold. It was admitted that the two representatives Van Syckel had dealt with had made the contract as he described it. The members of the combination did not deny that. But, they argued, it was not legally binding. "We simply concede," said these great men to the Court, "that they made a contract, but leaving it to the corporation itself to decide upon it.... There cannot be the slightest claim that the company was bound by a contract of that character." On this point they were defeated in the trial. Their second defence was that there were no damages. "The trouble is," they said, "that there are no damages sustained, no damages whatever sustained." They took the ground that his possessing a creative mind was the cause of Van Syckel's ruin, not their betrayal of him. "Mr. Van Syckel," they argued to the Court, sympathetically, "is an instance of what it means to get out a patent, and deal in patents—in nine cases out of ten. He was an inventive man. He has got out a good many patents. No question they were meritorious patents. And what is the result? Poverty, a broken heart, an enfeebled intellect, and a struggle now for the means of subsistence by this lawsuit. So that, if your honor please, there is nothing here from which we can determine what the original value of this patent was." The jury and the judge decided against them, and held there was a contract, legal and binding. That brought them face to face with the question of damages, and here the ruling of the judge saved them, as the decision of another judge saved other members of the combination in the criminal case in the same city, about the same time.[356]The judge ordered the jury to find the damages at six cents, and the jury—in the evolution of freedom juries appear to have become merely clerks of the Court—did so. "This direction of a verdict," said the Court toVan Syckel, "decides every other question of the case in your favor."
Six cents damages for breach of such a contract, and in Buffalo $250 fine for conspiracy to blow up a rival refinery! Here are figures with which to begin a judicial price-list of the cost of immunity for crimes and wrongs.
Lawyer Moot, Van Syckel's counsel, deferentially asked the Court to suggest where was the defect in the proof of damages. It would be "the wildest speculation and guesswork," the Court said, for the jury to attempt to compute the damages.
"Then the Court is unable to suggest any particular defect in the proof?"
The Court evaded the point of the counsel, and repeated in general terms that there was no testimony upon which a jury could assess damages.
Those whom he was suing did not disprove that, by threats of making it impossible for him to get transportation, they had driven Van Syckel to abandon his own business, and make a contract with them by which they were to pay him $100,000 for his new process, if successful. The Court held the contract binding. They had not furnished the money and works to test the inventions as they had agreed to do; but he had nevertheless gone on and completed the invention, so that patents were granted for it by the government. He had tested the invention in other works, they failing him, and had proved it a success; they had thereupon purchased and destroyed these works; he was beggared, and nobody else under these circumstances could be induced to venture money on his invention. Upon these facts, judicially ascertained, the judge refused to let the jury compute the damages, and ordered them to find the damages "nominal," as another judge sentenced their associates in Buffalo to "nominal" punishment.
"There are many things known to the law," said Parnell to the president of the Special Commission trying the Irish members of Parliament, "which are strange to a non-legal mind."
This pioneer, inventor, and true Captain of Industry, realcreator of wealth, has ever since had his neck bent to the pressure of hands too heavy for him. While all over the earth homes are brighter, knowledge is more easily got, and civilization forwarded, because of what his head has thought and his hands have done, he has retired to what is, in fact, a life of penal exile. He has been cut off from the darlings of his brain. Like the political prisoners of Siberia, he can eat and sleep and dress, but he cannot go into the world. His mind is at work there, in every factory and pipe line and lamp; but he must sit, unknown and unrewarded, in his pine cottage on unpaved Maurice Street, ploughed up in the prairies on the outskirts of Buffalo. Dearer than money to him, as to all such creative minds, would be the privilege of feeding the appealing activities of his brain with work. But he is banished from work. He has been set down outside the frontier of industry, and commanded never to return. No one dares buy or sell of him, nor adventure labor or money with him. He is an outcast. This is his greatest grief. The day I visited him he came into the sitting-room from the patch of garden behind the house. "I keep busy," he said, "to keep my mind off—anything to keep busy, if it is only pulling weeds." He is glad to see visitors. "I have been knocked out," he said, "so that nobody now comes to see me." His clear gray-blue eyes, tall, strong frame, firm mouth, large features and limbs, eager face, fit the facts of his career. He is one of the type of country-bred, hard-working American manhood of the last generation. There are no visionary lines in his face, as in his life there have been no impracticabilities, except his too great trustfulness. Gambling oil exchanges, wild oil-land speculations, inside "deals" with railroad freight agents, have never caught him. He has been a money-maker—not a money-taker. To-day, at eighty, the only thing he asks is that he may have the chance to work out his ideas. He talks patiently and courteously, with perfect intelligence and memory, but every once in a while breaks in with an outburst of what is evidently an unceasing refrain within—"I want to make oil."
The diminutive room we are in is stark in its simplicity and poverty. A paragraph in the morning paper on the table tells of "a massive oaken case, similar to a bookcase," which one of the chief reapers where Van Syckel has sowed is having put into his stable in New York. "It has doors of polished oak, with brass hinges, and heavy plate-glass. The inside will be lined with purple plush, and, when completed, the bits which shine in the mouths of his trotters and coach-horses will be arranged inside of this magnificent case in rows, ready for use, as well as an appropriate ornament for the stable."
It is better to be one of the king's horses than one of the king's men. But no words of envy pass his lips. He does not seem to repress them. He simply appears never to feel them. It chanced that as I left him, standing on the uppermost of the three wooden steps of his cottage, bleakness all about, "plain living" within, plain enough to satisfy the hardest climber for "high thinking," it chanced that his last words to me were—"I want to make oil," with an appeal to seek for him the opportunity so long denied. These words, plain and homely as they must seem to those who feed their appetite for the sublime and heroic with the highly varnished sayings of the battle-field and illustrious death-beds, will never cease to ring in my ears with a tone of greatness.[357]
CHAPTER XV
SYMPATHETICAL CO-OPERATION
Someday, perhaps, when more of our story-readers have learned that there are things in the world quite as important as the frets, follies, and loves of boys and girls half-grown, more of our story-tellers will hold their magic mirror up to the full-pulsed life with which mankind throbs through the laboring years that stretch along after the short fever of mating is over. George Rice, coming from the Green Mountains of Vermont, entered the oil business twenty-nine years ago, when he and it were young. He was one of the first comers. Beginning as a producer in the Pithole region, in the days of its evanescent glory, in 1865, he prospered. Escaping the ruin which overtook those who stayed too long in that too quick sand, he was one of the first to develop the new field at Macksburg, Ohio, and to see the advantages of Marietta, on the Ohio River, as a point for refining. Crude oil could easily be brought from Ohio and Pennsylvania by barge down the Ohio River. The field he entered was unoccupied. He drove no one out, but built a new industry in a new place. In 1876 he had risen to the dignity of manufacturer, and had a refinery of a capacity of 500 barrels a week, and later of 2000 barrels. Owning wells, he produced, himself, a part of the crude which he refined. His position gave him access to all the markets by river and rail. Everything promised him fortune. His family took hold with him in the work of bread-winning. "The executive part of the business is done altogether by my family," he says. "One daughter keeps the books, another daughter does nine-tenths of the correspondence, and my son-in-law is the general manager."[358]One ofthe daughters was a witness in one of her father's cases before the Interstate Commerce Commission. "She discussed with counsel," said the New YorkWorld, "the knotty points involving tank-car rates, mileage, rebates, and the long and short haul as familiarly as any general freight agent present."
Several other refiners, seeing the advantages of Marietta, had settled there. They who elected themselves to be trustees of the light of the world, thus having the advantages of the place pointed out to them by practical men, determined that Marietta must be theirs. They bought up some of the refiners. Then they stopped buying. Their representative there, afterwards a member of the trust, "told me distinctly that he had bought certain refineries in Marietta, but that he would not buy any more.... He had another way," he said, "of getting rid of them."[359]Of these "other ways" the independents were now to have a full exposition. In January, 1879, freight rates on oil were suddenly and without previous notice raised by the railroads leading out of Marietta, and by their connections. Some of the rates were doubled. The increase was only on oil. It was—in Ohio—only on oil shipped from Marietta; it was exacted only from the few refiners who had not been bought, because there were "other ways of getting rid of them."[360]
This freight-tariff attack on the independent refiners was arranged by their powerful rival and the railroad managers at a secret conference, as the latter admitted.
"Did you have any consultation or invite consultation with other manufacturers of oil at Marietta?"
"No, sir."[361]
When the representatives of the combination in this market were taxed by a dealer with getting the benefit of this manipulation of freight, "they laughed." All the railroads took part in the surprise. Curiously enough, the minds of the managers of a dozen roads acted simultaneously and identically, over thousands of miles of country—some, as they admitted, with suggestion, and some, as they testified, without suggestion—upon so precise a detail of their business as the rates on oil at one little point. "I did it at my own instance," said the freight agent of the Baltimore and Ohio. Freight officials of railways as far apart east, west, and south, and in interest, as the Baltimore and Ohio, and the Pennsylvania, and the Lake Shore, which had no direct connection with Marietta, and reached it only over other lines, stopped their "wars" to play their part in the move by raising the rate on oil only, and, most remarkable of all, to a figure at which neither they, nor the railroad connecting them with Marietta, nor (and this was the game they were gunning for) the independent refiners could do any business. From other points than Marietta, as Cleveland, Parkersburg, Pittsburg, and Wheeling, where the combination had refineries, but the Marietta independents had none, the railroads left the former rates unchanged.[362]
Rice was "got rid of" at Columbus just as effectually as if Ruskin's "Money-bag Baron," successor of "the Crag Baron," stood across the road with a blunderbuss. His successful rival had but to let its Marietta refineries lie idle, and transfer to its refineries at Wheeling its Marietta business—and Rice's too. By the pooling of the earnings and of the control of all its refineries—the essential features of the combination—its business could be transferred from one point to another without loss. One locality or another could be subjected to ruinous conditions for the extermination of competitors, and the combination, no matter how large its works there, would prosper without check. It gets the same profit as before, but the competitor by its side is ruined. All its refineries along a given railroad can be closed by high rates made to "overcome competition," but profits do not cease. Their business is done elsewhere by its other refineries, and all the profits go into a pool for the common benefit.
From Rice's point of view, Marietta was the storm-centre;but the evidence before the Ohio Legislative Investigation of 1879, before the Legislative Committee of New York of 1879, before Master in Chancery Sweitzer in Pennsylvania, and in the suit against the Lake Shore Railroad, showed that the low barometer there was part of a disturbance covering a wide area. The demonstration against the independent refiners of Marietta was only part of a wider web-spinning, in which those at all points—New York, Boston, Philadelphia, Pittsburg, Oil City, Titusville, Buffalo, Rochester,[363]and Cleveland—were to be forced to "come in" as dependents, or sell out, as most of them did.
That rates were not raised from points controlled by the combination is only part of the truth. At such places rates were lowered. This, like the increase of rates, was done at a secret conference with the oil combination and at its instance.[364]Where it had refineries the rates were to be low; the high rates were for points where it had competitors to be got rid of without the expense of buying them up. The independents knew nothing of the increase of freights prepared for them by the railroad managers and their great competitor until after, some time after, it had gone into effect.
The railroad company gave notice to their rivals what the rates were to be, but withheld that information from them.[365]That was not all. Before the new rates were given all the old rates were cancelled. "For a few days," said an independent, "we could not obtain any rates at all. We had orders from our customers, but could not obtain any rates of freight."
As to many places, the withholding of rates continued. "There's many places we can't obtain any rates to. They just say we sha'n't ship to these other places at any price."[366]
When the Ohio Legislature undertook to investigate, it found that the railroad men professed a higher allegiance to their corporations than to the State. They refused to answerthe questions of the committee, or evaded them. "I am working under orders from the general freight agent," said one of them, "and I don't feel authorized to answer that." The arguments of the committee that the orders of an employer could not supersede the duty of a citizen to his government, or the obligations of his oath as a witness, were wasted. "I will tell you just how I feel," said the witness to these representatives of an inferior power. "I am connected with the railroad company, and get my instructions from the general agent, and I am very careful about telling anybody else anything." The Legislature accepted the rank of "anybody else" to which it was assigned, and did not compel the witness to answer.
To a question about the increase in freight: "I object," said another railroad officer, "to going into details about my own private business."[367]
One peculiar thing about the action of the railroads was that it was an injury to themselves. The Baltimore and Ohio, for instance, by raising its rate, cut off its oil business with Marietta entirely. "What advantage is it, then?" the freight agent of the road over which the Baltimore and Ohio reached Marietta was asked.
"There is no advantage.... We had revenue before this increase in rates, and none since."
"What would be the inducement for her (the Baltimore and Ohio) to do it, then?"
"That is a matter I am not competent to answer."[368]
The railroad men testified positively that the increase affected all alike at Marietta. It was supposed even by those who thought they saw to the bottom of the manœuvre that the combination would close its Marietta works temporarily, in order to seem to be equally affected with all the rest. It could do this with no loss whatever, since, as explained, no raise in rates had been made from Wheeling, Parkersburg, Pittsburg, Cleveland, where it was practically alone, and itcould reach all its customers from those places as well as from Marietta. But the combination kept on filling orders from its refineries at Marietta at the old freight rates, while by its side the men it was hunting down sat idle because the discriminating rates of freight made it impossible for them to use the highways. It was so careless of appearances that oil ordered of its works at Parkersburg would be sent from the Marietta branch,[369]and at the old rate of 40 cents, while the other refineries could not ship because the rate to them was 65 cents; the increase at Marietta was not enforced against it, but only against the three independents—just as planned in the South Improvement scheme.
The move was far-reaching—as far as Chicago, the rate to which was made $1.20 a barrel, instead of 90 cents a barrel.
"Then they cut you off from the Western trade as well as this State?"
"Yes, sir; almost entirely.... I was selling in Chicago, and it cut trade entirely off."[370]
"Before the rates were changed did you run to your full capacity?"
"Yes, sir; about that."[371]
At one stroke the independents lost the business which it had cost them years of work to get. As the testimony of witness after witness showed, the merchants who had been their customers in Chicago, Columbus, and other places, now had to send their orders to those for whose benefit the railroad men had raised the rates. This sweeping change was not due to any change in their desire to sell, or of their old customers to buy. They could still make oil which was still wanted. But they were the victims of a competitor who had learned the secret of a more royal road to business supremacy than making a better thing, or selling it at a better price. Their better way was not to excel but to exclude. When their "secretary" was called before the Ohio Legislature, after this freight ambuscade had transferred the bulk of the business of the independent refineries at Marietta to him and his associates, he declared that the sole cause of their success was the "large mechanical contrivances" of the combination, its "economy," and its production of the "very best oil." "With an aggregation of capital, and a business experience, and a hold upon the channels of trade such as we have, it is idle to say that the small manufacturer can compete with us; and although that is an offensive term, 'squeezing out,' yet it has never been done by the conjunction of any railroads with us."[372]
The small manufacturer did compete and flourish until these railroad men literally switched him out of the market. He competed and got his share of the business, until the men who wanted monopoly, finding that they had no monopoly of quality or price or business ability, resorted to the "large mechanical contrivance" of inducing the managers of the railroads to derail the independent, throwing him off the track by piling impassable freight tariffs in his way. The successful men secured their supremacy by preventing their competitors from entering the market at all. Instead of winning by "better" and "cheaper," they won by preventing any competitor from coming forward to test the questions of "better" and "cheaper." Their method of demonstrating superiority has been to prevent comparisons.
All the independent refiners at Marietta, except Rice, died. "Most of those we received from have gone out of the business," a Cincinnati dealer told the Legislature. Some had fled; some had sold out.[373]Rice set himself to do two things: the first, to drag into the light of day and the public view the secrets of these "better methods"; and the second, to get new business in the place of what he had lost. He succeeded in both. It was in January that he had notice served upon him that he could no longer go to market. In two months he had the Ohio Legislature at work investigating this extraordinary administration of the highways. This was a great public service. It did not yield the fruit of immediate reform, but itdid work which is the indispensable preliminary. It roused the people who were still asleep on these new issues, and were dreaming pleasant dreams that in George III. they had escaped from all tyrants forever, and that in the emancipation of the blacks they had freed all slaves forever.
Rice knew that the Legislature were planting trees for posterity, and did not wait for help from them. He set about looking up markets where the public were free to choose and buy. He could not go West or East or North. He went South. The little family kept the refinery at Marietta running, and the father travelled about establishing new agencies in the South, and studying freight tariffs, railroad routes, and terminal facilities for loading and unloading and storing. In 1880, through all the storm and stress of these days, he was able to double the capacity of his refinery. Again he succeeded in building up a livelihood, and again his success was treated as trespass and invasion. His bitter experience in Ohio in 1879 proved to be but an apprenticeship for a still sterner struggle. Rice was getting most of his crude oil from Pennsylvania, through a little pipe line which brought it to the Alleghany. The pipe line was taken up by the oil trust.[374]
This compelled him to turn to the Macksburg, Ohio, field for most of his petroleum. He had one tank-car, and he ran this back and forth faster than ever. Then came the next blow. The railroad over which he ran his tank-car doubled his freight to 35 cents a barrel, from 17½. That was not all. The same railroad brought oil to the combination's Marietta refineries at 10 cents a barrel, while they charged him 35. That was not all. The railroad paid over to the combination 25 cents out of every 35 cents he paid for freight. If he had done all the oil business at Marietta, and his rival had put out all its fires and let its works stand empty, it would still have made 25 cents a barrel on the whole output. Rice found a just judge when he took this thing into court. "Abhorrent," "dangerous," "gross," "illegal and inexcusable abuse by a public trust," "an unparalleled wrong," are the terms in which Judge Baxter gave voice to his indignation as he ordered the removal of the receiver of the railroad who had made this arrangement with the combination, to enable it, as the judge said, "to crush Rice and his business."[375]
In an interview, filling four columns of the New YorkWorldof March 29, 1890, the head of the trust which would receive this rebate is reported to have made this attempt to reverse the facts of this and similar occurrences: "The railroad company proposed to our agent," he said. But the judge who heard all the evidence and rendered the decision, which has never been reversed or impaired, declared that it "compelled" the railroad to make the arrangement, "under a threat of building a pipe line for the conveyance of its oils and withdrawing its patronage." This arrangement was negotiated by the same agent of the oil combination who engineered the similar "transfer" scheme by which the trunk-line railroads gave it, in 1878, 20 to 35 cents a barrel out of the freights paid by its competitors in Pennsylvania, as already told.[376]
"I reluctantly acquiesced," the receiver said, writing in confidence to his lawyer, anxious lest so acquiescing he had made himself legally liable. The interview describes the arrangement as an innocent thing: "A joint agreement for the transportation of oil." It was an agreement to prevent the transportation of oil by anybody else. Judge Baxter shows that it was a joint agreement, procured by threats, for the transportation of "$25 per day, clear money," from Rice's pockets into the pockets of the members of the trust for no service rendered, and without his knowledge or consent, and with the transparent purpose of transporting his business to their own refineries. Judge Baxter called it "discrimination so wanton and oppressive it could hardly have been accepted by an honest man, and a judge who would tolerate such awrong or retain a receiver capable of perpetrating it, ought to be impeached and degraded from his position."[377]
This matter was also passed upon by the Select Committee of the United States Senate on Interstate Commerce. "No comment," the committee say, "is needed upon this most impudent and outrageous proposition"—by the oil company to the railroad.[378]
"Are you going to deny that story?" a great American statesman of the latter-day type was asked by one of his friends.
"Not I," was the reply. "The story's false. When you find me taking the trouble to deny a thing, you can bet it's true!"
This "agreement for the transportation of oil" had its calculated effect. It put a stop to the transportation of oil from the Ohio field by Rice over the railroad, just as the destruction by the same hands of the pipe line to the Alleghany had cut him off from access to the Pennsylvania oil-fields. He then built his own pipe line to the Ohio field. To lay this pipe it was necessary to cross the pipe line of his great rival. Rice had the pluck to do this without asking for a consent which would never have been given. His intrepidity carried its point, for, as he foresaw, they dared not cut his pipe for fear of reprisals.
In turning to the South, after his expulsion from the Ohio and Western markets, the Marietta independent did but get out of one hornet's nest to sit down in another. His opponent was selling its oil there through a representative who, as he afterwards told Congress, "was very fortunate in competing." He thought it was "cheaper in the long-run to make the price cheap and be done with it, than to fritter away the time with a competitor in a little competition. I put theprice down to the bone."[379]Rice, in the South, ran into the embrace of this gentleman who had the "exclusive control" of that territory, and whose method of calling the attention of trespassers to his right was to cut them "to the bone." The people and the dealers everywhere in the South were glad to see Rice. He found a deep discontent among consumers and merchants alike. They perhaps felt more clearly than they knew that business feudalism was not better, but worse, because newer, than military feudalism. This representative of the combination assured Congress that "99.9 of all the first-class merchants of the South were in close sympathetical co-operation with us in our whole history"—that is, out of every hundred "first-class merchants" only one-tenth of one merchant was not with them. This is a picturesque percentage.
Rice's welcome among the people would not verify his opponent's estimate that his vassalage included all but one-tenth of one dealer in every hundred. From all parts came word of the anxiety of the merchants to escape from the power that held them fast. From Texas: "Most of our people are anxious to get clear." From Arkansas: "The merchants here would like to buy from some other." From Tennessee: "Can we make any permanent arrangement with you by which we can baffle such monopoly?" From Kentucky: "I dislike to submit to the unreasonable and arbitrary commands." From Mississippi: "It has gouged the people to such an extent that we wish to break it down and introduce some other oils." From Georgia, from different dealers: "They have the oil-dealers in this State so completely cooped in that they cannot move." "We are afraid."[380]As Rice went about the South selling oil the agents of the cutter "to the bone" would follow, and by threats, like those revealed in the correspondence described below, would coerce the dealers to repudiate their purchases. Telegrams would pour into the discouraged office at Marietta: "Don't ship oil ordered from your agent." "We hereby countermand orders given your agent yesterday." Onetelegram would often be signed by all the dealers in a town, though competitors, sometimes nearly a dozen of them, showing that they were united by some outside influence they had to obey.[381]
Where the dealers were found too independent to accept dictation, belligerent and tactical cuts in price were proclaimed, not to make oil cheap, but to prevent its becoming permanently cheaper through free competition and an open market. Rice submitted to Congress letters covering pages of the Trust Report,[382]showing how he had been tracked through Tennessee, Missouri, Nebraska, Georgia, Kansas, Kentucky, Iowa, Mississippi, Louisiana, Texas, Arkansas, Alabama. The railroads had been got to side-track and delay his cars, and the dealers terrorized into refusing to buy his oils, although they were cheaper. If the merchants in any place persisted in buying his oil they were undersold until they surrendered. When Rice was driven out prices were put back. So close was the watch kept of the battle by the generals of "co-operation" that when one of his agents got out of oil for a day or two, prices would be run up to bleed the public during the temporary opportunity. "On the strength of my not having any oil to-day," wrote one of Rice's dealers, "I am told they have popped up the price 3½ cents."[383]
The railroad officials did their best to make it true that "the poor ye have with you always." By mistake some oil meant for the combination was delivered to Rice's agent, and he discovered that it was paying only 88 cents a barrel, while he was charged $1.68, a difference of 80 cents a barrel for a distance of sixty-eight miles.
"Could you stand such competition as that?"
"No, sir. Before that I went up there and sold to every man in the place nearly. They were glad to see me in opposition.... I lost them, except one man who was so prejudiced that he would not buy from them."
"Your business had been on the increase up to that time?"
"Increasing rapidly.... I haul it in wagons now forty miles south of Manito."
"The rates against you on that railroad are so high that you can for a distance of forty miles transport your oil by wagon and meet the competition better than you can by using their own road?"
"Infinitely better."[384]
CHAPTER XVI
"TURN ANOTHER SCREW"
A spyat one end of an institution proves that there is a tyrant at the other. Modern liberty has put an end to the use of spies in its government only to see it reappear in its business.
Rice throughout the South was put under a surveillance which could hardly have been done better by Vidocq. One of the employés of the oil clique, having disclosed before the Interstate Commerce Commission that he knew to a barrel just how much Rice had shipped down the river to Memphis, was asked where he got the information. He got it from the agents who "attend to our business."
"What have they to do with looking after Mr. Rice's business?... How do your agents tell the number of barrels he shipped in April, May, and June?"
"See it arrive at the depot."
"How often do your agents go to the depot to make the examination?"
"They visit the depot once a day, not only for that purpose, but to look after the shipment of our own oil."
"Do they keep a record of Mr. Rice's shipments?"
"They send us word whenever they find that Mr. Rice has shipped a car-load of oil."
"What do their statements show with respect to Mr. Rice's shipments besides that?"
"They show the number of barrels received at any point shipped by Mr. Rice, or by anybody else."
"How often are these statements sent to the company?"
"Sent in monthly, I think."
"It is from a similar monthly report that you get the statement that in July, August, and September, Mr. Rice shipped 602 barrels of oil to Nashville, is it?"
"Yes, sir."
"Have you similar agents at all points of destination?"
"Yes, sir."[385]
This has a familiar look. It is the espionage of the South Improvement Company contract, in operation sixteen years after it was "buried." When the representative of the oil combination appears in public with tabulated statements exhibiting to a barrel the business done by its competitors for any month of any year, at any place, he tells us too plainly to be mistaken that the "partly-born," completely "buried" iniquity, sired by the "sympathetical co-operation" of the trustees and their railroad associates of easy virtue, is alive and kicking—kicking a breach in the very foundations of the republic.
A letter has found the light which was sent by the Louisville man who was so "fortunate in competing," immediately after he heard that one of "his" Nashville customers had received a shipment from the Marietta independent. It was addressed to the general freight agent of the Louisville and Nashville Railroad. It complained that this shipment, of which the writer knew the exact date, quantity, destination, and charges, "slipped through on the usual fifth-class rate." "Please turn another screw," the model merchant concluded. What it meant "to turn another screw" became quickly manifest. Not daring to give the true explanation, none of the people implicated have ever been able to make a plausible explanation of the meaning of this letter. The railroad man to whom it was sent interpreted it when examined by Congress as meaning that he should equalize rates. But Congress asked him:
"Is the commercial phrase for equalizing rates among railroad people 'turn another screw'?"
He had to reply, helplessly, "I do not think it is."
The sender before the same committee interpreted it as a request "to tighten up the machinery of their loose office."[386]Rice found out what the letter meant. "My rates were raised on that road over 50 per cent. in five days."
"Was it necessary to turn on more than one screw in that direction to put a stop to your business?"
"One was sufficient."[387]
The rates to the combination remained unchanged. For five years—to 1886—they did not vary a mill. After the screw had been turned on, he who suggested it wrote to the offending merchants at Nashville, that if they persisted in bringing in this outside oil he would not only cut down the price of oil, but would enter into competition on all other articles sold in their grocery. He italicized this sentence: "And certainly this competition will not be limited to coal-oil or any one article, and will not be limited to any one year."[388]"Your co-operation or your life," says he.
"Have you not frequently, as a shipper of oil, taken part in the competition with grocers and others in other business than oil, in order to force them to buy oil?"
"Almost invariably I did that always."[389]
"The expense and influence necessary for sustaining the market in this manner are altogether expended by us, and not by the representatives of outside oil," he further wrote. "Influence," as a fact of supply and demand, an element of price-making, is not mentioned in any political economy. And yet the "influence" by which certain men have got the highways shut to other shippers has made a mark as plain as the mountains of the moon on our civilization. "If we allow any one to operate in this manner," he continued, "in any one of our localities, it simply starts off others. And whatever trouble or expense it has given us in the past to prevent it we have found it to be, and still believe it to be, the only policy to pursue."[390]
They "are threatening," his Nashville agent, after the screw was turned, wrote Rice, "to ruin us in our business."[391]
The head of the Louisville "bone-cutters," when a witness before Congress during the trust investigation, stigmatized the action of his Nashville victims as "black-mail." They were "black-mailers" because they had sold a competitor's oil, and refused to continue to sell his own unless it was made as cheap or cheaper. Competition, when he practised it on others, was "sympathetical co-operation." Tried on him, it was "black-mail." "That man wanted us to pay him more than we paid the other jobbers"—i.e., he wanted them to meet the prices of competitors "because he thought we had the market sustained, and he could black-mail us into it. I bluffed him in language, and language is cheap."[392]The "language" that could produce an advance of freights of 50 per cent. in five days against a competitor was certainly "cheap" for the man whose rates remained unchanged, and who thereby absorbed his neighbor's vineyard. The inevitable result followed at last. Rice fought out the fight at Nashville seven years, from 1880 to 1887; then, defeated, he had to shut up his agency there. That was "evacuation day" at Nashville. It was among his oldest agencies, he told Congress, "and it was shut out entirely last year on account of the discriminations. I cannot get in there."[393]
State inspection of oil and municipal ordinances about storage have been other "screws" that have been turned to get rid of competition. City councils passed ordinances forbidding oil in barrels to be stored, while allowing oil in tanks, which is very much more dangerous, as the records of oil fires and explosions show conclusively. His New Orleans agent wrote Rice concerning the manœuvres of his pursuer: "He has been down here for some time, and has by his engineering, and in consequence of the city ordinances, cut me out of storage. As matters now stand, I would not be able to handle a single barrel of oil."[394]In Georgia the law was madeso that the charge to the oil combination shipping in tank-cars was only half what it was to others who shipped in barrels. The State inspector's charge for oil in tanks was made 25 cents a barrel; for oil in barrels it was 50 cents a barrel. But as if that was not advantage enough, the inspector inspected the tanks at about two-thirds of their actual capacity. If an independent refiner sent 100 barrels of oil into the State, he would have to pay $50 for inspection, while the oil combination sending in the same would pay but 25 cents a barrel, and that on only 66-2/3 barrels, or $16 in all. This difference is a large commercial profit of itself, and would alone enable the one who received it to sell without loss at a price that would cripple all others. In this State the chief inspector had the power to appoint inspectors for the towns. He would name them only for the larger places, where the combination had storage tanks. This prevented independent refiners from shipping directly to the smaller markets in barrels, as they could not be inspected there, and if not inspected could not be sold.[395]All these manœuvres of inspection helped to force the people to buy of only one dealer, to take what he supplied, and pay what he demanded. Why should an official appointed by the people, paid by them to protect them, thus use all his powers against them? Why?
"State whether you had not in your employ the State inspector of oil and gave him a salary," the Louisville representative of the combination was asked by Congress.
"Yes, sir."[396]
Throughout the country the people of the States have been influenced to pass inspection laws to protect themselves, as they supposed, from bad oil, with its danger of explosion. But these inspection laws prove generally to be special legislation in disguise, operating directly to deprive the people of the benefit of that competition which would be a self-acting inspection. They are useful only as an additional illustration of the extent to which government is being used as an activepartner by great business interests. Meanwhile any effort of the people to use their own forces through governments to better their condition, as by the ownership of municipal gas-works, street-railways, or national railroads and telegraphs, is sung to sleep with the lullaby about government best, government least.
This second campaign had been a formidable affair—a worse was to follow; but it did not overcome the independent of Marietta. With all these odds against him, he made his way. Expelled from one place and another, like Memphis and Nashville, he found markets elsewhere. This was because the Southern people gave him market support along with their moral support. Co-operation of father and son and daughter made oil cheaper than the "sympathetical co-operation" opposing them, with its high salaries, idle refineries, and dead-heads. Rice had to pay no dividends on "trust" stock capitalized for fifteen times the value of the property. He did not, like every one of the trustees, demand for himself an income of millions a year from the consumer. He found margin enough for survival, and even something more than survival, between the cost of production and the market price. "In 1886 we were increasing our business very largely. Our rates were low enough so that we could compete in the general Southern market."[397]
Upon this thrice-won prosperity fell now blow after blow from the same hand which had struck so heavily twice before. From 1886 to the present moment Rice and his family have been kept busier defending their right to live in business than in doing the business itself. Their old enemy has come at them for the third time, with every means of destruction that could be devised, from highway exclusion to attacks upon private character, given currency by all the powerful means at his command. The game of 1886 was that of 1879, but with many improvements gained from experience and progress of desire. His rates were doubled, sometimes almost tripled; in some cases as much as 333 per cent. Rates to his adversary were not raised at all. The raise was secret. Suspecting something wrong, he called on the railroad officer July 13th, and asked what rates were going to be. The latter replied that he "had not the list made out." But the next day he sent it in full to the combination. Rice could not get them until August 23d, six weeks later, and then not all of them. As in 1879 the new tariff was arranged at a conference with the favored shippers.[398]
This was the first gun of a concerted attack. Rice was soon under fire from all parts of the field. One road after another raised his rates until it seemed as if the entire Southern market would be closed to him. While this was in progress the new Interstate Commerce Law passed by Congress—in part through the efforts of Rice—to prevent just such misuse of the highways, went into effect. But this did not halt the railway managers. A month after it was passed the Senate Committee on Interstate Commerce was shown that discrimination was still going on, as it is still. At points as far apart as Louisville, New Orleans, Atlanta, St. Louis, and San Francisco switches were spiked against Rice, and the main lines barricaded of all the highways between the Ohio River, the Atlantic and Pacific oceans, and the Gulf of Mexico. In the face of the Interstate Commerce Act the roads raised his freights to points in Georgia, Alabama, Tennessee, Kentucky, Louisiana, and Mississippi in no case less than 29, and in some cases as high as 150, 168, and 212 per cent. more than was charged the oil combination. Where the latter would pay $100 freight, he, shipping the same amount to the same place, would sometimes pay $310—if he got it taken at all.[399]
The general freight agent of one of the roads, when before the Interstate Commerce Commission, denied this. When confronted with written proof of it he could only say, "It is simply an error."[400]
Rice shows that in some cases these discriminations made him pay four times as much freight, gallon for gallon, as themonopoly. The differences against him were so great that even the self-contained Interstate Commerce Commission has to call them "a vast discrepancy."[401]The power that pursued him manœuvred against him, as if it were one track, all the railroads from Pennsylvania to Florida, from Ohio to Lake Superior and the Pacific coast. "Through its representative the oil combination was called before the Interstate Commerce Commission to explain its relation to this 'vast discrepancy.'"
"Your company pays full rates?"
"Pays the rates that I understand are the rates for everybody."
"Pays what are known as open rates?"
"Open rates; yes, sir."[402]
That the increase of rates in 1886, like that of 1879, was made by the railroads against Rice, under the direction of his trade enemy, is confirmed by the unwilling testimony of the latter's representative before Congress. "I know I have been asked just informally by railroad men once or twice as to what answer they should make. They said, Here is a man—Rice, for instance—writing us that you are getting a lower rate." He was asked if he knew any reason, legal or moral, why the Louisville and Nashville Railroad should select his firm as the sole people in the United States. "No, sir," the witness replied; but then added, recovering himself, "I think they did because we were at the front."[403]The railroads bring the people they prefer "to the front," and then, because they are "at the front," make them the "sole people."
Rice did not sleep under this new assault. He went to the Attorney-General of Ohio, and had those of the railroads which were Ohio corporations brought to judgment before the Supreme Court of Ohio, which revoked their action, and could, if it chose, have forfeited their charters. The Supreme Court found that these railroads had charged "discriminatingrates," "strikingly excessive," which "tended to foster a monopoly," "actually excluded these competitors," "giving to the favored shippers absolute control."[404]Rice went to Cincinnati, to Louisville, to St. Louis, and Baltimore to see the officials of the railroads. He found that the roads to the South and West, which took his oil from the road which carried it out of Marietta, were willing to go back to the old rates if the connecting road would do so. But the general freight agent of that company would give him no satisfaction. He wrote, October 3d, to the president of the road over which he had done all his business for years. He got no answer. He wrote again October 11th, no answer; October 20th, no answer; November 14th, no answer. Rice had been paying this road nearly $10,000 a year for freight, sending all his oil over it. The road had used its rate-making power to hand over four-fifths of his business to another, but he has never been able to get so much as a formal acknowledgment of the receipt of his letters to the head of the road, asking that his petitions for restoration of his rights on the highway be considered. A part only of the letters and telegrams which he sent during these years—to get rates, to have his cars moved, to rectify unequal charges, to receive the same facilities and treatment others got—fill pages of close print in the Trust Report of the Congressional Committee of Manufactures of 1888.
"Your time is a good deal occupied with correspondence, is it not?"
"I should say so. If the rates had been more regular, I would not have had so much correspondence. It takes about all my time to look after rates."[405]
Driven off his direct road to market, Rice set to hunting other ways. The Baltimore and Ohio, he found, was, though very roundabout, the only avenue left by which he could get his oils into Southern markets. He began to negotiate withit immediately, but it was not until several months later—the middle of November—that he succeeded in closing arrangements. To get to Chattanooga, Tennessee, over this route his oil had to travel 1186 miles as against 582 miles by the roads which had been closed to him, and yet the rate was lower over the more than double distance. Again, he could send a barrel of oil 1213 miles by the Baltimore and Ohio to Birmingham, Alabama, for $1.22, while the roads he had been using put his rate up to $2.26, although their line to Birmingham was only 685 miles.
All the arrangements had been concluded to the mutual satisfaction of Rice and the Baltimore and Ohio Railroad. After this thorough discussion of four months, in which every point had been examined, Rice sends forward his first shipment December 1st. He is not a little elated to have blazed his way out of the trackless swamp in which he had been left by the other roads. His satisfaction is short enough. In about a fortnight—on December 15th—the then general freight agent of the Baltimore and Ohio telegraphed him that he could not be allowed to ship any more. "We will have to withdraw rates on oil to Southern points, as the various lines in interest"—the connections to which the Baltimore and Ohio delivered the oil for points beyond its own line, and which shared in the rates—"will not carry them out."
This was stunning. It nullified the labor of months which had been spent in opening a way out of this blockade. It put the cup of ruin again to the lips of the family at Marietta, innocent of all offence but that of trying to make a living out of the industry of their choice, and asking no favors, only the right to travel the public highway on equal terms, and to stand in the open markets. The excuse given was heavy-laden with inaccuracy. Rice immediately found out by wire that the Piedmont Air Line, one of the most important of the connections, had not refused to carry at the agreed rate. Its traffic manager telegraphed the Baltimore and Ohio people to reconsider their action, and continue taking Rice's oil. When asked first by Rice, and afterwards by Congress, toname the lines which refused, as he alleged, to carry out the rates he had agreed upon, the general freight agent of the Baltimore and Ohio could not give one. He escaped from Congress by promising to send its committee, "within a day or two," all the correspondence with these other companies. Once out of the committee-room, he never sent a scrap of paper to redeem his promise, and the whole matter was lost sight of by the committee.[406]
Rice, badly shattered, still sought and managed to find a few long-way-around routes. He presented to Congress in 1888 a table showing how he still managed to get to some of his markets. To Birmingham, Alabama—the direct route of 685 miles, as well as the Baltimore and Ohio, being closed to him—he shipped over seven different railroads forward and backward 1155 miles. The rates of all these roads added together made only $2.10 a barrel instead of $2.66, to which the shorter line had raised its price, for the purpose, as this comparison shows, not of getting revenue, but of cutting it off. To get into Nashville he had to go around 805 miles over five different lines instead of 502 miles, as usual, and still had a rate of $1.28 instead of $1.60.
From 1880, the moment he turned to the Southern field, after the destruction of his business in the West, everything that railroad men's ingenuity could do was done to prevent him from becoming a successful manufacturer who might increase the amount to be shipped, open new markets, and steady the trade by making it move by many minds of different views and reasons instead of by one. In order barely to live he was kept writing, telegraphing, travelling, protesting, begging, litigating, worrying, and agitating by press, prosecutions, private and public, and by State and national investigation. The ingenuity of the railroad officials in chasing him down was wonderful. Nothing was too small if it would hurt. Sometimes the railroad made through rates so high that it was cheaper for him to ship his oil along by shortstages, paying the local rates from place to place until it reached its destination. In this way he got a car from Cincinnati to Knoxville at the rate of 32 cents altogether, when, if it had been shipped at once all the way on the through rate, it would have cost 40 cents a hundred. The railroads have spent hundreds of thousands of dollars, used up armies of gifted counsel, and spoiled tons of white paper with ink to argue out their right to charge more for short hauls than long hauls; but when some traffic manager wants to crush one of his employer's customers, no short-haul long-haul consistency stands in his way.[407]It was not enough to fix his rates at double what others paid. All kinds of mistakes were made about his shipments. Again and again these mistakes were repeated; nor were they, the Interstate Commerce Commission shows, corrected when pointed out.[408]One of the stock excuses made by railroad managers for giving preferential rates to their favorites is that they are the "largest shippers," and, consequently, "entitled to a wholesale rate." But when Rice was the largest shipper, as he was at New Orleans, they forgot to give him the benefit of this "principle." When Rice wrote, asking if a lower rate was not being made, the railroad agent replied: "Let me repeat that the rates furnished you are just as low as furnished anybody else." "This lacks accuracy," is the comment of the Interstate Commerce Commission.
Wishing to know if the Louisville and Nashville would unite with other roads in making through rates to him, Rice asked the question of its freight agent. He replied: "I do not see that it is any of your business." "It was undoubtedly his business," the Interstate Commerce Commission says, sharply; "and his inquiry on the subject was not wanting either in civility or propriety." When Rice asked the same road for rates, the officials refused to give them to him, and persisted in their refusal.[409]Like Vanderbilt before the NewYork Legislative Committee, they seemed to think excuses to shippers were a substitute for transportation, and evidently thought they had done more than their duty in answering Rice's letters. But as the Commission dryly observes, their answers to Rice's letters did not relieve him of the injurious consequences. In attempting to explain these things to the Interstate Commerce Commission, the agent of the railroad said:
"If I have not made myself clear, I—"
"You have not," one of the Commission interrupted.[410]
The refusal to give Rice these rates was an "illegal refusal," the Commission decided; "the obligation to give the rates ... was plain and unquestionable." This general freight agent was summoned by Congress to tell whether or not lower rates had been made to the oil combination than to their competitors. He refused to produce the books and papers called for by the subpœna. He had been ordered by the vice-president of the road, he said, to refuse. He declined to answer the questions of the committee. Recalled, he finally admitted the truth: "We gave them lower rates in some instances."[411]
Rice took to the water whenever he could, as hunted animals do. The Ohio, Mississippi, Tennessee, Missouri were public highways that had not been made private property, with general agents or presidents to say "No" when asked permission to travel over them. He began to ship by river. The chairman of the Committee of Commerce rose in his seat in Congress to present favorably a bill to make it illegal to ship oil of less than 150 degrees fire-test on the passenger boats of inland waters. The reason ostentatiously given was public safety. But, as was at once pointed out in the press, the public safety required no such law. The test proposed was far above the requirement of safety. No State in its inspection laws stipulated for so high a test. Most of the States were satisfied with oil of 110 degrees fire-test; a few, like Ohio, went as high as 120 degrees. All but a very smallproportion of the oil sent to Europe was only 110 degrees fire-test. The steamboat men did not want the law, and were all against it. There was no demand from the travelling public for such legislation. General Warner, member of Congress, said, in opposing the bill: "Petroleum which will stand a fire-test of 110 degrees is safer than baled cotton or baled hay, and as safe as whiskey or turpentine to be carried on steamers. What is the object, then? There can be but one, and I may as well assert it here, although I make no imputation whatever upon the Committee of Commerce, or any member of it. It will put the whole carrying trade of refined petroleum into the hands of the railroads and under the control of ... a monopoly which has the whole carrying trade in the oil business on railroads, and they will make it as impossible for refiners to exist along the lakes and the Ohio River as it is impossible for them now to exist on any of the railroads of the country." Why the trust, though it was the greatest shipper, should seek to close up channels of cheapness like the waterways was plain enough. They were highways where privilege was impossible. With its competitors shut off the railroads by privilege, and off the rivers by law, it would be competition proof.
The United States authorities, too, moved against Rice, responsive to the same "pull" that made jumping-jacks for monopoly out of committees of commerce and railway kings. When the Mississippi River steamerU.P. Schenckarrived at Vicksburg with 56 barrels of independent oil, the United States marshal came on board to serve a process summoning the officers and owners to answer to the charge of an alleged violation of law. Several steamboats were similarly "libelled."
"We were threatened a great many times," the representative of the steamboat company told Congress.[412]The steamboat men were put to great expense and without proper cause. When the cases came to trial they were completely cleared in every instance. But the prosecution had done its workof harassing competition. The success of the campaign of 1879 in Ohio was now repeated over a wider field. The attack of 1886, "in a period of five months," Rice said before Congress, "shut up fourteen of my agencies out of twenty-four, and reduced the towns we had been selling in from seventy-three to thirty-four."[413]This was a loss in one year of 79 per cent., or about four-fifths of his business.