CHAPTER XII

UNFINISHED MARCH TO THE SEA

Between May and December, Sherman made his march from Lookout Mountain to the sea, cutting the Confederacy in two. For thirty years the people of Pennsylvania have been trying to break a free way to the ocean through the Alleghanies and the oil combination, and in vain. For ten years the hope of independent outlet to the sea from the oil-fields of Pennsylvania lay prostrate under the blow of the surrender of the Tidewater. Twice the people have tried again, only each time to be headed off. The first of these two rallies collapsed in the shut-down of 1887; the second was stopped at the cannon's mouth by an armed force at Hancock, New York, in the year of peace, 1892.

By 1887 the people of the oil regions had recovered from the shock of losing the independent Tidewater Pipe Line,[285] and began to make new plans for getting to the sea. By some means the committee to whom they had intrusted the management of the new enterprise was persuaded to go to New York to confer with the officers of the oil combination, who had measures of conciliation to propose that would make it unnecessary to build the new pipe lines. This committee, and finally the constituency it represented, were made to believe that the cause of the woes of the oil country was simply and only that there was too much oil--not that there were too many empty or half-filled lamps. They agreed to cut down their business one-half, and were lured away from the project of getting full prices on a full product. The outcome was the "shut-down" of 1887. The producers were persuaded it would bring back oil to a dollar a barrel--to stay there; but after a brief and unremunerative spurt in values, a reaction, lasting to the present, carried prices to a lower level than ever, and the producers found that the last state of those who let such spirits enter them is always worse than the first.

Several times before this the oil producers had tried to imitate the policy of scarcity, which the most brilliant business successes are teaching to be the royal road to wealth. It is stated by the report of the General Council of the Petroleum Producers' Union[286] that the producers had twice entered into arrangements with the oil combination to lessen the product and regulate the price of crude petroleum, and that in each case the arrangement had been violated by the latter when it seemed about to become profitable to the producer. Hence, when invited to confer for a third venture of this sort, the Council declined to do so. But in 1887 the invitation, extended for the fourth time, was a third time accepted. The producers succeeded in the restriction, but they did not better their condition. These men gave the world the spectacle of the producers flirting with the solitary and supreme buyer of their product, in the belief that he would help them to raise their price against himself.

The agreement which was made with the producers was shown before Congress.[287] The producers were bound for a year from November 1, 1887, "to produce at least 17,500 barrels of crude petroleum less per day," and to make it, if possible, "30,000 barrels less per day." In return for this the oil combination agreed to give the speculative profits on 6,000,000 barrels of oil--the profits on 5,000,000 for them, and on 1,000,000 for their laborers. This move of those who want petroleum cheap to make it dear is one of the equivocations of policy in which princes have always distinguished themselves. The need of the hour was to stop the building of the competing pipe line. That was accomplished by the scheme of the shut-down, which amused the producers, and, as subsequent prices proved, did not hurt the buyer of their oil; quite the contrary.

Drills and pumps at once ceased their operations throughout the oil regions. Working-men were thrown out of employment, stores were closed, hundreds of families had to subsist on charity. One of the Broadway producers who made this bargain for the shut-down admitted to the committee of the New York Legislature that "the oil-producing interest was abnormally depressed," and "that there was great distress."[288] The agreement itself recites that the price of petroleum had been during the preceding year "largely below the cost at which it was produced." The people of the oil country went to work with desperation to enforce the policy of oil famine. Committees were formed among the well-drillers in each district, "whose duty," the formal papers of organization stated, "shall be to keep a lookout for and endeavor to prevent the drilling of wells." "We have no way of stopping those who want to drill wells," one of the officers of the organization said, "only by good, reasonable talk." The Well-drillers' Union appointed and paid one of their members to reason with people who insisted upon digging wells. It is not necessary to question the good faith of the assurance their officials gave Congress that his duties did not require the use of nitro-glycerine. But, "unofficially," nitro-glycerine was freely used to enforce the shut-down. Men who failed to feel the influence of the "good talk," and went on putting up machinery, and drilling wells, would find their derricks blown into kindling-wood. Referring to one of these occurrences, a member of the Well-drillers' Union told Congress it was a case where no permission had been granted by the union to drill.

"Was the rig destroyed?" he was asked.

"The derrick was blowed up by some kind of compound."

The quantity of the "compound" was enough to shake windows six miles distant. The derrick and the machinery were "cheapened" into junk.

"Did you ever know of a case of any man's derrick and apparatus being blown up in the oil region before the formation of this association?" one of the shut-downers was asked.

"I could not say that I do."[289]

The owner of the apparatus destroyed, it was stated by the press, had been repeatedly requested to join the shut-down, but had refused. There were several such occurrences, recalling the affairs at the Buffalo refinery in 1885.[290] When the people in Pennsylvania saw apostles of the gospel of making oil cheap enter into a bargain with them to make it scarce, it is not surprising that they should have become bewildered to the point of thinking that the noise of nitro-glycerine was "good talk," and should have sunk into the depression, monetary and moral, that alone could make such haggard faces rise among an honest laborious people.

We have seen how the refiners who pass under the control of the trust are compelled to make monthly reports. The same perfectness of discipline appears at once among the producers in this shut-down. Every one of them had to make monthly reports of how much oil he had taken out of the earth. If the mobilization of industry goes on at the rate of recent years, it will not be long--not later, perhaps, than the end of the nineteenth century--before all producers, and all makers, will be sending monthly reports to New York of grain, cattle, iron, wool, lumber, leather, and the manufactures of them to trustees, whose "pleasure it is to try to make them"--the men as well as the commodities--"cheap." The supervision by means of these monthly reports was so close that over-production, however minute, was immediately known. If the owner of a well over-produced only the one-hundredth of a barrel, he got a notice to go slower.[291]

To the producers engaged in it the result of the shut-down was that when their representatives at the end of it called on the oil combination in New York for the profits on the 5,000,000 barrels of oil set apart for them, as agreed, they were given a check for a sum between $200,000 and $250,000.[292] This was divided among those who had co-operated--nearly one thousand--in proportion to their share in the good work of making the supply of the light of the people so much "less per day." The drama of industry has not many scenes more striking than this of these men--the principal producers of the oil country, which had yielded in the thirty years up to this time more than 300,000,000 barrels of oil--going to the great syndicate in New York to buy the privilege of restricting the production of their own wells, thankfully accepting the scanty profits on a speculative deal in the oil exchange of 5,000,000 barrels, receiving with emotions of enthusiasm a check for a couple of hundred thousand dollars for a year's "co-operation" from the men who had made out of their product hundreds of millions.

The shut-down was a great disappointment in prices. The average price of petroleum at the wells for October, the month before the shut-down, was 70-7/8 cents a barrel. The highest monthly price reached during the restriction was 93-5/8, in March, 1888. The average for October, 1888, the last month of the year originally agreed upon, was 90-5/8. By a subsequent understanding the restriction was continued until July, 1889. The price then was 95-1/8. At no time during the shut-down was the coveted dollar mark maintained, and it was barely touched in March, 1888, after which there was a sharp decline to 71-3/8 in June, with savage losses to "the lambs." High prices did not come until the accumulation of 6,000,000 barrels set aside "for the use" of the producers had been sold out. After that there were in the winter following--1889-90--a few months in which the price rose, as to $1.12-1/2 in November, 1889, but it sank the year following to 60-3/4 in December, 1890, and it continued to go down until crude oil reached 50 cents in October, 1892, the lowest point known since there was an oil market.[293]

The men with whom the producers made their bargain, shrewder than they, and versed in the dynamics of the markets, knew that the effect of setting apart 6,000,000 barrels of oil would be ultimately depressive to prices, not stimulating. Not knowing when or at what price this vast amount would be unloaded, buyers, both for use and for speculation, would be made timid, and prices would be held in check. The shut-down produced a great gambling mania. Untold millions were lost by men in the oil country, who gambled on the exchanges to make the profits of the expected advance. Local panics, bank failures, ruin in all its shapes, were the escort of shame and loss which marched with the shut-down. Curiously enough, it was those who speculated for the rise who were the losers. There was against them an element which knew better than they what prices were going to be, for it made them. It is this ability of insiders to bet on a certainty which has been the destruction of the oil exchanges. From Pittsburg to New York they are now practically all dead.

The amount of the reduction effected by the shut-down, independent of a natural decline which had set in some months before, has been estimated at 11,000,000 to 15,000,000 barrels. The production ran down from 25,798,000 barrels in 1886 to 21,478,883 in 1887, and 16,488,688 in 1888. In 1889 it was up to 21,487,435 again, and in 1890, 29,130,910.

The price of light advanced. When the negotiations were in progress the producers were told that if the flow of oil glutting the market could be stopped the price of refined could be advanced, and that for every eighth of a cent a gallon advance in it the producers could expect an advance of 4 cents a barrel on their crude oil. Refined advanced during the shut-down to a price to correspond to which the crude should have risen to 96 cents a barrel. Instead, its price fell to 78 cents. The committee went to New York "to protest." Their New York ally said there was no change in the markets of the world. That they could get the price for the refined, but they did not propose to hold up the price of the crude. "If we could not do that, they could not help it."

"He had refined to sell, and crude to buy?"

"Yes, sir."[294]

This shut-down, the New York _Tribune_ said, was "one of the most interesting economical experiments made in recent years." It was, as the New York _World_ said, "one of the largest restrictive movements ever attempted in commerce." The president of the trust, when examined on February 27, 1888, by the New York Legislature, as to the agreement for the shut-down, declared positively that nothing of the kind had been done.

"There has been no such agreement?" he was asked.

"Oh no, sir!... Oil has run freely all the time."

"And no attempt to do that?"

"No, sir."[295]

He afterwards recalled these denials, and excused himself on the ground that as he had been in Europe when the arrangement was made he had known of it only "incidentally."[296] A "shut-down" on facts is as necessary to the success of the schemes for scarcity as a shut-down in oil. There are too many facts, as well as too much oil.

"By advancing the price of the crude material you necessarily advance the price of the refined?" another of the combination was asked.

"Yes, sir."[297]

The average price of refined at New York for export was 6.75 cents a gallon in 1887. This rose to 7.50 in 1888, the highest average price for any year between 1885 and 1893.[298] The effect of the restriction--"one of the most extensive ever attempted in commerce"--was thus to make oil and light and all its other products scarcer and dearer. The producers really got no good. After the shut-down had been in progress five months, their committee issued an address congratulating them on the "glorious results" achieved in the fidelity with which the pledge of restriction had been kept, but continued, "But prices are not yet remunerative."[299]

"We do not seem to have gotten it," one of the producers said to Congress, referring to the assistance they expected in an advance of the price to profitable figures.[300] No lasting gain came to any one unless to the monopoly, and it is possibly too soon to tell whether its gain will be "lasting."

Part of the speculation was that the profits of 2,000,000 barrels, contributed equally by the combination and the producers, were to be distributed among the working-men affected by the loss of employment. Men who had been earning $12 a day received a dollar a day from this fund, and lay idle.[301] A blistering picture of the condition of the region is to be seen in the testimony of one of the producers.

"The payments that you have made, or that your assembly has made, have been to individuals?"

"Yes, sir."

"State what the character of the occupation of the individuals thus relieved was in relation to the shut-in."

"Pumpers and roustabout men who had families sick and impoverished. That was a source of relief to them, and we did not withhold it. It was in our community, and we thought we could well afford to allow them that."

"For what did you pay them?"

"For charity's sake."

"Did you give them any occupation?"

"We had it not to give; we gave them money instead."[302]

This was the melancholy end of the great shut-down. But the people were not broken by their new failure. They did not lie long in the cul-de-sac into which they had been trapped. There is a magnificent reserve force of public spirit and love of liberty in the province of William Penn and the chosen State of Benjamin Franklin. The oil business has been a thirty years' war. The people have been whipped until one would suppose defeat had become part of their daily routine, but there have always been enough good men who did not know they were beaten to begin fighting again early the next morning. It was so when the independents of Pennsylvania took the pool of the oil trust's pipe lines and the railroads before the Interstate Commerce Commission, only to reap the unexpected demonstration that the tribunal created by Congress to prevent and punish discrimination was but one more theatre for litigation and delay.[303] Leaving their cause on the floor of the Interstate Commerce Commission, these men went forth for the seventy and seventh time to build a pipe line of their own, on which they are now busy. Their numbers, resources, and hopes are less, but their will and courage are undiminished. To-day, in northwestern and western Pennsylvania this small, determined body of men are going forward with a new campaign in their gallant struggle for the control of their own business. Their efforts have been, a friendly observer says, not too warmly, as heroic and noble and self-sacrificing as the uprising of a nation for independence.

Of all this very little has been known outside the oil regions, for the reason that the newspapers there are mostly owned or controlled by the oil combination,[304] or fear its power. The last independent daily in northwestern Pennsylvania became neutral when the threat was made to place a rival in the field. With sympathy from but few of the home press, ridiculed by the "reptile" papers, and met at every turn by crushing opposition, and annoyances great and little from spies and condottieri, these men are, in 1894, working quietly and manfully to cut their way through to a free market and a right to live. Their new pipe line has been met with the same unrelenting, open, and covert warfare that made every previous march to the sea so weary. The railroads, the members of the oil combination, and every private interest these could influence have been united against them. As all through the history of the independent pipe lines, the officials of the railways have exhausted the possibilities of opposition. At Wilkes-barre, where a great net-work of tracks had to be got under, all the roads united to send seven lawyers into court to fight for injunctions against the single-handed counsel for the producers. They pleaded again the technicalities which had been invoked afresh at every crossing, although always brushed away by the judges, as they were here again. Though they have allowed their right of way to be used without charge for pipe lines which were to compete with them, the railroads refused to allow the independents to make a crossing, even though they had the legal right to cross. Not content with the champerty of collusive injunctions, they have resorted to physical force, and the pipe-layers of the independents have been confronted by hundreds of armed railroad employés. When they have dug trenches, the railroad men have filled them up as fast. Appeal to the courts has always given the right of way to the independents, but the tactics against them are renewed at every crossing because they cost them heart and money, and they have not the same unlimited supply of the latter as of the former. Their telegraph-poles have been cut down, lawyers and land-agents have been sent in advance of them to make leases of the farmers for a year or two of the land it was known they would want. For a few dollars earnest-money to bind the bargain, a great deal of land can be tied up in such ways. In some cases conditional offers would be made guaranteeing the owner five times as much as the independents would give, whatever that might be. Further to cripple them, a bill was introduced into the Pennsylvania Legislature and strongly pushed, repealing the law giving pipe-line companies the right of eminent domain.

The Erie, which has let the combination lay its pipe lines upon its right of way, and bore there for oil,[305] has been conspicuous in its efforts to prevent the new pipe line from getting through. The line at last reached Hancock, New York; there it had to pass under the Erie Railroad bridge in the bed of the river. The last Saturday night in November, 1892, the quiet of Hancock was disturbed by the arrival of one hundred armed men, railroad employés, by special train. They unlimbered a cannon, established a day and night patrol, built a beacon to be fired as an appeal for reinforcements, put up barracks, and left twenty men to go into winter quarters. Dynamite was part of their armament, and they were equipped with grappling-irons, cant-hooks, and other tools to pull the pipe up if laid. Cannon are a part of the regular equipment of the combination, as they are used to perforate tanks in which the oil takes fire. To let the "independents" know what they were to expect the cannon was fired at ten o'clock at night, with a report that shook the people and the windows for miles about. These opponents of competition were willing and ready to kill though their rights were dubious, and there could be no pretence that full satisfaction could not be got through the courts if any wrong was done.

For weeks Hancock remained in a state of armed occupation by a private military force. Referring to this demonstration with a private army at a moment of profound peace, the Buffalo _Express_ said of those responsible for it: "They continue to fight with their old weapons--incendiarism and riot." No case has been come across in which the railroads made any opposition in the courts to the oil trust crossing under their tracks with its pipe line. More than once the railroads have allowed this rival carrier to lay its pipes side by side with their rails.

"Now, is your pipe line to New York laid upon the right of way of any railroad?"

"It touches at times the Erie road, and crosses the Erie road."

"Did you pay anything for that to them?"

"No, sir."

"Nothing?"

"Nothing."[306]

But never have the railroads failed to compel an independent pipe line to fight through the courts for every crossing it needed. It has made no difference how often or emphatically the law has sustained the right of the people to make such crossings. The next attempt would be resisted on the same ground, and with the same desperate determination "to overcome competition" for the favorite. The local line laid by the independents in 1892 between Coraopolis and Titusville had to pass under the Erie, the Lake Shore, the Pan Handle, the Western New York, and the Pennsylvania railroads, and in every case had to encounter needless litigation to do so. It was victorious, for the roads did not dare go to trial, though the managers, one after the other, to help cripple competition, spent the money of the stockholders in what was perfectly well known to be a hopeless opposition. A correspondent of the Bradford _Record_ wrote: "When the news reached Bradford that the Erie Railroad had sold her independence to the combination, that the latter might defeat honorable competition and continue to rob the people, that one hundred men and a cannon confronted the United States Pipe Line at Hancock, who could have censured the outraged producers of Bradford for blowing the great Kinzua viaduct out of the Kinzua valley? Who could blame the bankrupt producers of the oil country for destroying every dollar's worth of the combination's property wherever found? The people are getting desperate; they are ready, like the blind Samson, to pull down the pillars of the temple, even though they themselves fall crushed to death amid the ruins." These are wild, even wicked words, but is it not a portent that such words rise out of the heart of an honest community?

This opposition, with show of force and threats of violence, was successful. In February, 1893, after months of facing the cannon and the private army which the railroad maintained for the oil combination, it was publicly announced by the president of the new pipe line that the route by Hancock must be abandoned. Many thousands of dollars and time worth even more were lost. "Suppose," said a daily paper of Binghamton, "that a body of laboring men had unlimbered a cannon and stationed armed men to suppress competition, what denunciation of the outrage there would have been!"

A new way through Wilkes-barre was chosen after the retreat from Hancock, and by that route the independent producers and refiners, with hope long deferred, are now seeking to finish their march to the sea.

The producers are poor men, and their resources for this unequal contest come from the sale of oil, and day by day the price of oil was depressed until it sank to the neighborhood of half a dollar a barrel. There has been some recovery since, but still the lowest prices of many years are being made, and the producers are finding the burden of their escape very heavy. "It is the honest belief of all oil men," says one of them, "that the low price of oil for the year is due to efforts to make the producer so poor that he cannot carry through his pipe line." This is the enterprise of the independent refiners as well as producers. Against these refiners, therefore, the market for refined oil also is manipulated. Very fantastic have been the operations of the "unchanging" laws of supply and demand under this manipulation. The independents found that in the export market of New York, in the spring of 1894, petroleum, just as it came from the pipe line crude from the nether earth, was quoted at a higher price a barrel than the same oil after it had gone through all the processes of refining and was aboard ship ready for the lamps of Europe or Asia.[307]

To throw another obstacle in the way of the new line, the oil trust in 1893 began again the game of 1878, of refusing to relieve producers of their oil with its pipe lines. As in 1878, the oil was left to run to waste. Then, the object was to compel the producers to sell it "always below the market";[308] now, it was to force them to sign a contract not to patronize any other pipe lines. Producers who refused to sign this contract, in order to be free to join the new line when it was finished, were refused an outlet, and they had to pump their oil on the ground while appealing to the courts to compel this common carrier to do its duty.[309] When they applied for a mandamus the combination receded from its position without waiting for a trial.

This has been a warfare on more than a new competitor; it is an attempt to suppress improvement and invention. A new idea in oil transportation, which promises a revolution in the industry, was hit upon by these independents. This was that pipe lines could be used to send refined oil long distances to market as well as crude. The announcement of their plans to do this was met with the ridicule of those who control the existing pipe lines to the seaboard and do not wish to see their old-fashioned methods of piping crude oil alone disturbed. But the independents went on with their idea. They have proved it practicable. Now, for the first time in the history of the oil industry, a pipe line transports oil ready for the lamp. Refined oil is piped from Titusville to Wilkes-barre with no loss of quality. Many hundred thousand barrels of it have been piped for nearly three hundred miles, and not a barrel has been rejected by the inspection, either at New York or its destination abroad. The success of the experiment proves that it can be piped to New York.

The independents press on. Occasionally one of them, says a local journal, unhinged by the loss of property, commits suicide or is taken to an insane asylum, and another goes down out of sight in bankruptcy, but the others close the ranks and go on, and now about 4000 men, in a strongly organized association, are marching side by side towards the sea--the blue and free.[310]