CHAPTER XVI

"TURN ANOTHER SCREW"

A spy at 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 manoeuvres 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 made so 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 manoeuvres 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 active partner 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 the monopoly. 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 manoeuvred 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 "discriminating rates," "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 with it 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, to name 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 short stages, 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 New York 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 subpoena. 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 small proportion 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 steamer _U.P. Schenck_ arrived 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 work of 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.