CHAPTER V

STRIKING OIL

It was an American idea to "strike oil." Those who knew it as the "slime" of Genesis, or used it to stick together the bricks of the Tower of Babel, or knelt to it in the fire temples, were content to take it as it rose, the easy gift of nature, oozing forth on brook or spring. But the American struck it.

The world, going into partial eclipse on account of the failing supply of whale oil, had its lamps all ready for the new light, and industries beyond number needed only an expansion of the supply.

De Witt Clinton, with the same genius that gave us the Erie Canal, suggested as early as 1814 the use of petroleum for light. Reichenbach, the great German chemist, predicted in 1830 that petroleum would yield an illuminating oil equal to the finest. Inventors and money-makers kept up close with scientific investigators in France, Great Britain, and America.

As early as 1845 the manufacture of coal-oil, both for light and other purposes, had become important in France. Selligue had made himself master of the secrets of petroleum. His name, says one of his chroniclers, "must forever remain inseparably connected with that of the manufacture of light from oil, and to his researches few have been able to add."[40]

The name of this genius and benefactor of humanity has remained almost unknown, except within a small scientific world. He was a member of the French Academy, and almost every year between 1834 and 1848 he came to it with some new discovery. On one occasion he reminds his associates that he holds a patent, granted in 1832, for making illuminating oil from coal, and declares that the business can be developed to any extent which commerce or the arts may require. By 1845 he had unlocked nearly every one of the hidden places in which this extraordinary product has stored its wonders. He found out how to make illuminating oil, illuminating gas, lubricating oil, colors, paraffine for candles, fertilizers, solvents for resin for painters, healing washes, chemicals. He had three refineries in operation in the Department Saône-et-Loire, as described in the report of a committee of the French Academy in 1840. He exhibited his oils in the London Exhibition of 1851, and twelve years before, in the Parisian Industrial Exhibition of 1839, he had crude and refined oils and paraffine to show. "Among the most important objects of the exhibition," said its German historian, Von Hermann, "if they can be prepared economically." This Selligue accomplished. Between 1837 and 1843 he refined more than 4,000,000 pounds of oil, and 50 per cent. of his product was good illuminating oil.

Before 1850, the Scotch had succeeded in getting petroleum, called shale oil, out of bituminous coal, had found how to refine it, and had perfected lamps in which it would burn. Joshua Merrill, the pioneer of oil refining in this country, with his partners, successfully refined petroleum at Waltham, Mass., where they established themselves in 1853. The American manufacturers were making kerosene as early as 1856 from Scotch coal,[41] imported at a cost of $20 to $25 a ton, and getting experts like Silliman to analyze petroleum, in the hope that somehow a supply of it might be got. By 1860 there were sixty-four of these manufactories in the United States. "A crowd of obscure inventors," says Felix Foucon, in the _Revue des Deux Mondes_, "with unremitting labors perfected the lamp--when it was premature to dream that illumination by mineral oil should become universal." All was ready, as the eminent English geologist, Binney, said, "for the start of the vast American petroleum trade." It was not a lack of knowledge, but a lack of petroleum, that hampered the American manufacturer before 1860.[42] The market, the capital, the consumer, the skilled labor, the inventions, and science were all waiting for "Colonel" Drake.

With Drake's success in "striking oil" came to an end the period, lasting thousands of years, of fire temples, sweep and bucket, Seneca oil; and came to an end, also, the Arcadian simplicity of the old times--old though so recent--in which Professor Silliman could say, "It is not monopolized by any one, but is carried away freely by all who care to collect it."

The oil age begins characteristically. As soon as Drake's well had made known its precious contents, horses began running, and telegrams flying, and money passing to get possession of the oil lands for the few who knew from those who did not know. The primitive days when "it was not monopolized by any one" were over. Thousands of derricks rose all over the territory, and oil scouts pushed with their compasses through the forests of the wilderness in all directions. Wells were bored all over Europe, as well as America, wherever traces of oil showed themselves, sometimes so close together that when one was pumped it would suck air from the other.

As soon as the petroleum began to flow out of the ground, refineries started up at every available place. They were built near the wells, as at Titusville and Oil City, and near the centres of transportation, such as Pittsburg and Buffalo, and near the points of export, as Philadelphia, Baltimore, New York. Numbers of little establishments appeared on the Jersey flats opposite New York.

There was plenty of oil for every one; at one time in 1862 it was only ten cents a barrel. The means of refining it had long before been found by science and were open to all; and even poor men building little stills could year by year add on to their works, increase their capital, and acquire the self-confidence and independence of successful men. The business was one of the most attractive possible to capital. "There is no handsomer business than this is," said one of the great merchants of New York. "You can buy the (crude) oil one week, and sell it the next week refined, and you can imagine the quantity of business that can be done." Men who understood the business, he said, "if they had not the capital could get all of the money they wanted."[43]

Whatever new processes and contrivances were needed the fertile American mind set about supplying. To carry the oil in bulk on the railroads tubs on flat cars were first used; but it was not long before the tub was made of iron instead of wood, and, laid on its side instead of bottom, became the tank of the cylinder car now so familiar.

The fluid which lubricates so many other things on their way through the world is easily made to slip itself along to market. General S.D. Karns was the author,[44] in 1860, of the first suggestion of a pipe line. He planned only for oil to run down hill. Then Hutchinson, the inventor of the Hutchinson rotary pump, saw that oil could be forced through by pressure, and the idea of the pipe line was complete. The first successful pipe line, put down by Samuel Van Syckel,[45] of Titusville, in 1865, from Pithole to Miller's Farm, four miles, has grown into a net-work of thousands of miles, running through the streets of towns, across fields and door-yards, under and over and beside roads, with trunk lines which extend from the oil regions to Pittsburg, Cleveland, Buffalo, Baltimore, New York, Williamsport, Chicago, and the Ohio River.

There was a free market for the oil as it came out of the wells and out of the refineries, and free competition between buyers and sellers, producers and consumers, manufacturers and traders. Industries auxiliary to the main ones flourished. Everywhere the scene was of expanding prosperity, with, of course, the inevitable percentage of ill-luck and miscalculation; but with the balance, on the whole, of such happy growth as freedom and the bounty of nature have always yielded when in partnership. The valleys of Pennsylvania changed into busy towns and oil fields. The highways were crowded, labor was well employed at good wages, new industries were starting up on all sides, and everything betokened the permanent creation of a new prosperity for the whole community, like that which came to California and the world with the discovery of gold.

But shadows of sunset began to creep over the field in its morning time, and the strange spectacle came of widespread ruin in an industry prospering by great leaps. Wherever men moved to discover oil lands, to dig wells, to build refineries or pipe lines, to buy and sell the oil, or to move it to market, a blight fell upon them.

The oil age began in 1860. As early as 1865 strange perturbations were felt, showing that some undiscovered body was pulling the others out of their regular orbits.

Before the panic of 1873--days of buoyant general prosperity, with no commercial revulsion for a cause--the citizens of this industry began to suffer a wholesale loss of property and business among the refineries in New York, Pittsburg, Cleveland, and elsewhere, the wells of the oil valleys, and the markets at home and abroad.

To the building of refineries succeeded the spectacle--a strange one for so new a business--of the abandonment and dismantling of refineries by the score. The market for oil, crude and refined, which had been a natural one, began to move erratically, by incalculable influences. It went down when it should have gone up according to all the known facts of the situation, and went up when it should have gone down. This sort of experience, defying ordinary calculations and virtues, made business men gamblers.

"We began speculating in the hope that there would be a change some time or other for the better," testified one who had gone into the business among the first, and with ample capital and expert skill.[46]

The fright among the people was proportionate to the work they had done and the value of what they were losing. Since the first well was sunk the wilderness had become a busy region, teeming with activity and endowed with wealth. In ten years the business had sprung up from nothing to a net product of 6,000,000 barrels of oil a year, using a capital of $200,000,000 and supporting a population of 60,000 people. The people were drilling one hundred new wells per month, at an average cost of $6000 each. They had devised the forms, and provided the financial institutions needed in a new business. They invented many new and ingenious mechanical contrivances. They had built up towns and cities, with schools, churches, lyceums, theatres, libraries, boards of trade. There were nine daily and eighteen weekly newspapers published in the region and supported by it. All this had been created in ten years, at a cost of untold millions in experiments and failures, and the more precious cost of sacrifice, suffering, toil, and life.

The ripe fruit of all this wonderful development the men of the oil country saw being snatched away from them.[47]

More than once during these lean years, as more than once later, the public alarm went to the verge of violent outbreak. This ruinous prosperity brought stolid Pennsylvania within sight of civil war in 1872, which was the principal subject before the Pennsylvania Legislature of that year, and forced Congress to make an official investigation.

The New York Legislature followed Congress and the Pennsylvania Legislature with an investigation in 1873.

"There was great popular excitement.... It raged like a violent fever," was the description it heard of the state of things in Pennsylvania.[48]

There were panics in oil speculation, bank failures, defalcations. Many committed suicide. Hundreds were driven into bankruptcy and insane asylums.

Where every one else failed, out of this havoc and social disorder one little group of half a dozen men were rising to the power and wealth which have become the marvel of the world. The first of them came tardily into the field about 1862. He started a little refinery in Cleveland, hundreds of miles from the oil wells. The sixty and more manufacturers who had been able to plant themselves before 1860, when they had to distil coal into petroleum before they could refine petroleum into kerosene, had been multiplied into hundreds by the arrival of petroleum ready made from below. Some of the richest and most successful business men of the country had preceded him and were flourishing.[49] He had been a book-keeper, and then a partner, in a very small country-produce store in Cleveland. As described by his counsel some years later, he was a "man of brains and energy without money." With him were his brother and an English mechanic. The mechanic was bought out later, as all the expert skill needed could be got for wages, which were cheaper than dividends.[50] Two or three years later another partner was added, who began life as "a clerk in a country store,"[51] and had been in salt and lumber in the West. A young man, who had been in the oil region only eleven years, and for two of the eleven had been errand-boy and book-keeper in a mixed oil and merchandise business,[52] a lawyer, a railroad man, a cotton broker, a farm laborer who had become refiner, were admitted at various times into the ruling coterie.

The revolution which revolved all the freemen of this industry down a vortex had no sooner begun than the public began to show its agitation through every organ. The spectacle of a few men at the centre of things, in offices rich with plate glass and velvet plush, singing a siren song which drew all their competitors to bankruptcy or insanity or other forms of "co-operation," did not progress, as it might have done a hundred years ago, unnoticed save by those who were the immediate sufferers. The new democracy began questioning the new wealth. Town meetings, organizations of trades and special interests, grand juries, committees of State legislatures and of the United States Senate and House of Representatives, the civil and criminal courts, have been in almost constant action and inquiry since and because.

It was before the Committee of Commerce of the National House of Representatives in 1872 that the first authentic evidence was obtained of the cause of the singular ruin which was overwhelming so fair a field. This investigation in 1872 was suppressed after it had gone a little way. Congress said, Investigate. Another power said, Don't investigate. But it was not stopped until the people had found out that they and the production, refining, and transportation of their oil--the whole oil industry, not alone of the valleys where the petroleum was found, but of the districts where it was manufactured, and the markets where it was bought and sold, and the ports from which it was shipped abroad--had been made the subject of a secret "contract"[53] between certain citizens. The high contracting parties to this treaty for the disposal of an industrial province were, on one side, all the great railroad companies, without whose services the oil, crude or refined, could not be moved to refineries, markets, or ports of shipment on river, lake, or ocean. On the other side was a body of thirteen men, "not one of whom lived in the oil regions, or was an owner of oil wells or oil lands," who had associated themselves for the control of the oil business under the winning name of the South Improvement Company.[54]

By this contract the railroads had agreed with this company of citizens as follows:

1. To double freight rates.

2. Not to charge them the increase.

3. To give them the increase collected from all competitors.

4. To make any other changes of rates necessary to guarantee their success in business.

5. To destroy their competitors by high freight rates.

6. To spy out the details of their competitors' business.

The increase in rates in some cases was to be more than double.[55] These higher rates were to be ostensibly charged to all shippers, including the thirteen members of the South Improvement Company; but that fraternity only did not have to pay them really. All, or nearly all, the increase it paid was to be paid back again--a "rebate."[56] The increase paid by every one else--"on all transported by other parties"--was not paid back. It was to be kept, but not by the railroads. These were to hand that, too, over to the South Improvement Company.

This secret arrangement made the actual rate of the South Improvement Company much lower--sometimes half, sometimes less than half, what all others paid. The railroad officials were not to collect these enhanced freight rates from the unsuspecting subjects of this "contract" to turn them into the treasury of the railroads. They were to give them over to the gentlemen who called themselves "South Improvement Company." The "principle" was that the railroad was not to get the benefit of the additional charge it made to the people. No matter how high the railroads put the rates to the community, not the railroads, but the Improvement Company, was to get the gain. The railroads bound themselves to charge every one else the highest nominal rates mentioned. "They shall not be less," was the stipulation. They might be more up to any point; but less they must not be.[57]

The rate for carrying petroleum to Cleveland to be refined was to be advanced, for instance, to 80 cents a barrel. When paid by the South Improvement Company, 40 cents of the 80 were to be refunded to it; when paid by any one else, the 40 cents were not merely not to be refunded, but to be paid over to his competitor, this aspiring self-improvement company.[58] The charge on refined oil to Boston was increased to $3.07; and, in the same way, the South Improvement Company was to get back a rebate of $1.32 on every barrel it sent to Boston, and on every barrel any one else sent. The South Improvement Company was to receive sums ranging from 40 cents to $1.32, and averaging a dollar a barrel on all shipments, whether made by itself or by others. This would give the company an income of a dollar a day on every one of the 18,000 barrels then being produced daily, whether its members drilled for it, or piped it, or stored it, or refined it, or not.

To pay money to the railroads for them to pay back was seen to be a waste of time, and it was agreed that the South Improvement Company for its members should deduct from the ostensible rate the amount to be refunded, and pay the railroads only the difference. Simplification could not go further. The South Improvement Company was not even to be put to the inconvenience of waiting for the railroads to collect and render to it the tribute exacted for its benefit from all the other shippers. It was given the right to figure out for its members what the tribute would amount to, and pay it to them out of the money they owed the railroads for freight, and then pay the railroad what was left, if there was any left.[59] The railroads agreed to supply them with all the information needed for thus figuring out the amount of this tribute, and to spy out for them besides other important details of their competitors' business. They agreed to make reports every day to the South Improvement Company of all the shipments by other persons, with full particulars as to how much was shipped, who shipped, and to whom, and so on.[60]

The detective agency thus established by the railroads to spy out the business of a whole trade was to send its reports "daily to the principal office" of the thirteen gentlemen. If the railroads, forgetting their obligations to the thirteen disciples, made any reduction in any manner to anybody else, the company, as soon as it was found out, could deduct the same amount from its secret rate.[61] If the open rate to the public went down, the secret rate was to go down as much. For the looks of things, it was stipulated that any one else who could furnish an equal amount of transportation should have the same rates;[62] but the possibility that any one should ever be able to furnish an equal amount of transportation was fully taken care of in another section clinching it all.

The railway managers, made kings of the road by the grant to them of the sovereign powers of the State, covenanted, in order to make their friends kings of light, that they would "maintain the business" of the South Improvement Company "against loss or injury by competition," so that it should be "a remunerative" and "a full and regular business," and pledged themselves to put the rates of freight up or down, as might be "necessary to overcome such competition."[63] Contracts to this effect, giving the South Improvement Company the sole right for five years to do business between the oil wells and the rest of the world, were made with it by the Erie, the New York Central, the Lake Shore and Michigan Southern, the Pennsylvania, the Atlantic and Great Western, and their connections, thus controlling the industry north, south, east, west, and abroad. The contracts in every case bound all the roads owned or leased by the railroads concerned.[64] The contracts were duly signed, sealed, and delivered. On the oil business of that year, as one of the members of the committee of Congress figured out from the testimony, the railroad managers could collect an increase of $7,500,000 in freights, of which they were to hand over to the South Improvement Company $6,000,000, and pay into the treasury of their employers--the railways--only $1,500,000.

The contract was signed for the New York Central and Hudson River Railroad by its vice-president, but this agreement to kill off a whole trade was too little or too usual to make any impression on his mind. When publicly interrogated about it he could not remember having seen or signed it.[65]

"The effect of this contract," the vice-president of the Erie Railway Company was asked, "would have been a complete monopoly in the oil-carrying trade?"

"Yes, sir; a complete monopoly."[66]

Of the thirteen members of the South Improvement Company which was to be given this "complete monopoly," ten were found later to be active members of the oil trust. They were then seeking that control of the light of the world which it has obtained. Among these ten were the president, vice-president, treasurer, secretary, and a majority of the directors of the oil trust into which the improvement company afterwards passed by transmigration. Any closer connection there could not be. One was the other.

The ablest and most painstaking investigation which has ever been had in this country into the management of the railroads found and officially reported to the same effect:

"The controlling spirits of both organizations being the same."[67]

The freight rates were raised as agreed and without notice. Rumors had been heard of what was coming. The public would not believe anything so incredible. But the oil regions were electrified by the news, February 26, that telegrams had been sent from railroad headquarters to their freight agents advising them of new rates, to take effect immediately, making the cost of shipping oil as much again as it had been. The popular excitement which broke out on the same day and "raged like a violent fever" became a national sensation. The Titusville _Morning Herald_ of March 20, 1872, announces that "the railroads to the oil regions have already put up their New York freight from $1.25 to $2.84, an advance of over one hundred per cent." Asked what reason the railroads gave for increasing their rates, a shipper said, "They gave no reason; they telegraphed the local roads to put up the rates immediately." This advance, the superintendents of the railroads told complaining shippers, had been made under the direction of the South Improvement Company, and they had been instructed to make their monthly collections of oil freights from that concern.

The evidence even seems to show that the South Improvement Company was so anxious for the dance of death to begin that it got the freight agents by personal influence to order the increased rates before the time agreed upon with the higher officials. Strenuous efforts were made to have the public believe that the contracts, though sealed, signed, delivered, and put into effect, as the advance in rates most practically demonstrated, had really not been put into effect. The quibbles with which the president of the South Improvement Company sought to give that impossible color to the affair before the committee of Congress drew upon him more than one stinging rebuke from the chairman of the committee.

"During your whole examination there has not been a direct answer given to a question." "I wish to say to you," said the chairman, "that such equivocation is unworthy of you."

The plea needs no answer, but if it did, the language of the railroad men themselves supplies one that cannot be bettered. To the representatives of the people, who had telegraphed them for information "at once, as the excitement is intense, and we fear violence and destruction of property," General McClellan, of the Atlantic and Great Western, replied that the contract was "cancelled;" President Clark, of the Lake Shore, that it was "formally abrogated and cancelled;" Chairman Homer Ramsdell, of the Erie, that it was "abrogated;" Vice-president Thomas Scott, of the Pennsylvania Railroad, that it was "terminated officially;"[68] Vice-president Vanderbilt, of the New York Central and Hudson River Railroad, that it was "cancelled with all the railroads."

Contracts that were not complete and in force would not need to be "cancelled" and "abrogated" and "terminated." These announcements were backed up by a telegram from the future head of the oil trust then incubating, in which he said of his company: "This company holds no contracts with the railroad companies."[69] But in 1879 its secretary, called upon by the Ohio Legislature to produce the contracts the company had with the railroads, showed, among others, one covering the very date of this denial in 1872.[70]

Before Congress the South Improvement Company sought to shelter themselves behind the plea that "their calculation was to get all the refineries in the country into the company. There was no difference made, as far as we were concerned, in favor of or against any refinery; they were all to come in alike."

How they "were all to be taken in" the contract itself showed. It bound the South Improvement Company "to expend large sums of money in the purchase of works for refining," and one of the reasons given by the railroads for making the contract was "to encourage the outlay." Upon what footing buyer and seller would meet in these purchases when the buyer had a secret arrangement like this with the owners of the sole way to and from wells, refineries, and markets, one does not need to be "a business man" to see. The would-be owners had a power to pry the property of the real owners out of their hands.

One of the Cleveland manufacturers who had sold was asked why he did so by the New York Legislature. They had been very prosperous, he said; their profits had been $30,000 to $45,000 a year; but their prosperity had come to a sudden stop.[71]

"From the time that it was well understood in the trade that the South Improvement Company had ... grappled the entire transportation of oil from the West to the seaboard ... we were all kind of paralyzed, perfectly paralyzed; we could not operate.... The South Improvement Company, or some one representing them, had a drawback of a dollar, sometimes seventy cents, sometimes more, sometimes less, and we were working against that difference."[72]

It was a difference, he said, which destroyed their business.

He went to the officials of the Erie and of the New York Central to try to get freight rates that would permit him to continue in business. "I got no satisfaction at all," he said; "I am too good a friend of yours," said the representative of the New York Central, "to advise you to have anything further to do with this oil trade."

"Do you pretend that you won't carry for me at as cheap a rate as you will carry for anybody else?"

"I am but human," the freight agent replied.

He saw the man who was then busily organizing the South Improvement Company. He was non-committal. "I got no satisfaction, except 'You better sell, you better get clear.' Kind of _sub rosa_: 'Better sell out, no help for it.'"

His firm was outside the charmed circle, and had to choose between selling and dying. Last of all, he had an interview with the president of the all-conquering oil company, in relation to the purchase of their works. "He was the only party that would buy. He offered me fifty cents on the dollar, on the construction account, and we sold out.... He made this expression, I remember: 'I have ways of making money that you know nothing of.'"

For the works, which were producing $30,000 to $45,000 a year profit, and which they considered worth $150,000, they received $65,000.

"Did you ascertain in the trade," he was asked, "what was the average rate that was paid for refineries?"

"That was about the figure.... Fifty cents on the dollar."

"It was that or nothing, was it not?"

"That or nothing."

The freight rates had been raised in February. This sale followed in three weeks.

"I would not have sold out," he told the Legislature, "if I could have got a fair show with the railways. My business, instead of being an enterprise to buy and sell, became degraded into running after the railways and getting an equal chance with others."[73]

"The only party that would buy" gave his explanation a few years later of the centralization of this business.

"Some time in the year 1872," he swore, "when the refining business of the city of Cleveland was in the hands of a number of small refiners, and was unproductive of profit,[74] it was deemed advisable by many of the persons engaged therein, for the sake of economy, to concentrate the business, and associate their joint capital therein. The state of the business was such at that time that it could not be retained profitably at the city of Cleveland, by reason of the fact that points nearer the oil regions were enjoying privileges not shared by refiners at Cleveland, and could produce refined oil at a much less rate than could be done at this point. It was a well-understood fact at that time among refiners that some arrangement would have to be made to economize and concentrate the business, or ruinous losses would not only occur to the refiners themselves, but ultimately Cleveland, as a point of refining oil, would have to be abandoned. At that time those most prominently engaged in the business here consulted together, and as a result thereof several of the refiners conveyed" to his company, then as always the centre of the centralization, "their refineries, and had the option, in pay therefor, to take stock" in this company, "at par, or to take cash." This company, he continued, "had no agency in creating this state of things which made that change in the refining business necessary at that time, but the same was the natural result of the trade, nor did it in the negotiations which followed use any undue or unfair means, but in all cases, to the general satisfaction of those whose refineries were acquired, the full value thereof, either in stock or cash, was paid as the parties preferred."[75]

The producers were not to fare any better than the refiners. The president of the South Improvement Company said to a representative of the oil regions substantially: "We want you producers to make out a correct statement of the average production of each well, and the exact cost per barrel to produce the oil. Then we propose to allow you a fair price for the oil."

Within forty-eight hours after the freight rates were raised, according to programme, "the entire business of the oil regions," the Titusville _Herald_, March 20, 1872, reported, "became paralyzed. Oil went down to a point seventy cents below the cost of production. The boring of new wells is suspended, existing wells were shut down. The business in Cleveland stopped almost altogether. Thousands of men were thrown out of work."

The people rose. Their uprising and its justification were described to the Pennsylvania Constitutional Convention of 1873 by a brilliant "anti-monopolist," "a rising lawyer" of Franklin, Venango Co. The principal subject to which he called the attention of his fellow-members was the South Improvement Company, and the light it threw on the problems of livelihood and liberty. Quoting the decision of the Pennsylvania Supreme Court in the Sanford case,[76] he said:

"That is the law in Pennsylvania to-day. But in spite of this decision, and in spite of the law, we well know that almost every railroad in this State has been in the habit, and is to-day in the habit, of granting special privileges to individuals, to companies in which the directors of such railroads are interested, to particular business, and to particular localities. We well know that it is their habit to break down certain localities, and build up others, to break down certain men in business and to build up others, to monopolize certain business themselves by means of the numerous corporations which they own and control, and all this in spite of the law, in defiance of the law.

"The South Improvement Company's scheme would give that corporation the monopoly of the entire oil business of this State, amounting to $20,000,000 a year. That corporation was created by the Pennsylvania Legislature along with at least twenty others, under the name of improvement companies, within a few years past, all of which corporations contain the names as original corporators of men who may be found in and about the office of the Pennsylvania Railroad Company, in Philadelphia, when not lobbying at Harrisburg. The railroads took but one of those charters which they got from the Legislature, and by means of that struck a deadly blow at one of the greatest interests of the State. Their scheme was contrary to law, but before the legal remedy could have been applied, the oil business would have lain prostrate at their feet, had it not been prevented by an uprising of the people, by the threatenings of a mob, if you please, by threatening to destroy property, and by actually commencing to destroy the property of the railroad company, and had the companies not cancelled the contract which Scott and Vanderbilt and others had entered into, I venture to say there would not have been one mile of railroad track left in the County of Venango--the people had come to that pitch of desperation.... Unless we can give the people a remedy for this evil of discriminations in freight, they will sooner or later take the remedy into their own hands."[77]

Soon after this attorney for the people was promoted from the poor pay of patriotism to a salary equal to that of the President of the United States, and to the place of counsel for the principal members of the combination, whose inwardness he had descried with such hawk-eye powers of vision. Later, as their counsel, he drafted the famous trust agreement of 1882.

The South Improvement Company was formed January 2d. The agreement with the railroads was evidently already worked out in its principal details, for the complicated contracts were formally signed, sealed, and delivered January 18th. The agreed increase of freights went into effect February 26th. The pacific insurrection of the people began with an impromptu mass-meeting at Titusville the next day, February 27th. Influential delegations, or committees, on transportation, legislation, conference with press, pipe lines, arresting of drilling, etc., were set to work by the organization thus spontaneously formed by the people. A complete embargo was placed on sales of oil at any price to the men who had made the hateful bargain with the railroads. The oil country was divided into sixteen districts, in each of which the producers elected a local committee, and over all these was an executive committee composed of representatives from the local committees--one from each. No oil was sold to be used within any district except to those buyers whom the local committee recommended; no oil was sold to be exported or refined outside the district, except to such buyers as the executive committee permitted. One cent a barrel was paid by each producer into a general fund for the expenses of the organization.

Steps were taken to form a company with a capital of $1,000,000, subscribed by the producers, to advance money, on the security of their oil, to those producers who did not want to sell.

Able lawyers were employed and sent with the committees to all the important capitals--Harrisburg, Washington, the offices of the railway companies. The flow of oil was checked, the activities of the oil world brought near a stop.

Monday, March 15th, by the influence of the Washington committee, a resolution was introduced into the House of Representatives by Representative Scofield, ordering an investigation of the South Improvement Company. Immediately upon this the frightened participants cancelled the contracts. By the 26th of March the representatives of the people had secured a pledge in writing from the five great railroads concerned of "perfect equality," and "no rebates, drawbacks, or other arrangements," in favor of any one thereafter. March 30th, Congress began the investigation which brought to light the evidence of the contracts, and meanwhile the committees on legislation and pipe lines were securing from the Pennsylvania Legislature the repeal of the South Improvement Company charter, and the passage of a "so-called" Free Pipe Line law, discovered afterwards to be worthless on account of amendments shrewdly inserted by the enemy.

It was an uprising of the people, passionate but intelligent and irresistible, if the virtue of the members held good. Until April 9th the non-intercourse policy was stiffly and successfully maintained. But by that time one man had been found among the people who was willing to betray the movement. This man, in consideration of an extra price, violating his producer's pledge, sold to some of those concerned in the South Improvement Company a large quantity of oil, as they at once took pains to let the people know. The seller hoped to ship it quietly, but, of course, the object in buying and paying this additional price was to have it shipped openly, and the members of the South Improvement Company insisted that it should be done so.[78]

This treachery had the effect planned. Every one became suspicious that his neighbor would be the next deserter, and would get the price he would like to have for himself. To prevent a stampede, the leaders called a mass-meeting. Reports were made to it of what had been done in Congress, the Legislature, and the other railway offices; the telegrams already referred to were read affirming the cancellation of the contracts. Amid manifestations of tumultuous approbation and delight the embargo on the sale of oil was declared raised.

"We do what we must," says Emerson, "and call it by the best name possible." The people, as every day since has shown, grasped the shell of victory to find within the kernel of defeat.

The committee of Congress noticed when the contracts were afterwards shown to it, that though they had been so widely declared to be "cancelled," they had not been cancelled, but were as fresh--seals, stamps, signatures and all--as the day they were made. This little circumstance is descriptive of the whole proceeding. Both parties to this scheme to give the use of the highways as a privilege to a few, and through this privilege to make the pursuit of livelihood a privilege, theirs exclusively--the railroad officials on one side, and their beneficiaries of the South Improvement Company on the other--were resolute in their determination to carry out their purpose. All that follows of this story is but the recital of the sleuth-like tenacity with which this trail of fabulous wealth has been followed.

The chorus of cancellation from the railroads came from those who had meant never to cancel, really. In their negotiations with the representatives of the people they had contested to the last the abandonment of the scheme. "Their friendliness" to it "was so apparent," the Committee of the Producers reported, "that we could expect little consideration at their hands,"[79] and the committee became satisfied that the railroads had made a new contract among themselves like that of the South Improvement Company, and to take its place. Its head frankly avowed before the Investigating Committee of Congress their intention of going ahead with the plan. "They are all convinced that, sooner or later, it will be necessary to organize upon the basis on which the South Improvement Company was organized, including both producers and refiners."

This conviction has been faithfully lived up to. Under the name of the South Improvement Company the arrangement was ostentatiously abandoned, because to persist in it meant civil war in the oil country as the rising young anti-monopolist lawyer pointed out in the Constitutional Convention. Mark Twain, in describing the labors of the missionaries in the Sandwich Islands, says they were so successful that the vices of the natives no longer exist in name--only in reality. As every page will show, this contract no longer exists in name--only in reality. In the oil world, and in every other important department of our industrial life--in food, fuel, shelter, clothing, transportation,[80] this contract, in its various new shapes, has been kept steadily at work gerrymandering the livelihoods of the people.

The men who had organized the South Improvement Company paid the public revolt the deference of denial, though not of desistance. The company had got a charter, organized under it, collected twenty per cent. of the subscription for stock, made contracts with the railroads, held meetings of the directors, who approved of the contracts and had received the benefits of the increase of freights made in pursuance of the agreement. This was shown by the testimony of its own officers.[81]

But "the company never did a dollar's worth of business," the Secretary of the Light of the World told Congress,[82] and "there was never the slightest connection between the South Improvement Company and the Standard Oil Company," the president of the latter and the principal member of both said in an interview in the New York _World_, of March 29, 1890. "The South Improvement Company died in embryo. It was never completely organized, and never did any business. It was partly born, died, and was buried in 1872," etc.

Still later, before a committee of the Legislature of New York, in 1888, he was asked about "the Southern Improvement Company."

"There was such a company?"

"I have heard of such a company."

"Were you not in it?"

"I was not."[83]

So help me God!

At almost the moment of this denial in New York, an associate in this and all his other kindred enterprises, asked before Congress who made up the South Improvement Company, named as among them the principal members of the great oil company, and most conspicuous of them all was the name of this denier.[84]

The efficiency with which this "partly born" innocent lived his little hour, "not doing a dollar's worth of business," was told in a summary phrase by one of the managers of the Pennsylvania Railroad, describing the condition of the oil business in 1873:[85]

"All other of our largest customers had failed."

When the people of the oil regions made peace after their uprising it was, as they say, with "full assurance from the Washington committee that the throwing off the restrictions from trade will not embarrass their investigation (by Congress), but that the Sub-Committee of Commerce will, nevertheless, continue, as the principle involved, and not this particular case alone, is the object of the investigation."[86]

The Committee of Commerce did not "continue." The principal witness, who had negotiated the contracts by which the railroads gave over the business of the oil regions to a few, refused in effect, beyond producing copies of the contract, to be a witness. Permission was given by the Committee of Congress during its first zeal to the Committee of Producers from Pennsylvania to copy the testimony as it was taken, but no official record of its discoveries exists. This transcript was published by the producers, and copies are possessed by a few fortunate collectors. The committee did not report, and in the archives of the national Capitol no scrap of the evidence taken is to be found. All has vanished into the bottomless darkness in which the monopoly of light loves to dwell.