305 lines
16 KiB
Plaintext
305 lines
16 KiB
Plaintext
|
|
Conspiracy Nation -- Vol. 11 Num. 18
|
|
=======================================
|
|
("Quid coniuratio est?")
|
|
|
|
|
|
--------------------------------------------------------------------
|
|
|
|
THE OIL WAR OF 1872
|
|
===================
|
|
|
|
Most of the independent oil producers in the Oil Region of
|
|
west-central Pennsylvania were young, and they looked forward to
|
|
the years ahead. They believed they would solve problems such as
|
|
railroad discrimination. They would make their towns the most
|
|
beautiful in the world. There was nothing they did not hope and
|
|
dare.
|
|
|
|
But suddenly, at the very heyday of this confidence, a big hand
|
|
reached out from nobody knew where, to steal their conquest and
|
|
throttle their future. The suddenness and the wickedness of the
|
|
assault on their business stirred to the bottom their manhood and
|
|
their sense of fair play, and the whole region arose in a revolt
|
|
which is scarcely paralleled in the commercial history of the
|
|
United States.
|
|
|
|
In Cleveland, young John D. Rockefeller was also in the oil
|
|
business, as a refiner. Young Rockefeller was a ruthless
|
|
bargainer. Said one writer, "The only time I ever saw John
|
|
Rockefeller enthusiastic was when a report came in from the [Oil
|
|
Region] that his buyer had secured a cargo of oil at a figure
|
|
much below the market price. He bounded from his chair with a
|
|
shout of joy, danced up and down, hugged me, threw up his hat,
|
|
acted so like a madman that I have never forgotten it."
|
|
|
|
Gradually, Rockefeller's competitors began to suspect he was
|
|
somehow getting better shipping rates from the railroads than
|
|
they were. Because there was fierce competition between the
|
|
railroads at the time, other large oil shippers insisted on and
|
|
got their own special rates. But crafty John Rockefeller seemed
|
|
to be getting the best rates of all.
|
|
|
|
But the railroads were supposed to be COMMON CARRIERS, and had no
|
|
right to discriminate between patrons. The railroads had also,
|
|
as shown by Gustavus Myers in *History of the Great American
|
|
Fortunes*, been built largely at the public's expense; huge land
|
|
grants had been given to them under the premise that the
|
|
railroads would be a benefit to the people of the United States.
|
|
These land grants had not been merely narrow strips of land, but
|
|
vast acreages filled with timber and valuable minerals. The
|
|
railroad companies had already gulped down a vast fortune,
|
|
courtesy of the American people via Congressional give-aways.
|
|
|
|
Rockefeller had the advantage of a complete, far-flung
|
|
organization, even in those early days: buyers in the Oil
|
|
Region, an exporting agent in New York, refineries in Cleveland,
|
|
and transportation favoritism. Mr. Rockefeller should have been
|
|
satisfied in 1870. But Mr. Rockefeller was far from satisfied.
|
|
Those twenty-five Cleveland rivals of his -- how could he at once
|
|
and forever put them out of the game? He and his partners had
|
|
somehow conceived a great idea -- the advantages of COMBINATION.
|
|
What might they not do if they could buy out and absorb the big
|
|
refineries now competing with them in Cleveland? The Rockefeller
|
|
corporation, Standard Oil, began to sound out some of its
|
|
Cleveland rivals.
|
|
|
|
But there was still a problem: What about their rivals in the
|
|
Oil Region of Pennsylvania? They could ship to refineries on the
|
|
eastern sea-coast. And the Pennsylvania Railroad was helping
|
|
them; they shipped in volume and the railroad gave them a
|
|
discount.
|
|
|
|
Aligned with the Cleveland crowd were the Lake Shore and New York
|
|
Central Railroads. If the Oil Region won the developing
|
|
competition, these railroads would lose business.
|
|
|
|
All the competition was causing a problem for Rockefeller. The
|
|
price of refined oil was steadily falling. This was *good* for
|
|
the average American who bought the oil, but bad for these few
|
|
wheeler-dealers. Mr. Rockefeller and friends looked with dismay
|
|
on their decreasing profits.
|
|
|
|
In the fall of 1871, certain refiners brought to Rockefeller and
|
|
friends a scheme, the gist of which was to bring together
|
|
secretly a large enough body of refiners and shippers -- a SECRET
|
|
COMBINATION -- to persuade all the railroads handling oil to give
|
|
to the company formed special rebates on oil shipped, and
|
|
*drawbacks* (raised rates) on that of other people. If they
|
|
could get such rates it was evident that those outside of their
|
|
combination could not compete with them long and that *they*
|
|
would become, eventually, the dominant refiners. They could then
|
|
*limit* their output to actual demand, and so keep up prices.
|
|
|
|
The railroads went along with the deal so they could stop having
|
|
to cut each other's throats through their rate wars -- they would
|
|
stop competing among themselves, keep their rates high, and
|
|
thereby gouge the unsuspecting public. The railroads, it was
|
|
agreed, were to receive a regular amount of freight: the
|
|
Pennsylvania was to have 45 percent of the eastbound shipments,
|
|
the Erie and the Central each 27.5 percent; the westbound freight
|
|
was to be divided equally between them -- fixed rates, and
|
|
freedom from competition amongst themselves.
|
|
|
|
The first thing was to get a CHARTER -- *quietly*. At a meeting
|
|
held in Philadelphia in 1871 mention had been made that a certain
|
|
estate then in liquidation had a charter for sale which gave its
|
|
owners the right to carry on any kind of business in any country
|
|
and in any way. This charter was promptly purchased. The name
|
|
of the charter was the "South Improvement Company."
|
|
|
|
Under the threat of this SECRET COMBINE, known blandly as the
|
|
"South Improvement Company," almost the entire independent oil
|
|
interest of Cleveland collapsed. From a capacity of less than
|
|
1500 barrels of crude per day, the Standard Oil Company rose in
|
|
three months' time to over 10,000 barrels per day. It had become
|
|
master of more than one-fifth of the refining capacity of the
|
|
United States. Its next individual competitor was Sone and
|
|
Fleming, of New York, whose per day capacity was 1700 barrels.
|
|
The transaction by which Standard Oil acquired this power was so
|
|
stealthy that not even the best-informed newspaper men of
|
|
Cleveland knew what went on. It had all been accomplished in
|
|
accordance with one of Mr. Rockefeller's chief business
|
|
principles -- "Silence is golden."
|
|
|
|
But one man had not been let in on the deal with the "South
|
|
Improvement Company." He had been a past enemy of some of the
|
|
Erie Railroad directors. In revenge, that man began telling
|
|
people in the Oil Region what was going on. At first, people did
|
|
not believe the rumors. But when independent oil producers there
|
|
learned that their freight rates had suddenly gone up by nearly
|
|
100 percent, they believed. It was a conspiracy, and it worked
|
|
against them.
|
|
|
|
The rise in freight rates promised to ruin the Oil Region. On
|
|
the morning of February 26, 1872, the morning papers told how,
|
|
somehow, all members of the "South Improvement Company" were
|
|
exempted from the rise in freight rates. On every lip there was
|
|
but one word, and that was "conspiracy." In fury, crowded
|
|
meetings were held at Titusville, Pennsylvania and then at Oil
|
|
City, Pennsylvania. The temper was war-like; banners proclaimed,
|
|
"Down With the Conspirators!" A Petroleum Producers Union was
|
|
organized. It was agreed that no new oil wells would be started,
|
|
production would halt on Sundays, no oil was to be sold to anyone
|
|
belonging to the "South Improvement Company," the offending
|
|
railroads were to be boycotted, and *new* railroad lines would be
|
|
built and controlled by the Petroleum Producers Union. A
|
|
committee was sent to the U.S. Congress, demanding an
|
|
investigation on the ground that the "South Improvement" scheme
|
|
was an interference with trade. The whole body of Oil Region
|
|
producers became intent on destroying the "Monster," the "Forty
|
|
Thieves," the "Great Anaconda," as they called the mysterious
|
|
"South Improvement Company."
|
|
|
|
The sudden uprising of the Oil Regions against the "South
|
|
Improvement Company" did not alarm its members at first. The
|
|
excitement would die out, they told one another. All that they
|
|
needed was to keep quiet. But the excitement did not die out.
|
|
Instead, it became more intense and more wide-spread.
|
|
|
|
The stopping of the oil supply finally forced the "South
|
|
Improvement Company" to recognize the Producers Union. A
|
|
compromise was sought. But the producers responded that they
|
|
believed the "South Improvement Company" meant to monopolize the
|
|
oil business. A compromise would not be considered. Said the
|
|
Producers Union: We can no more negotiate with you than we could
|
|
sit down to negotiate with a burglar.
|
|
|
|
The Congressional Investigation into all this was NOT PUBLISHED
|
|
officially, and NO TRACE of its work can now be found in
|
|
Washington. But the Petroleum Producers Union published their
|
|
own report, called "A History of the Rise and Fall of the South
|
|
Improvement Company." This report contained the full testimony
|
|
taken by the Congressional Committee.
|
|
|
|
Nothing could have been more damaging than the publication of the
|
|
charter of the "South Improvement Company." The charter was
|
|
described by "South Improvement's" president, Peter H. Watson, as
|
|
"a sort of clothes-horse to hang a scheme upon." As a matter of
|
|
fact it was a clothes-horse big enough to hang the earth upon.
|
|
It granted powers practically unlimited.
|
|
|
|
When the course of this charter through the Pennsylvania
|
|
Legislature came to be traced, it was found to be devious and
|
|
uncertain. The company had been incorporated in 1871, and vested
|
|
with all the "powers, privileges, duties and obligations" of an
|
|
earlier company -- incorporated in April, 1870 -- the
|
|
Pennsylvania Company; both of them were children of that
|
|
interesting body known as the "Tom Scott Legislature." The act
|
|
incorporating the company was not published until after the oil
|
|
war; its sponsor was never known. The origin of the "South
|
|
Improvement Company" has always remained in darkness. It was one
|
|
of several "improvement" companies chartered in Pennsylvania at
|
|
about the same time, and enjoying the same commercial *carte
|
|
blanche*.
|
|
|
|
The chairman of the Congressional Committee declared in disgust
|
|
that the success of the members of the "South Improvement
|
|
Company" meant "the destruction of every refiner who refused for
|
|
any reason to join your company, or whom you did not care to have
|
|
in, and it put the producers entirely in your power. It would
|
|
make a monopoly such as no set of men are fit to handle."
|
|
|
|
The U.S. public became convinced that the Petroleum Producers
|
|
were right in their opposition. The newspapers (not then under
|
|
monopoly control themselves, as they are now; see *The Media
|
|
Monopoly* by Ben Bagdikian) were in sympathy with the people. It
|
|
was ROBBERY, cried newspapers throughout the U.S. Said the *New
|
|
York Tribune*, "Under the guise of assisting in the development
|
|
of oil-refining in Pittsburg and Cleveland, this corporation has
|
|
simply laid its hand upon the throat of the oil traffic..." And
|
|
if this could be done in the oil business, what was to prevent
|
|
its being done in any other industry? Why should not a company
|
|
be formed to control wheat or beef or iron or steel, as well as
|
|
oil? The "South Improvement Company," it was agreed, was a
|
|
menace to the free trade of the country.
|
|
|
|
It now began to be generally said, "This is a transportation
|
|
question." The sentiment against discrimination on account of
|
|
amount of freight or for any other reason had been strong in the
|
|
country since its beginning, and it now crystalized. Nothing was
|
|
more common than to hear on the passenger trains, within which
|
|
occurred the real public forum of the time, conversations
|
|
explaining that the railways derived their existence and power
|
|
from the people, that their charters were contracts with the
|
|
people, that a fundamental provision of these contracts was that
|
|
there should be no discrimination in favor of anyone, that such a
|
|
discrimination was a violation of charter, that therefore the
|
|
"South Improvement Company" -- the "clothes-horse to hang a
|
|
scheme upon" -- was founded on fraud, and the courts must
|
|
dissolve it if the railways did not abandon it.
|
|
|
|
But the railways (for public consumption) *did* CLAIM to abandon
|
|
the deal. Explained railroad king "Commodore" Vanderbilt: "I
|
|
told Billy (son, W.H. Vanderbilt) not to have anything to do with
|
|
that scheme." The Erie and the Atlantic and Great Western
|
|
railroads privately offered the Petroleum Producers Union a
|
|
special deal similar to that offered the "South Improvement
|
|
Company," but the reaction was shocked outrage. It had seemed
|
|
impossible to the railroad men that the oil producers really
|
|
meant what they said about no discrimination in rates. But the
|
|
Oil War of 1872 was an uprising against an injustice, and the
|
|
moral wrong of the thing had taken a deep hold of the Oil Region
|
|
and its people.
|
|
|
|
The railroads were finally obliged to consent to revoke the
|
|
special contracts and to make new ones providing that all
|
|
shipping of oil should be made on a fair and equitable basis. On
|
|
March 28, 1872, the railroads officially annulled their contracts
|
|
with the "South Improvement Company."
|
|
|
|
Now that the thing seemed settled, the question was, "Should we
|
|
let bygones be bygones?" Would the oil producers sell to the
|
|
Cleveland refiners? It happened that almost nothing could wipe
|
|
out the memory of the recent excitement and loss which the Oil
|
|
Region had suffered. No triumph could stifle suspicion. There
|
|
henceforth could be no trust in those who had devised a scheme
|
|
intended to rob the producers of their property. And it was the
|
|
Standard Oil Company of Cleveland which was at the bottom of the
|
|
business, and the "Mephistopheles of Standard Oil" was John D.
|
|
Rockefeller. All who sold to Rockefeller were called "traitors."
|
|
|
|
And "Mephistopheles" Rockefeller was, even then, busy plotting
|
|
his next move. The "South Improvement Company" would merely
|
|
"shift gears" and work under the charter of the Standard Oil
|
|
Company. Read a headline in the Cleveland Herald: "South
|
|
Improvement Company *alias* Standard Oil Company."
|
|
|
|
Even as the railroad people were *publicly* saying they would not
|
|
discriminate, *privately* they were giving Rockefeller the same
|
|
special deals as before. Rockefeller said to Vanderbilt, I can
|
|
make a contract to ship a great quantity of oil, every day, on
|
|
your railroad -- *BUT*, not unless you give me a concession. And
|
|
Mr. Vanderbilt made the concession *even while he was publicly
|
|
pretending otherwise.* Says Rockefeller to Vanderbilt (and
|
|
Vanderbilt nods, "yes"): "Remember: Silence (*omerta*) is
|
|
golden."
|
|
|
|
[Synopsis of *The History of the Standard Oil Company* by Ida
|
|
Tarbell]
|
|
|
|
+ + + + + + + + + + + + + + + + + + + + + +
|
|
|
|
For related stories, visit:
|
|
http://www.shout.net/~bigred/cn.html
|
|
http://feustel.mixi.net
|
|
|
|
-----------------------------------------------------------------
|
|
Views expressed do not necessarily reflect those
|
|
of Conspiracy Nation, nor of its Editor in Chief.
|
|
-----------------------------------------------------------------
|
|
I encourage distribution of "Conspiracy Nation."
|
|
-----------------------------------------------------------------
|
|
New mailing list: leave message in the old hollow tree stump.
|
|
-----------------------------------------------------------------
|
|
Want to know more about Whitewater, Oklahoma City bombing, etc?
|
|
(1) telnet prairienet.org (2) logon as "visitor" (3) go citcom
|
|
-----------------------------------------------------------------
|
|
Aperi os tuum muto, et causis omnium filiorum qui pertranseunt.
|
|
Aperi os tuum, decerne quod justum est, et judica inopem et
|
|
pauperem. -- Liber Proverbiorum XXXI: 8-9
|
|
|
|
|
|
|
|
|