A SUCCESSFUL "CORNER."
IT is not known what fertile and audacious mind first conceived the idea of the great "Combine," known as the Standard Oil Company. Perhaps, like Topsy, it " growed ;" the originator of the scheme may no more have foreseen than the merest outsider that it was destined to become the most successful " Corner " of the age, counting its gains by millions and enriching, beyond the dreams of avarice its organisers and promoters. The inner history of the Company has yet to be written ; but, thanks to sundry law-suits in which it has played a part, and the inquiry conducted by the New York Investigating Committee, the main incidents of its meteor-like course are a matter of public knowledge, and may be briefly narrated. Little more than fifteen years ago, the Standard Oil Com- pany was simply a petroleum refining corporation, with a capital of £200,000, at Cleveland, Ohio ; and as touching its objects and its organisation, identical with two or three score other similar concerns in the same locality. Nevertheless, between them and it there was an almost measureless difference. The other Companies were conducted by ordinary men of business on old-fashioned lines ; the Standard was managed by a man, perhaps by two men, of original views, great daring, and few scruples, for whom old-fashioned lines existed only to be despised. It was the difference between Bonaparte and the Austrian Generals who, after the first Italian campaign, complained that they had been beaten contrary to the rules of war.
The business of the Cleveland Companies was buying crude oil from the well-owners, refining it, selling it to dealers in local markets, and shipping it to foreign countries. Of these various operations, the last was the most onerous, the cost of pumping and treating petroleum, as compared with the cost of carrying it to the consumer, being a bagatelle. . Transport, therefore, was the main factor in the problem. All being on the same level in the matter of prime cost, the Company which could " handle " the refined article the most cheaply would naturally dis- tance its rivals. Now, at the time in question (1870-74), there were three Railway Companies at Cleveland, all eager for business, and all, as was supposed, charging the same rates. But the Standard Oil Company, in the person of Mr. Rockaffeller, its managing director and presiding genius, contrived to obtain from the Railway Companies a contract, in virtue of which the Standard got its oil carried for considerably less than any other refining Company. What were the inducements held out to the railway people has never been divulged. It is, however, easy to conjecture how an adroit gentleman with a strong personality and a persuasive tongue would go to work in such circumstances. He would play off one Company against the other. You help me and I will help you,' we can imagine him saying to each of them separately. Give me this advantage, and when, as I mean to do, I have absorbed all the other Refining Companies in the place, you shall have all the traffic.'
Be this as it may, the Standard did in a very short time swallow up or drive out of the field all competitors. Thanks to the unfair privileges which it enjoyed, the Standard, while making handsome profits for itself, could ruin, by underselling them, all who opposed it. In the end, all were glad to sell or lease their plants to the great monopolist, whose managers had the good sense to offer their rivals handsome terms as the alternative of a ruinous competition. The Standard, moreover, bought up the United Pipe Lines Company, which conveyed oil in pipes from the wells to the railways. And then the railway people found that, like Frankenstein, they had created a monster who was beyond their control. In possession of all the refineries and all the pipes, the " Corner " could now dictate its own terms. From a suppliant it had become a tyrant. The railways had to do its bidding. But the Pittsburgh refiners still stood out, and in order to escape the onerous transport rates demanded by the rail- ways, resolved to lay an independent pipe-line from the oil regions to their own works, to which end a special Coin- pany, the Columbia Conduit Company, was organised. If this project could have been carried out in its integrity, Pittsburgh, being nearer to the sea than Cleveland, would have become the chief refining centre of the country. By a law of the State, pipes could be laid through the oil region without a special Act, but outside that region a special Act would be necessary ; and a Bill conferring the necessary powers was introduced into the Legislative Assembly of Pennsylvania. In ordinary circumstances, the Bill would have passed as a matter of course ; but the Pennsylvania Railway and the Standard Oil Companies opposed it tooth and nail, and succeeded in " lobbying " it °it of the House. The rejection of the Bill did not, how- ever, prevent the Conduit Company from making private arrangements with landowners, and the pipe was even- tually laid. But for the carriage of their oil to the em, the Pittsburgh people were dependent on the Balti- more and Ohio Railway, and by threatening a war of tariffs, the other Companies, compelled thereto by the "Corner," coerced the Baltimore Company into joining the "ring," and charging the Pittsburgh refiners rates which rendered competition with the Standard impossible. The next pro- ceeding of the Standard was to lay a pipe of its own to Pittsburgh, and to do the very business which it had pre- vented others from doing ! It also bought up, or took into partnership, a number of refining firms in New York, Baltimore, and elsewhere, and eventually became, and still remains, the absolute master of the refining trade of the United States. The few surviving refiners who refused to bow the knee to Baal were crushed one by one, and every subsequent opponent has been either ruined or purchased. It keeps up an organisation which watches the entire trade. If the retail dealers of any particular town refuse to obey its behests, or attempt to obtain their supplies from other sources, tank-waggons are sent round to sell oil to private customers at wholesale rates. "With its power to control the retail trade," says the author of "The Railways and the Republic," "at one time checking shipments and glutting the market with crude oil, at another taking exactly the opposite course manipulating the foreign exchanges, and by the constant rebates through which it monopolises the export trade, the accumulation of wealth by the Standard has been unchecked." In 1873, its resources were reckoned at £200,000; in 1878, they had grown to six millions, and are now said to reach a total of nearly thirty millions. The two directors—who, if they did not actually create the Company, made it what it is—are believed to be worth between them forty-four millions of pounds sterling. And, strangely enough, this remarkable result has been achieved without increasing the cost of oil to the consumer. It is quite possible that had the Standard Oil Company never existed, petroleum might have been cheaper than it actually is. As a matter of fact, however, the price is considerably lower than it was before the Company began its operations. The principal sufferers have been the owners of wells, who are constrained to accept whatever price, not absolutely ruinous, the Standard people may think fit to offer them. On the other hand, the Standard people perceived from the first that it would pay them better to sell much at low prices than little at high prices. This was the sole motive of their moderation, for we may be quite sure that had they found it in their interest they would have squeezed the consumers as pitilessly as they squeeze the producers. For the rest, the success of the " Corner " is due quite as much to the peculiar organisation of American railways and the political system of the United States, as to the executive ability and Bismarckian audacity of the " cornerers." Had the Railway Companies which virtually created the Standard Company been justly con- ducted ; had certain State Legislatures not been venal— and it is the nature of State Legislatures to be venal—this portentous "combine," with its monopolising methods, could never have reached its present bad eminence, and become one of the greatest powers of the American Commonwealth.
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