That such was Mr. Rockefeller's argument is proved by abundant testimony from different individuals who suc cumbed to the pressure. Mr. Rockefeller's own brother, Frank Rockefeller, gave most definite evidence on this point in 1876 when he and others were trying to interest Congress in a law regulating interstate commerce.
"We had in Cleveland at one time about thirty establish ments, but the South Improvement Company was formed, and the Cleveland companies were told that if they didn't sell their property to them it would be valueless, that there was a combination of railroad and oil men, that they would buy all they could, and that all they didn't buy would be totally valueless, because they would be unable to compete with the South Improvement Company, and the result was that out of thirty there were only four or five that didn't sell." "From whom was that information received?" asked the examiner.
"From the officers of the Standard Oil Company. They made no bones about it at all. They said: 'If you don't sell your property to us it will be valueless, because we have got advantages with the railroads.'" "Have you heard those gentlemen say what you have stated?" Frank Rockefeller was asked.
"I have heard Rockefeller and Flagler say so," he answered.
W. H. Doane, whose evidence on the first rebates granted to the Cleveland trade we have already quoted, told the Con gressional committee which a few months after Mr. Rocke feller's great coup tried to find out what had happened in Cleveland: "The refineries are all bought up by the Standard Oil works; they were forced to sell; the railroads had put up the rates and it scared them. Men came to me and told me they could not continue their business; they became fright ened and disposed of their property." Mr. Doane's own business, that of a crude oil shipper, was entirely ruined, all of his customers but one having sold.
To this same committee Mr. Alexander, of Alexander, Sco field and Company, gave his reason for selling: Mr. Hewitt, the partner who Mr. Alexander says carried on the negotiations for the sale of the business, appeared before an investigating committee of the New York State Senate in 1879 and gave his recollections of what happened. According to his story the entire oil trade in Cleveland became paralysed when it became known that the South Improve ment Company had "grappled the entire transportation of oil from the West to the seaboard." Mr. Hewitt went to see the freight agents of the various roads ; he called on W. H. Vanderbilt, but from no one did he get any encouragement. Then he saw Peter H. Watson of the Lake Shore Railroad, the president of the company which was frightening the trade. "Watson was non-committal," said Mr. Hewitt. "I got no satisfaction except, 'You better sell—you better get clear— better sell out—no help for it.'" After a little time Mr. Hewitt concluded with his partners that there was indeed "no help for it," and he went to see Mr. Rockefeller, who offered him fifty cents on the dollar on the constructive account. The offer was accepted. There was nothing else to do, the firm seems to have concluded. When they came to transfer the property Mr. Rockefeller urged Mr. Hewitt to take stock in the new con cern. "He told me," said Mr. Hewitt, "that it would be suffi cient to take care of my family for all time, what I represented there, and asking for a reason, he made this expression, I remember: 'I have ways of making money that you know nothing of.'" A few of the refiners contested before surrendering. Among these was Robert Hanna, an uncle of Mark Hanna, of the firm of Hanna, Baslington and Company. Mr. Hanna had been refining since July, 1869. According to his own sworn state ment he had made money, fully sixty per cent. on his invest- . ment the first year, and after that thirty per cent. Some time in February, 1872, the Standard Oil Company asked an interview with him and his associates. They wanted to buy his works, they said. "But we don't want to sell," objected Mr. Hanna. "You can never make any more money, in my judg ment," said Mr. Rockefeller. "You can't compete with the Standard. We have all the large refineries now. If you refuse to sell, it will end in your being crushed." Hanna and Basling ton were not satisfied. They went to see Mr. Watson, president )f the South Improvement Company and an officer of the Lake Shore, and General Devereux, manager of the Lake Shore road. They were told that the Standard had special rates; that it was useless to try to compete with them. General
Devereux explained to the gentlemen that the privileges ;ranted the Standard were the legitimate and necessary advantage of the larger shipper over the smaller, and that if anna, Baslington and Company could give the road as large t quantity of oil as the Standard did, with the same regularity, hey could have the same rate. General Devereux says they `recognised the propriety" of his excuse. They certainly rec )gnised its authority. They say that they were satisfied they :ould no longer get rates to and from Cleveland which would liable them to live, and "reluctantly" sold out. It must have )een reluctantly, for they had paid $75,000 for their works, .nd had made thirty per cent. a year on an average on their nvestment, and the Standard appraiser allowed them $45,000. Truly and really less than one-half of what they were abso utely worth, with a fair and honest competition in the lines f transportation," said Mr. Hanna, eight years later, in an ffidavit.* Under the combined threat and persuasion of the Standard, rmed with the South Improvement Company scheme, almost le entire independent oil interest of ,Cleveland collapsed ) three months' time. Of the twenty-six refineries, at least iffnty-one sold out. From a capacity of probably not over ksoo barrels of crude a day, the Standard Oil Company rose in three months' time to one of io,000 barrels. By this manoeuvre it became master of over one-fifth of the refining capacity of the United States.* Its next individual competitor was Sone and Fleming, of New York, whose capacity was 1,7oo barrels. The Standard had a greater capacity than the entire Oil Creek Regions, greater than the combined New York refiners. The transaction by which it acquired this power was so stealthy that not even the best informed newspaper men of knew what went on. It had all been accom • plished in accordance with one of Mr. Rockefeller's chief business principles—"Silence is golden." While Mr. Rockefeller was working out the "good of the oil business" in Cleveland, his associates were busy at other points. Charles Lockhart in Pittsburg and W. G. Warden in Philadelphia were particularly active, though neither of them accomplished any such sweeping benefaction as Mr. Rocke feller had. It was now evident what the stockholders of the South Improvement Company meant when they assured the railroads that all the refiners were to go into the scheme, that, as Mr. Warden said, they "never had any other purpose in the matter!" A little more time and the great scheme would be an accomplished fact. And then there fell in its path two of those never-to-be-foreseen human elements which so often block great manoeuvres. The first was born of a man's anger. The man had learned of the scheme. He wanted to go into it, but the directors were suspicious of him. He had been concerned in speculative enterprises and in dealings with the Erie road which had injured these directors in other ways. They didn't want him to have any of the advantages of their great enterprise. When convinced that he could not share in the deal, he took his revenge by telling people in the Oil Re gions what was going on. At first the Oil Regions refused to believe, but in a few days another slip born of human weakness came in to prove the rumour true. The schedule of rates agreed upon by the South Improvement Company and the railroads had been sent to the freight agent of the Lake Shore Ran i road, but no order had been given to put them in force. The freight agent had a son on his death-bed. Distracted by his 'sorrow, he left his office in charge of subordinates, but neg lected to tell them that the new schedules on his desk were a secret compact, whose effectiveness depended upon their being held until all was complete. On February 26, the subor dinates, ignorant of the nature of the rates, put them into effect. The independent oil men heard with amazement that freight rates had been put up nearly ioo per cent. They needed no other proof of the truth of the rumours of conspiracy which were circulating. It now remained to be seen whether the Oil Regions would submit to the South Improvement Company as Cleveland had to the Standard Oil Company. Lt,o.
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