The campaign was conducted along two main lines: first, to absorb other refining interests and secure control of that end of the business; and second, to obtain advantages of shipment not en joyed by rival operators, as a means of eliminating existing competition and of crushing rivals which might appear in the future. Both of these strug gles were carried on relentlessly and more or less simultaneously during the succeeding decade.
The first effort at expansion was directed toward the independent refineries situated in or about Cleveland, and, in the course of two years, prac tically all of them, to the number of a score or more, had been secured in one way or another. Having thus established themselves securely in their own region, the Standard operators were in a position to turn their attention toward certain outside localities. Plants were first acquired at New York, Philadelphia and Baltimore to afford a foothold in both seacoast markets and in foreign trade, where the consumption was increasing enor mously each year. The attack was then directed to the independent refiners scattered through the Pennsylvania oil regions and in three years the majority of them had been forced to surrender.
This policy followed everywhere, soon yielded to the Standard practically absolute control of the refining business. In 1870 the newly formed Stand ard corporation had represented not over five per cent of the total refining business. In 1878 the principal competitors had been so thoroughly elim inated that the Standard controlled about ninety five per cent of the business. Thus the first object, the domination of the refining business, had been successfully attained.
Various means had helped carry the process of absorption to such a satisfactory result. The larger concern had been able to adopt the many desirable innovations which small capital could not afford. Distinct advances in the methods of refining, per fected by long and costly experiments, made it possible to distill grades of oil previously of little value, to utilize products hitherto lost in the resid uum, and to make better products at less cost. Other economies were introduced by the Standard in the manufacture of their own barrels, cans for case oil, boxes, paint, glue, acid, and so on, all helping to lessen the cost of putting the refined oils on the market, in ways which were entirely be yond the reach of the small plant. Acquisition by
direct purchase or by consolidation, forcing their rivals to the wall by underselling and various other methods, were adopted to suit individual cases. The financial depression of 1873 also found the Standard well prepared to survive it, while many smaller concerns were quickly reduced to a con dition where absorption by the trust was inevi table. But the most important factor of all was undoubtedly found in the rebates and discrimina tions in freight rates which the Standard was able to secure from the railroads.
Cleveland was plainly a strategic point, as com pared with Pittsburg or the oil regions, for the purpose of securing favorable rates on oil ship ments. It was the happy possessor of two routes to the eastern markets and the seaboard : it had the New York Central Railroad and the water route by way of Lake Erie and the Erie Canal. At any time the refiners could easily ship by water if the railroad refused to give them satisfactory terms. The oil traffic was so important that the railroad, then struggling for existence, could not afford to let it go elsewhere and the Standard knew it. The result was obvious. This fact of competing rail and water transportation made it possible for the Standard to demand greater and greater conces sions from the railroad, and the latter, utterly helpless, was forced to yield. Such a condition, of course, became a tremendously powerful weapon in the campaign against competitors and greatly facilitated the process of absorption. The enjoy ment of freight rates a third or a half less than those paid by other operators made the Standard irresistible whenever it chose to crush independent interests and absorb them at its own price.
Why this particular group of refiners always secured the greatest concessions has always been a mystery. All the railroads at that time made a general practice of favoring large shippers to build up freight traffic, but how the Standard ever managed to wield such enormous power over the railroads is unexplainable. It extended in some cases even to demanding and securing rebates on all shipments made by their competitors, or liter ally compelling the railroad to pay the Standard for the privilege of carrying some one else's oil.