Episode 11

Nor must we overlook the fact that the Standard group contained a large number of exceedingly able men."They are mighty smart men," said the despairing W.H.Vanderbilt, in 1879, when pressed to give his reasons for granting rebates to the Rockefeller group."I guess if you ever had to deal with them you would find that out." In Rockefeller the corporation possessed a man of tireless industry and unshakable determination.Nothing could turn him aside from the work to which he had put his hand.Public criticism and even denunciation, while he resented it as unjust and regarded it as the product of a general misunderstanding, never caused the leader of Standard Oil even momentarily to flinch.He was a man of one idea, and he worked at it day and night, taking no rest or recreation, skillfully turning to his purpose every little advantage that came his way.His associates--men like Flagler, Archbold, and Rogers--also had unusual talents, and together they built up the splendid organization that still exists.They exacted from their subordinates the last ounce of attention and energy and they rewarded generously everybody who served them well.They showed great judgment in establishing refineries at the most strategic points and in giving up localities, such as Boston and Portland, which were too far removed from their supplies.They established a marketing system which enabled them to bring their oil directly from their own refineries to the retailer, all in their own tank cars and tank wagons.They extended their markets in foreign countries, so that now the Standard sells the larger part of its products outside the United States.They established chemical research laboratories which devised new and inexpensive methods for refining the product and developed invaluable byproducts, such as paraffin, naphtha, vaseline, and lubricating oils.It is impossible to study the career of the Standard Oil Company without concluding that we have here an example of a supreme business intelligence working in a field which gave the widest possible scope of action.

A high quality of organization, however, does not completely explain the growth of this monopoly.The Standard Oil Company was the beneficiary of methods that have deservedly received great public opprobrium.Of these the one that stands forth most conspicuously is the railroad rebate.Those who have attempted to trace the very origin of the Rockefeller preeminence to railroad discrimination have not entirely succeeded.Only the most hazy evidence exists that the firm of Rockefeller, Andrews, and Flagler greatly profited from rebates.In fact, refined oil was not transported from Cleveland to the seaboard by railroad until 1870, the year that this firm dissolved; practically all of the product then went by way of the Great Lakes and the Erie Canal.

Possibly the Rockefeller firm did get occasional rebates on crude oil from the oil regions to the refineries, but so did their competitors.It is therefore not likely that such favors had great influence in making this single firm the most successful in the largest refining center.With the organization of the Standard Oil Company, however, rebates became a more important consideration.

The turning-point in the history of the oil industry came when the Rockefeller interests acquired the Cleveland refineries.The details concerning this act of generalship are fairly well known.

The South Improvement Company is a corporation that necessarily bulks large in the history of the Standard Oil.Mr.Rockefeller and his associates have always disclaimed the parentage of this organization.They assert--and their assertion is doubtless true--that the only responsible begetters were Thomas A.Scott, President of the Pennsylvania Railroad, and certain refineries in Pittsburgh and Philadelphia which, though they were afterwards absorbed by the Standard, were at that time their competitors.

These refiners and the Pennsylvania, over which the Standard Oil then was making no shipments, thus represented a group, composed of railroads and refiners, which was antagonistic to the Rockefeller interests.The South Improvement Company was an association of refiners with which the railroads, chiefly the Pennsylvania, the New York Central, and the Erie, made exclusive contracts for shipping oil.Under these contracts rates to the seaboard were to be generally raised, though the members of the South Improvement Company were to receive liberal rebates.The refiners of Cleveland and Pittsburgh were to get lower rates than the refiners located in the oil regions.But the clause in these contracts that caused the greatest amazement and indignation was one which gave the inside group rebates on every barrel of oil shipped by its competitors.