The heart of the railroad problem: The history of railway discrimination in the United States, the chief efforts at control and the remedies proposed, with hints from other countriesParsons, Frank
History
The heart of the railroad problem: The history of railway discrimination in the United States, the chief efforts at control and the remedies proposed, with hints from other countries
Parsons, Frank
Railroads -- Freight -- Rates -- United States; Railroads and state -- United States
Some of the worst discriminations of the early years were those
connected with the oil business.[22] In 1872 the Oil Combine (then
called the South Improvement Co.) secured a secret agreement from all
the railroads running into the oil regions, first, to double freight
rates on oil; second, not to charge the S. I. C. the increase; third, to
pay the S. I. C. the increase collected from all other shippers. The
rate to Cleveland was to be raised to 80 cents, except for the S. I. C.,
which continued to pay 40, and would receive 40 of the 80 paid by any
one else. The rate to Boston was raised to $3, and the S. I. C. would
receive $1.32 of it. The Combine was to have 40 cents to $1.32 a barrel
rebate not only on their own oil which constituted only one-tenth of the
business, but on all the oil their competitors shipped, so they would
get $9 in rebates for every dollar they paid in freight. The S. I. C.
were to receive an average of $1 a barrel on the 18,000 barrels produced
daily in the oil regions. The rates were raised as agreed, but the
excitement in the oil regions was so intense that mobs would have torn
up the tracks of the railways if Scott and Vanderbilt and the rest had
not telegraphed that the contracts were cancelled, and put the rates
back. But some of the contracts afterwards came into court, and had not
been cancelled at all. In 1874 the roads began gradually to carry out
the plan that had been stopped by popular excitement in 1872.
In 1874 the Oil Combine had on some lines 10 different transportation
advantages over its competitors, _i. e._, 49 cents direct rebate per
barrel of refined oil, 22 cents rebate on crude-oil pipeage, 8½ percent
of refined oil carried free (due to the method of calculating crude and
refined equivalents), 13 cents a barrel advantage through possession of
the railroad oil terminal facilities, 15 percent of by-products carried
free, a rate to New York 10 cents a barrel less than the published rate
on refined oil, and 15 cents on crude oil, exclusive use of tank cars,
underbilling of carload weights, twenty thousand lbs. often for cars
containing forty thousand or even sixty thousand lbs. of oil, or a lump
sum per car regardless of excess weight, and a mileage payment from the
railroads on the tank cars amounting in itself to a large rebate.
Nearly all the refineries of the oil region and of Pittsburg passed by
sale or lease into the hands of the Combine in 1874–5.
W. H. Vanderbilt, and other prominent railroad men were stockholders in
the Standard.
Frank Rockefeller, brother of John D., testified before a congressional
committee July 7, 1876, that he believed Tom Scott, W. H. Vanderbilt,
and other big railroad men shared in the oil rebates.
Public-domain text, read in full here on John Shaqi.
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