_A._ Yes, sir, the South Improvement Company had to enter into a contract, such substantially as I have furnished a draft of here, to give the producers the full benefit of everything connected with the contract before the contract itself could go into effect. _Q._ There are three principal interests connected with the oil trade? _A._ There are, the producers, refiners and transporters; no injustice could be done to either interest without affecting, injuriously, the others. The object of the railroads in this matter was to promote the interests of the trade in order to promote their own interests. By the Chairman. _Q._ You say there were three interests, producers, refiners and shippers? _A._ Yes, sir, connected with the trade. _Q._ And that the object of all these arrangements was to protect these three interests? _A._ To protect these three interests and incidentally, of course, protecting the general interest in doing that, for this is peculiarly an American traffic. _Q._ It was in the direction of increasing to each of these parties, respectively the benefits and profits of the business? _A._ Yes, sir, that each might receive a fair profit. The railroad companies had not been receiving cost for transportation, and it was to save them from loss, for they had been transporting at a loss during the whole of the year 1871. _Q._ Well, that is to increase profits, is it not? _A._ Yes, to save from loss. _Q._ Did it look to increasing in any way the benefits of cheapness to the consumer? _A._ Yes, sir. _Q._ How? _A._ By steadying the trade. You will notice what all those familiar with this trade know, that there are very rapid and excessive fluctuations in the oil market; that when these fluctuations take place the retail dealers are always quick to note a rise in price, but very slow to note a fall. Even if two dollars a barrel had been added to the price of oil, under a steady trade, I think the price of the retail purchaser would not have been increased. That increased price would only amount to one cent a quart, and I think the price would not have been increased to the retail dealer because the fluctuation would have been avoided. That was one object to be accomplished. Moreover, there is only one-sixth of the oil produced here consumed in this country—a very small proportion of the product. In discussing what compensating advantage would arise from an increase of price, the railroad companies considered, in the first place, that there was a very great compensation afforded by a steady trade. _Q._ Will you state to the committee how, with your mode of arriving at these conclusions, that cheapness to the consumer is promoted by stability in trade—how that arrangement which gave $1.50 a barrel to the South Improvement Company benefited either the railroad company or the producer?