[In the case of the Standard Oil Company vs. William C. Scofield et al., in the Court of Common Pleas, Cuyahoga County, Ohio, 1880.]

John D. Rockefeller being duly sworn, says that for about eighteen years past he has been engaged in the business of refining crude petroleum; that from about the year 1863 to 1870 he was engaged as a member of firms in such refining, and from January, 1870, he has been and still is engaged in such refining business as president of said plaintiff, the Standard Oil Company; that during said time he has given the business personal attention and has thereby become familiar with the general business of refining crude petroleum, with the amount of crude petroleum produced, with the amount of crude petroleum refined, so far as the same can be ascertained, and especially with the business of the Standard Oil Company.

Affiant says the said Standard Oil Company owns and operates its refineries at Cleveland, Ohio, and its refinery at Bayonne, New Jersey; that it has no other refineries nor any interest in any other refineries, nor does the Standard Oil Company operate or control in the United States any other refineries of crude petroleum; that there are in Ohio, West Virginia, Pennsylvania, New York, and New Jersey a large number of refineries of crude petroleum that are not owned or controlled by said Standard Oil Company, and in which the said Standard Oil Company has no interest whatever, directly or indirectly, which are now and for years past have been refining crude petroleum and selling it in the open market; that the amount of crude petroleum refined by the said Standard Oil Company does not exceed thirty-three per cent. of the total amount refined in the United States.

Affiant further says that the capacity of all the refineries in the United States is more than sufficient to supply the markets of the world, and in the judgment of affiant if all the refineries were run to their full capacity they would refine at least twice as much oil as the markets of the world require; that this difference between the capacity of refineries and the demands of the market has existed for at least seven years past, and during that period the refineries of the Standard Oil Company have not been run to their full capacity, and in the judgment of affiant not to exceed one-half of their capacity.

Affiant further says that during all the period of time that he has been engaged in the business of refining oil he has been familiar with the price of crude oil and with the price of refined oil and with the profits to be derived therefrom, and from such experience he states that the average price of refined oil and the average profits to the manufacturer per gallon on same since 1876 have been much less than the average profit for several years previous to 1876; that said Standard Oil Company has no means now and never has had any of influencing the price of refined oil, save by the sale of its product in the open market.

Affiant further says that the Standard Oil Company has not nor did it ever have any interest in any oil property or any control over the production of crude petroleum; that it does not own any oil wells or land producing oil, and never did; nor has it any control over the price of crude petroleum, but relies upon obtaining its supplies, as all others do, by purchase in the open market and at the prices paid by others at the same time; that the said Standard Oil Company is not now nor has it ever been a stockholder in any railroad, pipe-line, or other common carrier for the transportation of oil, but within the year past it has for its own convenience constructed, and owns and is now operating, a pipe-line from Cleveland to the western line of the state of Pennsylvania for the purpose of bringing oil to its refineries at Cleveland; that said pipe-line is now insufficient to supply the demands of the Standard Oil Company for crude oil for its own refineries, and for that reason it has been and is now compelled to bring crude oil to Cleveland in cars to supply its wants.

That from the deponent’s experience in business he knows it to be true that a large manufacturer always has an advantage in cheapness of manufacture over a small manufacturer; that all the advantages derived by the Standard Oil Company are legitimate business advantages, due to the very large volume of supplies which it purchases, its long continuance in the business, the experience it has thereby acquired, the knowledge of all the avenues of trade, the skill of experienced employees, the possession and use of all the latest and most valuable mechanical improvements, appliances and processes for the distillation of crude oil, and in the manufacture of its own barrels, glue, etc., etc., by reason of which it is enabled to put the oil on the market at a cost of manufacture much less than by others not having equal advantages. These advantages, by reason of which the Standard Oil Company is enabled to refine oil cheaper than smaller manufacturers, are not exclusive to the Standard Oil Company, but are open to every person doing business under similar circumstances. That this state of facts has been detrimental to smaller refineries and has prevented them from making as much profit as they desired, and in some cases compelled them to suspend refining, and this constitutes the only foundation for the oft-repeated expressions “crushed out,” “squeezed out,” and “bulldozing.”

Affiant says he has examined the answer of the defendants, Shurmer and Teagle, and his attention has been called to various statements contained in it. In regard to the statement made therein that “if the business of the defendants were stopped as prayed for by plaintiff, it would result in a still higher price for refined oil and the establishment of a more perfect monopoly in the manufacture and sale of the same by plaintiff.” The same is untrue, as there is not, never has been, and never can be a monopoly in the manufacture of refined oil, nor has the limitation in said agreement as to quantity to be manufactured affected, nor will the stoppage by the defendants of their manufacture, as prayed for in plaintiff’s petition, in the least affect the price of refined oil, for the reason that leaving out the entire capacity of the refinery of defendants there would still remain a large excess of capacity for supplying all the demands of the public, and hence there would be no opportunity for advancing the price, nor would it tend to create a monopoly of the business by the plaintiff.

Affiant further says that it is not true that the said plaintiff has at any time or in any manner violated the terms of said agreement as alleged in said answer or in any other manner. That it is not true that plaintiff has intentionally or otherwise withheld from the defendants the benefit of the advantages agreed upon in said contract to be given them, nor is it true that the plaintiff has not given to defendants the benefit of its contracts relating to freight on crude and refined oil, but the plaintiff has given to the defendants privileges not required by the agreement. That it is not true that the defendants have ever been required to pay larger rates of freight than were paid by the plaintiff when the defendants made any shipments of oil in accordance with the terms of the contract; nor is it true that the plaintiff has not allowed to defendants the same rebates that it has received from different carriers upon any shipments of oil made in accordance with the terms of the contract.

That it is true that the plaintiff has recently constructed a pipe-line from Cleveland to the western line of the state of Pennsylvania, through which its oil has been pumped to Cleveland since the spring of 1880, but it is not true that it is the owner of the said pipe-line from the western line of the state of Pennsylvania to the Oil Regions. That it is true that to promote the interest of the defendants, the plaintiff has furnished to defendants crude oil through said pipe-line and charged them twenty cents per barrel for the transportation of same; but it is not true that said pipe-line was constructed for the purpose of transporting oil for others than the plaintiff, nor is it true that under the terms of said agreement the defendants are entitled to the transportation of oil through said pipe-line, nor is it true that the charge of twenty cents per barrel is an unreasonable price for transporting oil through said pipe-line from the Oil Regions to Cleveland; but affiant avers it to be true that during the time it so furnished the oil through the pipe-line at twenty cents per barrel, of forty-two gallons each, the railroads were charging freight at the rate of from thirty-five to fifty cents per barrel, of forty-five gallons each.

Plaintiff continued to deliver defendants through the pipe-line, and at twenty cents per barrel, until they had received all they were entitled to manufacture under the contract dated July 20, 1876.

Affiant says that it is not true that “at the time when said agreement was signed, said plaintiff was endeavouring by contracts with divers persons to establish a monopoly in the manufacture of refined oil in the state of Ohio and in the United States.” Affiant avers that it has made but one other contract with other persons like the one made with defendants, and that was a contract made at the same date, viz., July 20, 1876, with the Pioneer Oil Company of the City of Cleveland, of which the defendants had full knowledge. Affiant further says that he was present and participated in the negotiations which resulted in the formation of the contract with these defendants, and that it is not true that said contract was entered into for the purpose of monopolising the trade in refined oil or for the purpose of enhancing the price thereof and maintaining an unnaturally high price for the same; and affiant says that it is not true that plaintiff by said contract, and by the said other contract made with the same design, succeeded in creating a substantial monopoly and averting competition, and maintaining an unnaturally high price for refined oil; but said contract was made, as is therein stated, for the purpose of equalising the business of manufacturing oil and giving to each of said contracting parties their due proportion thereof, and that the amount of 85,000 barrels per annum to which the distillation of defendants is by said contract limited is, as agreed, a relative proportion to their full capacity, as is the amount distilled by plaintiff per annum since said contract was entered into to its total capacity for refining oil; and it is not true that said agreement is in restraint of trade and against public policy, as alleged in the said answer of defendants, Shurmer and Teagle. Affiant says that on or about the first day of October, 1879, it came to his knowledge that the defendants had, in violation of said agreement, distilled about 22,984 barrels of oil more than they were entitled to by the terms of said agreement, and thereupon he had an interview with defendants, W. C. Scofield and John Teagle, who admitted the defendants had distilled in excess of the quantity stipulated in the contract, and agreed to reduce the quantity distilled during the year following, July 20, 1879, by the amount they had already distilled in excess up to that date, but requested they might be allowed to distribute said reduction equally over each six months of the year instead of wholly in either the first or last six months of the year following July 20, 1879, to which request affiant assented.

Affiant says that it is not true that “the plaintiff, on the fourth day of March, 1880, with full knowledge of how much oil in excess of 85,000 barrels per year had been manufactured by defendants and plaintiff, demanded of said defendants that they should pay to plaintiff the entire profits upon said excess,” other than as is hereinafter stated; and it is not true that plaintiff, at the time it demanded said profits, claimed that it had any monopoly, or that its monopoly was so perfect that it would have sold said excess if defendants had not, or that it was entitled to said profits in consequence of any monopoly; but affiant says that it did claim the profits upon the oil sold in excess of said 85,000 barrels, because defendants had broken their agreement with said plaintiff, and the profits on such excess the plaintiff at that time was willing to accept as compensation for such breach of said contract.

Affiant says that he does not know what contracts for the sale of oil defendants may have made, or what contracts for the manufacture or for the construction of barrels they may have entered into, or what obligations they may be under to their customers; but he says that for a long time past the defendants have had notice that plaintiff would insist upon the performance by them of their obligations under their said contract, and that if they have entered into contracts for the sale of oil as alleged by them and entered into other obligations, they have done so with the full knowledge that they were thereby violating and continuing the violation of said agreement of July 20, 1876.

I have read the affidavit of H. L. Taylor, filed in this case October 18, 1880, in which he says “that he has been for some six or eight years last past acquainted with Mr. Rockefeller, Mr. Flagler, Mr. Payne, and others; that he has had conversations with some of these parties with regard to the control by the Standard Oil Company of the distilling and refining business in the state of Ohio and in the United States, and that he has heard them say in substance that the Standard Oil Company intended to wipe out all the refineries in the country except theirs, and to control the entire refining business in the United States.” Affiant says that he has been acquainted with H. L. Taylor for several years past, that all the foregoing statements so far as they relate to him are false, and that he never made to said Taylor or to any person in his hearing any such statement, nor statements in substance to that effect. Affiant further says that he never in company with said Taylor visited any of the cities or places mentioned in his affidavit for the purpose of inspecting or examining refineries, though he may have met said Taylor incidentally at various places, but that he never showed him refineries that were formerly under the control of others and running independently and stated that the same had passed under the control of the Standard Oil Company, nor did anybody else make such statements to Taylor in his hearing.

Affiant says that it has not come to pass, as sworn to by said Taylor, that said Standard Oil Company has “wiped out” the refining business of the United States or that it to-day controls it, but affiant believes that at the time said Taylor made his affidavit he knew there were very many refineries running independently of and in no way connected with the Standard Oil Company, and that said Taylor was himself then interested in the profits of a large refining business represented by a number of refiners who were large competitors of the Standard Oil Company.

With respect to the assertion of said Taylor that “in many instances to his knowledge the Standard Oil Company has bought refineries and taken them down,” affiant says that several years ago when the business was very much scattered, in several instances and for greater economy in manufacturing, the Standard Oil Company dismantled refineries unfavourably located and utilised the construction, machinery, and appliances of the same to increase its manufactory at Cleveland.

It is true that in many cases persons who had been unsuccessfully engaged in refining, but had experience, were to some extent employed by the Standard Oil Company in its business of refining, but that with respect to the averment in said Taylor’s affidavit that “in other cases said company employed men who had refineries, at large salaries and at the same time gave them no absolute employment,” the same is untrue. But it is true that it has restricted its employees from entering the business of refining and distilling oil except under said company’s direction.

But none of these things were done by the plaintiff for the purpose of creating and maintaining a monopoly of the business of refining, but were done for the purpose of conducting its business more efficiently.

And affiant says that it is not true, as sworn to by said Taylor, that the Standard Oil Company during a large portion of the time that he refers to, to wit, six or eight years past, or for any length of time, has substantially controlled the transportation of oil; that it is not true that said Standard Oil Company ever had, or that it now has, any contract with any lines of transportation in which it was stipulated that it should have a lower rate of freight than other shippers undertaking the same obligations and furnishing equal terminal facilities; that in all the contracts ever had with the railroads, the railroad companies have reserved the right to charge others the same rate of freight as that paid by the Standard Oil Company; and affiant further says that even those contracts with the railroad companies which gave the Standard Oil Company a commission for facilities furnished have long been abrogated and abandoned.

Affiant says that with respect to the statement in said Taylor’s affidavit that “other language has been used to him—said Taylor—by the officers of said Standard Oil Company to the effect that the said company intended to have all the refineries and aimed at having entire control of the oil market,” the same, so far as it related to him, is wholly untrue.

Affiant says that it is not true that the plaintiff got control of the refineries of the firm of Logan Brothers of Philadelphia, Octave Oil Company, Easterly and Davis, and Bennett, Warner and Company of Titusville, Pennsylvania; R. S. Waring and Citizens’ Oil Works of Pittsburg, or of either of them. The statement of H. L. Taylor that “the principal way by which these independent refineries came under the control of the Standard Oil Company was from the fact that said company had such rates of transportation that the small companies could not compete with it, and when said company had such in its power it would make such arrangements with parties engaged in these refineries as would prevent them from thereafter competing with the Standard Oil Company,” is false in its facts and its inferences. Affiant has already correctly stated the facts as to the purchase of refineries by the Standard Oil Company of Cleveland, what led to such purchases, and that persons engaged in such refineries were in some cases employed by said company; and any statement or inference to the effect that by illegal means or unfair influences the plaintiff “squeezed out” or “crushed out” small refiners and prevented them from again entering into the business of refining, is untrue.

Affiant further responding to the affidavit of said Taylor, says that with reference to the statement therein contained that “the effect of the control of the refining business by the Standard Oil Company upon the oil market is to largely increase the price to consumers beyond what they ought to pay,” the same is untrue, and he avers again that since the date of the contract with defendants the average price to consumers of refined oil has been lower than for years previous.

As to the allegation of said Taylor that “if the business was distributed among the independent refineries it would furnish employment to a much larger number of persons than at present, and the interests of the country would be decidedly promoted by having the refining business in the hands of competent parties,” in so far as the same implies that there are not independent competing refineries outside of the works of said plaintiff, the same is untrue, and that it is a fact that a larger number of persons are now employed in connection with the business of refining oil than ever before.

Affiant says that with reference to the language used by the said Heisel in his affidavit that he, Heisel, was not afraid, to which Mr. Rockefeller replied, “You may not be afraid to have your head cut off, but your body will suffer,” “and that this was said by affiant prior to the time that he sold his interest in the refining business to Bishop and was said for the purpose of inducing affiant to sell out to the Standard Oil Company,” that affiant has no recollection of ever using any such language to said Heisel, and so far as said statement implies threats or inducements held out to said Heisel to procure the control of the works of Bishop and Heisel by the Standard Oil Company, the same is wholly false in spirit and effect.

Affiant says respecting the statement in said Heisel’s affidavit, that “the effect resulting from the control by this one company—the Standard Oil Company—of the entire refining business in Cleveland has been to largely increase the price of refined oil to consumers, to lessen its production, to reduce the number of hands employed in the refining business, and to reduce the price paid labourers for their work, and thereby to largely injure the public,” the same, so far as it alleges that there is a control by the Standard Oil Company of the entire refining business, is false; and that so far as it undertakes to state consequences of said alleged control by the Standard Oil Company, it is also false.

I have read the affidavit of Mrs. B. filed in this case on October 18, 1880. Said affidavit is incorrect, erroneous and in many respects false.

The first interview that I ever had with Mrs. B. was at her house, when she sent for Mr. Flagler and myself to consult with her in reference to selling out her establishment to one of her employees. This occurred during the year 1876. She stated to us the terms of an offer that she had received from the said employee, and expressed an earnest desire to dispose of the business and to be free from its perplexities and annoyances, and evinced a disposition to accept the offer, and we advised her to accept providing the payments were made secure. I did not see her again until the fall of 1878, more than two years later. Then at her urgent request I met her at her house, at which time she made reference to the conversation she had had with Mr. Jennings, and desired me to pursue negotiations with her with reference to the sale of her property, which I positively declined, stating to her that I knew nothing about her business or the mechanical appliances used in the same, and that I could not pursue any negotiations with her with reference to the same, but that if, after reflection, she yet desired to do so, some of our people familiar with the lubricating oil business would take up the question with her. She was very desirous to begin negotiations, but I declined to negotiate and advised her not to take any hasty action, as from her own statements there was no such change in the condition of the business as to discourage the expectation that she could do as well in the future as she had in the past. When she responded expressing her fears about the future of the business, stating that she could not get cars to transport sufficient oil, and other similar remarks, I stated to her that though we were using our cars and required them in our own business, yet we would loan her any number she required or do anything else in reason to assist her, and I saw no reason why she could not prosecute her business just as successfully in the future as in the past. This is the last interview I had with her.

Affiant thinks it is true that Mrs. B. stated in the course of the conversation in substance that “the B. Oil Company was entirely in the power of the Standard Oil Company, and that all she could do would be to appeal to affiant’s honour as a gentleman and to his sympathy to do with her the best that he could do.” To the statement that she was in the power of the Standard Oil Company, affiant made a positive denial, and stated to her there was no foundation for the fears she expressed, and in this connection made the offer to her to furnish her with cars. He cannot remember what was said by Mrs. B. at this interview in relation to an agreement upon the part of the Standard Oil Company not to touch the lubricating branch of the trade. It is true that the Standard Oil Company had a contract with the B. Oil Company, made early in 1873, terminable on sixty days’ notice by either party, in reference to carbon oil only—which contract had been voluntarily assumed by the B. Oil Company—and it was entirely optional with the said B. Oil Company to discontinue said contract upon a notice of sixty days and thereby relieve itself from its obligations if it so desired; but said contract was continued in full force and effect up to the time of the sale by Mrs. B. of her interest in said B. Oil Company; but the Standard Oil Company had no contract with B. Oil Company by which it “agreed not to touch the lubricating branch of the trade,” nor did it have any contract with the said B. Oil Company having reference in any particular to the lubricating oil business, nor did affiant have any such contract. While affiant declined to enter into a negotiation with the said Mrs. B., it may be true that during the interview alluded to he said to her that in case a sale were made she could retain whatever stock in the B. Oil Company she desired. As a result of the negotiations, in which affiant took no part, the construction and good-will of the B. Oil Company was purchased for sixty thousand dollars, which was at least twenty thousand dollars in excess of its value, and largely in excess of the value placed upon it by Mrs. B. in the interview above referred to between Mr. Flagler and affiant with her in 1876. In addition to the construction and good-will which was purchased for the sum of sixty thousand dollars, there was purchased of the B. Oil Company its entire stock of oils on hand at the full market value, and the sum paid for same amounted to $19,144.49, making an aggregate of $79,144.49, and did not include any other assets of the company, such as cash, accounts receivable and accrued dividends.

With respect to the allegation in said affidavit that “Mrs. B., seeing that the property had to go, asked that she might, according to the understanding with the president of the company, retain fifteen thousand dollars of her stock,” so far as said statement implies that she was parting with her property under any duress, restraint, or undue influence, or was forced thereto by any acts of the Standard Oil Company, the same is absolutely false; and it is also false that she ever had any understanding with the president of the Standard Oil Company that she should retain fifteen thousand dollars of the stock of the B. Oil Company, nor was there any reference to that subject save as is hereinbefore stated; and if the said Mrs. B. refers to this affiant in that connection wherein she says that “to this request the reply was, ‘No outsider can have any interest in this concern’ and ‘that said Standard Oil Company had dallied as long as it would over this matter, that it must be settled up that day or go, and insisted upon her signing the bond above referred to,’” the same is also false; nor has he any knowledge that during said negotiation any such language was ever used, or that the negotiations were ever carried on or closed in any such spirit.

Affiant says that it is not true that he made any promises that he did not keep in the letter and spirit; and it is not true that he was instrumental to any degree in her being obliged to sell the property much below its true value; and he avers that she was not obliged to sell out, and that such sale was a voluntary one upon her part and for a sum far in excess of its value, and that the construction which was purchased of her could be replaced for a sum not exceeding twenty thousand dollars.

On Saturday, the ninth day of November, 1878, the negotiations were closed and payments made to Mrs. B. Affiant had no knowledge of dissatisfaction upon her part until the receipt of a letter dated Monday, November 11, which reached him on the 12th, and on November 13 the reply thereto was made, copy of which is as follows:

November 13, 1878.

Dear Madam: I have held your note of 11th inst., received yesterday, until to-day, as I wished to thoroughly review every point connected with the negotiation for the purchase of the stock of the B. Oil Company, to satisfy myself as to whether I had unwittingly done anything whereby you would have any right to feel injured. It is true that in the interview I had with you I suggested that if you desired to do so you could retain an interest in the business of the B. Oil Company by keeping some number of its shares, and I then understood you to say that if you sold out you wished to go entirely out of the business. That being my understanding, our arrangements were made in case you concluded to make the sale, that precluded any other interests being represented, and therefore when you did make the inquiry as to your taking some of the stock our answer was given in accordance with the facts noted above, but not at all in the spirit in which you refer to the refusal in your note. In regard to the reference that you make as to my permitting the business of the B. Oil Company to be taken from you, I say that in this, as in all else that you have written in your letter of 11th inst., you do me most grievous wrong. It was of but little moment to the interests represented by me whether the business of the B. Oil Company was purchased or not. I believe that it was for your interest to make the sale, and am entirely candid in this statement, and beg to call your attention to the time, some two years ago, when you consulted Mr. Flagler and myself as to selling out your interests to Mr. Rose, at which time you were desirous of selling at considerably less price, and upon time, than you have now received in cash, and which sale you would have been glad to have closed if you could have obtained satisfactory security for the deferred payments. As to the price paid for the property, it is certainly three times greater than the cost at which we could now construct equal or better facilities; but wishing to take a liberal view of it, I urged the proposal of paying the sixty thousand dollars, which was thought much too high by some of our parties. I believe that if you would reconsider what you have written in your letter, to which this is a reply, you must admit having done me great injustice, and I am satisfied to await upon your innate sense of right for such admission. However, in view of what seems your present feelings, I now offer to restore to you the purchase made by us, you simply returning the amount of money which we have invested and leaving us as though no purchase had been made. Should you not desire to accept this proposal, I offer to you one hundred, two hundred, or three hundred shares of the stock at the same price that we paid for the same with, this addition that if we keep the property we are under engagement to pay into the treasury of the B. Oil Company an amount which, added to the amount already paid, would make a total of $100,000, and thereby make the shares one hundred dollars each.

That you may not be compelled to hastily come to conclusion, I will leave open for three days these propositions for your acceptance or declination, and in the meantime, believe me,

Yours very truly,

John D. Rockefeller.

To which letter no reply was ever received, and since which time affiant has had no communication with Mrs. B. upon any subject.

Affiant says that he has had his attention called to the affidavit of Daniel Shurmer, filed in this case October 18, 1880, and to the language as follows: “That the Standard Oil Company had already squeezed out one refining concern with which he was connected, whereby he had lost over twenty thousand dollars.” Affiant says that the same is false, as nothing of the kind ever occurred.

Affiant says that he conducted most of the negotiations which led to the making of the contract with defendants, and that at no time previous or during the same were any threats made by him or any officer of the Standard Oil Company or agent to his knowledge to the effect that the firm of Scofield, Shurmer and Teagle would be ruined if they did not make such a contract, and no promises were made by him nor anybody else in behalf of said Standard Oil Company to said Shurmer or any of the defendants, that if said contract was signed the Standard Oil Company and defendants would control and monopolise the whole refining business in Cleveland; nor is it true, as alleged by said Shurmer, that he was reluctant to enter into said agreement, but, so far as affiant knows, the said Shurmer was anxious to make the arrangement, believing it to be a profitable one for the defendants. That some time in the year 1872, when the refining business of the City of Cleveland was in the hands of a number of small refineries and was unproductive of profit, it was deemed advisable by many of the persons engaged therein, for the sake of economy, to concentrate the business and associate their joint capital therein. The state of the business was such at that time that it could not be retained profitably at the City of Cleveland by reason of the fact that points nearer the Oil Regions were enjoying privileges not shared by refiners at Cleveland, and could produce refined oil at a much less rate than could be made at this point. That it was a well-understood fact at that time among refiners that some arrangement would have to be made to economise and concentrate the business or ruinous losses would not only occur to the refiners themselves, but ultimately Cleveland as a point of refining oil would have to be abandoned. At that time those most prominently engaged in the business here consulted together, and as a result thereof several of the refiners conveyed to the plaintiff their refineries and had the option in pay therefor to take stock in the Standard Oil Company at par or to take cash. That at this time the Standard Oil Company, by reason of its facilities and large cash capital, was agreed upon as the one best adapted to concentrate the business, and for no other reason whatsoever. That said Standard Oil Company had no agency in creating this state of things which made that change in the refining business necessary at that time, but the same was the natural result of the trade; nor did it in the negotiations which followed use any undue or unfair means, but in all cases, to the general satisfaction of those whose refineries were acquired, the full value thereof either in stock or cash was paid, as the parties preferred.

Since that time the Standard Oil Company, by diligent and faithful attention to its business, by the exercise of the most rigid economy, by promptly taking advantage of all legitimate business opportunities, has acquired large and valuable property at Cleveland with a capacity to refine oil largely in excess of any local refinery, but he denies that from 1872 to the present time, by any conclusion, conspiracy, or undue means from first to last, the present standing and capacity of the Standard Oil Company has been acquired, or that it seeks to maintain its hold upon business through any purpose to create or maintain a monopoly.

John D. Rockefeller.

[Transcript of record, Supreme Court of the United States, October term, 1886. Number 1,290. The Lake Shore and Michigan Southern Railway Company, plaintiff in error, vs. Scofield, Shurmer and Teagle, in error to the Supreme Court of the state of Ohio, pages 14–21.]

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3,112, pages 576–577.]

32 Nassau Street, New York, March 2, 1885.

General Phineas Pease,

Receiver Cleveland and Marietta Railroad Company.

Dear Sir: My opinion is asked as to the legality of your making such an arrangement with the Standard Oil Company as set forth below.

The facts, as I understand them, are as follows:

The Standard Oil Company proposes to ship or control the shipping of a large amount of oil over your road, say a quantity sufficient to yield to you $3,000 freight per month. That company also owns the pipes through which oil is conveyed from the wells owned by individuals to your railroad, except those pipes leading from the wells of George Rice, which pipes are his own. The company has, or can acquire, facilities for storing all its oil until such time as it can lay pipes to Marietta, and thus deprive your company of the carriage of all its oil.

The amount of oil shipped by Mr. Rice is comparatively small, say a quantity sufficient to yield $300 per month for freight.

The Standard Oil Company threatens to store, and afterward pipe all oil under its control unless you make the following arrangements, viz.: You shall make a uniform rate of thirty-five cents per barrel for all persons excepting the Standard Oil Company; you shall charge them ten cents per barrel for oil and also pay them twenty-five cents per barrel out of the thirty-five cents collected from other shippers.

It may render the subject less difficult of consideration to determine, first, those acts which you cannot with propriety do as receiver.

You are by the decree vested with all the powers of receiver, according to the rules and practice of the court; are directed to continue the operations of the railroad and can safely make disbursements from such moneys as come into your hands for such purposes only as the decree directs, viz.: wages, interest, taxes, rents, freights, mileage on rolling stock, traffic balances and certain debts for supplies.

In my opinion this would not protect you in collecting freight from one shipper and paying it over to another.

All moneys received, therefore, from any person for freight over your road, must pass into your hands and there remain to be disbursed by proper authority. After an examination of your statute, however, I find no prohibition against your allowing a discount, or charging a rate less than a schedule rate to a shipper on account of the large amount shipped by him.

As you are acting, therefore, in the interest of the company, and endeavouring to increase its legitimate earnings as much as possible, I find nothing in the statutes to prevent your making a discrimination, especially where the circumstances are such that a large shipper declines to give your road his freight unless you allow him to ship at less than the schedule rates. Therefore, there is no legal objection to the making of an arrangement which in practical effect may be the same as that proposed, provided the objections pointed out above are obviated.

You may with propriety allow the Standard Oil Company to charge twenty-five cents per barrel for all oil transported through their pipes to your road, and I understand from Mr. Terry that it is practicable to so arrange the details that the company can, in effect, collect this direct, without its passing through your hands. You may agree to carry all such oil of the Standard Oil Company or of others delivered to your road through their pipes, at ten cents per barrel. You may also charge all other shippers thirty-five cents per barrel freight, even though they delivered oil to your road through their own pipes, and this I gather from your letter and from Mr. Terry would include Mr. Rice.

You are at liberty, also, to arrange for the payment of a freight by the Standard Oil Company calculated upon the following basis, viz.:

Such company to be charged an amount equal to ten cents per barrel, less an amount equivalent to twenty-five cents per barrel upon all oil shipped by Rice, the agreement between you and the company thus being that the charge to be paid by them is a certain sum ascertained by such a calculation. If it is impracticable so to arrange the business that the Standard Oil Company shall, in effect, collect the twenty-five cents per barrel from those persons using the company’s pipes from the wells to the railroad without its passing into your hands, you may properly also deduct from the price to be paid by this company an amount equal to twenty-five cents per barrel upon the oil shipped by such persons provided your accounts, bills, vouchers, etc., are consistent with the real arrangement actually made, you will incur no personal responsibility by carrying out such an arrangement as I suggest. It is possible that by a proper application to the court, some person may prevent you in the future from permitting any discrimination. Even if Mr. Rice should compel you, subsequently, to refund to him the excess charged over the Standard Oil Company, the result would not be a loss to your road, taking into consideration the receipts from the Standard Oil Company, if I understand correctly the figures. There is no theory, however, in my opinion under the decisions of the courts, relating to this subject, upon which, for the purpose, an action could be successfully maintained in this instance.

Yours truly,

Edward S. Rapallo.